Invalid Default Notices

[Guest]

What happens to an account that has been "abandoned" by the OC and sold on?

.................

Alan

 

good point. 'repudiation' perhaps?, dependant on the circumstances.

when the new dn arrives, maybe don't accept it?

a creditor can't have it both ways!

imo.

[welshperson3]

I have been speaking to a number of people, Qc down, and only one supports the view on repudiation but the problem is conceded that there is a statutory prohibition on termination unless a default notice is served , setting aside an de minimis points.

 

The Act also clearly states NO SANCTION CRIMINAL OR CIVIL but for that provided by the act, so i think you may struggle there, as the act does not allow acceptance of termination

 

We will know more when we get the Brandon appeal heard

 

 

Ok if there is no right in the CCA why is this in the act?

 

 

 

(b) Termination of an agreement under section 99 or 101, or by the exercise of a right or power in that behalf expressly conferred by the agreement.

 

 

This seems to show that it is to do with acts of rescission out side of the rules of the CCA, and also out side of contract rules.

 

 

102 Agency for receiving notice of rescission

 

(1) Where the debtor or hirer under a regulated agreement claims to have a right to rescind the agreement, each of the following shall be deemed to be the agent of the creditor or owner for the purpose of receiving any notice rescinding the agreement which is served by the debtor or hirer—

 

(a) a credit-broker or supplier who was the negotiator in antecedent negotiations, and

 

(b) any person who, in the course of a business carried on by him, acted on behalf of the debtor or hirer in any negotiations for the agreement.

 

 

(2) In subsection (1) “rescind” does not include—

 

(a) service of a notice of cancellation, or

 

(b) termination of an agreement under section 99 or 101, or by the exercise of a right or power in that behalf expressly conferred by the agreement.

 

 

wp3

Edited October 15, 2010 by welshperson3

[welshperson3]

102 Agency for receiving notice of rescission

when they put this in the act they clearly stated that it is not in respect of,

(2) In subsection (1) “rescind” does not include—

(a) service of a notice of cancellation, or

(b) termination of an agreement under section 99 or 101, or by the exercise of a right or power in that behalf expressly conferred by the agreement.

If it is not in respect of 99 Right to terminate hire-purchase etc agreements

If it is not in respect of 101 Right to terminate hire agreement

If it is not in respect of a right or power in that behalf expressly conferred by the

agreement.

Now the question is what is it in respect of ?

We don’t know what or how.

but we do know who to send it to .

[welshperson3]

The Act also clearly states NO SANCTION CRIMINAL OR CIVIL but for that provided by the act, so i think you may struggle there, as the act does not allow acceptance of termination

 

 

IMHO the above shows that rescission isn't out side of the act.

[The Mould]

The Courts must look upon the creditor's cause of action in cases of this type.

 

Is the creditor's cause of action without legal excuse, is the creditor's cause of action a just one?

 

Without anyone thinking I am being funny, I would say "Quite frankly my dear I really don't give a dam what the act has to say in respect of the creditor's non-entitlement to do something without first having complied with his obligations as prescribed in the act".

 

There are many ocassions whereby a creditor has issued a DN as a result of just one missed payment by the debtor and there are also other ocassions whereby the creditor has issued a demand for the full balance without serving a non-defective DN first upon the debtor.

 

A simple breach of a condition by the debtor is not a fundamental breach of the contract, in such cases as this it is the creditor who is the contract breaker with his fundamental breach of the contract and that [is] repudiation of the contract, therefore the debtor need only accept his repudiation.

 

In the Woodchester case such a thing did happen, the two parties had agreed that the contract was at an end, the Court did not undo their agreement to the ending of the contract and on Appeal the claimant was awarded the arrears that were actually due and owing, the claimant was not entitled to the £13,000.00+ awarded to him in the lower Court, the goods on hire were taken back by the claimant but there was no longer a 'Live' agreement between the two parties, a re-issue of a valid DN was not available because of the agreed ending of the contract, the claimant (creditor) stuffed things up for himself as his cause of action was unwarranted it was done without legal excuse and was unjust.

 

Kind Regards

 

The Mould

[Kayyak]

There is so much information on contracts here that I am confused. I would appreciate it if someone could look at my thread and point me in the direction as to how I stand. Basically, valid DN (Dec), OC entered into an "informal agreement" (Feb), I kept up with payments and then they terminated half way through (March).

http://www.consumeractiongroup.co.uk/forum/showthread.php?259063-Is-my-Halifax-CCA-enforceable

[The Mould]

Hello Kayyak

 

What do you mean by 'informal agreement', if there is evidence in writing of such agreement then, there is nothing informal about it.

 

I shall have another look at your case.

 

My apologies to you all for this hijack, we will be landing shortly so please fasten your seat belts.

 

Kind Regards

 

The Mould

[welshperson3]

As the draftsman of the Consumer Credit Act 1974

http://www.francisbennion.com/pdfs/fb/2009/2009-043-cca-aborted-foreword.pdf

[Lord_Alcohol]

The Mould hits the nail on the head again, and this has to be the way forward.

 

If a lender subsequently makes a previously-terminated contract live in order to issue a new DN, he must breach s89 unless there has been zero impact on the debtor. If he absolutley insists on breaching s89 in order to correct his original mistake, then the debtor has s140 available as this would very clearly come under it.

 

I still believe that if a lender terminates a contract on breach and contrary to s88, and the borrower accepts that termination, then the game's up for the OC. If s87 cannot be satisfied, then the OC has ended the agreement unlawfully, but ended it remains.

 

I would say at this stage the OC needs to accomplish the following in order to recover all sums;

 

1. Convince a court that the agreement is still live, despite a clear statement to the debtor that it is ended and a letter from the debtor that accepts that termination.
   
2. Ask the court to overlook the various letters of termination, badgering from DCAs, threats of legal action, abuses of the OFT's debt collection guidelines and recording of adverse data with the CRAs.
   
3. Persuade the court that it (the OC) is exempt from s89, or that the debtor has no need of the entitlement that s89 provides.
   
4. Re-instate the contract while ignoring all the fundamental tenets of contract law (that a contract can only exist where both parties want it to).
   
5. Issue a new DN (and hope that it complies with s88!).
   
6. Hope that the debtor does not make a defence under s140 or, if he does, faces a judge hostile to s140 and the OFT's interpretation of it.
   

I think that's quite a tall order.

 

LA

[emandcole]

Section 98 of the CCA 1974

 

98 Duty to give notice of termination (non -default cases)

 

(1) The creditor or owner is not entitled to terminate a regulated agreement except by or

after giving the debtor or hirer not less than seven days’ notice of the termination.

 

(2) Subsection (1) applies only where—

 

(a) a period for the duration of the agreement is specified in the agreement,

and

(b) that period has not ended when the creditor or owner does an act

mentioned in subsection (1),

 

but so applies notwithstanding that, under the agreement, any party is entitled to terminate

it before the end of the period so specified.

 

(3) A notice under subsection (1) is ineffective if not in the prescribed form.

 

(4) Subsection (1) does not prevent a creditor from treating the right to draw on any credit

as restricted or deferred and taking such steps as may be necessary to make the restriction or deferment effective.

 

(5) Regulations may provide that subsection (1) is not to apply to agreements described

by the regulations.

 

(6) Subsection (1) does not apply to the termination of a regulated agreement by reason of any breach by the debtor or hirer of the agreement.

 

If I've interpreted this correctly isn't this stating that in cases relating to a regulated agreement, if the debtor has not acted in a manner that warrants a default notice being served the creditor is not entitled to terminate irrespective of giving 7 days notice of intent? Can't quite get my head round it as I've read it too many times now!

[Lord_Alcohol]

Section 98 of the CCA 1974

 

98 Duty to give notice of termination (non -default cases)

 

(1) The creditor or owner is not entitled to terminate a regulated agreement except by or

after giving the debtor or hirer not less than seven days’ notice of the termination.

 

(2) Subsection (1) applies only where—

 

(a) a period for the duration of the agreement is specified in the agreement,

and

(b) that period has not ended when the creditor or owner does an act

mentioned in subsection (1),

 

but so applies notwithstanding that, under the agreement, any party is entitled to terminate

it before the end of the period so specified.

 

(3) A notice under subsection (1) is ineffective if not in the prescribed form.

 

(4) Subsection (1) does not prevent a creditor from treating the right to draw on any credit

as restricted or deferred and taking such steps as may be necessary to make the restriction or deferment effective.

 

(5) Regulations may provide that subsection (1) is not to apply to agreements described

by the regulations.

 

(6) Subsection (1) does not apply to the termination of a regulated agreement by reason of any breach by the debtor or hirer of the agreement.

 

If I've interpreted this correctly isn't this stating that in cases relating to a regulated agreement, if the debtor has not acted in a manner that warrants a default notice being served the creditor is not entitled to terminate irrespective of giving 7 days notice of intent? Can't quite get my head round it as I've read it too many times now!

 

I don't think that it will apply, as there was a breach (hence a DN).

 

LA

[basa48]

Section 98 of the CCA 1974

 

 

I understood s98 applied only to loans (fixed term agreements) and that para (6) meant the rules for defaulted accounts are in a different section.

[basa48]

The Mould hits the nail on the head again, and this has to be the way forward.

 

LA

 

LA I don't follow your references to s89? (89 Compliance with default notice

 

If before the date specified for that purpose in the default notice the debtor or hirer takes the action specified under section 88(1)(b) or © the breach shall be treated as not having occurred. )

 

Do you perhaps mean s87?

[emandcole]

87 Need for default notice

 

(1) Service of a notice on the debtor or hirer in accordance with section 88 (a “default

notice”) is necessary before the creditor or owner can become entitled, by reason of any

breach by the debtor or hirer of a regulated agreement,—

 

(a) to terminate the agreement, or

 

(b) to demand earlier payment of any sum, or

 

© to recover possession of any goods or land, or

 

(d) to treat any right conferred on the debtor or hirer by the agreement as

terminated, restricted or deferred, or

 

(e) to enforce any security.

 

Just thinking out loud I guess but this thread has concentrated very heavily on the supposed fact that if a creditor hasn't issued a valid DN they are not entitled (and therefore effectively prevented) from issuing a termination, even though we all know they do it anyway.

 

It is clear that although they are technically not entitled to do this, rendering any termination as a supposedly ineffective event that is not recognised by the law, they are also not actually 'entitled' to demand the full sum either as detailed above right under the other item they are supposedly not entitled to do - terminate.

 

They also are not entitled to do any part of point D either, to prevent or remove any right bestowed on the debtor under that agreement. With a credit card for example this would mean removing the access to credit previously conferred under the live agreement...but they do that as well.

 

So, using a credit card as a typical example although a creditor is not entitled to do it once they have issued a termination notice after the dodgy DN the creditor is likely to breach 3 of the 5 things they are expressly forbidden to do if the DN they issue is invalid.

 

To my mind regardless of entitlement that constitutes 3 seperate breaches of statute and is surely sufficient ammo in any resultant defence offered under section 140 or argument forwarded about the creditor actually being the first party to breach the contract 'to its core' with the removal of the major benefit to the debtor, in clear breach of statutory intent.

[Lord_Alcohol]

LA I don't follow your references to s89? (89 Compliance with default notice

 

If before the date specified for that purpose in the default notice the debtor or hirer takes the action specified under section 88(1)(b) or © the breach shall be treated as not having occurred. )

 

Do you perhaps mean s87?

 

No, I really meant that s89 intends that the debtor is entitled to remedy the breach as though it never occurred. However, he cannot get himself into this position if he's been dragged through the courts and had his CRF mangled.

 

So, if the OC issues a new DN after these events, he breaches s89.

 

LA

[Lord_Alcohol]

87 Need for default notice

 

(1) Service of a notice on the debtor or hirer in accordance with section 88 (a “default

notice”) is necessary before the creditor or owner can become entitled, by reason of any

breach by the debtor or hirer of a regulated agreement,—

 

(a) to terminate the agreement, or

 

(b) to demand earlier payment of any sum, or

 

© to recover possession of any goods or land, or

 

(d) to treat any right conferred on the debtor or hirer by the agreement as

terminated, restricted or deferred, or

 

(e) to enforce any security.

 

Just thinking out loud I guess but this thread has concentrated very heavily on the supposed fact that if a creditor hasn't issued a valid DN they are not entitled (and therefore effectively prevented) from issuing a termination, even though we all know they do it anyway.

 

It is clear that although they are technically not entitled to do this, rendering any termination as a supposedly ineffective event that is not recognised by the law, they are also not actually 'entitled' to demand the full sum either as detailed above right under the other item they are supposedly not entitled to do - terminate.

 

They also are not entitled to do any part of point D either, to prevent or remove any right bestowed on the debtor under that agreement. With a credit card for example this would mean removing the access to credit previously conferred under the live agreement...but they do that as well.

 

So, using a credit card as a typical example although a creditor is not entitled to do it once they have issued a termination notice after the dodgy DN the creditor is likely to breach 3 of the 5 things they are expressly forbidden to do if the DN they issue is invalid.

 

To my mind regardless of entitlement that constitutes 3 seperate breaches of statute and is surely sufficient ammo in any resultant defence offered under section 140 or argument forwarded about the creditor actually being the first party to breach the contract 'to its core' with the removal of the major benefit to the debtor, in clear breach of statutory intent.

 

Yes, agree with this.

 

The issue of sanctions under s170 wouldn't apply under s140, as s170 allows sanctions permitted under the Act.

 

The problem now, I guess, is getting a court to agree that repeated breaches of the Act by the OC and the resulting mess caused to the debtor is "unfair" under s140 and that it should exercise it's authority to get the debt reduced or binned entirely by way of "compensation".

 

I'm now wholly convinced that the lenders are using the courts to recover money as the preferred option over using CCA, maybe especially where the consumer has been through a bad period and is not paying on time. It's the only explanation as to why they cannot get DNs right and stick two fingers up to the Act.

 

Grrrrrrr.....

 

LA

[welshperson3]

I have until Wednesday when I am back in court, (set aside)

I have raised the issue of invalid DN and used the unlawful rescission/termination argument, during the last hearing the judge indicated that he was of a different opinion to me on this.

 

 

Now on the DN issue what I also have available to me is s140 unfair relationship as I have made a request to determine whether the relationship is unfair, and this covers everything that the creditor has done.

 

 

The judge is in agreement that the original court order is wrong, but he also thinks they can issue a new DN and start the process again.

 

Now I have the option of carrying on with the termination argument on the same lines as what was believed on this thread. ( faulty DN +termination =creditor loses right to claim).

 

After a lot of research I have come to the conclusion that a faulty DN isn’t as terminal as we first believed, but it is far from fair.

 

So we all know that a faulty DN is unfair, it has removed all the protection that S87 CCA was supposed to offer.

 

 

The courts powers under s140B CCA

Where a court determines that a relationship is unfair, it can make a wide range of orders.

Among them are:

• requiring repayment of all or part of any sum paid by the debtor or any guarantor by virtue of the agreement or any related agreement2;

• requiring the creditor to do or not do anything specified in the order in connection with the agreement;

• setting aside all or part of any obligation of the debtor or any guarantor as a result of the agreement or related agreement;

• altering the terms of the credit agreement;

• directing the return of property given as security for the agreement.

 

Now my question is if a faulty DN is unfair under s140 what remedy’s can one ask for from the court?

 

 

How would this be put right?

 

wp3

Edited October 16, 2010 by welshperson3

[frettful38]

Hi WP3 hope this is of some help although I believe they may be much more.

 

Remedies

 

If the court finds that the relationship between borrower and lender is unfair, it has a wide range of remedies including;

 

 

• requiring the creditor to repay any sum paid by the debtor
  
• ordering the creditor to act or cease to act in a particular way in connection with the agreement
  
• reducing the amount payable under the agreement
  
• directing the return of any security under the agreement
  

altering any of the terms of the agreement

[Lord_Alcohol]

I have until Wednesday when I am back in court, (set aside)

I have raised the issue of invalid DN and used the unlawful rescission/termination argument, during the last hearing the judge indicated that he was of a different opinion to me on this.

 

 

Now on the DN issue what I also have available to me is s140 unfair relationship as I have made a request to determine whether the relationship is unfair, and this covers everything that the creditor has done.

 

 

The judge is in agreement that the original court order is wrong, but he also thinks they can issue a new DN and start the process again.

 

Now I have the option of carrying on with the termination argument on the same lines as what was believed on this thread. ( faulty DN +termination =creditor loses right to claim).

 

After a lot of research I have come to the conclusion that a faulty DN isn’t as terminal as we first believed, but it is far from fair.

 

So we all know that a faulty DN is unfair, it has removed all the protection that S87 CCA was supposed to offer.

 

 

The courts powers under s140B CCA

Where a court determines that a relationship is unfair, it can make a wide range of orders.

Among them are:

• requiring repayment of all or part of any sum paid by the debtor or any guarantor by virtue of the agreement or any related agreement2;

• requiring the creditor to do or not do anything specified in the order in connection with the agreement;

• setting aside all or part of any obligation of the debtor or any guarantor as a result of the agreement or related agreement;

• altering the terms of the credit agreement;

• directing the return of property given as security for the agreement.

 

Now my question is if a faulty DN is unfair under s140 what remedy’s can one ask for from the court?

 

 

How would this be put right?

 

wp3

 

You have been considerably and unfairly disadvantaged by the OC's activities, presumably based on his failure to perform the contract at ss 88 and 89. You will probably have had adverse data recorded with the CRAs (maybe for some time), in addition to dealing with the stress of being sued.

 

At an absolute minimum, I would ask the court to grant compensation based on;

 

1. Damages costs for recording of adverse data when your entitlement to avoid this was significantly reduced by the OC's defective DN.
   
2. Compensation for having the entitlement of s89 unilaterally withdrawn by the OC.
   
3. A sum to pay for your time and costs in dealing with the matter to date.
   
4. The fact that the OC's apparent termination has caused additional stress and cost, as had he simply issued a new and compliant DN way back then it's unlikely that you would be in court at all.
   

It may be that, had the DN been compliant, you would have cleared the arrears and maintained payments but, as the DN was not compliant and the OC removed his entitlement to all sums unpaid, those payments were not made. You could therefore ask for, in addition to the above, that the balance of the account is set to what it would be now had the arrears and payments since issue of the DN been made.

 

That would be the minimum I would ask for if the court insists on enforcing a resurrected agreement. I would start off by asking the court to wipe the debt entirely, due to the simple fact that the OC has been unable to adhere to CCA and you have no confidence that he will do so in the future. For example, you may find yourself in the same situation next year, dealing with an OC that cares little about the Act.

 

Having said that, I still maintain that if an OC terminates on the back of a defective DN, it represents unlawful termination and can still be accepted. That might be b******s, but it's what I think at the mo.

 

I would also say to the judge that, assuming he finds against you, that you wish for clear reasons why the OC is apparently exempt from ss 88 and 89 and why in this case s87(1) does not apply to him. If you say that you will require his legal reasoning it implies an appeal is going to be requested, so if the DJ decides to try and make legal history he will know that his name may be later batted around the higher courts.

 

One last point; under s140 the OC must show the court that the relationship is fair. The onus is on him to do so, and not on you to show how it was unfair. He therefore needs to fully justify his actions and demonstrate that they were fair (although how he will do that is a mystery!).

 

LA

[frettful38]

Excellent advice as always LA I am sure most will agree.....just been reading this if it is of any help.

 

 

http://www.hammonds.com/FileServer.aspx?oID=23087

 

http://online.lightfoots.co.uk/Downloads/consumer_credit/Published/001-0022_AMEX_v_Brandon.pdf

Edited October 16, 2010 by frettful38

[Lord_Alcohol]

Excellent advice as always LA I am sure most will agree.....just been reading this if it is of any help.

 

 

http://www.hammonds.com/FileServer.aspx?oID=23087

 

http://online.lightfoots.co.uk/Downloads/consumer_credit/Published/001-0022_AMEX_v_Brandon.pdf

 

Hi Frett

 

What a nightmare. Presumably after Brandon lenders everywhere will start dishing out DN's with no time to remedy, then claim they didn't start proceedings until after the prescribed time. That way they can rely on the courts to grant money orders without having to bother with CCA or wait for the debtor to repay under the agreement.

 

This is likely to be a way for lenders to collect their money early under regulated agreements.

 

Here's a list of s140 cases I found on the "other" web site, which may be useful...

 

http://www.oft.gov.uk/shared_oft/business_leaflets/consumer_credit/unfair-relationships-cases.pdf

 

LA

[welshperson3]

Thanks lord alcohol

Hi have done a considerable amount of research and I think I have a better than average chance with the unfair relationship part, but the DN = termination part is what I think I will struggle on, and I don’t want to set a precedence with a losing argument.

My claim has always been about the unfairness,

As I know for a fact that the claimant in my case reads what I am Writing on this site so I have to keep my opinions (arguments) on certain things quiet.

[Lord_Alcohol]

Thanks lord alcohol

 

Hi have done a considerable amount of research and I think I have a better than average chance with the unfair relationship part, but the DN = termination part is what I think I will struggle on, and I don’t want to set a precedence with a losing argument.

 

My claim has always been about the unfairness,

 

As I know for a fact that the claimant in my case reads what I am Writing on this site so I have to keep my opinions (arguments) on certain things quiet.

 

Good luck wp!

 

One other possibility for you is to simply refuse to accept any attempt to resurrect the agreement (so that the OC can issue a new DN). I'm not sure what anyone can do in that circumstance; you'd be acting perfectly reasonably to take that position.

 

As for monies due, we all know what they are because CCA tells us. They are the arrears, because the OC relinquishes entitlement to unpaid amounts through his earlier error. This situation is quite similar to unenforceable agreements and the wish of Parliament to 'favour' the debtor where the OC cannot be arsed to do things properly.

 

I really would like to see a DJ try to force a contract on two parties who have previously agreed to end it.

 

Let us know how it goes wp.

 

LA

[frettful38]

I personally think that the unfair relationship route is probably our best shot at getting any kind of justice and help getting out of the mess the financial industries have placed us in.

 

It takes a lot of guts and bravery to see it through but then if we don't pull out everything we can then I believe that like the refund of bank charges this matter will also be swept under the carpet.

 

WP3 I think you are very brave and right in fighting for what you believe and what wrong you feel has been done to you. You are getting a lot of help and support from many on here and will continue to. Maybe the courts are in bed with the bankers and maybe their not........6 Dec 10 we will know if Brandon's appeal is successful or not. In the meantime we have plenty of time to build on other arguments to support what we need.

 

LA I agree this is a nightmare.......now what we have to do is make sure this nightmare does not come true LOL!!!!!!!!!!!!

[frettful38]

Thanks lord alcohol

 

Hi have done a considerable amount of research and I think I have a better than average chance with the unfair relationship part, but the DN = termination part is what I think I will struggle on, and I don’t want to set a precedence with a losing argument.

 

My claim has always been about the unfairness,

 

As I know for a fact that the claimant in my case reads what I am Writing on this site so I have to keep my opinions (arguments) on certain things quiet.

 

 

Hope this info is of some more help WP3:

 

What unfair & fair terms look like

 

How to spot a term that may be unfair under the Regulations.

Under the Regulations a term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance between the rights and obligations of the firm and the consumer, to the detriment of the consumer. The list below provides examples of the types of terms that may be unfair. This is not a complete list, as there are other kinds of unfair terms. A term is not necessarily unfair just because it looks like one of the terms listed below. The assessment of whether a term is unfair also depends on a wider consideration of the contract as a whole. However, this list should help you consider whether any of the terms in your contract seem unfair.

Examples of unfair terms

 

Examples of terms that may be regarded as unfair under the Regulations:

 

• Terms that charge the consumer a disproportionately large sum if they do not fulfill any of their obligations under the contract or cancels the contract
  
• Terms that tie a consumer into the contract, while letting the firm decide whether or not to provide the service.
  
• Terms that give the firm the absolute right to decide if its products or services have met the requirements under the contract or to interpret any term of the contract as it sees fit.
  
• Terms that require the consumer to fulfill all their contractual obligations, while letting the firm avoid its own.
  
• Terms that automatically extend a fixed-length contract where the deadline for the customer opting not to extend the contract is unreasonably short (e.g. these could apply to some renewable insurance contracts).
  
• Terms that limits a firm's obligation to honour its agents' commitments to the consumer (e.g. “whole agreement” clauses).
  
• Terms that tie the consumer into the contract, even if they have not had a real opportunity to understand the terms before they sign it.
  
• Terms that mislead the consumer about the contract or their legal rights.
  
• Terms that exclude or limit the consumer’s legal rights or remedies when the firm has failed to meet its obligations under the contract.