Invalid Default Notices

[means2anend]

I think this is important...

 

PART 6 - SERVICE OF DOCUMENTS - Ministry of Justice

 

 

 

6.3

 

It would seem that a DN sent second class breaches Civil Procedure rules?

 

maybe....

 

But the section specifically refers to Claim Forms!!!

[Stagparty]

Has anyone recently received a DN from Nationwide?

 

I've recently had a second one on the same account after I told them the first one was defective (something that they denied) - please see my thread "About to be sued by Brian Carter" for more information

 

The first DN did not allow time for service - the remedy date was exactly 14 days from the date of the letter.

 

The new DN gives a remedy date of "21 days from the date of this letter".

 

I'm trying to find out if NW have had a change of policy or if this second DN I've received has been done especially for me.

 

In any event, as they terminated the account in writing after the first (faulty) DN and I accepted the unlawful termination I don't think the second one affects me too much, although any suggestions as to how to respond would be gratefully received.

 

Thanks everyone

SP

[emandcole]

Has anyone recently received a DN from Nationwide?

 

I've recently had a second one on the same account after I told them the first one was defective (something that they denied) - please see my thread "About to be sued by Brian Carter" for more information

 

The first DN did not allow time for service - the remedy date was exactly 14 days from the date of the letter.

 

The new DN gives a remedy date of "21 days from the date of this letter".

 

I'm trying to find out if NW have had a change of policy or if this second DN I've received has been done especially for me.

 

In any event, as they terminated the account in writing after the first (faulty) DN and I accepted the unlawful termination I don't think the second one affects me too much, although any suggestions as to how to respond would be gratefully received.

 

Thanks everyone

SP

 

 

Looks as if they've tried to remedy their first DN by issuing a second, fine ordinarily but not once they've terminated.

 

I'd write back asking what they think they're doing, they cannot issue a DN on an account that is closed and if they register this new one with CRA's then more trouble for them. Ask them specifically what they intend to achieve by issuing a second default on a terminated account.

 

As for the 21 days to remedy...still doesn't comply as they are supposed to provide you with a clear date such as 'on or before the 8th August 2010' etc. Perhaps one day these financial institutions will actually read the regulations 'governing' them .

[Stagparty]

Thanks for the prompt response Emandcole

 

I agree. it's slightly confusing. I really don't think they know what they are doing.

 

I'm interested in finding out if this "new format" DN is now standard for NW - if it is it clearly shows they realised there was a problem with the old format, this should help many NW customers if my hunch is correct.

 

So again, has anyone received a DN from Nationwide recently and if so does it have a specific date as the remedy date or does it say 21 days?

[threadbare]

I also thought that they can only remedy a defective DN (i.e correct what they got wrong in the first one) ... if they issue a further DN BEFORE the expiry date of the original DN ...if that make sense ... !!

 

Once the expiry date of the original (defective) DN has expired i.e exceeded the amount of days they gave you, or the actual date quoted .. then it cannot be rectified by a 2nd DN, as the account is already in default as per their original notice ....

 

Happy to be corrected if I'm wrong ... but pretty sure the above is correct from my own readings etc ...

 

TB

[Stagparty]

I think you are right Threadbare - my readings confirm the same. The only way they can issue a 2nd (correct) DN is if I agree to it! Something in the circumstances that I am quite unlikely to do!

 

I'm trying to find the wider picture though as if NW have changed their DN policy then it will add weight to everyone's argument who have had one of the old type ones.

[threadbare]

I see what you mean ...

 

But to be fair if a DN is defective then its defective full stop .... a lawfull DN has to (without exception) meet the terms and format as defined under the CCA74, if it doesn't than tough cookies to the claimant ....

 

They can say what they want .. but they and you know that there's nothing to play for here ....(except the genuine arrears .. but don't tell them that will you ... !!) ... even if they have re-jigged their new DNs ... doesn't change the fact that yours is defective ....no matter how they may try and convince you otherwise..

 

TB

[Stagparty]

Don't worry TB, they won't convince me they are right.

 

I'm trying to find the answer to the "is it a change of policy" here to help the hundreds/thousands of people who NW have issued faulty DN's too in the past.

 

In my own case NW have acted despicably and if I can help others fight back against them by highlighting this change I'd be delighted to.

[means2anend]

Courtesy of Surfaceagent x20

 

post taken from

 

http://www.consumeractiongroup.co.uk/forum/legal-issues/170345-tale-dodgy-dn.html

 

Hope it helps..

 

 

The contention advanced by ABC's lawyers was that if the DN was ineffective, the termination which ABC subsequently brought about in reliance upon that ineffective DN, was itself ineffective. In support, ABC said that since the law did not permit a creditor to terminate an agreement unless there had been serivce upon a debtor of an effective DN, by extension therefore, rather than having been terminated, the agreement endured.

 

The law in support of this proposition was Consumer Credit Act 1974 section 87(1)(a) which says:

 

(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

 

ABC went on to say that owing to the agreement enduring, ABC were therefore at liberty to serve a second DN.

 

At first blush, that looks quite a convincing argument. The Act itself forbids the creditor the right to terminate save in certain circumstances. So if the required circumstances were not present, how could the law regard the agreement as having terminated?

 

[1] Termination of a Contract and General Principles

A good place to start would be to dispel the myth that the law will not tolerate contract breaking. On the contrary whilst not actively ncouraging it, the law will tolerate it. The courts will rarely impose upon one party an obligation to perform under a contract against its will, to do what it failed to do or redo what it tried and failed to do. Instead, what the law will do is on the one hand restrain the contract breaker from procuring the benefits it would have enjoyed had it fulfilled its contractual obligations and on the other, enable the injured party to recover damages flowing from the breach.

 

In Golden Strait Corporation v Nippon Yusen Kubishka Kaisha [2007], Lord Bingham said:

 

'The repudiation of a contract by one party ("the repudiator"), if accepted by the other ("the injured party"), brings the contract to an end and releases both parties from their primary obligations under the contract. The injured party is thereupon entitled to recover damages against the repudiator to compensate him for such financial loss as the repudiator's breach has caused him to suffer. This is elementary law.

 

The damages recoverable by the injured party are such sum as will put him in the same financial position as if the contract had been performed.'

 

What's more, the law will not merrily award whatever loss the injured party says he suffered. The court will require the injured party to prove his loss and further, will expect the injured party to take steps to mitigate the loss.

 

'An injured party such as the owners may not, generally speaking, recover damages against a repudiator such as the charterers for loss which he could reasonably have avoided by taking reasonable commercial steps to mitigate his loss.' [Lord Bingham in Golden Strait Corporation.]

 

Further still, in assessing damages the law will not even award what the parties may at formation of the agreement have agreed should be payable as liquidated damages in the event of breach. The court will not permit the recovery of liquidated damages unless the damages represent a fair pre-estimate of what loss might flow from the breach. If the liquidated damages are shown to be excessive and unrepresentative of the sactual loss suffered the law will readily declare the liquidated damages as a penalty and unenforceable.

 

In short, not only does the law tolerate contract breaking, but also, it will not tolerate the injured party taking advantage of the wrongdoer. The law does not pounce on the contract breaker to teach him a lesson. The court only awards the innocent party what damages truly flow from the breach. That admits of the possibility that a contract breaker can get away with it. If the injured party is unable to show resulting loss, the injured party may get nothing.

 

'One must look at the contract as a whole, and if it is clear that the innocent party has lost nothing, he should recover no more than nominal damages for the loss of his right to have the whole contract completed.' [Edmund Davies LJ in 'The Mihalis Angelos' (1971)]

 

[2] Termination in Non-Conformity with section 87.

The contention I advance is that an ineffective DN does not prohibit the creditor from terminating the agreement. Termination after service of an effective default notice is lawful termination, but as we have seen, a party may still terminate an agreement and be in the wrong for doing so. The law operates on a wrongful termination to offer to the injured party the choice of accepting the termination or to hold the contract breaker to his promise.

 

In the world of consumer credit, I contend a termination of the agreement by a creditor in terms whereby he announced he would no longer permit the debtor time to repay the credit, was a creditor in repudiatory breach of the agreement, unless in leading up to termination, the creditor complied with the requirements of the Act in circumstances where the debtor was in first breach of the agreement.

 

Further, and it is worth remembering, the Act is an Act for the purpose of consumer protection. The purpose of the Act is not to preserve the rights of creditors in contracts and to protect them from misadventure where for example, they terminated an agreement where it subsequently transpired the termination had not been in their interests. If that were so, the Act would have been an Act for the better protection of financiers.

 

In a proper case, the law will come to the aid of the vulnerable to protect them from the consequences of their contracts (for example the unsound in mind, children, those under duress or undue influence). To suggest financiers fell into that bracket and the Consumer Credit Act

operated to protect them and not the consumer, was absurd. The civil law does not come to rescue the misadentures of the sain and the savvy.

 

The clue to the position of the creditor on termination is in the use of the word 'entitled' in section 87(1). 'Entitled' connotes a right or a benefit. The Act therefore confers rights, conditional upon the provisions of section 87(1) being fuilfilled. Fail to fulfill the condition and the entitlements do not become available.

 

In the case of a contract entered into by a person under duress and who then breaks the contract the law will come to that person's aid by recognising that person's plea that the contract was made under duress. If that person seeks a declaration of the court that the contract was made under duress the court wil readily declare the contract void.

 

If the Act had intended that a creditor's termination in circumstances where section 87(1) had not been fulfilled by the creditor and was to be of no effect, the Act would have declared that termination void. It doesn't. The termination is voidable at the option of the debtor.

 

[3] The Debtor's Point of View

Third, let us look at the position from the ordinary man as debtor's point of view in a consumer credit situation.

 

The DN is defective for failing to conform to the prescribed terms, or gives misleading information or at worse is plain nonsense so that the debtor does not know precisely what he has to do in order to comply with it and is consequently disadvantaged. Should the law disregard the fact that the creditor put the debtor at a disadvantage and thereby at risk the creditor might lawfully terminate the agreement?

 

'This statute was plainly enacted to protect consumers, most of whom are likely to be individuals. When contracting with a large financial organisation they are at a disadvantage. The contract is likely to be in standard form and relatively complex with a number of detailed provisions. If the hirer is said to have broken its terms, the hirer needs to know precisely what he or she is said to have done wrong and what he or she needs to do to put matters right. The lender has the ability and the resources to give that information with precision. If he does not do so accurately then he cannot take what Mr Gruffyd conveniently referred to as "the next step". [per Kennedy LJ in Woodchester v Swayne [1998]]

 

Moving on, if the debtor receives a notice from the creditor in which the creditor expressly states the contract is terminated, what is the debtor supposed to think? Would the law regard him as likely to think the creditor had terminated the contract or would the law regard him as thinking it had not terminated because strictly speaking, the creditor had served a default notice which was not in accordance with prescribed terms?

 

Or where perhaps the creditor did not expresly terminate but sent the bully boys over to demand the keys to the car. What was the debtor to think then? Would the debtor think the creditor had terminated?

 

It seems to me on the basis of the passages below, the courts will be ready to hold a creditor to his words and actions.

 

"... a person who signs a document, and parts with it so that it may come into other hands, has a responsibility, that of the normal man of prudence, to take care what he signs, which if neglected, prevents him from denying his liability under the document according to its tenor".

[per Lord Wilberforce in Gallie v Lee (1971)]

 

'.. a man cannot escape from the consequences, as regards innocent third parties, of signing a document if, being a man of ordinary education and competence, he chooses to sign it without informing himself of its purport and effect..'

[per Scott LJ in Norwich & Peterborough Building Society v Steed (1992)]

 

In short, the creditor is bound by his deed. All that is required is for the debtor to accept the creditor's termination. He can write saying 'thank you I accept you termination' or he can conduct himself in a way in keeping with that termination. Not paying the instalments would be in keeping with an acceptance of the termination.

 

[4] The fiction of the Second DN and the Enduring Obligation

The service of any second default notice, at a time when the contract is terminated, owing to the wording of the DN in its prescribed form, would perpetuate the fiction that the contract endured. The same can be said owing to the provisions of section 89 of the Act.

 

The form of words in the DN incorporate text in order to meet the intention of section 89 of the Act which provides:

 

'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.'

 

In other words, in serving the second DN, the creditor would be suggesting:

 

[a] an obligation had persisted post termination by which the debtor was bound to make instalment payments (ie post-termination 'arrears'), and

that if payment of those 'arrears' was made, an obligation to make future instalment payments would endure.

 

The obligations at [a] and are obligations enduring during the currency of the agreement. Besides maintaining the fiction of the enduring agremeent as I say, it seems to me any second DN would be bound to be defective for over-stating the sums due. The creditor can not state as an amount due for 'arrears' of instalments that which he said in consequence of his termination was no longer due and payable by instalments. If the creditor sought to use a form of DN which made sense by getting round the fact the agreement had been terminated, the DN would not be in prescribed form.

 

The only way in which a second DN would be of value to the creditor would be where the contract had been re-instated. If the debtor has accepted the termination, re-instatement requires the consent of the debtor.

 

The net result of [1] to [4] is the agreement is terminated for all time. The creditor's remedy is now limited by section 87(1). All that is left for the creditor to recover is the sum truly in arrear at the date of the default notice.

 

Damage to Credit

A man's credit is damaged when it is impugned. He learns it is damaged when he seeks credit to fund a transaction and is turned away or when his creditors seek to call in debts. The effect can be simple embarrasment to being totally destabilising. A learned his credit was impugned when he was warned by his bankers. The damaging effect of the adverse reporting could have been a lot worse.

 

I had deliberately tried to keep my first post as simple and straight forward as I could. I hope this expanded version showing the way strands of law can intertwine to build a case is of assistance.

[penmarine]

Hi PM,

They are all the same pic...

It's not actually a Default Notice, it's an Arrears Notice, which is just sent for information purposes only and is not a demand for payment.

 

DN's start off:

Important, You should read this carefully

Default Notice served...etc etc..

 

Elsa x

PS if its an error and you manage to sort it I'll take a look and edit this response.

Hi Elsa, I think I may have just managed it with the DNs now. I've checked and they are showing up what they are supposed too. I've not put the Arrears Notice or Instalment Default Notices on as there is no point, I don't think. Cheers PM

[bustthematrix]

Someone just told me that

Wilson v Pawnbrokers [2005] EWCA Civ 147

 

was overturned on appeal. Does anyone know the truth in relation to this? I'm not able to investigate fully where I am at present!

 

It's one of the pro Unlawful Rescission of contract cases.

 

Thanks.

[middenmess]

Google is your friend

 

Wilson v Howard

[nks22]

It seems to be about enforceability of agreements rather than rescission of contracts.

 

 

1. The paragraph of the appellant's notice on which Jonathan Parker LJ gave the defendant permission to appeal reads:
   "(3) The learned judge was [wrong] in law, in accepting the accounts in respect of giving credits for the loan to the claimant and accepting that the loan was deemed to have been paid. This creates an unjust enrichment by profit for the claimant, and an injustice to the creditor."

   
   

 

Wilson v Pawnbrokers [2005] EWCA Civ 147 (04 February 2005)

Edited July 29, 2010 by nks22

[penmarine]

They're not all the same. The fifth one is a default notice:

 

CrapOne1s0001.jpg picture by penmarine - Photobucket

 

And the third one terminates the account:

 

CrapONEDefaultpage1c0001.jpg picture by penmarine - Photobucket

 

The DN, sent on 19/6/09 gives 28 days "from the date of this letter" to remedy the breach and the termination was sent by Capital One on 25/6/10.

 

This one is a DN from Vanquis but there's only one date visible on it. Was the account assigned (sold) by Capital One?

 

 

vanquispg20001.jpg picture by penmarine - Photobucket

 

Hi NKS, Vanquis is in the hands of 1st Credit, nothing to do with CrapOne. I think I may have confused the situation with photobucket having a brain fart when linking my paperwork. I've managed to do it properly this time. PM

[middenmess]

It seems to be about enforceability of agreements rather than rescission of contracts.

 

 

1. The paragraph of the appellant's notice on which Jonathan Parker LJ gave the defendant permission to appeal reads:
   "(3) The learned judge was [wrong] in law, in accepting the accounts in respect of giving credits for the loan to the claimant and accepting that the loan was deemed to have been paid. This creates an unjust enrichment by profit for the claimant, and an injustice to the creditor."

   
   

 

Wilson v Pawnbrokers [2005] EWCA Civ 147 (04 February 2005)

 

 

IMO Paras 74 & 75 of the full judgement seem to sum up the position

[nks22]

And this in sect. 72:

"These consequences also apply where, as in the present case, the borrower suffered no prejudice as a result of the non-compliance as they do where the borrower was misled..."

Does this not apply for a DN which, for example, appears to give sufficient time to remedy (e.g. '28 days from the date of this notice') but fails to comply with the exact requirements of CCA74 because it does not specify a date?

"...it is open to Parliament, when Parliament considers the public interest so requires, to decide that compliance with certain formalities is an essential prerequisite to enforcement of certain types of agreements."

House of Lords - Wilson and others v. Secretary of State for Trade and Industry (Appellant)

[GeoffreyAlby]

Quote:

Originally Posted by GeoffreyAlby

I think this is important...

 

PART 6 - SERVICE OF DOCUMENTS - Ministry of Justice

 

 

 

6.3

 

It would seem that a DN sent second class breaches Civil Procedure rules?

maybe....

 

But the section specifically refers to Claim Forms!!!

 

 

 

 

But not if you read Para 6.1 as well.....

[nks22]

Although 6.1 does include this:

This Part applies to the service of documents, except where –

(a) another Part, any other enactment or a practice direction makes different provision;

 

 

I see that it specifically excludes Good Friday as a 'business day', though,which is relevant to a DN discussed earlier here.

[Guest unicorn4321]

hi when i file my defence do i have to put in that the default notice is faulty as the dates to rectify the breach were wrong would i also have to send a copy of the dn to the court.

 

i have also been advised to send an unlawful rescission to the oc and mc

but is it too late to do this as my defence has to be in for friday.

 

thanks in advance

[lexis200]

I also thought that they can only remedy a defective DN (i.e correct what they got wrong in the first one) ... if they issue a further DN BEFORE the expiry date of the original DN ...if that make sense ... !!

 

Once the expiry date of the original (defective) DN has expired i.e exceeded the amount of days they gave you, or the actual date quoted .. then it cannot be rectified by a 2nd DN, as the account is already in default as per their original notice .... Sorry, no. They can issue as many DN's as they like until they terminate your agreement. There is a possibility that you could convince a judge that it was terminated once the remedy date was passed, but without some sort of actual termination (either in letter or demand for full balance) you'd be playing with fire to try it.

 

Happy to be corrected if I'm wrong ... but pretty sure the above is correct from my own readings etc ...

 

TB

 

I think you are right Threadbare - my readings confirm the same. The only way they can issue a 2nd (correct) DN is if I agree to it! Something in the circumstances that I am quite unlikely to do! As above, if they've not terminated they can issue cra**y DN's until the cows come home. If you point out the DN is faulty before they have terminated you may simply risk them (if they are at all on the ball) sending out a legit one.

 

I'm trying to find the wider picture though as if NW have changed their DN policy then it will add weight to everyone's argument who have had one of the old type ones.

 

Of course that's if you have to accept at all. As I've said before,

IMHO having to do that relies on us having knowledge of complicated contract law, which as laymen I find it hard to believe would be expected (as did x20 if you continue reading his later posts). There has been (to my knowledge) one case which has had issues because of not accepting the termination, so if you've not done it I don't think you need to be desperately concerned about it! Not that it's going to do any harm if you do accept though - as long as it's been terminated. If that's not the case (ie you have the dodgy DN but no concrete termination), personally I believe you are better off keeping schtum and waiting for their error to materialise.

[nks22]

i have also been advised to send an unlawful rescission to the oc and mc

but is it too late to do this as my defence has to be in for friday.

 

Friday as in tomorrow? I don't see you've anything to lose by sending it in, though.

[Guest unicorn4321]

yes tommorow is right would i also have to sendthe court a copy

[diddydicky]

I also thought that they can only remedy a defective DN (i.e correct what they got wrong in the first one) ... if they issue a further DN BEFORE the expiry date of the original DN ...if that make sense ... !!

 

Once the expiry date of the original (defective) DN has expired i.e exceeded the amount of days they gave you, or the actual date quoted .. then it cannot be rectified by a 2nd DN, as the account is already in default as per their original notice ....

 

Happy to be corrected if I'm wrong ... but pretty sure the above is correct from my own readings etc ...

 

TB

 

you are wrong!

[diddydicky]

Quote:

Originally Posted by GeoffreyAlby

I think this is important...

 

PART 6 - SERVICE OF DOCUMENTS - Ministry of Justice

 

 

 

6.3

 

It would seem that a DN sent second class breaches Civil Procedure rules?

maybe....

 

But the section specifically refers to Claim Forms!!!

 

 

 

 

But not if you read Para 6.1 as well.....

 

DN's dont come under CPR - they are pre litigation!

[diddydicky]

I see what you mean ...

 

But to be fair if a DN is defective then its defective full stop .... a lawfull DN has to (without exception) meet the terms and format as defined under the CCA74, if it doesn't than tough cookies to the claimant ....

 

They can say what they want .. but they and you know that there's nothing to play for here ....(except the genuine arrears .. but don't tell them that will you ... !!) ... even if they have re-jigged their new DNs ... doesn't change the fact that yours is defective ....no matter how they may try and convince you otherwise..

 

TB

 

if you are relying on the "21 days" instead of a specific date i am afraid you will be dissapointed as it is more the likely that this would be accepted by a judge