Invalid Default Notices

[Bigdebtor]

I wish these "legalese" arguments - which are probably all perfectly valid - could also be translated into terms the lay person can understand.

 

I am now totally lost - and a few weeks ago I thought I had a good handle on this topic with what I thought had been distilled from the many excellent posts on this most valuable thread - namely:

 

Dodgy DN + followed by TN + followed by debtor's acceptance

= debtor only needs to pay lawful arrears to date

- but debtor can offset "damages" against such arrears

= arguably nothing is now "owed" (or at least enforceable)

- creditor unlikely to take debtor to court on this

= debtor of the hook - but debt stays on file for 6 years.

 

I understand most older case law (and many instances of creditors throwing in the towel before court) backs up this scenario but a recent case (being appealed?) went the other way. Have I got this bit right?

 

I think I can see a bit of "logic" in arguing that if terminating the agreement wasn't "allowed" or would be illegal/unlawful/not lawful/incompetent/invalid etc. (due to being done after issuing a dodgy DN) then the termination "didn't happen" - so the agreement "endures" - even if the debtor was willing to accept the termination (i.e. BOTH parties seem to have said they want to terminate - but they are not allowed to do so?).

 

On the other hand the law is realistic enough in other circumstances to realise it can be broken - theft, murder, fraud, drunken driving etc. are "not allowed" - but they still happen - and the wrongdoer gets punished (if caught) according to sanctions already determined (on assumption/recognoition that what is "not allowed" or "illegal" will still happen).

 

Equally if a contract of employment is wrongly broken by the employer not jumping through all the "right hoops" then the employee can claim compensation. The employer is not allowed to just keep "firing" the employee until he gets it right.

 

So why give the creditor umpteen chances? Why not also punish the creditor who either breaks or attempts to break an agreement on the back of a dodgy DN - instead of allowing him to issue DN after DN until he gets it right?

 

Surely that was not what the CCA 1974 set out to acheive? How does that "protect" the debtor - which we are told was the overriding aim of it?

 

Have I still got a grasp of the basics? Or has the recent (perverse?) judgement made this distillation too simplistic?

 

I studied nuclear physics for a while at University - it seemed simpler and made a lot more sense than this!

 

Can someone please let us have a simpler (but still valid) view of this issue - so we can either retain hope or give it up right now?

 

BD

[pumpytums]

OK so failure to issue a valid DN denies the lender his entitlement to terminate or demand earlier payment of sums.

 

But how then do we describe the lenders obvious failure to perform the contract (i.e. provide credit)? Is that not a repudiation in common law (Having now departed from under the umbrella of the regulatory legislation)?

 

I think the answer to that lurks inside s140

 

140A Unfair relationships between creditors and debtors

(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following—

(a) any of the terms of the agreement or of any related agreement;

(b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;

© any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement)

 

140B Powers of court in relation to unfair relationships (1) An order under this section in connection with a credit agreement may do one or more of the following—

(a) require the creditor, or any associate or former associate of his, to repay (in whole or in part) any sum paid by the debtor or by a surety by virtue of the agreement or any related agreement (whether paid to the creditor, the associate or the former associate or to any other person);

(b) require the creditor, or any associate or former associate of his, to do or not to do (or to cease doing) anything specified in the order in connection with the agreement or any related agreement;

© reduce or discharge any sum payable by the debtor or by a surety by virtue of the agreement or any related agreement;

(d) direct the return to a surety of any property provided by him for the purposes of a security;

(e) otherwise set aside (in whole or in part) any duty imposed on the debtor or on a surety by virtue of the agreement or any related agreement;

(f) alter the terms of the agreement or of any related agreement;

(g) direct accounts to be taken, or (in Scotland) an accounting to be made, between any persons.

 

So the CCA 1974 does have teeth. Again it would seem to depend on a Creditors actions after issuing of a dodgy DN. The question again is do you point this out to them prior to court proceedings? They could argue we are really sorry we didn't know that DN was utter cr@p and we didn't give the credit 14 days. However if you pointed it out to them?? Then that's their problem my favorite bit by the way.

 

(9) If, in any such proceedings, the debtor or a surety alleges that the relationship between the creditor and the debtor is unfair to the debtor, it is for the creditor to prove to the contrary.]

 

I would have thought a Creditor proceeding to court in full knowledge of not having issued a DN or a Valid one is very clearly unfair. Even more so if a debtor unfamiliar with the court process informs the creditor of their failings.

 

Do I expect a judge to write off £10k for not underling a passage, not really.

 

Do I expect a judge to write off £?k for not issuing a DN, demanding the full amount, harassing me, threatening debt collector visits, issuing proceedings in full knowledge that they have no legal right but wish to try it anyway, frustrating proceedings in court etc. Who knows. It would certainly make any counter claim easier I would hope.

 

Again it seems to come down to the Judge lottery, I believe (and hope) that if a debtor has behaved in a manner with good intentions and are the victim of a OC/DCA's greed then that must count for something.

 

Did I send UR letters when my Creditors sent dodgy DN and confirmed termination yes I did. Did I consider it to be a repudiatory breach of contract yes. If they now trot of to Northampton will I use this in my favour most certainly, do I think it will write debts off not really but I consider the Creditors actions to be unfair.

 

If no valid DN is issued they have no right under an act of parliament to terminate or demand sums not yet due.

 

Pumpytums

[Bigdebtor]

Pumpytums

 

Thanks for that - excellent stuff and totally comprehensible too.

 

I think we all agree on your final sentence - but the big prize would be knowing that only arrears (less damages) would be recoverable if a dodgy DN were issed and the creditor went to court demanding the rest.

 

From what you say he would be unlikely to be told by court he could claim the total balance still outstanding right away - the court could "write off" the balance - but onth eother hand he could possibly claim it be repaid in the same instalments as set out in the agreement - if the agreement is deemed to endure. He could then issue a complaint DN and start all over again if the debtor can't keep up such payments - back to square 1, but this time with a fully compliant DN etc.

 

It's these last two bits I don't like at all - and that is at variance with what I thought until recently.

 

So still pretty confused on huge bits of this topic!

 

Surely the CCA didn't intend to allow such a cat and mouse game to endure?

 

BD

[pumpytums]

It's pretty confusing,

the one point I would like to be confirmed by any legal bods is the following :-

 

Discontinuance and subsequent proceedings

 

38.7

 

A claimant who discontinues a claim needs the permission of the court to make another claim against the same defendant if –

(a) he discontinued the claim after the defendant filed a defence; and

 

(b) the other claim arises out of facts which are the same or substantially the same as those relating to the discontinued claim.

 

A creditor in proceedings discontinues namely his/her DN is a load of old bobbins. They then issue fresh proceedings with exactly the same POC the court allows this, their new shiny DN is again a load of old bobbins. How many times would a court allow such conduct?

 

On the third attempt if it was allowed could the debtor claim that the creditor was issuing vexatious litigation's I think it's 2 attempts.

 

Pumpytums

[Bill Shidding]

Hi,

 

A claimant who discontinues a claim needs the permission of the court to make another claim

 

Trouble is a claimant doesn't have to discontinue. They can cease complying (with court orders/etc) to ensure the existing case is struck out. Then re-issue, as the new claim is not restricted by res judicata (because the old case did not proceed to a full trial).

 

I had this scenario during a claim. As the first case was struck out and I had received my costs, the court allowed the claimant to proceed with the new case. The court decided that I had been sufficiently compensated by getting my costs.

[means2anend]

Not meaning to hijack but check this out

 

http://www.oft.gov.uk/news-and-updates/press/2010/101-10

 

m2ae

[MandM]

Hi,

 

 

 

Trouble is a claimant doesn't have to discontinue. They can cease complying (with court orders/etc) to ensure the existing case is struck out. Then re-issue, as the new claim is not restricted by res judicata (because the old case did not proceed to a full trial).

 

I had this scenario during a claim. As the first case was struck out and I had received my costs, the court allowed the claimant to proceed with the new case. The court decided that I had been sufficiently compensated by getting my costs.

 

Out of interest Bill, had you filed a defence? I thought that was the 'point of no return'.

 

M

[alangee]

Most of the above comments refer to the OC issuing an invalid default notice followed by a termination notice - but retaining the account. It would appear that in the vast majority of cases, the OC then goes onto sell the account to a DCA. The DCA then issues a claim. My question is, what is the state of the account at that time? Is it still owned by the original OC because he issued an invalid DN or has it been terminated because he sold it to a DCA? What is the legal status of the account?

 

Alan

Edited September 28, 2010 by alangee
spelling

[crockie]

Hi looking for a bit of help with what I think is a Natwest default notice.

 

I say I think as it doesnt actually say "default notice" on it as such.

 

Accompanying letter states FORMAL NOTICE OF INTENTION TO FILE A DEFAULT AND TO TAKE ACTION TO RECEOVER DEBT. This letter states that bank card etc has to be returned and gives 28 days to remedy situation or make payment arrangement and says we must contact them in response to the attached default notice.

 

The attached letter states Notice served under sections 76(1) and 98(1) of the consumer credit act 1974. It doesn't actually state Default Notice. It is referring to termination of an overdraft - however there has never been an overdraft on this account, the account in question is a step account and the current overdrawn amount of £1300+ is 100% charges. The notice is dated 16/11/09 and gives untill 3/12/09 to remedy.

 

The next letter we recevied is dated 15/12 and states that OH has failed to comply with the requirements set out in recent default notice. Would have had a hard job complying with it as in all honesty I didn't realise it was a default notice because it doesnt actually say that it is a default notice.

 

We are now being chased by Bryan Carter amongst others for repayment of this debt and a default was lodged against my OH earlier on this year.

 

I have asked advice on the bank forum in respect of Natwest applying £1300 charges to a step account but unfortunatley havent got anywhere.

[Bill Shidding]

Hi MandM,

 

Bill, had you filed a defence?

 

Yes, the claim had gone through allocation (to the fast track) and the judge had ordered the claimant to file and serve his "relied upon" default notice. The DN the claimant had previously filed had a different date to the one the claimant had stated on the POC.

 

I thought that was the 'point of no return'

 

I understand why you think that. My presumption (at the time) was that if the claimant discontinued or the claim was struck out, he would need permission to re-issue.

I made an application to "strike out" the new claim, but the judge said that the original claim did not proceed to trial (no res judicata) and that the original claim was not discontinued. The claimant stated that "as they were unable to comply with the request to f+s the correct DN in the time specified, they "allowed" the claim to be struck out!".

 

As we know the CPR states -

 

A claimant who discontinues a claim needs the permission of the court to make another claim against the same defendant if –

(a) he discontinued the claim after the defendant filed a defence

and

(b) the other claim arises out of facts which are the same or substantially the same as those relating to the discontinued claim.

 

That is no comfort when the claimant allows the claim to be struck out. At least not in my case.

It was strange that the original claim was fast track, but the second claim was sct, at the request of the claimant!

Still, we live and learn.

Discontinuance is infinitely better than a strike out.

Bill.

[emandcole]

Bear with me on this one

 

I always believed the concept that if a creditor issues a dodgy DN and then terminates it amounts to unlawful repudiation too. However, recent discussions have suggested that the law would not hold that the termination was valid as the DN wasn't valid.

 

I fail to see how the act of termination has anything to do with the issue or not of a DN. They are seperate acts, each with their own format and prescribed requirement. Seems a bit like categorically stating you cannot have a dessert unless you've first had the main meal. Of course you should start with the main meal but a failure to have done so does not prevent you in any way from having the dessert. Doing it this way round does not make the act of eating the dessert any less true.

 

So, it seems that a creditor cannot actually terminate unless the DN is valid, even though they have clearly displayed their intention to end the agreement and recoup all sums? Even though they've passed details to third parties who are now sending threat letters?

 

If the termination is therefore invalid the following must apply?

 

If the termination is not in effect then the decision by the creditor to have passed your details to a third party are surely a breach of Data Protection laws as they are subsequently using that data for wrongful purposes.

 

If the creditor demands full payment from you technically that is evidence of an unfair relationship as the creditor actually can only demand the true arrears amount.

 

Technically if the creditor is demanding full sums it would amount to an unfair business practice as you were expecting to pay on a monthly basis and now they want it all at once.

 

Technically if they are demanding full sums and commence litigation that action is vexatious and an abuse of the court system.

 

All of it would amount to harrassment.

 

On another note if the bank sends out an invalid DN (bearing in mind that these regulations have been around for many years, they are hardly new) and then terminates that contract I would look to the statement of Lord Wilberforce in the case of Saunders v Anglia Building Soc (sub nom Gallie v Lee) [1970] UKHL 5 (09 November 1970)

"... 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"

I believe the notion that a bank, a supposedly professional organisation, has a basic duty to get things right and not mess a consumer around. If they issue a DN and then Terminate and its all been done with little care and respect for the provisions of the CCA then why shouldn't they be held accountable?

How about this?

Even if the actual DN and Termination is then considered void I consider the 'accidental' act of the bank to then demand the full sum of X, typically delivered under threat of future action, is paramount to a breach of contract in itself.

If the agreement following a supposedly ineffective DN and Termination states you will discharge your obligations on a weekly or monthly basis and the bank then issues what amounts to an unlawful demand for the full sum (as of course the actual agreement is still supposedly live as the termination is invalid) this would amount to an unfair business practice at best.

If the agreement is still live you only have a contractual obligation to pay as arranged, so the demand for the full sum should surely represent a further perceived act of repudiation as the bank are only allowed to demand the full sum after a valid DN and Termination. They admit their original DN and Termination was void and as a consequence the contract must therefore still be live. Why therefore do you now have a seperate letter demanding the full balance? It is in effect a double whammy!

If the DN is invalid and they terminate you accept their repudiation, however if they state you can't as they messed up and the agreement is still live you are then clearly still bound by the contractual terms between the two parties.

If you are therefore within the confines of that agreement the letter you have in your hands demanding the full payment is surely seperate ground to then 're-accept' as if you were within the confines of the agreement at all times and your original acceptance was therefore worthless the demand for the full balance (which would have come after the pointless DN and Termination) would surely constitute an act falling outside of the agreement for which you could then 're-accept'.

It is evidence of a very clear breach of contract as the contract you have (which remember is now not actually terminated - therefore live) clearly states that the debtor will discharge their obligations on a monthly/weekly basis and not as the creditor now demands all in one go.

 

They can't have it both ways after all - either it's terminated correctly or it isn't and if it isn't all of the above applies doesn't it?

 

A creditor cannot demand the full sums unless a valid DN and Termination has been effected. Irrespective of valid terminations if you have a demand in your hand for the full sum that is seperate to the DN and Termination letters surely that very letter (as the agreement is still supposedly live to allow the bank to escape its earlier cock up) is evidence alone of a second intention by the bank to end the agreement? You can then accept as the agreement is still live and your contractual obligation is very different to the full sum demanded.

 

What do we think? They can't have it both ways and as Lord Wilberforce commented there is an obligation to ensure that what is sent out is correct, clearly hinting at the peril the sender can expect if they fail to act in a responsible manner.

[pumpytums]

An OC can legally sell an account without issuing a DN, legally the DCA can ask you to make payments however they cannot demand monies not yet due without a valid DN. If they issue a claim and the DN is fatally flawed or doesn't exist then they cannot gain judgement. What happens as a result after they discontinue is anyone's guess however.

 

A DCA can only take you to court if is an absolute assignment unless the OC joins them in the action.

 

Pumpytums

[MandM]

Hi Bill,

 

So in your case are you saying that the court struck the claim out purely because of their failure to adhere to time limits?

 

Was this done at a hearing or did you go on to apply for SO?

 

On the new claim did they submit a new DN or stay with the original one?

 

Sorry for all the questions Bill

 

M

Edited September 28, 2010 by MandM
Typo. Got 10 thumbs

[pumpytums]

Hi Crockie,

firstly as you have said a step account doesn't have a OD.

 

Have Nasty ever sent you a facility letter? Basically this gives you a OD up to a set amount.

 

They tend to get a bit sheepish when you mention this, as they HAVE to send one.

 

Pumpytums

[Bill Shidding]

Hi MandM,

 

So in your case are you saying that the court stuck the claim out purely because of their failure to adhere to time limits?

 

Yes.

 

Was this done at a hearing or did you go on to apply for SO?

 

The original order stated "if the claimant fails to comply with this order, the claim be struck out without further order" this was included at my request, at the preliminary hearing.

 

There was a future hearing already listed, and that hearing dealt with my costs instead of the original purpose. I asked for SJ, but the judge wouldn't have it.

 

On the new claim did they submit a new DN or stay with the original one?

 

They relied upon the DN that they were ordered to produce in the first claim. I eventually convinced the judge (by cross-examining the C's witness) that it was reconstructed to enhance the claimants claim, and that it was never actually sent/posted at all.

 

Bill.

[MandM]

I eventually convinced the judge (by cross-examining the C's witness) that it was reconstructed to enhance the claimants claim, and that it was never actually sent/posted at all.

 

Bill.

 

Nice. :-) Thanks for that Bill.

 

I suppose that what i'm trying to get at is maybe there's a marked difference if a hearing has gone ahead AND THEN their DN gets shot down and the case gets struck out because of it.

 

Although the OCs only option then would be to issue a new DN before starting again as the original was proven as flawed.

 

In that case - new DN, new arrears amount etc - could the OC start again and pretend that the first round never happened or would the courts permission be needed?

 

M

[alangee]

Pumpytums

 

That is my point. If an account has been sold on after the OC has issued an invalid DN and susequently terminated, who actually owns the account? What is the state of the assignment? Is the assignment invalid as well?

 

It has to be an absolute assignment for the DCA to make a claim against you in their sole name, but if the account has not been "terminated" by virtue of the fact that an invalid DN had been issued by the OC, does the DCA have the right to make a claim in their sole name?

 

Alan

[Bill Shidding]

Hi MandM,

 

maybe there's a marked difference if a hearing has gone ahead AND THEN their DN gets shot down and the case gets struck out because of it.

 

I agree, maybe there is. My experience is where a claim is struck out because of non-compliance with an order.

 

Although I would assume that if the DN has been shot down at a hearing, then could it be argued that the hearing was a trial? And then a judgement would be given instead of a strike out?. Then res judicata steps in.

 

Although the OCs only option then would be to issue a new DN before starting again as the original was proven as flawed.

 

I expect the claimant would have trouble denying the original TN though! Or another notice demanding the full balance that pre-dates the new DN.

 

could the OC start again and pretend that the first round never happened or would the courts permission be needed?

 

IMHO,

If the first claim was discontinued after a defence is filed, and the new claim is substantially the same, then he would need permission.

 

If the first claim was struck out, then he doesn't need permission.

I made an application to strike out the second claim, and it failed for the reasons I have given.

 

I can only write from my experience, so don't take anything here as gospel:-).

HMCS (corp.) work in mysterious ways. Usually in favour of the banks.

 

Bill.

[pumpytums]

Pumpytums

 

That is my point. If an account has been sold on after the OC has issued an invalid DN and susequently terminated, who actually owns the account? What is the state of the assignment? Is the assignment invalid as well?

 

It has to be an absolute assignment for the DCA to make a claim against you in their sole name, but if the account has not been "terminated" by virtue of the fact that an invalid DN had been issued by the OC, does the DCA have the right to make a claim in their sole name?

 

Alan

 

This is very similar to my case,

the OC sold it to a DCA, the DCA demanded the full amount confirmed the account was terminated. I had my suspicions no DN was issued which I managed to confirm myself at a latter date from the OC. I contacted the DCA and informed them of my concerns that no DN was issued. They "noted" my letter and sent a MCOL claim form. At my allocation hearing the Judge asked for all document relied upon including the DN. Shortly after the DCA discontinued. May I add they didn't discontinue due to the lack of a Dnanother reason was given.

 

There are two possibilities regarding the DCA and the missing DN :

 

1. The DCA was told by the OC that a DN existed and ignored my letter.

2. The DCA was fully aware that no DN existed and continued anyway.

 

I'm leaning towards the latter as the DCA's tact was to avoid the DN issue altogether. I asked for it under the CPR rules and got nothing.

 

The OC has now repurchased the account issued a DN and is carrying on as if nothing happened. They have actually stated in a letter the account should not have been sold without a DN but this is not strictly true.

 

The account does not have to be terminated for an absolute assignment eg Santander buys Abbey but I don't see many DCA's offering credit cards. So I think yes the assignment is invalid. The DCA bought the account under the impression it was lawfully terminated. I don't actually think their is an unlawful termination as it appears that such an act is impossible under CCA 1974 so I'm told.

 

Pumpytums

[Bill Shidding]

Hi Pumpytums,

 

I don't actually think their is an unlawful termination as it appears that such an act is impossible under CCA 1974 so I'm told.

 

Thats correct.

 

There is no sanction whatsover (in cca74) when a creditor fails to issue a compliant DN and then terminates/demands sums not yet due.

 

The termination is ineffective.

 

Subsequently, the claimant is not entitled to claim for sums not yet due.

 

Just imagine all the claims (for sums not yet due) the creditor has *won* on the presumption of a compliant DN, that was not actually compliant.

 

How many people with CCJs will be hooking out their DN to check it was compliant?

 

How many people have been duped into repaying sums (not yet due) by the creditors and courts?.

 

How many appeals/set asides' will be in the pipeline now?

 

If the agreements were in fact "alive" the debtor could've applied for a time order, or the creditor would have to re-issue the claim with a compliant DN. More revenue for the courts, less profit for the banks, less tax for HMRC.

 

Wishful thinking!

 

Fortunately, an acceptance (word or deed) falls under contract law, and is well established.

AFAIK, there is no precedent (yet) that disqualifies an acceptance of U/T from the cca74.

 

My judge (and counsel for the claimant) were well versed in U/T or U/R, and the accepting of same.

But again, thats my experience, it may not be the same for anybody else.

Edited September 28, 2010 by Bill Shidding

[Peterbard]

i would caggers of the following observations by SurfaceagentX20- upon whom i would suggest more reliabilty should be placed in this matter

 

 

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.

 

 

 

 

Yes read this very well reasoned, I notice however that in his case the creditors did issue a second default notice, the issue was that the sums owed would be difficult to calculate and so the default sum would be nigh impossible to correctly calculate so the process would have go on forever.

This I think was the deciding factor if I am wrong I am sure I will be corrected by a reliable source.

I do not agree about the debtor being able to chose to accept the termination the creditor is not after all in a position to issue it so how can it be accepted. In any case in a repudiatory breach involving a deficient DN it would be the DN itself that would be the cause of the breach and therefore up to the debtor to accept this and then terminate himself hardly helpful

I am sure that not many of you are still under the impression that there is any such thing as a rescission of agreement on a credit agreement, if you are I suggest you look up the term for yourself , rescission requires the agreement is taken back to before it was executed, hardly possible when there is n active contract which there will always be as long as a sum remains unpaid.

No I think you mean unlawful termination also impossible on a credit card or fixed sum come to that

Peter

[Guest HeftyHippo]

I am sure that not many of you are still under the impression that there is any such thing as a rescission of agreement on a credit agreement, if you are I suggest you look up the term for yourself , rescission requires the agreement is taken back to before it was executed, hardly possible when there is n active contract which there will always be as long as a sum remains unpaid.

No I think you mean unlawful termination also impossible on a credit card or fixed sum come to that

Peter

for once, you are slightly correct, but as usual, you shroud the smallest element of correctness with a large cloak of wrongness.

"Rescission" is literally, the unmaking of a contract, and turns the clock, and the position of each party back (as far as possible), to the point before the contract existed. it is not moving the contract back before it was executed.

 

It is therefore perfectly possible with a credit agreement because the agreement is treated as never having existed, in contrast to your incorrect statement that the agreement is live and always will be as long as there is an outstanding sum, and therefore cannot be rescinded.

 

Rescinding a contract is not based on rules, but the opinion of a judge on how much the previous status quo ie, immediately before the contract existed, can be achieved. The exact previous status quo may therefore not be completely achieved - eg, when different materials have been incorporated or materials have been disposed of

 

The term is often incorrectly used in place of "repudiation", which is the breaking of the fundamental terms of a contract, in such a way that the contract is substantially not fulfilled. Nevertheless, should a court decide, it could rescind a credit agreement, as indeed, could the parties to it (without court intervention) should they agree.

 

And of course, unlawful termination is possible - a lender simply does not fulfil the contract and demonstrates that they will not do so in a way other than is allowed under applicable laws. Perhaps you should look up your facts before posting in future

[Bill Shidding]

I may be mistaken, but I believe that X20s case was settled at the door of the court.

Had it been presented to a judge, it would've been subject to the judge lottery.

Who knows where it would've ended.

 

On a different point, is anybody else looking forward to the thread where X20 and peterbard "discuss" this issue?

[Scrapper]

Afternoon All

 

I have a small question with regards to MBNA and a Default Notice. I have my own thread but just want to clarify something with people who know more than me.

 

A mate of mine struck a deal with MBNA for a short settlement which was agreed in writing for payment on a set date. He called MBNA on the date agreed to make payment to be informed that the account had been defaulted and payment couldn't be made. He then sent of a SAR so he could check his statements, only to find out that MBNA had charged off the account 1 month previous to the agreed payment date and the balance was ZERO. Then out of the blue the said default arrived in the post which was invalid as it only gave him 10 days to resolve and the resolution date was 30 days after the original agreed date. Make sense.

 

How can this be? his credit file shows MBNA defaulting the account 30 days before the original agreed short settlement date.

 

Confusing I know but could someone shed some light as it all went very quiet and today he's received a call from the outfit debt clear something or other starting to chase again.

 

The one thing that worries me is they never issued him with a termination notice. and after all this time he's worried that they will issue a new correct one and have him over.

 

The other consulation is the copy of the original CCA is pants. No prescribed terms but as we are all aware that's a judge lottery

 

Thanks

Scrapper Coco 8-)

[Guest HeftyHippo]

I may be mistaken, but I believe that X20s case was settled at the door of the court.

Had it been presented to a judge, it would've been subject to the judge lottery.

Who knows where it would've ended.

Thats why it was settled at the door, and why the various lenders are reluctnat to go to court, they know they could lose and encourage similar agruments against them. Far easier to just keep defaulting you and harrassing you in the hope that you'll give in,. They know as well as we do that the ICO, OFT, FSO etc are totally unable and unwilling to rein these **** in and to enforce a decent standard of behaviour.