Unenforceability Cases on hold until further notice

[Josie8]

But damage has now been done - it's hard to understand why the case proceeded

[Tricky Dickie]

Para 17:

 

paragraphs 13 and 14 clearly state the bank has never provided a signed copy of the agreement however the judge has accepted their assertions that they have such a document even though it has not been provided.

 

para 17 says

 

the agreement was valid and enforceable until 11 March 2009 (the date when the 12 day period for compliance with a demand under section 77(1) expired).

 

Furthermore, by virtue of section 77(4) the agreement will be valid and enforceable again once the bank has provided the claimant with a signed statement of account.

 

So it will be when and if the signed agreement is produced but as matters stand the issue of unenforceability remains at large but the judge and other parties seem to have accepted the enforceability issue as resolved.

If I was the borrower I would want to see that signed agreement.

Edited October 6, 2009 by Tricky Dickie

[Tricky Dickie]

But damage has now been done - it's hard to understand why the case proceeded

 

I don't know why the claimants lawyers let the case proceed other than has been mentioned to fly a kite and see where it gets to but for the lenders its another stick to beat us with.

They will say now that they have the right to report lenders to CRA's and this will be enforcement by another name

[enoughisenough]

Josie8

 

hi. I'm sorry but I simply don't agree. The same thing was inferred concerning the Berwick v Lloyds bank charges case in April 2007. As I remember the Banks wheeled out their PR big guns trying to deter future claims and eventually wound up pleading a doomsday scenario before the law lords. Only yesterday in South Shields MBNA were ordered to repay a claimant their entire history of payments. Hard cases make bad law.

 

Keep the faith. EiE.

[Josie8]

Re read it - the bank only failed to provide a signed statement of account - no mention is made of them not providing a copy of the agreement

[Mistermind]

 

correct me if I am wrong but I can find nowhere in the judgement where it says the agreement was enforceable.

The judge said it was not irredeemably unenforceable, rather potentially enforceable at a future date. The judgement too long to read -- probably true he never did say the agreement was enforceable on the day of hearing.

 

A grey position, neither enforceable nor outright unenforceable. Weak ground on which to fight for a strong decision, and not material for a Test Case as the judge pointed out.

[haggis1984]

Josie8

 

hi. I'm sorry but I simply don't agree. The same thing was inferred concerning the Berwick v Lloyds bank charges case in April 2007. As I remember the Banks wheeled out their PR big guns trying to deter future claims and eventually wound up pleading a doomsday scenario before the law lords. Only yesterday in South Shields MBNA were ordered to repay a claimant their entire history of payments. Hard cases make bad law.

 

Keep the faith. EiE.

 

Any further info on this available?

[foolishgirl]

The case was weak and should not have been put forward as a test case!

 

Not sure if a case involving an unenforceable agreement would have altered the outcome.

 

I agree. I think the issue of enforceability as far as this case & the judgment was concerned was immaterial. As I understand it, the primary point that HH is making is that once an agreement is signed (regardless of whether it complies with S60 or not) that agreement continues to exist, enforceable or not.

 

The appeal to the court was to decide whether reporting to a CRA etc. was to be catergorised as 'enforcement action' as determined by CCA1974 i.e. could data still be passed to a CRA on an agreement that everybody knew could not be enforced by the court? The answer was 'yes' because reporting of data does not constitiute 'enforcement' - only legal action does that - & the status of unenforcability does not nullify the entire agreement. Therefore reporting will continue as a perfectly legal action.

 

The issue of 'fairness' under UTCCR cannot be tested by consumer action, that will be up to OFT etc.

 

Interestingly HH declined to comment on exactly how the consumer could seek redress under these circumstances but IMO it is implied that action could be taken.

[herbie171]

I have 5 creditors reporting defaults

Mint

1st Credit Direct DCA Barclays Bank

Lloyds

HFC

Marlin DCA HFC Bank

Citicard

Subject access all and

None of the above have even got a credit agreement let alone one signed

Does this mean that I can not continue try to get the defaults removed.

[dpick]

I have 5 creditors reporting defaults

 

Mint

1st Credit Direct DCA Barclays Bank

Lloyds

HFC

Marlin DCA HFC Bank

Citicard

 

Subject access all and

None of the above have even got a credit agreement let alone one signed

Does this mean that I can not continue try to get the defaults removed.

 

Hi I will probably get shot down for this but my reading of this judgement is that this was from a case of section 77 cca request not complied with within the allowed time scale which was complied with at a later date. Should the creditor have been able to report to CRA while they were in default on the CCA request. Again my reading is that the judge felt that as there was an enforceable agreement though in default on a CCA s77 request the creditor could report on the account to CRA for the time that the default existed, remembering that this judgement has been made after the creditor complied with the CCA request.

 

The judge would not rule on a hypothetical no agreement/unenforceable agreement exists should the creditor still be able to report to CRA etc.

 

I await the result of other test cases still to be reported on before I get exited about this single case.

 

I am holding back on 2 cases of reporting to CRA, one with no agreement at all (never even signed one for this) and one where the agreement is unenforceable re s127(3) CCA, the results of these type of cases will be of interest to me.

 

dpick

[enoughisenough]

Originally posted by Haggis1984

 

Any further info on this available?

 

Hi sorry for the delay it took me a while to dig out. here's the link. I hadn't realised it was to do with PPI but I still think it has some significance for us.

 

As a previous cagger pointed out the emotive language puts an anti cag slant on it. I look forward to the day lenders are routinely described as delinquent, toxic and sub prime.

 

BBC NEWS | Business | Court lets woman off £8,000 loan

 

Keep the faith. EiE.

[enoughisenough]

I now notice that it was pretty extensively discussed here

 

http://www.consumeractiongroup.co.uk/forum/legal-issues/198059-unenforceability-cases-hold-until-36.html

 

Apologies for repeating the link.

 

Haggis what further info do you want? In the meantime have a look at this:

 

10th June 2009

 

The below case exceeds our expectations for the service as not only has the credit card debt been written off but the lender has been ordered to refund all payments ever made to them by the client amounting to some £ 12,000!

 

 

The following result has been achieved by one of Liberty’s panel solicitors acting on behalf of their client.

 

A judge at Warrington County Court has made an order against a major lender as follows;

 

"The defendant shall deliver up to the Claimant:-

 

• A statement of account as required by Section 77 and Section 78 of the Consumer Credit Act 1974; and

• A declaration that the said agreement is unenforceable; and

• An account of all monies paid by the Claimant to the Defendant under the said agreement; and

• The repayment of all sums paid by the Claimant to the Defendant under the said agreement"

 

This is fantastic news for the client, as not only have they had their agreement declared unenforceable, but the lender has been ordered to pay back all monies ever paid by the client.

 

Once again, this is evidence that the process we are following produces results.

 

 

3rd June 2009

 

A Wetherby man has had over £15,000 of credit card debt written off after Bank of Scotland backed down minutes before the case was due to be heard in a Leeds court.

 

Judge Langham at Leeds County Court believes that the bank didnt fight the case because it feared highlighting failings and opening the floodgates to further claims.

 

Self-employed Mr Mitchell, 60, had a judgement against him after delaying payments to his credit card while he waited for the bank to supply specific information that he had requested on a number of occasions.

 

His case was won on an appeal that his credit card application didn't contain the prescribed terms and conditions and therefore didnt comply with the Consumer Credit Act.

 

The Bank of Scotland argued that the terms and conditions had been given as a separate document when Mr Mitchell applied for the card at the Wetherby branch of Halifax, but he denies ever receiving them.

 

However, under the law, a credit agreement is only binding if it is a single document that has been signed by both parties and contains all the prescribed terms.

 

Although the Bank of Scotland gave up its fight and agreed to write off Mr Mitchells debt, amazingly they refused to pay his costs.

 

However, as a final blow to the lender Judge Langham ruled that the bank needed to pay all the costs in full and said that the bank was trying to shy away from highlighting this issue.

 

County Court Order

 

 

12th March 2009

 

In an appeal heard at Chester County Court by Judge Derek R Halbert, a Mr & Mrs Walker from Winsford, Cheshire had their suspended possession order quashed and the agreement that the possession order applied to was declared "irredeemably unenforceable".

 

The judge ruled that a broker administration fee of £875 to the amount of credit stated as £17,500 meant that the amount of credit was in fact £18,375, and that interest had been charged on this and not the lower number.

 

In his judgement, Judge Derek R Halbert said that he could not improve on the way counsel for the defendants had put it in his submissions at an earlier hearing;

 

"to charge interest upon any element of a regulated advance is by definition to treat that element as credit. This is equally true where that element must by law form part of the charge for credit since it cannot lead a double life(as the trial judge had wrongly held it could in Wilson) Yet section9 (4) is absolutely prohibitive. It does not say that a particular element can be treated as credit for some purposes (e.g attracting interest) of but not for others (eg identifying the aggregate advance) nor does it say that a particular element may be treated as credit by the lender, but not by the court."

 

The Solicitors acting on the Walker case commented on their success and of the mis-information in the press:-

 

"We were delighted to win the Walker case as the decision reflected our views on the Law on these matters. We were very disappointed at the disgraceful and erroneous information which has recently been put out by people who should have known better. This information was mischievous and was clearly intended to further a very different agenda."

 

the link for the above is here:

 

Liberty Claims | Credit agreement review services

 

And heres the June 3rd Mitchell case order. Saved on my hard drive now!

 

http://www.bw.libertycredit.co.uk/BOS.pdf

Edited October 7, 2009 by enoughisenough

[heliosfa]

The appeal to the court was to decide whether reporting to a CRA etc. was to be catergorised as 'enforcement action' as determined by CCA1974 i.e. could data still be passed to a CRA on an agreement that everybody knew could not be enforced by the court? The answer was 'yes' because reporting of data does not constitiute 'enforcement' - only legal action does that - & the status of unenforcability does not nullify the entire agreement. Therefore reporting will continue as a perfectly legal action.

 

I'd disagree with that - and (I don't mean to offen you here) but you seem to be in the same "rut" that the courts are in by thinking that the only form of "enforcement" is compulsorily obtaining payment.

 

 

Hypothetically, say we had an agreement that said I could do two things - take your prized motor car if you didn't do something AND report on the condition of it to some agency.

 

If you were to take advantage of both of these "rights" aforded to you by the contact, you would be "Enforcing" (taking advantage) of those rights.

 

Say the agreement between us is unenforceable for some reason, would you be able to still take the car AND report on it's condition? NO - because both "rights" are afforded to you by this unenforceable agreement.

 

 

Now think of credit agreements. They are basically a bunch of terms and the gist is usually:

• You will pay £x amount per month
  
  
• We will give you £y amount in total
  
  
• We will charge interest at z% rate
  
  
• If you don't pay we will charge you £w amount
  
  
• We will share data with CRAs
  
  

The agreement is more than just the creditors "right" in obtaining payment. Charging interest, adding Default Charges and sharing data are all additional "rights" afforded to them by the same agreement that gives them the "right" to repayment.

 

So, following on from the above example, if the credit agreement (not just the "you must pay us £X" term) is unenforceable, then the creditor should not be able to "obtain the benefit" (enforce) any of the rights granted by the agreement.

 

 

If the "right" to pass data to CRAs was granted by statute instead of Contract, I would agree with you. Sharing of the data would not be "enforcement" of the agreement but would be "enforcement" of a statutory right.

 

 

 

In a case of temporary unenforceability, I would put that a creditor (if one went by the book) would have to cease passing data for the period of unenforceability BUT could leave what data there was there (e.g. the current balance and previous payment history) and start sharing again when the agreemet became enforceable. Whether they could mark payments due during the unenforceability as late when they can share data again is a bit odd as all of the terms of the agreement should have been effectively on "hold", so no payments would have been due but the liability would still have existed.

 

 

 

Now, as for when the agreement is irrevocably unenforceable (127(3)), the HoL deemed that a creditor is to have "Gifted" the money to the debtor. In this case, I would argue that there is no credit relationship and therefore any data shared with the CRAs implying or saying that there is a credit relationship is inaccurate and would need to be corrected.

 

However, again, I would argue that the CCA uses the term "the agreement can only be enforced on the order of the court" and therefore all of the "terms" are on hold again.

 

 

Where there is no agreement of the creditor has lost/destroyed/eaten/fed-to-the-dog the agreement then I would put that the creditor cannot proove you agreed to any of the terms of the agreement (except possibly that you would make payment, which would also be unobtainable without the agreement) and therefore has no "right" to any of the alleged additional terms.

 

 

Sorry it's so long,

H

[foolishgirl]

I have 5 creditors reporting defaults

 

Mint

1st Credit Direct DCA Barclays Bank

Lloyds

HFC

Marlin DCA HFC Bank

Citicard

 

Subject access all and

None of the above have even got a credit agreement let alone one signed

Does this mean that I can not continue try to get the defaults removed.

 

IMO if you could prove that the OCs had not got an agreement at all, you may have grounds for the removal of defaults; however if an agreement is produced, enforceable or not, in the light of this judgment, you will struggle to get the defaults removed.

 

However the proof of the pudding is in the eating & I guess your first call should be a CPR 31.16 herbie to try & flush out the possibility of the actual existence of an agreement(s).

[foolishgirl]

I'd disagree with that - and (I don't mean to offen you here) but you seem to be in the same "rut" that the courts are in by thinking that the only form of "enforcement" is compulsorily obtaining payment.

 

I'm not offended heliosfa - I always welcome a debate.

 

Note though that I didn't say I agree with the judgment, I was just trying to summarise Judge Flaux's opinion.

 

In a case of temporary unenforceability, I would put that a creditor (if one went by the book) would have to cease passing data for the period of unenforceability BUT could leave what data there was there (e.g. the current balance and previous payment history) and start sharing again when the agreemet became enforceable. Whether they could mark payments due during the unenforceability as late when they can share data again is a bit odd as all of the terms of the agreement should have been effectively on "hold", so no payments would have been due but the liability would still have existed.

 

I agree

 

Now, as for when the agreement is irrevocably unenforceable (127(3)), the HoL deemed that a creditor is to have "Gifted" the money to the debtor. In this case, I would argue that there is no credit relationship and therefore any data shared with the CRAs implying or saying that there is a credit relationship is inaccurate and would need to be corrected.

 

However, again, I would argue that the CCA uses the term "the agreement can only be enforced on the order of the court" and therefore all of the "terms" are on hold again.

 

However this is not what HJ is saying.

 

Where there is no agreement of the creditor has lost/destroyed/eaten/fed-to-the-dog the agreement then I would put that the creditor cannot proove you agreed to any of the terms of the agreement (except possibly that you would make payment, which would also be unobtainable without the agreement) and therefore has no "right" to any of the alleged additional terms.

 

In this case I don't think you can say any agreement exists, therefore you have not agreed to data sharing. Unfortunately this was not in the remit of this particular case so we all wait for another 'test' case...

 

 

FG

[Undercover-Elsa]

I totally disagree with the judge on the meaning of enforcement. I feel both the judge and the claimant's counsel failed to address the issue correctly and holistically.

The judge stated, quite rightly, that there is nothing in the CC Act defining enforcement. However, the Act is administered and interpreted by the OFT, and the judge (and the Claimant's counsel) would have done well to further research the OFT guidelines and CPR 2008 before drawing such conclusions, in my opinion.

While I agree the definition of enforcement is not (and clearly SHOULD) be neatly laid out in one place in the CCA, nonetheless "enforcement" is defined in various sections of the OFT Debt Collecting Guidelines AND, ironically enough, in the Banking Code:

 

From OFT Debt Collection Guidelines

falsely implying or stating that action can or will be taken when it legally

cannot

h. ignoring and/or disregarding claims that debts have been settled or are

disputed and continuing to make unjustified demands for payment

not ceasing collection activity whilst investigating a reasonably queried or

disputed debt.

visiting or threatening to visit debtors without prior agreement when the

debt is deadlocked or disputed.

CPR 2008

Aggressive Commercial Practices

Section 7 (2 e)

Any threat to take any action which cannot legally be taken.

Banking Code 2008

13.6 We may give information to credit reference agencies

about the personal debts you owe us if:

• you have fallen behind with your payments;

• the amount owed is not being disputed; and

• you have not made proposals we are satisfied with

for repaying your debt, following our formal demand

I'm sure there's more, if anyone else can come up with them please chip in

Weak case that should have been dropped as soon as RBS found the agreement, if ever started at all.Weak, incomplete arguments and a judge who knows less about Consumer Credit Agreements than the average Cagger.

Elsa x

[dad]

Hi all,

 

An interesting case, wrongly decided, in part due to the claimant's legal team's conduct of the case.

 

I am not having a go at them because I know how you can be blindsided when concentrating on other points.

 

In my view the fatal error of the claimant was:

 

80. So far as activities (iii) to (vi) are concerned, it was accepted on behalf of the claimant that these did not amount to enforcement or actions to enforce the agreement.

 

For reference activities (i)-(vi) are:

(i) reporting to CRAs without also telling them that the agreement is currently unenforceable; (ii) disseminating or threatening to disseminate the claimant's personal data in respect of the agreement to any third party; (iii) demanding payment from the claimant; (iv) issuing a default notice to the claimant; (v) threatening legal action and (vi) instructing a third party to demand payment or otherwise to seek to procure payment.

 

My view is that (iv) is enforcement, which is supported by:

 

a. The mandatory language of the notice itself which states (See SI1983/1553 schedule 2 para 4):

"IF THE ACTION REQUIRED BY THIS NOTICE IS TAKEN BEFORE THE DATE SHOWN NO FURTHER ENFORCEMENT ACTION WILL BE TAKEN IN RESPECT OF THE BREACH".

That wording must mean that by the time a default notice is issued some enforcement has taken place.

 

b. In the judgement the judge himself acknowledges that the language of the Act 'contemplates that the actions listed under section 87(1) are enforcement:

 

 

 

74. The Consumer Credit Act does not define what constitutes "enforcement" and therefore does not define what actions a creditor may not undertake during a period when the agreement is unenforceable. Both sections 76 (dealing with provisions in agreements which entitle a creditor to take certain steps when an event, such as bankruptcy, occurs, but there is no breach of contract by the debtor) and 87 (dealing with the entitlement of the creditor to take such steps where there has been a breach) contemplate that those steps will amount to enforcement. Those steps include matters which might be said to be obviously enforcement such as (under section 87), enforcing security or (under both sections) recovering possession of goods or land.

 

75. Both sections also include two steps which might be said less obviously to amount to enforcement: (i) demanding earlier repayment of any sum and (ii) treating any right conferred on the debtor by the agreement as terminated, restricted or deferred.

Had the claimant said that these are obviously enforcement then the judgment might have been quite different (Note: I have not seen a transcript and it may be that this point was made and the judge chose to 'overlook' the submissions).

 

The difficultly that this presents is that being a concession by the claimant, he will be unable to appeal the point. So ultimately someone else is going to have to go to the Court of Appeal if this is to be addressed.

 

Dad

Edited October 7, 2009 by dad

[egg-sterminator]

If you sign an agreement usually it will mention " we draw your attention to condition x on the cca which allows us to procese your data " even if they have an application unless they have the cca with your signiture and the conditions it referred to can they still process your data ? also as i understand it when you sign an application form you give them a "lawful right" just as you give permition for a ccc's data controling officer to process your data in writing can that consent not be withdrawn in writing . the data protection act as it is an act would this not overule "lawful right" therefor a data controller would have to act as requested or fall foul of the act ? very interesting thread on this stated by the scolarly Vint title CRA'S &OC'S-CREDIT REF REPORTING-DISCUSSION .

Edited October 7, 2009 by egg-sterminator

[kel123]

I think that this was a predetermind outcome, heads you win, tials I loose senario. By this judge quoting, he said this and he said that was a vain attempt to justify going against the house of lords majority ruling and side with the minority. Democracy, republic or marksisum, it has facets of all 3; your choice!

I did not expect it to be ruled that it is enforcement to continue to record with the CRA's because of the political perceived will for responsible lending and any other ruling would contradict this. (this does not mean I agree) What did shock me is the redifining of the definition of the word enforcement? One can argue that the DN is a precourser to enforcement but that this is by definition a legel standpoint, however from Joe P's perception and in examination of the wording of the DN it is a 'you must do' : What do I need to do to correct this? - You must pay XXX by XXX. Enforcement by another name.

Now lets spin this on it's head, the account goes into dispute for what ever reason. The lender issues a DN and then terminates. The lender then finds that they can for what ever reason resolve the dispute. They cannot reinstate the account because it has been terminated (well not without the debtors signature). their only course of action open is take it to court. Now under the unfair relationship critria it can be said that the lender has had total control and that the debtor has been a mear bystander with no recourse at any stage therefore the judge must (I say must, tongue in cheek) rule that because of this inbalance under the unfair relationship critria, the debt is unenforceable regardless of whether the agreement meets the ccact or not!

[foolishgirl]

Hi all,

 

An interesting case, wrongly decided, in part due to the claimant's legal team's conduct of the case.

 

I am not having a go at them because I know how you can be blindsided when concentrating on other points.

 

 

Go on, have a go at them dad!

 

These are barristers, supposedly trained & experienced in the law. They are not LIPs, they should not be 'blindsided' by legal argument. They had plenty of time to prepare for this case, they knew they were up against the big boys & IMO not have they failed their client they have failed consumers in general

 

Your points are particularly relevant. Mr McGuffick would have done well to employ you as his legal advisor.

[Artie44]

Had the claimant said that these are obviously enforcement then the judgment might have been quite different (Note: I have not seen a transcript and it may be that this point was made and the judge chose to 'overlook' the submissions).

Dad

McGuffick v The Royal Bank of Scotland Plc [2009] EWHC 2386 (Comm) (06 October 2009)

[foolishgirl]

Useful link artie but this is the judgment not transcript i.e. you can't tell from this exactly what points were made by the individual lawyers

[Artie44]

Does the transcript get published as a matter of course?

[foolishgirl]

Does the transcript get published as a matter of course?

 

No, not usually, one of the parties usually applies.

 

There are costs involved too!!

[car2403]

I'm not sure I agree - it is not about an obligation to repay but a record that a debt exists that has not been repaid, providing there is proof of the debt, of course. I don;t think that the court would ever decide differently on this in the absence of evidence of severe and intentional prejudice through the reporting alone and providing that such was the only intent. Where others may 'benefit' from the decision then I can see the logic.

 

All my CRA file entries show monthly payments due and a payment history - if there is no legal obligation to repay the debt, I can pay 1p a month and they can do nothing about it.

 

The point being is that credit referencing is used to determine if you are a good credit risk, based on credit repayment history. If there was no obligation to repay a debt, there is no applicable repayment history to display and no "arrears" can accrue.

 

I know the CRA's will just alter their system to reflect different data - % repaid from total, etc, or something, each month - to get around the argument.

 

Re enforceability: I'm basing my comments only on the comments made in this thread, I've yet to read the judgment, but I don't (or didn't...?*) agree that enforcement was only actual legal action. the OFT v Foxtons case seemed to also take the view that enforcement was also writing letters etc. I can see the view but now I'm a tad confused. I see the attraction of the argument but also see that some actions are a means to an end and that it is misleading to imply an end, through means, if that end is not possible. If that makes sense...

 

 

*my opinions are often based on stated law and statute and the interpretation of such and therefore I can't really say that I don't agree if they've been as clear as the posters above seem to think then I perhaps need to revisit my opinion...hmmm...confusing :/

 

Fair enough, K, but I think the enforcement of this one wasn't in question regarding the agreement, just the fact they were in dispute of the CCA request, so I tend to agree with you there. (As did the Court)

 

But might not the other side say, their purpose in creditors passing info onto CRA was not to collect on a dubious debt, but to warn other lenders about a known bad risk.

 

I've sort of covered this above, but it would undermine the reasoning behind credit referencing, IMHO.