Silver vs MBNA - is this enforceable please?

[silver1977]

Hi all,

 

Please help if you can.

 

I have 2 accs with MBNA - both in dispute. 1 been sold to DLC (have sent the 'bemused' letter). In meantime I have received a reply to my CCA request for the other account - attached here....

 

Please can anyone tell me whether this is enforceable and how best to respond..

 

Any advice will be greatfully received! This was how it came, so am struggling to get it any bigger !

 

http://i42.tinypic.com/2q3t11x.jpg

http://i42.tinypic.com/fcl8qa.jpg

[toto003]

I take it you have covered the initial credit limit over ?

 

it should be stated below your name and address. If it isnt exactly 1,000, 3,000 or 5,000 ... then it might be important....

[silver1977]

My name and address is on the second page on left (i have blanked it out)

 

There is a table on page one which shows the APR for cash advances depending on whether my credit limit was 1,000, 3,000, 5,000. It doesn't state what my actual credit limit is.

 

Does this make a difference? Any thoughts please!

[silver1977]

bump!

[toto003]

Well ...

 

your agreement certainly isn't legible, and what they have given you is a print of from a microfiche. - some people say that (i) not having an original, (ii) not having a legible copy and (iii) not having a copy has complied with the relevant regulations for storing "electronic" copies - are enough to render an agreement unenforceable.

 

You would need to get a judge to agree with that.

 

further;

I am able to see how the two documents are linked - if they are are indeed front and back (they may be, they may not be).

 

I have done my best to try and make out the wording, so I am unable to work out whether they have failed to state all the applicable rates or not.

 

However, I have had to use this thread;

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/196098-mbna-agreements-application-forms.html

 

to try and find an agreement that looks similar to get the wording.

 

Below assumes that the wording on your agreement is indeed exactly the same;

 

There are a lot of references to other conditions - such as 2.4, 3.5, 3.6 and 2.1.

 

If your point 5 does indeed say;

 

5. We will charge interest on the outstanding amount of;

(a) any Retail Transaction as 1.2408% monthly, except as mentioned in condition 2.1

 

There is no condition 2.1 within the this agreement. This could be important.

 

The fact that all the interest rates quoted are monthly - there are no APRs at all could be important.

 

The table that does contain APRs [if your limit isnt there as you earlier stated] does not apply to you either. - this I think is important too.

 

There is no doubt in my mind that your agreement is in breach of schedule 1 - and is therefore improperly executed. [This means it is only enforceable by an order of the court]

 

At this point, I am not prepared to comment on whether it breaches Schedule 6 and is therefore unenforceable in terms of section 127 (which prevents the court making an order)

[silver1977]

Thank you so much for that & for the thread link - all very helpful and I will go and study it.

 

They did send a copy of Terms & Conditions which I think refer to the conditions you mentioned. I'll double check though (didnt scan the T's & C's as there are rather alot of pages).

[steven4064]

THis is a standard MBNA agreement - you will see loads like it on the thread that toto linked.

 

What you have is the front and back of a tear-off form which has your signature on one side and the prescribed terms on the other. It is enforceable IMO, unfortunately.

[toto003]

Hi Steve4064,

 

I am glad you've replied on this thread. As I have some thoughts I wish to raise with you. (I haven't found them raised elsewhere so hopefully these are new points.)

 

Your guide explains that Schedule 6 requires (among other things);

 

- A term stating the rate of any interest on the credit to be provided under the agreement

in point 5 - of silver1977's agreement. it refers to certain types of retail transactions that are described in "condition 2.1" - Condition 2.1 is in a separate document.

 

Doesnt that mean that the interest rate for all types of credit are not within the 4 corners of the agreement ?

 

secondly, the same agreement doesn't state any APRs (look at the APR table - that is only applicable to limits of 1k, 3k and 5k)

 

am I mistaken in believing that the interest rate must be expressed as an APR and not monthly/daily etc ?

 

Above being true - The debtor is supposed to be informed of how to discharge his/her obligations under the agreement.

 

Should the debtor make a transaction that falls into the category specified in point 5(a) and falls within this condition 2.1 - would it not fail to inform silver1977 how to do that ?

 

Lastly - there is a small error in your guilde - point 3 of summary should contain the date 6th April 2007 - not January 2007.

 

Thanks for your thoughts

 

toto

[steven4064]

They seem to be able to get away with a lot in terms of the terms that are deemed to comply with schedule 6. For example, one of the terms is "A term stating the credit limit or the manner in which it will be determined or that there is no credit limit." Most credit card agreements comply with this by saying "we will notify your credit limit to you". So long as there is some statement that sort of complies with schedule 6, they seem to be able to refer out to other documents for details. Whether condition 2.1 complies depends on what it says.

 

APR is not a prescibed term in schedule 6 (it is in schedule 1) - the prescibed term in scehdule 6 is "A term stating the rate of any interest on the credit to be provided under the agreement". APR is not actually the rate of interest charged. There is no specification about whether rate of interest is to be given as annual, monthly or anything else.

 

Thanks for pointing out the error - corrceted now

[silver1977]

Hi,

 

Have still been trying to get my head around whether this is indeed enforceable or not. I think it probably is.

 

In the meantime I have received a default notice....

 

Please can anyone tell me whether this is valid? It is dated 8th and received 12th

 

And what the best course of action may be. Is it time to start paying up??!

 

 

Would greatly appreciate any further views on this.

 

Thanks

[silver1977]

Just done some more digging on the agreements they sent and it refers to conditions that don't exist in the terms & conditions that they attached. The numbers of those conditions don't match up to the ones specified.

 

Could this bear any relevance at all??

[summerbreeze]

Did the default notice arrive via second class post?

If so it will fail on dates as it does not give 14 clear days to remedy the default.

 

Have you had a further letter to say the account has been sold on ?

[silver1977]

Hi, thanks.

 

Well its dated 8th and received 12th - so taking into account the weekend I guess that means it was first class but then again the envelope has an S on it (does that stand for 'second'??!)

 

No, havent had a further letter on this one yet...

 

I'm still not 100% whether the agreement is enforcable yet either - so really don't know what to do..

 

ANy advice appreciated

[summerbreeze]

was it royal mail postage ?

[steven4064]

I think the DN is invalid for the reasons SB has alluded to. The 8th May was a Friday and a document sent by 1st class post is deemed to be served on the next but ine working day, which is Tuesdaythe 12th (the day you did actually recieve it as it happens). They give you until the 25th to remedy the arrears which is not 14 clear days. If they dsent it 2nd class post it would be deemed to be served on Thursday 14th - even worse.

 

If they take you to court tht is enough to have their case struck out as they have no right of action - Game Over.

[silver1977]

Thanks Steven.

 

And thanks Summerbreeze - it was ukmail rather than Royal Mail.

 

So any thoughts on what to do next? Ignore it or do something?

 

Am I right then in thinking that because they have issued the default notice then it's irrelevant whether the original agreement is enforceable or not (or is that wishful thinking!)

[summerbreeze]

UK Mail is certainly not first class so it counts as second class service so your DN is well out on dates .

 

If they terminate now they will have a big problem claiming anything more than the arrears.

 

So if they write demanding the total amount owing or issue a court claim for the total then I think its safe to say they have terminated your agreement.

 

I would think also if they sell your balance on to a DCA they have terminated too but there is some debate about that as a ' live' account can be sold on too I believe.

 

There are more experienced caggers who may comment on this point.

 

I think you will have to sit tight and see what happens next.

[silver1977]

Thanks again summerbreeze - very helpful. Ok, so to be clear, if they terminate what was an enforceful agreement after issuing faulty DN, then its as bad (for them) as it being unenforcable in the first place?!

 

Will see what happens next then. Also have another account with them that have never received any CCA response on and has now been sold to Hillesden...so watching other threads on them carefully.

[steven4064]

Thanks again summerbreeze - very helpful. Ok, so to be clear, if they terminate what was an enforceful agreement after issuing faulty DN, then its as bad (for them) as it being unenforcable in the first place?!

In principle, an unenforceable agreement means that a court cannot enforce it. A dodgy DN means that the creditor doesn't even have the right to ask a court to enforce it.

 

Just to summarise on the postage issue. IMO, the DN is invalid evern if it had been sent first class. Becasue the 8th was a Friday, the law says that it was served on theTuesday and than only give 13 days to remedy when the law says you must have 14. If it was sentby anything other than first class post, then the situatio is just worse (for them, that is).

 

HAve a look at this (from a defence by the shadow)

The requirement for a valid Default Notice to lawfully Terminate an Account whilst in default

 

1. Notwithstanding the matters pleaded above, the Claimant must under Section 87(1) of the Consumer Credit Act 1974 serve a valid Default Notice before they can demand early payment of sums not yet due under a Regulated Credit Agreement.

 

2. Under the Interpretation Act 1978 Section 7, it states:

 

Where an Act authorises or requires any document to be served by post (whether the expression "serve" or the expressions "give" or "send" or any other expression is used) then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have effected at the time at which the letter would be delivered in the ordinary course of post."

 

2. Practice Direction

Service of Documents - First and Second Class Mail.

 

With effect from 16 April 1985 the Practice Direction issued on 30 July 1968 is hereby revoked and the following is substituted therefore.

1). Under S7 of the Interpretation Act 1978 service by post is deemed to have been effected, unless the contrary has been proved, at the time when the letter would be delivered in the ordinary course of post.

2). To avoid uncertainty as to the date of service it will be taken (subject to proof to the contrary) that delivery in the ordinary course of post was effected:-

(a) in the case of first class mail, on the second working day after posting;

(b) in the case of second class mail, on the fourth working day after posting.

"Working days" are Monday to Friday, excluding any bank holiday.

3). Affidavits of service shall state whether the document was dispatched by first or second class mail. If this information is omitted it will be assumed that second class mail was used.

4). This direction is subject to the special provisions of RSC Order 10, rule 1(3) relating to the service of originating process.

 

8th March 1985

J R BICKFORD SMITH Senior Master

Queen's Bench Division

 

3. Further to point 2 above, CPR rules on service also state the required timescales to be given for serving of documents :-

 

Under CPR 6.26 First class post (or other service which provides for delivery on the next business day) is deemed to be “served” The second day after it was posted, left with, delivered to or collected by the relevant service provider provided that day is a business day.

 

4. The Default notice supplied by the Claimant is dated Friday 3rd August, to allow service in line with the statutory requirements mentioned in points 2 & 3 above, 2 working days were required to allow for 1st Class postage. Thus the Rectify date should be 14 calendar days from Wednesday 8th August, namely Wednesday 22nd August 2007, not the 14 calendar days from the date of the letter as stated in the Default notice which would have been 17th August.

 

5. I therefore put the Claimant to strict proof that any Default Notice sent to me was valid and allowed the statutory 14 clear days to rectify the breach. I also note that to be valid, a Default Notice needs to be accurate in terms of both the scope and nature of breach and include an accurate figure required to remedy any such breach. The prescribed format for such document is laid down in Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561) and Amendment regulations the Consumer Credit (Enforcement, Default and Termination Notices) (Amendment) Regulations 2004 (SI 2004/3237).

 

6. The failure of a Default Notice to be accurate not only invalidates the Default Notice (Woodchester Lease Management Services Ltd v Swain and Co - [2001] GCCR 2255) but is an unlawful rescission of contract which would not only prevent the Court enforcing any alleged debt, but give me a counter claim for damages Kpohraror v Woolwich Building Society [1996] 4 All ER 119.

 

7. It is submitted that the above Default Notice served s87(1) Consumer Credit Act 1974 failed to comply with the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561).

 

8. For a Creditor to be entitled to terminate a regulated Credit Agreement where there is a breach, demand repayment in full or take any legal action to recover any monies due under the Agreement, a creditor must serve a Default Notice under section 87(1) of the Consumer Credit Act 1974 which states:

 

Section 87. Need for Default Notice

 

(1) Service of a notice on the Debtor or hirer in accordance with section 88 (a "Default Notice ") is necessary before the creditor or owner can become entitled, by reason of any breach by the Debtor or hirer of a regulated Agreement -

 

(a) to terminate the Agreement, or

 

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

 

© to recover possession of any goods or land, or

 

(d) to treat any right conferred on the Debtor or hirer by the Agreement as terminated, restricted or deferred, or

 

(e) to enforce any security.

 

9. The Act also sets out via Section 88(1), that the Default Notice must be in the prescribed form, as below:

 

Section 88. Contents and effect of Default Notice

 

(1) The Default Notice must be in the prescribed form…

 

10. The wording must make it clear that no variation is acceptable. Therefore it cannot be dispensed with as a De Minimus issue.

 

11. I note that the regulations do not allow any variation in the form of these statements and therefore it is suggested that where the statements are not as laid down in the regulations the Default Notice is rendered invalid as a consequence.

 

12. In the case of Woodchester Lease Management Services Ltd v Swain & Co - [1998] All ER (D) 339 in the Court of Appeal, the Court addressed in some detail the issue of the contents of a Default Notice and should the notice fail to comply with the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561) it would render the Default Notice invalid I quote the comment of KENNEDY LJ: "This statute was plainly enacted to protect consumers, most of whom are likely to be individuals" the judgment appears to confirm the consumer credit legislation made under the Consumer Credit Act 1974 as plainly enacted and set out to offer protection to the consumer. Therefore it is suggested that the failure of the Claimant to set out the Default Notice in accordance with the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561) could unduly prejudice me as it failed to allow the required time to remedy the alleged default.

 

13. The Claimant’s failure to issue a valid Default Notice must surely prevent a right of action and would make any termination of the Agreement unlawful, as statute provides the procedure that must be followed. Since the Claimant has failed to adhere to statutory procedure it is averred that the Claimant does not have a right of action, and can never now have a right of action having terminated the Agreement unlawfully.

 

14. This is at all times an Agreement Regulated by the Consumer Credit Act 1974. There is no provision in the Act that allows a large financial institution to terminate an Agreement that is in alleged default or breach simply by giving notice to the Consumer. Section 98(6) makes that quite clear. The Creditor must follow the steps outlined in Section 87 and Section 88 if they are to lawfully Default and Terminate, and enjoy the benefits of Section 87.

 

15. Finally, an invalid Default Notice cannot be remedied by simply issuing a new Default Notice. The Claimant may not serve a second effective default notice in prescribed form post-termination of the agreement. Any such second default notice will necessarily state a date by when I would be required to comply after which in default the agreement would terminate. The second default notice would therefore contain the fiction that the agreement endured when that cannot be the case, as it was terminated on XX/XX/XX. Terminating an Agreement on the back of a defective Default Notice, simply confirms the undeniable truth that Termination of the agreement by the Claimant was carried out in circumstances which then prohibited them from enjoying the benefits of Section 87, namely the opportunity to seek early Payment of a sum that was, prior to Termination, only payable in the future.

[silver1977]

Thanks so much for that. One last question and then I think I am there with this....

 

If they choose not to terminate/sell the debt on, would I be right in thinking the above still applies and they still can't take any action other than to retrieve the default amount?

[the_shadow]

Thanks so much for that. One last question and then I think I am there with this....

 

If they choose not to terminate/sell the debt on, would I be right in thinking the above still applies and they still can't take any action other than to retrieve the default amount?

 

The faulty DN only comes into play if they terminate the agreement, if they realise their error then they can re-issue a new default notice up to the time they terminate.

 

Once they terminate they cannot re-issue a default as the agreement no longer exists legally.

 

You need to sit tight on the default notice and wait for their next move I'm afraid.

 

Just my opinion as ever.

 

S.

[silver1977]

Thanks very much, its such a relief to get my head round all this.

 

Right, so if they do not terminate, and the agreement is enforcable - then I am in trouble!? ;-)

[the_shadow]

Thanks very much, its such a relief to get my head round all this.

 

Right, so if they do not terminate, and the agreement is enforcable - then I am in trouble!? ;-)

 

If they terminate on the back of a faulty DN then they are only entitled to the amounts outstanding at termination, i.e. the arrears amount that is stated on the default notice. Any future monies they would have received are lost due to the contract being broken without the required statutory exit route.

 

S.

[summerbreeze]

In my experience of reading the forums MBNA will usually terminate in some way. They seem to only wait until you get to a certain level of arrears and then they dont want you as a customer .

 

So they will either take you to court or sell your debt .

 

In my case they sold the balance before the remedy date on the DN but I have yet to hear from the DCA they sold it to although I am sure I will do soon .

[the_shadow]

In my experience of reading the forums MBNA will usually terminate in some way. They seem to only wait until you get to a certain level of arrears and then they dont want you as a customer .

 

So they will either take you to court or sell your debt .

 

In my case they sold the balance before the remedy date on the DN but I have yet to hear from the DCA they sold it to although I am sure I will do soon .

 

Yes MBNA seem particularly inept at anything they do to be honest, they just love to kill trees and flood everybody with paper

 

Thanks for the scales tip Silver1997?

 

S.