Claim Stayed – Due to Unenforceable CCA Test Cases.

[egg-sterminator]

I don't see how showing other CAGgers that the Banks typical T&C's and CCA's at that time were not enforceable helps the Banks at all

 

It SHOULD make the Judge change his view on the "balance of probabilities" - and hopefully get an earlier more stress-free settlement for the CAGger.

 

BD

Am i right in thinking you have a right to view the original agreement and if it didn't exist would they not have to tell you so giving you evidence the agreement just isn't there and knocking the wind out of the "employee giving affidafit" angle ?

[paulwlton]

Wacksman seems to have given the LIP a major headache.

 

PW

[gaz2006]

Wacksman seems to have given the LIP a major headache.

 

PW

I agree scenario bank etc hasnt got agreement cobbles one up and says true copy judge accepts it how do we know hat original has all prescribed terms ? Answer we dont and we get shafted

[maxedout]

Im not getting to grips with this.Could someone explain please. Under s127 (3) the creditor has got to have a true signed copy with t/c not a recon one to enforce but with a cca request they can knock up a recon? Thanks Maxedout.

[paulwlton]

Im not getting to grips with this.Could someone explain please. Under s127 (3) the creditor has got to have a true signed copy with t/c not a recon one to enforce but with a cca request they can knock up a recon? Thanks Maxedout.

 

According to Wacksman the creditor hasn't got to have a signed copy for enforcement but only need to provide hear say evidence that an agreement was signed by the debtor. Furthermore, Wacksman gives an example of how this can be achieved.

 

PW

[maxedout]

Thanks Paul • if an agreement has been subsequently varied by the lender, then the lender is obliged to supply a copy of both the original agreement as well as the current one. Does this mean that if apr etc has been varied then the original signed agreement not a recon one has to be supplied. Thanks Maxedout.

[dizzyblonde1966]

What if the creditor has already sent a cca from pre wakesman test case

And its an application form missing all the prescribed terms etc,and the creditor admits to no longer having the original

 

Does that then become iredeemingly unenforcable ,or could they also supply hear say evidence for the prescribed terms etc ,or can agreements only be knocked up if there is no original /microfish to take a copy from.

 

Ie, are the people who already have copies of dodgy cca"s safer than those who are just applying now who can be given any old pile of nonsense especially if ther creditor locates the original sees its unenforcable and pretends he cant find it so he can knock a compliant copy up and it will fulfill the section 78 requirements

 

Am i right in thinking Wakesman said creditors should inform the debtor if the cca is unenforcable,? if so surely that quote is suggesting that certain agreements are unenforcable and not rectifyable, but for what breaches is there absolutely no get out clause for creditors now ?

Edited February 1, 2010 by dizzyblonde1966

[uptoeyeballs]

According to Wacksman the creditor hasn't got to have a signed copy for enforcement but only need to provide hear say evidence that an agreement was signed by the debtor. Furthermore, Wacksman gives an example of how this can be achieved.

 

PW

 

Only for s77-79 though, surely.

 

uteb

[maxedout]

Thought he was only dealing with s77/79 and not s127(3).

[uptoeyeballs]

Thought he was only dealing with s77/79 and not s127(3).

 

Yeah, missed the last post. Things go slowly on my mobile.

[Baggio]

Baggio brunnel franklins seem to be dropping a lot of their cases on the back of this judgement is it the case with other claim handling companies ?

 

BF were never that concerned about pursuing UCA cases as there sols are a injury claims specialist and have little understanding of CCA74.

 

I understand they have issues with their ATE insurers and prefer to concentrate on PPI claims.

[paulwlton]

Thought he was only dealing with s77/79 and not s127(3).

 

 

He touched upon s127(3)

[maxedout]

Any ideas on post 1562 anyone?

[haggis1984]

Thanks Paul • if an agreement has been subsequently varied by the lender, then the lender is obliged to supply a copy of both the original agreement as well as the current one. Does this mean that if apr etc has been varied then the original signed agreement not a recon one has to be supplied. Thanks Maxedout.

 

Im fairly certain the Mcguff judgement touched on this and did state that if an agreement has been varied then the original has to be supplied.

 

If there's disagreement on this from other caggers Ill try n back this up with a quote from the judgement 2mo when ive got time to re-read it

[maxedout]

Thanks haggis .Could you please do that anyway.

[paulwlton]

Thanks Paul • if an agreement has been subsequently varied by the lender, then the lender is obliged to supply a copy of both the original agreement as well as the current one. Does this mean that if apr etc has been varied then the original signed agreement not a recon one has to be supplied. Thanks Maxedout.

 

According to Wacksman a recreation would suffice.

[stripper]

IMO it appears to keep coming around to the fact that we are stuffed,unless I am defending,is this so?

Just so I got this right.

Thanks out there

Stripper

[elizabeth1]

Im fairly certain the Mcguff judgement touched on this and did state that if an agreement has been varied then the original has to be supplied.

 

If there's disagreement on this from other caggers Ill try n back this up with a quote from the judgement 2mo when ive got time to re-read it

 

 

This is just one of the many summary versions of the McGuffick case that I saw - it may be of some use - but keep in mind that there are many summary views on this case - but it may be a starting point

 

http://www.hammonds.com/FileServer.aspx?oID=22785

 

 

Credit Act 1974: More Good News for Lenders

Introduction

Consumer credit decisions are like the proverbial bus: following the recent and emphatic judgment in McGuffick1 comes the Court of Appeal’s equally emphatic decision in SouthernPacific Mortgage Limited v Jayne Elizabeth Heath [2009] EWCA Civ 1135 (‘Heath’) on multiple agreements under Section 18 of the Consumer Credit Act 1974 (the ‘CC A 1974’). For many lenders, particularly those facing claims by consumers alleging a multiple agreement exists (typically on re-financing where part is used to pay off an old loan with the balance being free to use as the borrower wishes) but has not been properly documented meaning the agreement is irredeemably unenforceable, this decision will come as extremely welcome news.

The Facts

Put shortly, Ms Heath owned a property in Workshop subject to a charge in favour of the Halifax.

The balance outstanding was around £19,000. She applied for and obtained a loan from a new lender for around £28,000. It was a condition of the loan that Ms Heath’s existing loan with the Halifax would be repaid on completion. Ms Heath accepted the terms and entered into an agreement with the new lender. Upon completion, her mortgage with the Halifax was redeemed and Ms Heath received the balance of around £9,000 to spend as she wished.

The lender later assigned its agreement with Ms Heath to Southern Pacific Mortgage Limited (‘Southern Pacific’). The total credit advanced exceeded £25,000 (the statutory limit at the time of the loan) meaning it was not regulated by the CCA 1974 or subject to the Consumer Credit (Agreements) Regulations 1983 (the ‘CC AR 1983’).

 

The Proceedings

After initially obtaining a possession order, suspended on terms both in 2004 and 2006,Southern Pacific applied for a warrant of possession. Ms Heath obtained legal advice and argued that the agreement between her and Southern Pacific was regulated by the CCA 1974 because it was a multiple agreement under Section 18 and should be treated as two separate agreements. She also argued that because the forms failed to comply with the requirements of the CCA 1974 and the CCAR 1983, the agreement was unenforceable and the Court could notgive Southern Pacific permission to enforce it.[/font]

The arguments came before the High Court on 29 January 2009 and His Honour Judge Purle

QC, sitting as a High Court Judge, (in a judgment described by Lord Justice Lloyd as a ‘clear

and admirable judgment’) decided that the agreement was not a multiple agreement but an agreement not regulated by the CCA 1974. Southern Pacific could therefore enforce the debt and obtain possession of the property. Ms Heath appealed to the Court of Appeal.Commercial & Dispute ResolutionFor many lenders, particularly those

facing claims by consumers alleging a multiple agreement exists.

1 If you want to know more about the Court’s decision in McGuffick, please see our Review dated 8 October 2009 entitled

“First Consumer Credit Test Case decided in Bank’s Favour” available from our website: http://www.hammonds.com or by

contacting Russell Kelsall by e-mail at [email protected].

 

The Issue

The Court of Appeal was, as Lord Justice Lloyd says at the beginning of his judgment, asked to decide the correct interpretation of Section 18 of the CCA 1974. Tellingly, he noted that the decision may have (if Ms Heath was right) “serious consequences for transactions of a commonplace nature.” The precise issue to be decided was whether the transaction (not the credit) fell under Section 18, meaning it had to be split into parts and require separate documentation.

Section 18

Notoriously difficult to understand and with differing academic views, Section 18 says:

(1) This section applies to an agreement (a “multiple agreement”) if its terms are such as -

(a) to place a part of it within one category of agreement mentioned in this Act, and another part of it within a different category of agreement so mentioned, or within a category of agreement not so mentioned, or

b) to place it, or a part of it, within two or more categories of agreement so mentioned.

(2) Where a part of an agreement falls within subsection (1), that part shall be treated for the purposes of this Act as a separate agreement.

(3) Where an agreement falls within subsection (1)(b), it shall be treated as an agreement in]each of the categories in question, and this Act shall apply to it accordingly.

(4) Where under subsection (2) a part of a multiple agreement is to be treated as a separate agreement, the multiple agreement shall (with any necessary modifications) be construed accordingly; and any sum payable under the multiple agreement, if not apportioned by the parties, shall for the purposes of proceedings in any court relating to the multiple agreement be apportioned by the court as may be requisite.

The Decision

After considering the various arguments, the Court noted that if Ms Heath’s argument was right (ie that the agreement was a multiple agreement because there were two loans: one for restricted-use credit to pay off the Halifax loan and another for unrestricted-use credit which Ms Heath was free to spend as she wished), it would pose substantial practical difficulties. For example, if part of the loan was to be used to pay off an existing debt then the amount may not be easy to work out: it would often alter on a daily basis. To state the precise figure on the agreement may therefore be difficult meaning (if the agreement were regulated) that it may be unenforceable. This, Lord Justice Lloyd said, must be a relevant consideration. The Court of Appeal went on to dismiss Ms Heath’s appeal and said, in particular, that:

The starting point is the terms of the loan. From this, one must work out whether the

agreement is one advance, under which there are two or more parts in different categories,

or whether it (or part of it) falls into two or more categories.

• It was wrong to start from the proposition that if there seemed to be more than one disparate category (ie restricted use credit to pay off the Halifax advance and unrestricted use credit for the balance) then the agreement must fall into two or more parts.

• Instead, the question is whether the agreement falls into one or more categories, not the credit provided under it.

• Section 18 is, in part, aimed at attempts to avoid the application of the CCA 1974. This was a bigger issue before the removal of the £25,000 limit.

• The use of the word “category” in Section 18(1)(a) and (b) was the same and meant disparate categories (for example, restricted-use and unrestricted-use or running-account credit and fixed sum credit): it did not mean compatible categories (like unrestricted-use, debtor-creditor and running-account credit).

• Section 18(1)(b) recognised that the agreement as a whole could fall within more

than one category without being an agreement in parts (which would require separate documentation).

Taking these considerations into account, Ms Heath’s loan was not split between the amount to be paid towards the Halifax charge and the amount which Ms Heath was free to use. Instead, there was simply a term of the agreement requiring part of the loan to be used to pay off the outstanding mortgage. This was not a multiple agreement and it would be an artificial exercise for the Court to notionally apportion the monies between the two categories.

Summary

During these tough economic times, lenders are facing an increased number of consumer credit challenges from borrowers, many of which are stimulated by claims management companies. The decision in Heath further erodes the prospects of such claims succeeding.

Lenders can also take considerable comfort from the Court of Appeal’s decision that it is the agreement that must be considered. Lenders will often advance monies to borrowers who wish to use part to pay off existing debts and part for unrestricted use. Lenders may even include a contractual provision requiring certain debts to be paid off as a condition of advancing the loan.

This, the Court of Appeal said, did not automatically make the agreement a multiple agreement. Instead, it is clear that the Court will look at the agreement and see whether it (and not the credit) falls within Section 18. This is likely to seriously reduce the number of claims under Section 18 and Courts are likely to treat with suspicion any such claim, particularly where the consequences may have serious implications for the credit industry. Lenders defending claims under Section 18 should seriously consider the impact of Heath on the facts of its dispute.

It is likely that applications for summary judgment under CPR 24.2 or strike-out under CPR 3.4 will no doubt follow with obvious costs consequences for borrowers, claims management companies and after the event insurers.

Edited February 1, 2010 by elizabeth1

[ruinedbynatwest]

Elizabeth1 Quote:-

"Lenders can also take considerable comfort from the Court of Appeal’s decision that it is the agreement that must be considered. Lenders will often advance monies to borrowers who wish to use part to pay off existing debts and part for unrestricted use. Lenders may even include a contractual provision requiring certain debts to be paid off as a condition of advancing the loan..................

____(text omitted)____

This, the Court of Appeal said, did not automatically make the agreement a multiple agreement. Instead, it is clear that the Court will look at the agreement and see whether it (and not the credit) falls within Section 18."

EndQuote

 

Hi Elizabeth !

 

Admirable report of stateofplay re S 18 !

 

Don't forget that the CCA regulates the terms of the agreement by which credit is provided - and not the credit itself.

 

It is hardly surpising (given the confusion that emanates from the common law courts) that such reports that seek to answer common questions about Sec 18 omit to mention the primary purpose of the CCA which is to regulate the borrowing relationship between creditor/debtor that comes into being when terms of the type protected by Section 8 are caught by the CCA - often overlooked is the policy that the protection provided at inception is to remain thereinafter and the protection is to remain no matter how the creditor tinkers with terms later in an attempt to avoid the consequences of that protection - a protection that was put on the statute books in order to combat the cancer of burdensome, unsustainable debt. In that respect the CCA remains an awesome example of legislative foresight where it also insisted on transparency in consumer credit agreements in order to protect the debtor against the mischief of undocumented credit agreements. At present the string of common law cases continually cited on these threads makes plain that the common law has not allowed itself to be repealed - and this is evident from the common law Judgments where they are still full of common law reasoning that, incidentally, defeats the Statute - this dumbing down of the statue by the common law is unlawful under The Bill of Rights Act (1689) "Only Parliament may take away that which Parliament has given".

 

The Common Law Courts (High Court and above), in all of these cases, have failed to give way to the burden of proof issues that this parliamentary policy raises - the onus (to prove a case) shifts from the debtor to the creditor - the creditor is to prove CCA compliance if he wants to enforce the agreement - so why do all these cases give the benefit of any doubt raised by the non-documentation of terms to the creditor who has not documented as required by his CCA licence ??? This happened in Story where we had to prove, to the criminal burden, that a multiple agreement contained a strict common law refinancing term - where nothing at all had been written but where 3 existing agreements that were refinanced by the multiple agreement, were already regulated under Section 8 and had been for many years where the debt was continually rolled up (refinanced) by handshake.

 

The Court has refused to determine that the existing agreements were indeed regulated agreements where their total of £12000 was within the limit that qualified for the protection of Section 8 - and where Mr Bennion has opined that these existing primary agreements are regulated and are to remain regulated under S 18 where their existing regulated terms form a distinct part of the new multiple agreement.

 

The reason for the overriding (social policy) requirement to document imposewd by the CCA is quite plain - it is to allow the Court to trace the papertrail of debt from its inception (Section 8 - wherever the borrowing commenced) to ensure that abuse does not lie at the root of the particular relationship - abuse occurs in varying forms and degrees of course, and that is why S 127 (3) carries such onerous consequences for the (licensed) creditor who fails for whatever reason to not properly document terms as required as a condition of his CCA licence. People overlook this - that these lenders are well aware that the CCA simply says "We've had enough of creditors resorting to extra-judicial (and judicial) tactics, wrongfully, to enforce by any means, an undocumented credit agreement - GET YOUR ACT together or else".

 

In none of the (in part, refinancing, 'multiple agreement') test cases I have seen (Hannah, Story, Meadows, Heath) does the common law give way to Section 8 - the courts' preferring to seek evidence as to the terms by which existing regulated agreements are refinanced - and, finding for the creditor where no evidence exists (because none is written) the common law in effect refuses to pass the batton to the CCA.

 

Point being that there is no place for these common law evidential tests once an agreement of the type regulated by Section 8 arises.

 

THAT IS THE PROBLEM - IN ALL OF THE ABOVE TEST CASES, (including Heath) THE JUDGES JUMP INCORRECTLY ONTO THE "LADDER" AT THE 2ND, 3RD or even 4TH rung where Section 173 CCA forbids the Court to "Contract out" of the CCA where eg Rung no 1 constitutes a regulated agreement.

 

The courts do not have authority to remove that protection provided by Section 8 at inception and implied to the remaining rungs of that ladder by policy where the original debt is subsequently taken up that ladder in any form. Witness refinancing agreements (S 11(1)©), modifying agreements (S 82(3) "once regulated always regulated") and of course Section 18 (Multiple Agreements) which is very clear where existing agreements are regulated - S 18(1) applies to those existing regulated terms.

 

John Story

 

www.ruinedbynatwest.com

Edited February 2, 2010 by ruinedbynatwest
typos

[stripper]

Thanks mate

Makes it a lot clearer.

Stripper;)

[dizzyblonde1966]

Im very confused now

lots of differing opinions on the wakesman test cases,and if its only applicable to sec 78 requests, or for enforcement action too

 

However if a creditor can recreate any cca then surely that would mean every cca would/could become enforcable in a court of law based on a reconstruction(cause the crditor would recreate a compliant one)

 

However im sure judge wakesman and the oft both said a creditor has to inform a debtor when an agreement is unenforcable

 

So that leaves us with a huge contradiction here

 

What breaches still make a cca permanantly unenforcable ,?

[RoadToRecovery]

Im very confused now

lots of differing opinions on the wakesman test cases,and if its only applicable to sec 78 requests, or for enforcement action too

 

However if a creditor can recreate any cca then surely that would mean every cca would/could become enforcable in a court of law based on a reconstruction(cause the crditor would recreate a compliant one)

 

However im sure judge wakesman and the oft both said a creditor has to inform a debtor when an agreement is unenforcable

 

So that leaves us with a huge contradiction here

 

What breaches still make a cca permanantly unenforcable ,?

 

Certainly is confusing. I have eventually arrived at the same conclusion! In that any agreenent whether in existence or not would be treated as enforceable if the bank sign a piece of paper swearing they would originally have used an enforceable agreement & terms and conditions.

 

It is then down to the defendent to prove the agreement / T&C's the bank say they used and were compliant were not. There was a notable success a few days ago by a cagger who was able to prove the bank were being economical with the truth and won. Professional representation was used to win the case.

[Bigdebtor]

Certainly is confusing. I have eventually arrived at the same conclusion! In that any agreenent whether in existence or not would be treated as enforceable if the bank sign a piece of paper swearing they would originally have used an enforceable agreement & terms and conditions.

 

It is then down to the defendent to prove the agreement / T&C's the bank say they used and were compliant were not. There was a notable success a few days ago by a cagger who was able to prove the bank were being economical with the truth and won. Professional representation was used to win the case.

 

I have previously suggested that we set up a register of "typical" agreements so other CAGGERS can use these to refute the "balance of probabilities" cr*p that they ALWAYS had proper prescribed terms etc.

 

So far no feedback from site team on this.

[brooooooooooce]

BigD. I agree that is what we need. I have a Halifax one to add. I also think this thread is getting more and more confusing. Someone needs to come up with a list of definitive statements in respect the Waksman judgment. Also makes the case for a SAR even more compelling.

[Bigdebtor]

Unfortunately you can't rely on either the £1 CCA request nor the £10 SAR to get a signed copy of the original CCA. They only need to give the info held on it - not an actual copy. They can still recreate their own works of fiction - so that is why we need to build up a library of all unenforceable agreements for all OC's from the year dot. We don't need to post them up - just have a thread where we register what we have - so we can pm it to others as required.

 

I do hope CAG will help set this up?

 

BD