Default Notice or Termination?

[postggj]

google the regs and have a nose

[postggj]

DEFAULT NOTICE

 

The Need for a Default notice

· Notwithstanding the above, it is also drawn to the courts attention that no default notice required by s87 (1) Consumer Credit act 1974 has been attached to the petition.

· It is denied that any Default Notice in the prescribed format was ever received and the Defendant puts the Claimant to strict proof that said document in the prescribed format was delivered to the defendant

· Notwithstanding the above points, I put the claimant to strict proof that any default notice sent to me was valid. I 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)

· Service of a default notice is a statutory requirement as laid out in sections 87,88 and 89 Consumer Credit Act 1974. Section 87 makes it clear that a default notice must be served before a creditor can seek to terminate the agreement or demand repayment of sums due to a breach of the agreement. therefore without a valid default notice, I suggest the claimants case falls flat and cannot proceed and to do so is clearly contrary to the Consumer Credit Act 1974

· 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 a 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

__________________

 

[postggj]

that says it all:grin::grin:

[NGEddie]

Thank you so much!

 

Its almost scary the way the more you read the more it, almost, sinks in, so I can clearly see the end of the second post last paragraph makes sense to me, and from the first paragraph, the fact we recieved an invalid one, is the same really as not receiving one at all?

 

and its all this stuff I need to be attaching to my defence form? which I need to really send off in the next couple of days!

[postggj]

have you your own thread on this

 

when did you acknowledge service

[postggj]

what makes you think the dn is invalid

 

the check list is above

[NGEddie]

I started this one :-

 

http://www.consumeractiongroup.co.uk/forum/legal-issues/237396-defence-advice-needed-please.html#post2634983

 

sorry didnt mean to confuse people.

 

Had to be acknoweldgment the other week, had to be in by 2nd.

 

I believe invalid due to not giving 14 clear days and words not underlined, so I have been told anyway!

 

Where is the checklist, sorry couldnt see it!

[postggj]

ill drop in later tonight and rustle up a defence for you

 

study it as its most important you understand it

 

with any luck you will never see the inside of a court room

 

the regs are in post 25

[NGEddie]

Thank you! That is like a weight being lifted honestly

 

I will PM you a copy of the default if you like just to be sure?

[postggj]

i would prefer you post it up minus personal details

 

google photo bucket

 

it will help out future caggers

 

if you want it on the qt, ill send you my email addy

 

well then

 

seems another satisfied customer

 

give em hell

[NGEddie]

If you wouldnt mind please? I will be happy to post once the defence is in but am just very worried of anyone getting a sniff of it and messing up my defence!

 

Thanks

 

E

[postggj]

ill send you a pm with my email addy

 

send as an attachment

[NGEddie]

Did you get the email?

[tpedge]

...They may at that point, refer your case to a DCA or take the matter to court.

 

I would refuse to deal with any DCA where a agreement has been terminated unlawfully and wait (even insist) that the lender take court action.. Once I got the letter from the DCA I would write to the lender advising that I dispute the decision made to involve a DCA due to the FACT that the agreement has been ended unlawfully, and I would at this time, put all the facts in front of them as to why they cannot get any money from me without the order of a court.

 

Apple : )

 

The bank have indeed now passed it on to a DCA although I have had no communication from them since the phone call. I got a call from a DCA this morning saying they were calling on behalf of the bank. I told her that I had received no communication from the bank regarding them and I would only deal with them in writing, the lady was very polite and said that she would send off a letter today.

 

So now I get to wait a bit more but at least there has been some movement.

[diddydicky]

whilst i always advocate waiting for a termination letter (or demand for the full amount of the account) after receiving a dodgy DN i have to say that in the case where the DN demands the full amount it would be folly in the extreme to wait and do nothing.

 

the demand for payment in full, the more so on a DN than in an open letter, is clear repudiation and i would get in quick and acknowledge it PDQ

 

 

if they notice the error and try to re issue you are then left with an argument as they will say that you did nothing to indicate that you accepted the unlawful rescission so they therefore assumed that you were content to let the agreement endure

 

why give them half a chance of an argument in court when it is easier to slam the door shut!

 

thats just my advice

 

 

 

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

Edited January 8, 2010 by diddydicky

[applecart]

I see your point, however in practice - 'accepting' the default would be by way of starting to make timely payments again as if the default had never been served....this would then leave the way open for another default to be served at a later date should one default again.

 

In tpedge's case - The fact that the DCA has agreed to 'backtrack' is a good thing, they effectively acknowledge that they have purchased a disputed debt and have no recourse other than to refer the matter back to the original lender as they are not personally owed anything and have no legal right to chase a disputed debt.

 

The ball is firmly back in the lenders court; deal with it via court if they want their money and prove they have followed legal protocol in administering the loan under the CCA and gain their right to any money allegedly owed by way of court order - it is up to the lender to prove they have a right to their money having served a defective default/termination notice surely?

 

The way to deal with this situation when and if it occurs is shown in the advise given by post gg above.

 

(hope i have not mis understood the post from tpedge - if I have - apologies)

 

Apple : )

[diddydicky]

i think you have misunderstood me

 

if the creditor unlawfully repudiates the agreement (as in demands payment in full of sums not yet due under the agreement) the performing or injured party (you) has TWO choices:-

 

do NOTHING in which case it will be taken that you intended that the repudiating party honour the agreement

 

OR

 

accept the unlawful repudiation - that is not accepting the DN - the DN is simply the document that the creditors unlawful repudiation is written on

 

The creditor in effect is saying "i am no longer prepared to let you pay the sums not yet due under the agreement by monthly payment amounts of your own choosing- instead you must pay it all to me immediately

 

the creditor thus removes from you a (the?) major benefit of the agreement

 

he does so unlawfully because he is not allowed to do this lawfully unless and until he has issued an EFFECTIVE DN and the time has expired without being remedied.

 

the creditors unlawful repudiation does not terminate the agreement- the debtors acceptance of it does

[Deb T]

i think you have misunderstood me

 

if the creditor unlawfully repudiates the agreement (as in demands payment in full of sums not yet due under the agreement) the performing or injured party (you) has TWO choices:-

 

do NOTHING in which case it will be taken that you intended that the repudiating party honour the agreement

 

OR

 

accept the unlawful repudiation - that is not accepting the DN - the DN is simply the document that the creditors unlawful repudiation is written on

 

The creditor in effect is saying "i am no longer prepared to let you pay the sums not yet due under the agreement by monthly payment amounts of your own choosing- instead you must pay it all to me immediately

 

the creditor thus removes from you a (the?) major benefit of the agreement

 

he does so unlawfully because he is not allowed to do this lawfully unless and until he has issued an EFFECTIVE DN and the time has expired without being remedied.

 

the creditors unlawful repudiation does not terminate the agreement- the debtors acceptance of it does

 

 

How would that work then if a debtor had previously written to their creditors prior to default/termination notices and said 'look, I can no longer maintain payments as in the terms and conditions and as such am offering a token payment but in essence I do not have the money to pay the monthly amounts' and then make that 'token payment'

 

Clearly it's a breach of the original agreement and there is a two way hit.

A/ Most of the creditors refuse the payment, continue to apply charges and go 4 or 5 months before defaulting the account, some with faulty DN's and Termination notices.....If the debtor has previously put them on notice that they cannot maintain the acccount as per the original agreement but has made the 'token payment' but the creditor then issues faulty DN's/termination notices.... would your point still carry that the debtor has acted responsibly and the creditor has not by issuing faulty dn's/termination notices...does the principle remain the same but with a debtor getting in first so to speak?

 

At the same time as this and to your initial point of getting in quick and notwithstanding that ignorance is no defence, but most debtors were not armed with the power of knowledge that the likes of CAG provides, Their must be an argument that not responding to a faulty termination notice in a 'thanks for that' is as lawful as the creditors actions are unlawful?

 

It's almost like an insurance claim, you pay them your money, you've been with them for decades, never had reason for a claim but now you have and the insurer then comes out with something in the small print and their 'interpretation' and sorry your claim is void..... They knew it was their, you didn't or you didn't realise that their interpreation of it was something totally different.....but they know this and know it catches people out but they don't give you advance warning ...I realise this last paragraph is a bit off base but I know what I'm trying to say, I just can't quite put it in a manner consistent with your pov's

Edited January 12, 2010 by Deb T

[diddydicky]

ok,

 

getting behind with payments will account for 99.9999% of all default of the agreement on the part of the debtor

 

Parliament recognised this and the whole purpose and intent of the requirement for a default notice is to give the debtor a "second chance" if he gets into difficulty,

 

the act therefore states that before the creditor can act on any alleged default by the debtor, he must fist give him that opportunity by serving a n effective default notice telling the debtor what he has to do to put things right (the sums claimed in the DN must not be overstated or contain unlawful charges)

 

IF the debtor complies with the DN then the slate is wiped clean and it is as if the default had never occurred.

 

the same chance to remedy any alleged breach is NOT offered to the creditor as he is a large and powerful organisation and has the best legal and financial brains at his disposal and is expected to get things right

 

 

when the creditor unlawfully seeks to terminate the agreement ie not in accordance with the act which governs it(the consumer credit act) then he steps over the line into general contract law

 

the DN has important messages in it to warn you to obtain legal advice and shows you where to get it (free if necessary) therefore you cannot plead like "Manuel" in fawlty towers that " i know norrrthing!!

 

Mine is not the definative answer as i am not legally qualified

 

i can only tell you that from the not inconsiderable research i have and do undertake with regard to DNs and contract rescission is that the broad base of opinion is that doing nothing following an unlawful rescission is deemed to be acceptance that the contract endures

 

put it this way

 

 

if you like, try writing to your creditors and giving them notice that you are now terminating your agreement with them and no longer intend to perform

 

they will do............ absolutely nothing- because your letter is meaningless (unless they want to agree and accept it) and you are still contractually obliged to them - they will just keep sending you monthly statements and demands for arrears

 

You have a legally binding agreement

 

one party can Lawfully terminate it if the terms and conditions allow for that due to a breach of the agreement by the other side

 

one party cannot unlawfully terminate the agreement unilaterally

 

however, one party can say to the other- look i know this is naughty but i think ill renege on this agreement and not do what i agreed to do

 

the other side can either say

 

no, sorry i insist you carry on (silence does that )

 

OR he can say

 

ok youre awful...... but i like you - so yes i agree to your unlawfulf proposition as it is clear you dont want to perform

 

thus you have BOTH reached a NEW agreement ...........to cancel the original agreement!!!

 

 

the letter from the creditor telling you of his unlawful action ( taking away your right to make monthly payments) does NOT therefore terminate the agreement-

 

The termination ONLY occurs when you do some thing or action which demonstrates that you have accepted his unlawful repudiation of his obligations

 

the effect of your acceptance is to releive yourself of any of the obligations you had under the agreement, and since the other side already told you that THEy had releived THEMSELVES of their obligations - the agreement therefore is effectively terminated!!

Edited January 12, 2010 by diddydicky

[tpedge]

Thanks for all the responses.

 

I still haven't received the letter from the DCA but today I did receive a letter from the bank which again states the outstanding amount as the full amount of the loan. Then it gets worse. They tell me to prevent further action I must contact them "within 14 days of the letter". The letter is dated a few days ago but then says if I fail to contact them by a date in December 2009 they will refer it to their solicitors without further warning.

 

So I'm guessing now is the time to send them a letter accepting their unlawful repudiation?

[diddydicky]

yes a letter demanding you pay the full amount after the dn is good confirmation that they have terminated

[Its WAR]

Is that the same if the DN asks for a full amount to be paid, rather than a susequent letter asking it?

[emandcole]

Diddydicky,

Have also been researching this stuff and have reached the exact same conclusions as you and others.

 

When the termination letter has been sent after a defective default notice do you think there is any need to wait until the termination date ultimatum to pass before writing to accept their termination or can you write to accept that termination immediately?

 

I have this exact position right now and was going to wait until the date the termination notice gives before responding to confirm my acceptance.

Is the very act of them sending their intention to terminate enough to enable me to accept or will writing back before the termination date arouse suspician?

 

I was going to keep the letter very simple, just an acknowledgement of the default, the termination and to explain that I understand the contractual obligations of either party have now been cancelled.

 

Thanks for any advice and opinion

[diddydicky]

if the default notice contains a demand to pay the whole of the outstanding balance of the account in order to remedy the breach (and assuming of course that the whole of the account is not due - as arrears), then IMO this is repudiation (unlawful) and can be accepted upon receipt.

 

 

if the DN says that after the stated time they WILL (as opposed to MAY) terminate then this also could also be accepted, after the time limit quoted has expired to be termination since you would be allowed to take the creditor at their word

 

the danger with accepting dodgy DN's on perhaps a day or two short or wrong figures is that some numpty judge might later find it a de minimus issue

 

more preferable in my opinion, to let them compound the folly with a termination letter or later demand for the full amount of the account.

 

Once terminated, whether they say lawfully or you say unlawfully - it is still termination and cannot be undone

 

that of course then prevents any pretence of them issuing a new DN in the hope of correcting their mistake or arrogance as the case may be,

 

because the wording of a DN is predicated on the fact of an enduring agreement, it would be of no effect on an agreement that no longer exists.

 

i:e:- the recipient would be unable to remedy the alleged default and then act "as if the breach had never occurred"

 

further, the amount stated in the DN could never be accurate.

Edited January 14, 2010 by diddydicky

[emandcole]

Thanks for such a comprehensive reply diddydicky.

 

Checked the default and it says the usual such as the amount required, dates (which are well short of 14 days) but interestingly as you pointed out earlier the default states that further action if the default is not complied with is to:

 

 

• Recover all monies outstanding under this loan agreement
  

It goes on to detail the amount owing, including interest and charges up to (date given).

 

Technically then this default notice could also be construed as a termination notice as the result of failing to comply with the default is clearly termination, irrespective of a seperate termination notice being issued.

 

Just as an exercise and learning opportunity for others reading however the termination notice says the following:

 

We now DEMAND immediate payment of (sum).

 

Interest will be added on the same basis as presently applies.

 

YOU HAVE EIGHTEEN DAYS TO REPAY IN FULL.

 

ACTION may be taken against you through DEBT COLLECTORS or SOLICITORS if you fail to comply with this demand wihin 18 days. You may also be taken to COURT.

 

Finishes with general info about credit reference agencies, defaults,blah blah.

 

It's then signed by a senior manager.

 

I was originally waiting until the termination date provided to send the letter accepting the termination but if I've got the right end of the stick it appears as if the original default notice, given the way it is worded, could also be construed as a termination notice meaning I could accept that termination right now?

 

This loan is with a big bank who got their loan figures wrong and who have spent the last (many) months ignoring my requests for clarity whilst helping themselves to an absurd amount in charges. I therefore have little guilt if they do this to themselves when all they had to do was answer some very straight forward questions.

 

By accepting their termination they deny themselves the right to collect anything other than the arrears due to the defective default notice and as the agreement has been mutually ended one party cannot reinstate the agreement in order to re-issue a correct default notice. That's mu understanding, hope others following can learn from this