Mrs Aristoc vs. Halifax (Currently with moorcroft)

[Aristoc]

I'm dealing with this on behalf of my partner (not married, if thats important legally). She had a student account with Halifax which she used regularly until 2008 when her relationship with the bank deteriorated.

 

Because of a spiraling debt on a Halifax credit card at the same time, Halifax promptly removed her £1xxx student overdraft in autumn of 2008.

 

She was hit with a default notice on the 13th of December 2008. It gives until the 11th of January 2009 to remedy the situation, and references section 87(1) of the CCA 1974.

 

On 26th of December 2008, a mere 13 days after the issuing of the default notice, she was hit with a termination letter. It does not reference any part of the CCA, but merely states that 'You have failed to repay the requested amount by the date shown in the notice. As a result we have terminated your credit agreement.' Does this count as a termination notice? Because...

 

On 1st of January 2009, six days after her account was allegedly terminated, she was hit with a letter advising of an unauthorised overdraft fee of £28.00. On the 9th of January she was sent a statement, with charges and interest added since the alleged date of termination. She received three such statements until the 9th of April.

 

Whats interesting is that in the interim she was also sent letters from Albion Debt Collections requesting immediate payment. I can only assume that these are inhouse collectors.

 

By April 09 the account was £2,xxx.xx as per ADC. At least £150 of this constituted charges and interest applied after the supposed termination of her account.

 

On the 3rd of October 2009 Moorcroft Pre-Court Devision advised her of their instructions from Halifax to collect on the £2xxx.xx. They have been sending letters since, the most recent of which kindly 'allows' her to pay £120 pounds per month (she is jobless as of January and living on a student loan in her third year of study).

 

A huge amount of this debt is composed of unlawful bank charges, but I (like many) am waiting on the POC's and templates to be drafted before going down that avenue.

 

Can I put the account into dispute since charges were added after the account was terminated, or was the account terminated improperly and thus Moorcroft should not have their hands on it?

 

Many thanks as always,

 

John

Edited December 11, 2009 by Aristoc

[Pinky69]

What was the date on the Default Notice by which the breach was supposed to have been remedied? Take the date on the DN, add 2 days or 4 days for post depending on whether it was sent 1st class or 2nd class, and it's 14 clear days from when the DN was received. From what you say they have not given her sufficient time to remedy the breach. Thus the account was rescinded before they sold it to Moorcroft (terminated without sufficient time to remedy the breach) and Moorcroft has no legal right to be pursuing you for a rescinded account.

[Aristoc]

Thats what I thought. However I'm confused over which way I should persue this... let me sum up.

 

They gave from the 13th of December until the 11th of January 2009 to remedy the breach. This is well in excess of 14 days, and no doubt sufficient for the DN. However they went and terminated anyway on 26th of December. I see two possible options:

 

The DN is fine but they terminated on the 13th day after default. Thus they have not allowed enough time to remedy and thus they have unlawfully rescinded the account.

 

Alternatively, they chose to terminate a full 16 days before their own deadline for remedy as outlined in the default. They have contradicted their own DN and not given the time they said they would, thus they have unlawfully rescinded the account?

 

Which of these do you think I should persue as the stronger argument? Are they both accurate arguments to make? Must the creditor follow their own deadlines as outlined in the DN?

 

Cheers,

 

John

[Pinky69]

The argument to follow is the legal one. They did not give the time to remedy the breach required by the CCA 1974, as amended by the CCA 2006.

[Aristoc]

Thanks. So that minimum time is 14 days from the date of the letter. Will it hurt my argument that their default notice is compliant? Ie they gave >14 days but then terminated on day 13?

 

Surely the bottom line is irrespective of the date issued in the DN, they defaulted

 

I'll have to dig around to see what my next step should be now. Thanks a lot pinky.

 

John

[Pinky69]

It is not 14 days from the date on the letter - it is 14 days from the date of receipt of the letter as explained above (Queen's Bench 1985). The fact they terminated before the time laid down in law is all that is relevant. The fact the DN was compliant doesn't matter - they did not give you sufficient time to remedy the breach.

[Aristoc]

Fantastic. Thanks very much pinky, its much appreciated as always. I had misinterpreted the timeslot as 12+2 days and not 14+2. Even if they hand delivered it on the day it's still not compliant!

 

This is very good news. I'll have a root around to try and determine what my next course of action is.

 

Cheers again,

 

John

[Aristoc]

Ah, I'm now worried that the termination notice is not valid. I've been looking at some of hungrybears posts and he mentions that a termination notice will start with something like 'this is a termination notice under sections 78(1) and 98 of the cca'.

 

Because they continued to send statements after the date of this supposed 'termination letter', I'm worried they could argue it infact was never terminated until a much later date when it was sold to a DCA.

 

John

[Pinky69]

An account can be terminated in more ways than a termination notice. It is terminated if they ask for the full balance or sell it on.

[Aristoc]

This is what i'm worried about. I think albion are in-house and since she received statements until April I dont think it was sold on until well after the 14 days.

 

My whole argument rests on whether or not this letter is a valid termination, so I will transcribe the whole letter here...

 

Dear Sir/Madam

 

A Default Notice has recently been issued to you as you are in breach of the terms and conditions of your agreement.

 

You have failed to repay the requested amount by the date shown in the notice. As a result we have terminated your credit agreement.

 

Your account will now be managed by the Debt Recovery Department. No further notices will be given and you are therefore requested to telephone us immediately to discuss repayment.

 

If you choose to ignore this message, as stated in the Default Notice, we will be left with no alternative other than to take further action to recover the outstanding debt. this could be either through the Court or Collection Agents who will contact you for repayment. You will be liable for all fees and costs incurred by any action taken.

 

And now I will provide a transcription of the default notice incase it comes in handy:

 

IMPORTANT - YOU SHOULD READ THIS CAREFULLY

 

Default Notice served under section 87(1) of the Consumer Credit Act 1974.

 

Ther terms and conditions of the above account state:

 

At any time we may require you to pay us the whole or part of any overdraft, interest and fees or charges which you owe on your account.

 

You are in breach of that condition because we have asked you to repay the whole or part of your overdraft and you have failed to do so.

 

To remedy the breach you must pay into your bank account the sum of £1,xxx before 11th January 2009.

 

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

 

IF YOU DO NOT TAKE ACTION REQUIRED BY THIS NOTICE BEFORE THE DATE SHOWN THEN FURTHER ACTION SET OUT BELOW MAY BE TAKEN AGAINST YOU.

 

The letter goes on (on a separate page) to list what action may be taken if I do not repond.

 

John

Edited December 11, 2009 by Aristoc

[Aristoc]

To remedy the breach you must pay into your bank account the sum of £1,xxx before 11th January 2009.

 

Am I right to be a little uneasy about this sentence appearing on a default notice? Does requesting the full balance, even on an overdraft facility, not constitute termination of the account? Obviously they cannot terminate on a default and so the default is not in the prescribed form?

 

Cheers,

 

John

Edited December 11, 2009 by Aristoc

[Pinky69]

Nothing to worry about. They terminated the account in writing on the back of not giving you sufficient time to remedy the breach. They have rescinded the account.

[Aristoc]

Section 98 states, in regards to termination notices

 

A notice under subsection (1) is ineffective if not in the prescribed form.

 

I've found an OFT post contracts information requirements document, but it cites the Consumer Credit (Agreements) Regulations of 1984 and merely states that the termination notices have prescribed terms similar to those for DN's. I cannot find the 1984 Regulations anywhere.

 

Again i'm worried that this termination letter does not legally constitute a termination notice, and as such the termination was made on the date of transfer to a DCA, which was outside of the 14+2/4 day time period imposed on the DN.

 

Your thoughts? Cheers again,

 

John

[Aristoc]

Okay. I've just been looking at this little gem,

 

http://www.johnpughschambers.co.uk/Consumer%20Credit%20%28Enforcement,%20Default%20and%20Termination%20Notices%29%20Regulations%201983.pdf

And while it's clear that the DN is 100% as prescribed, the following requirements for the termination notice are of interest:

Details of agreement

1 A description of the agreement sufficient to identify it.

 

Parties to agreement

2

(1) The name and a postal address of the creditor or owner.

(2) The name and a postal address of the debtor or hirer.

 

Term of the agreement providing for termination

3

The term of the agreement providing for termination of the agreement by the creditor or owner, or a reference to and a

short description of that term.

 

Action to terminate the agreement

4

A clear and unambiguous statement by the creditor or owner--

(a) indicating that by the giving of the notice he is terminating the agreement and indicating any steps that he intends

to take to effect the termination or, as the case may be, indicating the manner and circumstances in which he intends to

take action to terminate the agreement; and

(b) indicating the date, being a date not less than seven days after the giving of the notice, of the termination or, as

Page 9 of 10

the case may be, the date on or after which he intends to take action to terminate the agreement.

 

Now excluding the date of termination, everything above is included in the document. Everything below section 4 is not included and so the termination notice is not valid. In addition to this no mention of sections 98 and 76 (as required per the regulations) is made. That said, just because its an invalid notice doesn't necessarily render the termination invalid, surely, as they have clearly stated that they have terminated the credit agreement.

 

As such, by virtue of both their invalid termination notice and their failure to allow 14+2 days following the DN, they have unlawfully rescinded the agreement, no?

 

John

Edited December 11, 2009 by Aristoc

[Aristoc]

Okay! More crap!

 

I've been looking at section 98, and it does state that subsection (1) does not apply in situations of termination due to a breach of the agreement. This means that schedule three of the regulations (the prescribed form of the termination notice) simply do not apply at all.

 

I then looked at section 76 and noted again (subsection 6) that subsection (1) does not apply in situations where the agreement is to be enforced or where any right of the debtor is terminated due to a breach of the agreement. As such schedule 1 of the regulations does not apply to the termination notice.

 

I then went back to section 87 and 88 and noticed that the creditor must not take action such as is mentioned in section 87(1) (ie, termination of the agreement) before the date specified.

 

The default is valid, the termination was made unlawfully. The creditor explicitly states that the agreement HAS been terminated. No prescribed form (that i can find) for termination due to breach of agreement exists and so the termination is valid and unlawful. Am i right?

 

John

[Pinky69]

The fact is that they have told you in writing that they have terminated the account, which is all you need. They have probably now sold it to Moorcroft following termination and Moorcroft have no right to pursue it as it has been rescinded.

 

So, they did not give you sufficient time to remedy the breach in the DN, they then terminated the account, thus rescinding it, then they assigned the account to Moorcroft who, because it has been rescinded, have no lawful right to pursue it. That's as much as I can give you - it 's all you need. If you need further advice, you'll have to wait for someone else to come along.

[Aristoc]

No no, I greatly appreciate your help, I do. I was just a bit uneasy about it and unsure about their termination notice. I'm quite happily convinced now though.

 

Thank you again,

 

John

[hungrybear]

Nothing to worry about. They terminated the account in writing on the back of not giving you sufficient time to remedy the breach. They have rescinded the account.

 

 

Having read through this in detail then, despite my initial apprehension in the PM john I have to agree with pinky 100% here.

 

BUT, you will have a fight on with this and if it gets as far as a court hearing then you will have to be 110% prepared.

 

hope that helps

[Aristoc]

Having read through this in detail then, despite my initial apprehension in the PM john I have to agree with pinky 100% here.

 

BUT, you will have a fight on with this and if it gets as far as a court hearing then you will have to be 110% prepared.

 

hope that helps

 

Aye, It's certainly not as straight forward as an invalid DN (with which I believe we can reference precedents? I wonder if there is a precedent for this kind of breach.)

 

At this point i'm wondering if it would be best to hold out for the updated templates and then take them for bank charges, which constitute a vast majority of the debt. In the meantime perhaps I could pursue some other avenue to get moorcroft off our backs.

 

Thanks for your input, both of you, much appreciated.

 

John

Edited December 12, 2009 by Aristoc

[Aristoc]

So, they did not give you sufficient time to remedy the breach in the DN, they then terminated the account, thus rescinding it, then they assigned the account to Moorcroft who, because it has been rescinded, have no lawful right to pursue it.

 

There seems to be a bit of confusion regarding this. Halifax's date in the DN does give adequate time to remedy the default as per the regulations.

 

The DN seems valid, it's the fact that they sent a 'termination letter' before that date in the DN was reached (and, incidentally before the 14+2 requirement of the regulations), that would be relied upon should this go legal.

 

I am pretty sure that they would argue, in this event, that the account was not terminated and that because she continued to receive statements until April, action to be taken as documented in the DN did not occur until after the date specified.

 

I would be basing my entire argument not on a faulty DN or inadequate time given, but instead on their one letter dated the 26th of December stating that they had 'terminated the credit agreement', thus contravening the CCA section 87 and 88 which stipulates that no such action can be taken by the creditor before the date given on the DN.

 

An argument of this type has no precedent that I can find, at least not here on CAG, and so as hungrybear has suggested this would not be a straightforward 'I refer you to such and such a case' affair and depending on judge/nerves (if it went to court) could really go either way.

 

In the event that we did indeed argue that the agreement was rescinded, we would not be able to refer to precedents in which damages were rewarded for unlawful defaults, as the default itself was lawful and so we would be unable to demonstrate a tarnished credit file as the result of unlawful action.

 

As such, other than (possibly?) obtaining a ruling that the debt is unenforceable, is there any use in pursuing this avenue with Halifax? It is quite possible that once the POC's and templates are updated we would have much greater success claiming back bank charges, which with interest added would likely total a sum exceeding the amount being chased.

 

Thanks again all, I dont know what i'd do without this place.

 

All input appreciated. If you think this rescindment stuff is worth following please speak up!

[hungrybear]

you did not have a valid DN because the account was terminated before the 14 days - which is 14 days from service not 14+2 incidentally.

 

However you go on to discuss what will I think be their defence, which was my initial apprehension.

 

It is straightforward in that they are in breach of section 87 as amended. There is no need for case law precedent in the high court because it is a statute defence.

 

The default was not lawful because the 14 days after service were not given before termination.

 

BUT I see a 50:50 chance depending on the judge of winning at the first hearing. I think there is an even chance of you needing to appeal, at which point you will get a 'real' judge who knows what they are talking about - THAT is my reason for apprehension in this. - your argument against yourself given by a real solicitor for a big company may sway the level of judge you get at the first hearing, depending on the judge.

 

As for case law precedent, this is the same as ANY case where the DN gives less than 14 days for remedy. The DN was cut off before the 14 days.

 

does that make sense?

[Aristoc]

Yeah that does make sense hungrybear, though I'm concerned about the dangers of arguing that the termination rendered the DN invalid. While section 88(2) states very clearly that the creditor shall take no action prior to the remedy date, it gives no clear provision invalidating the DN as a result of these circumstances. I may be misunderstanding the law here - if a subsection of s88 is not adhered to, does it render the creditor non compliant with the whole section?

 

Regardless of this, the success of the argument will ultimately rest on whether or not I can hold up a good case in court. I have never been in a courtroom, and though I love a good debate, the majority of my experience in such matters is dervied of faceless forum banter.

 

As such, I have been considering an alternative course of action that I would be greatful for anybodies thoughts on...

 

 

1. I contact moorcroft and Halifax and declare that because the account was unlawfully rescinded, the debt should never have been sold on and my details should not have been passed to a third party DCA.
   
2. While letters are passed back and forth along these lines I wait for the POC and templates for bank charge claims to be updated, and then hit out at Halifax for the full balance (and then some) with interest.
   

A problem I see with this is that by arguing the agreement rescinded, would any bank charge claim not be rendered invalid? After all a CCA regulated agreement no longer exists to make the claim under if it has already been rescinded, right?

 

The above being accurate, would a better approach be to CCA moorcroft for the terms and conditions and a copy of the letter outlining interest and limits etc etc? This alone could buy time to build the bank charges case against Halifax.

 

Oh, and I also have a letter from Halifax demanding the full balance before the date the DN was issued, but because this is an overdraft the bank reserve the right to demand the full sum and as such I would have a hard time arguing that this letter amounts to early termination. Is that right?

 

Many, many thanks once again. The deeper I get into this the less scary and more exciting it actually becomes.

 

Cheers!

Edited December 14, 2009 by Aristoc

[Aristoc]

Okay... finally made a decision.

 

CCA off today to moorcroft recorded delivery. I know, I know, its an OD account but for those who might be following this thread I refer you to...

 

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/237096-overdrafts-covered-ccas.html

 

So we'll see what they come up with!

 

Once again a big thanks to everyone on here who has helped me to date. Hats off to your all round awesomeness.

[hungrybear]

Okay... finally made a decision.

 

CCA off today to moorcroft recorded delivery. I know, I know, its an OD account but for those who might be following this thread I refer you to...

 

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/237096-overdrafts-covered-ccas.html

 

So we'll see what they come up with!

 

Once again a big thanks to everyone on here who has helped me to date. Hats off to your all round awesomeness.

 

 

good choice in my humble opinion

[Aristoc]

Thanks man, appreciate it. I'll keep the thread updated as news comes in.