Dissecting the Manchester Test Case....

[bazaar]

OR, you have more than enough intelligence to deal with some adverse comments. for what its worth

[spartathisis]

Here we go, get posting you lot esp Oily I need some sharp minds to fill the thread up with good discussion on the positives.

 

http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/244190-positives-recent-manchester-case.html#post2726599

[seriously fed up]

Oilyrag, I too would be sorry to see you stop posting, but you know people disagreeing is the essence of dialogue and from that dialogue comes a better and more considered position. Sometimes getting their can be painful - often this is particularly so when you are right (or more right than wrong).

Can I make a couple of points in reply to your last contribution

 

1. you are absolutely right, if MBNA withdrew two cases at Manchester, you can bet your life that they didnt do this because they thought they would win and thus information about these cases would be most useful (to put it mildly). Where do we get it from? There wont be a judgement to look at. Its by no means certain (possibly the other way) that the other parties are on CAG. If anyone has any suggestions about how to find out then speak up. But I dont think this is so much
   
2. I have had a look for DDJ Smith at Manchester on/about December 2009 and cant find anything. We cant do anything if the information isnt there
   
3. you are right about Mitchell and about Langan's judgement and I think more should be made of this. However, the limitation on it is that its County Court and thus influential (on some judges probably) but not authoritative.
   

So, I would be sorry to see you go, but re your specific points, I really dont know what can be done about 1, and for 2 some sort of steer is needed.

Hope you feel better soon.

[stripper]

Come on OR I really appreciate your input,don't throw in the towel,please;)

Stripper

[emandcole]

Same here. Have to say that some of the posts submitted by oilyrag have really got me thinking and I would thank him for that quite readily.

 

Although I'd be the first to admit I'm often out of my depth in some of these discussions it is only the reading and questioning of posts raised by others with greater insight that will help me to spread what I've learned to others. It's simply a process, a means to an end, one I believe we are all looking to find, regardless of the efficiency or methods we choose to travel there.

 

And so the learning spreads, the corporations sit up just a touch in their plush chiars and between us we make things just a little bit better. If this means wading through the occasional nonsense and misinformed procrastination so be it. I for one think it's worth it

[vint1954]

Oilyrag, I too would be sorry to see you stop posting, but you know people disagreeing is the essence of dialogue and from that dialogue comes a better and more considered position. Sometimes getting their can be painful - often this is particularly so when you are right (or more right than wrong).

Can I make a couple of points in reply to your last contribution

 

1. you are absolutely right, if MBNA withdrew two cases at Manchester, you can bet your life that they didnt do this because they thought they would win and thus information about these cases would be most useful (to put it mildly). Where do we get it from? There wont be a judgement to look at. Its by no means certain (possibly the other way) that the other parties are on CAG. If anyone has any suggestions about how to find out then speak up. But I dont think this is so much
   

These cases were withdrawn on the steps of the court by MBNA. Sols were asked bt MBNA, what it would take to make them go away. I beleive that it is reported on Cartels website.

1. I have had a look for DDJ Smith at Manchester on/about December 2009 and cant find anything. We cant do anything if the information isnt there
   

Was he not the judge in the bank charges appeal? Unfair relationships.

1. you are right about Mitchell and about Langan's judgement and I think more should be made of this. However, the limitation on it is that its County Court and thus influential (on some judges probably) but not authoritative.
   

So, I would be sorry to see you go, but re your specific points, I really dont know what can be done about 1, and for 2 some sort of steer is needed.

Hope you feel better soon.

Vint

[Enron]

The part i'm surprised about is that effectively they have judged that they can continue to run the account as normal, even when the creditor is in default of a request.

 

"If McGuffick is rightly decided, the effect of the unenforceability provision is as follows: the contractual liability of the debtor to pay any sums due or falling due by reason of his use of his credit card remains. It is not the case that the creditor’s rights to payment were never acquired or that they were extinguished. The result is that if the debtor stops paying during the s78 breach period, interest will accrue. And if and when the s78 breach is cured, the creditor may sue him and recover all outstanding amounts. Moreover, during the breach period the creditor can still report the debtor to credit reference agencies (“CRAs”) without the need to tell them that the agreement is currently unenforceable."

 

This runs contrary to the OFT take on a s77-79 request which is in default where they state that "a creditor is not entitled to enforce the agreement AT ALL either with or without a court order until which time the default (request for executed agreement) is remedied."

 

My understanding was that an account could not be operated as normal whilst the request was in default, I even had Citi refund interest and acknowledge that no adverse information had been reported to my credit file during a period that they acknowledged they were in default of a request.

[brooooooooooce]

Hi Oilyrag, Saddler & Andrew1

 

I hope you don't stop posting Oily because its people like you that are giving hope to people like me.

 

After advice from people on CAG I recently wrote to a number of creditors (that I had received dodgy agreements for) offering them a full & final settlement of 15% of the amount outstanding. Not had any written replies yet except one has just contacted me to confirm they will accept my offer and mark my credit file as 'account satisfied'. He says they'll confirm it all in writing and give me 28 days to pay.

 

 

I was getting a bit down with the whole job (especially after so much misplaced negativity following the Waksman judgment) but this has really pepped me up - the whole unenforceable credit palava - its not a myth!

 

 

 

The other thing is that this company did provide me with a microfiche copy of an agreement which on its own wasn't enforceable but did contain a line of text that said something like 't & c on the reverse'. They provided a typed copy of these t & c which did appear to make the agreement enforceable.

 

 

 

The relevance to this thread is they have provided a signed copy of an agreement and the alleged t & c. But they obviously don't have the original and presumably know that without it the court couldn't enforce. Back to the old 'better to be defendant than claimant'. And they settled for only 15%.

 

 

Some might post that I should have offered nothing - but the thing that drives us all nuts is the 'uncertainty'. Provided they are as good as their word I now have 'certainty' and in my view at a small price

 

 

Thanks to everyone who posts and please keep posting. 1 down only 8 more to go!

[seriously fed up]

Re MBNA, I have had a look on Cartel and cant see anything (gagging clause?). I wouldnt expect MBNA to advertise "this is why we gave up". Would Cartel go public on their application (why not sell it?). I dont know - I am just pointing to the degrees of difficulty in getting that type of information (which yes Oilyrag, I for one would very much like to have)

 

Re Smith (about as difficult a name to google without getting overwhelmed) I dont know. But does Oilyrag know something - even a clue - and would he share it?

[egg-sterminator]

Hi Oilyrag, Saddler & Andrew1

 

I hope you don't stop posting Oily because its people like you that are giving hope to people like me.

 

After advice from people on CAG I recently wrote to a number of creditors (that I had received dodgy agreements for) offering them a full & final settlement of 15% of the amount outstanding. Not had any written replies yet except one has just contacted me to confirm they will accept my offer and mark my credit file as 'account satisfied'. He says they'll confirm it all in writing and give me 28 days to pay.

 

 

I was getting a bit down with the whole job (especially after so much misplaced negativity following the Waksman judgment) but this has really pepped me up - the whole unenforceable credit palava - its not a myth!

 

 

 

The other thing is that this company did provide me with a microfiche copy of an agreement which on its own wasn't enforceable but did contain a line of text that said something like 't & c on the reverse'. They provided a typed copy of these t & c which did appear to make the agreement enforceable.

 

 

 

The relevance to this thread is they have provided a signed copy of an agreement and the alleged t & c. But they obviously don't have the original and presumably know that without it the court couldn't enforce. Back to the old 'better to be defendant than claimant'. And they settled for only 15%.

 

 

Some might post that I should have offered nothing - but the thing that drives us all nuts is the 'uncertainty'. Provided they are as good as their word I now have 'certainty' and in my view at a small price

 

 

Thanks to everyone who posts and please keep posting. 1 down only 8 more to go!

"Better to defend " This may bare you out " direct quote from a Brunnel Franklin letter " we believed your case had at least a 65% chance of success and therefor were able to take the case forward and insure it " " over recent months this area of law has been subject to extensive testing in the high court on various occasions the results have been generally unfavourable to CLAIMANTS " o and by the way their not refunding any fees payed .

[freethemice]

Hi Oilyrag, Saddler & Andrew1

 

I hope you don't stop posting Oily because its people like you that are giving hope to people like me.

 

After advice from people on CAG I recently wrote to a number of creditors (that I had received dodgy agreements for) offering them a full & final settlement of 15% of the amount outstanding. Not had any written replies yet except one has just contacted me to confirm they will accept my offer and mark my credit file as 'account satisfied'. He says they'll confirm it all in writing and give me 28 days to pay.

 

 

I was getting a bit down with the whole job (especially after so much misplaced negativity following the Waksman judgment) but this has really pepped me up - the whole unenforceable credit palava - its not a myth!

 

 

 

The other thing is that this company did provide me with a microfiche copy of an agreement which on its own wasn't enforceable but did contain a line of text that said something like 't & c on the reverse'. They provided a typed copy of these t & c which did appear to make the agreement enforceable.

 

 

 

The relevance to this thread is they have provided a signed copy of an agreement and the alleged t & c. But they obviously don't have the original and presumably know that without it the court couldn't enforce. Back to the old 'better to be defendant than claimant'. And they settled for only 15%.

 

 

Some might post that I should have offered nothing - but the thing that drives us all nuts is the 'uncertainty'. Provided they are as good as their word I now have 'certainty' and in my view at a small price

 

 

Thanks to everyone who posts and please keep posting. 1 down only 8 more to go!

 

 

I think this post is just about the most sensible approach in the entire thread. When going to court every case has it's chance of sucess or failure and the creditors know this. It should be noted that creditors will also consider a full and final offer paid in instalments rather than risk getting nothing.

 

Even if they refuse your offer it is good evidence that you have tried to find a solution and a judge should take this into account when awarding costs. Just make sure you never actually acknowlegde the debt when asking. "alleged balance" "alleged agreement"

[oilyrag]

removed

Edited January 27, 2010 by oilyrag
professional advice to do so

[vint1954]

The part i'm surprised about is that effectively they have judged that they can continue to run the account as normal, even when the creditor is in default of a request.

 

"If McGuffick is rightly decided, the effect of the unenforceability provision is as follows: the contractual liability of the debtor to pay any sums due or falling due by reason of his use of his credit card remains. It is not the case that the creditor’s rights to payment were never acquired or that they were extinguished. The result is that if the debtor stops paying during the s78 breach period, interest will accrue. And if and when the s78 breach is cured, the creditor may sue him and recover all outstanding amounts. Moreover, during the breach period the creditor can still report the debtor to credit reference agencies (“CRAs”) without the need to tell them that the agreement is currently unenforceable."

 

This runs contrary to the OFT take on a s77-79 request which is in default where they state that "a creditor is not entitled to enforce the agreement AT ALL either with or without a court order until which time the default (request for executed agreement) is remedied."

 

My understanding was that an account could not be operated as normal whilst the request was in default, I even had Citi refund interest and acknowledge that no adverse information had been reported to my credit file during a period that they acknowledged they were in default of a request.

I think that this is what we all struggle to understand. The Act, the OFT and bennion himself, all conclued that if the creditor is in default of s77-79, he is not allowed to enforce the agreement until the default is remedied.

 

Mcguffick has reduced the term enforcement, to an actual decission in court. Most oppinion is that McGuffick was incorrectly decided and I was under the impression that it was being appealed.

[diddydicky]

Hi Peoples,

To those who have supported thank you.

 

I owe a sincere apology from my last post. I should have checked instead of relying on memory. This was another case I had dismissed as irrelevant not in Manchester.

 

The case in question was again MBNA at South Shields the name

 

Deputy District Judge Jaqueline Smart QC (right initials-- wrong name) (look at the bits at the end re appeals and finding the docs????)

 

Sorry to those looking in the wrong place-- my fault:(

 

I will be watching progress but it is unlikely that I will post. It has been made clear by some (senior members to boot) that I have nothing to offer you. I cannot as explained tell all about my own case and all of the knowledge I have gleaned due to potential jeopardy of the legal position of strength we currently hold in this to and fro war we are all in. I have attempted to point the path we are on where I am able.

 

 

Take great care all

OR:)

 

seeing as your post mentioned myself in particular, i feel obliged to respond

 

I am no more a "senior member" than anyone else, nor have i any more authority on the site than yourself

 

As far as i recollect my main response to your post was the aggressive way you put your points and made reference to those who disagreed as only having half a brain cell

 

If you want to run away with your tail between your legs because someone has disagreed with you then you are clearly a lightweight- the danger therefore being that you might one day be helping a fellow cagger to the point where things didn't go your way and then you might "drop out" and leave them in the lurch

 

Of all the qualities a cagger needs most - it is the ability to carry on and not quit under pressure

 

if you cant stand the heat perhaps you are better not being in the Kitchen!

 

Don't leave on my account - or suggest that i am the reason for your own lack of stickability

 

I am sure your knowledge is equal to or far superior to mine.

 

I would hope that if you are serious about using your knowledge to help others and not just on an "ego trip" that you will stick around and become part of the community

Edited January 26, 2010 by diddydicky

[vint1954]

Hi Oilyrag, Saddler & Andrew1

 

I hope you don't stop posting Oily because its people like you that are giving hope to people like me.

 

After advice from people on CAG I recently wrote to a number of creditors (that I had received dodgy agreements for) offering them a full & final settlement of 15% of the amount outstanding. Not had any written replies yet except one has just contacted me to confirm they will accept my offer and mark my credit file as 'account satisfied'. He says they'll confirm it all in writing and give me 28 days to pay.

 

 

I was getting a bit down with the whole job (especially after so much misplaced negativity following the Waksman judgment) but this has really pepped me up - the whole unenforceable credit palava - its not a myth!

 

 

 

The other thing is that this company did provide me with a microfiche copy of an agreement which on its own wasn't enforceable but did contain a line of text that said something like 't & c on the reverse'. They provided a typed copy of these t & c which did appear to make the agreement enforceable.

 

 

 

The relevance to this thread is they have provided a signed copy of an agreement and the alleged t & c. But they obviously don't have the original and presumably know that without it the court couldn't enforce. Back to the old 'better to be defendant than claimant'. And they settled for only 15%.

 

 

Some might post that I should have offered nothing - but the thing that drives us all nuts is the 'uncertainty'. Provided they are as good as their word I now have 'certainty' and in my view at a small price

 

 

Thanks to everyone who posts and please keep posting. 1 down only 8 more to go!

It is a good result if you are happy with it.

[vint1954]

Hi Peoples,

To those who have supported thank you.

 

I owe a sincere apology from my last post. I should have checked instead of relying on memory. This was another case I had dismissed as irrelevant not in Manchester.

 

The case in question was again MBNA at South Shields the name

 

Deputy District Judge Jaqueline Smart QC (right initials-- wrong name) (look at the bits at the end re appeals and finding the docs????)

 

Sorry to those looking in the wrong place-- my fault:(

 

I will be watching progress but it is unlikely that I will post. It has been made clear by some (senior members to boot) that I have nothing to offer you. I cannot as explained tell all about my own case and all of the knowledge I have gleaned due to potential jeopardy of the legal position of strength we currently hold in this to and fro war we are all in. I have attempted to point the path we are on where I am able.

 

 

Take great care all

OR:)

From the Beeb.

 

 

A decision by a county court judge could mean thousands of borrowers being able to renege on their debts. Judge Jacqueline Smart at South Shields county court has decided that the MBNA credit card company cannot demand the repayment of a customer's debt.

It tried to force Mrs Lynne Thorius to repay the £8,000 she owed on her card.

But the Judge decided there had been an unfair relationship between Mrs Thorius and MBNA because of the way she had been sold payment protection insurance.

'Massive ramifications'

Mrs Thorius's case was pursued on her behalf by a claims management firm Cartel Client Review, based in Manchester, and the law firm Consumer Credit Litigation Solicitors.

Carl Wright of Cartel Client Review said the court decision was a landmark judgement.

"This will have massive ramifications for consumers up and down the country," he said.

But MBNA downplayed the importance of the court decision.

"The judgement went against MBNA for a number of reasons," a spokeswoman said.

"In principle, because the deputy district judge felt that MBNA had not on this occasion provided the appropriate documents to the customer and as such was not able to rely on the clauses MBNA would ordinarily seek to rely on in these cases," she explained.

"The case is a county court case and each case is decided on its own merits and on the factual circumstances of each case. This does not set any legal precedent," said MBNA.

'Secret commission'

The credit card in question was branded with the logo of Sunderland football club and was sold to Mrs Thorius in the club's shop in 2002.

 

We have been using this argument for some time but lenders have been settling outside the courts to avoid publicity

 

 

Carl Wright, Cartel Client Review

 

 

The PPI policy was strongly recommended by MBNA to her at the same time, to pay off her account if she fell ill or was made redundant.

But, critically, she had not been told that MBNA would be receiving regular commission payments from the insurance provider ITT London & Edinburgh, a subsidiary of the Aviva insurance group.

Judge Smart agreed with the argument of Mrs Thorius's barrister, Paul Brant, that this "secret" commission meant the credit card deal was unfair and therefore in breach of the Consumer Credit Act.

This point could potentially undermine many other agreements where PPI has been sold by the lender alongside a loan.

These include car finance deals, other personal loans and even mortgages.

"This practice is believed to be widespread and formed part of the Competition Commission's decision to prohibit the co-sale of PPI with credit in its report published on 29/1/09," her solicitors noted.

"This point is likely to affect many thousands of individuals within England and Wales," they added.

Repayments

The main ground on which Judge Smart said Mrs Thorius's credit card debt was unrecoverable was because MBNA could not provide a copy of the original signed loan agreement, which is also a requirement by the Consumer Credit Act.

The Judge ordered the company either to repay Mrs Thorius's PPI premiums and interest, or the value of the commissions it had received which so far has been undisclosed.

The PPI premiums, which rose each month as the credit card debts increased, amounted to £2,500 over the time the card had been in use.

The claims management industry which has emerged in the past few years has been highly controversial.

Many firms advertise in newspapers and on television, encouraging people to come forward to write off their debts.

This year the authorities, such as the Office of Fair Trading (OFT), Ministry of Justice (which regulates claims management firms) and the Solicitors Regulation Authority, have warned firms not to make exaggerated claims about their ability to get debts written off because of apparent technical errors in the lenders' paperwork.

Appeal?

Since April 2007 more than 100 such firms, or those advertising for people to pursue personal injury claims, have been shut down by the OFT.

But the South Shields ruling appears to open up a new and genuine line of attack for claims firms.

"We have been using this argument for some time but lenders have been settling outside the courts to avoid publicity," said Mr Wright.

MBNA applied for leave to appeal, which was rejected, but it may now apply directly to a higher court for permission to appeal.

Or it may be able to appeal if it can find the original loan documentation.

Only when higher courts have decided the issue will the legal ramifications, and the effects on lender and borrowers, be clear.

[diddydicky]

the full transcript:-

 

MBNA -v- LYNNE THORIUS - SOLICITORS OPTIMA LEGAL SERVICES

 

*** TRANSCRIPT OF JUDGMENT APPEARS BELOW ***

 

 

IN THE NEWCASTLE-UPON-TYNE*COUNTY COURT

The Quayside

Newcastle Upon Tyne

NE1 3LA

Date: 21st September 2009

Before:

DEPUTY DISTRICT JUDGE SMART

- - - - - - - - - - - - - - - - - - - - -

Between:

MBNA EUROPE BANK LTD. Claimant

- and -

MRS. LYNNE*THORIUS*Defendant

- - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - - -

APPROVED JUDGMENT

Tape Transcription by Marten Walsh Cherer Ltd.,

1st Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP.

DX 410 LDE

Telephone: 020 7067 2900. Fax No: 020 7831 6864

DEPUTY DISTRICT JUDGE SMART:

 

1. This is a claim by MBNA to recover a total debt of £8,396.90 under a Sunderland FC MBNA Credit Card.

 

2. The sums claimed comprise:

(a) what I shall describe as "capital borrowing"; the purchases and cash advances;

(b) "interest";

© "standard charges" such as late payment fees and administrative expenses;

(d) Monthly payments for payment for Payment Protection cover ("PPI").

 

3. It is for the Claimant to prove on the balance of probabilities the prima facie

contractual right to recover the sums claimed.

 

4. Thus the Defendant invokes specific statutory protection and remedies of:

 

(i) An unfair relationship under section 140A Consumer Credit Act 1974 as amended, which when established results in the court having the flexible powers of intervention under section 140B Consumer Credit Act 1974;

 

(ii) In relation to the levying of charges, Regulation 5 of the Unfair Terms in

Consumer Contract Regulations 1999, which has been held as capable of applying to such charges (as falling outside the core obligations) at first instance upheld on appeal by the Court of Appeal in Abbey National PLC & Others v. Office of Fair Trading [2009] EWCA Civ 119, [2009] 2 WLR 1286; and further argues

 

(iii) in relation to the PPI Claimant was or should be treated as, or in the same position as a broker or equivalent ("ad hoc") fiduciary relationship and concealed (in the sense of did not disclose) commission, so that Defendant is entitled to rescind the PPI transaction

 

(iv) in breach of section 78(1) Consumer Credit Act 1974 Claimant failed upon

request of Defendant to provide the documents as required by that section and

accordingly its right to enforce the consumer credit agreement is suspended.

 

THE AGREEMENT

 

5. The Agreement was signed by the Defendant on 6th July 2002 when she was visiting Sunderland FC Shop to buy Christmas presents for her son who was a keen Sunderland supporter. She went at that time well in advance of and to avoid the increased demand for items closer to Christmas. She too was a loyal Sunderland supporter.

 

6. The Defendant was the only witness to give evidence. She was an extremely honest witness, completely without guile, who answered all the questions put to her in crossexamination immediately and directly, readily and maturely accepting the responsibility for the decisions she had made in relation to taking out the credit card. I accept her evidence in its entirety.

 

7. Her evidence was that she was approached by a sales person to take out the credit card and originally declined. The sales person was persistent and she was followed round the shop and pressed again. She was told (paragraph 3 of her section witness statement) that she could save money in the shop. She was told that she did not have to keep the card. Eventually she agreed and signed up. She said "Sometimes it is easier to do that with these people to shut them up."

 

8. The original Agreement, to the extent that it has been reproduced, is in the trial bundle at pages 56-57 (with a more legible version of the front page at page 231).

 

9. It includes personal details of the applicant (2), employment details (3), financial details (4), and a "Principal Cardholders Request and Declaration" which concludes with a request for the issue of a credit card including:

 

"I agree to be bound by the MBNA Credit Card Terms and Conditions and I understand I will be responsible for paying any balance due on my credit card account."

 

10. No document headed or described "MBNA Credit Card Terms and Conditions" has been produced, no document described specifically as such. The document at page 57 of the bundle is headed "Financial and Related Conditions". Under that is a reference to the MBNA Credit Card. It is very probable, and I find, that this is a reproduction of what is on the original, on the reverse of the original Agreement reproduced at page 56 of the bundle. In the absence of proof of any other documents satisfying the description, I find that is "the MBNA Credit Card Terms and Conditions". This will become important later.

 

11. The Defendant was asked on that occasion if she wished to take out payment protection insurance ("PPI"). She declined and in the box "no" was ticked under "5. Payment Protection Cover". At the time of taking out the credit card her gross income was £10,000. She had a clear credit record. She had not previously had a credit card, had no substantial debts, no County Court judgments, and her only experience of credit, she said, was a catalogue account. On the other hand, I am satisfied from the evidence she was not vulnerable. She knew what a credit card was. She knew what PPI was.

 

12. The subsequent steps in relation to using the card required that she telephone to activate it, which she did. She said in evidence that payment insurance was mentioned at that time, but she does not accept that she agreed to it being taken out. That appears to have been on 31st July 2005, only some twenty-five days after the agreement was signed.

 

13. There has been produced by the Claimants (through the statement of someone who is actually the case worker at the Claimant’s solicitor’s office) a computer record with very limited information on it. I heard no direct evidence from anybody from the Claimant. The computer record refers to thetelephone call*being for activation of the credit card and a standard record of the PPI being sold. So far as that conflicts with what the Defendant’s evidence is I accept the Defendant’s evidence. I do not accept that when she activated the credit card she agreed to take out the PPI which she had rejected only some twenty-five days earlier.

 

14. Her evidence is that she noted she had been charged for PPI and she noticed it on the credit card statements. She initially discussed it with her partner and did not challenge it because she thought at that price there might be a certain benefit on that. But the payments increased as her liability did, and she made a further*phone call*to the Claimant in which she challenged it and effectively sought to terminate the PPI policy.

 

15. Her evidence of that occasion is that she was told that she had to have it. She could not have the credit card without it. That was her understanding of the conversation. What is quite clear from her evidence is she did make such a*telephone call*and it did not result in the Claimant cancelling the PPI, which was the purpose of the call. What she said specifically in her evidence was that she was told she had to have the PPI and she would not have got the credit card without it. She did not know the law. It is clear to me that she understood from that conversation that she could not cancel the PPI and that she had to have it.

 

16. There is no evidence from the Claimant to rebut the Defendant’s evidence. There is nothing but a computer record, unsupported and unexplained even as to the circumstances in which the record of the sale of PPI would have been put on the computer file.

 

17. In the light of that, I find that there was no contract in relation to the PPI. The fact that it was charged for against a background of making minimum payments in my view cannot constitute an acceptance of the liability to make those payments. There is a further difficulty in relation to that in my view. It would have been a fundamental variation in the contract as originally taken out; that such a variation goes not as to amount to anything chargeable under a head previously agreed but introduced a new head of payment. If it was a term of the consumer credit contract (as benefiting the creditor), to actually vary that agreement there would have to be compliance with the Consumer Credit Act Regulations. (I also have that in mind in relation to fixed charges.)

 

18. The PPI was probably not a part of the consumer credit contract, rather a separate contract, but related.

 

19. However, I am not satisfied on the evidence before me, bearing in mind that the Defendant has given what appeared to be consistent and logical evidence of the steps taken against the background of someone who had originally declined PPI, that the Claimant has established a contract entitling it to recover for that insurance, and it is no answer to say, well, she has got it so she should have paid for it. She did not want it. I am not satisfied that there was an agreement to take it out. On the contrary, the charging of the payments continued on the basis of her understanding of information which was incorrect when she tried to stop further payments being added to the account.

 

20. After those phone conversations the monthly statements continued to be provided. She made the minimum payments. The original credit card limit was £1,500 and over the subsequently years those credit limits were increased, I accept unilaterally, in the sense that those increases are offered by the creditor and unless there is opposition to them they are activated. But I do accept also that it is entirely open to the person with the credit card to actually respond back and say they want the credit limit restored as it previously was.

 

21. The Defendant did use the credit card. She did use it with the benefit of the increasing limits. She maintained minimum monthly payments at least, and the bank statements evidence a significant increase in, shall we say, capital indebtedness even before we get to the charges being added, until 2008 when she struggled, because of a reduction in her income where her employment circumstances changed and her hours reduced, to maintain the monthly payments. That is the crystallisation ultimately of the Claimant commencing proceedings.

 

22. Prior to the commencement of proceedings on 19th December 2008 the Defendant’s solicitors requested documents under sections 7 and 8 of the Consumer Credit Act 1978 enclosing the appropriate fee required under those sections. The response was sent on 20th January 2009. For the purposes of this hearing in relation to the request it sent a copy of the signed Agreement and the current conditions, that is, the conditions current in 2009. So far as the Agreement is concerned, in 2002, the crucial documents, and the only ones anybody can point to, are at page 56-57 in the bundle. The current conditions on the face of what has been provided are different to the 2002 conditions.

 

23. Dealing with the various issues raised, this is necessarily a summary of my reasons.

 

24. Firstly, in relation to the terms formulated in the Agreement, I have dealt with that previously.

 

25. So far as the fixed charges are concerned the Claimant has not proved a contractual term entitlement to recover them, that is the default charges and the charges for legal and administrative expenses. The evidence before me of the original contract is at pages 56-57 of the bundle. That is what the Claimant has produced, and doing the best I can with a magnifying glass to read the conditions, which I do find must have been what is on the reverse of the original Agreement, what has been provided is incomplete and does not evidence any entitlement to recover fixed charges. It deals with interest and the minimum payments and the ability of the Claimant to suspend them or reduce them, but it does not deal with fixed charges. There clearly was more

to the Terms and Conditions than that, because if you read on the first page the reference to the Conditions under "Data Protection" the person applying is actually directed to Condition 11 -- there is no Condition 11 -- and the power to make conditions attached to that. Quite clearly that document is not complete. The Claimant has to prove it. This is the trial and I am not prepared to make leaps of faith as to what was in the original agreement. This is not an unusual type of proceedings and it is not that difficult to produce the original contractual documentation, even if it is on microfiche. Therefore in any event on the evidence before me today, the standard charges have not been proved as recoverable.

 

26. So far as the Claimant tries to rely, effectively as a course of dealing, on the statements produced from time to time, that is one thing in relation to the amounts claimed; it is quite another in relation to a heads of charge that the Claimant is entitled to recover. If you cannot prove the original contract you have got to prove entitlement as a variation, and variations of the Consumer Credit Act in material particulars have to be established by notice served under the Consumer Credit Act. It is also limited in its scope where it can apply. None of that has been established before me having regard to the sums claimed in reliance solely on the credit card statements.

 

27. The interest rates are covered under the terms and conditions, and as far as I can see from the extracts of the original Terms and Conditions, the ability to vary them from time to time. In so far as the contract is concerned, on the question of proof before me today the Claimant is limited to the provisions in the actual sections of the credit card conditions it has produced.

 

28. Similarly, in relation to the PPI, so far as it might fall within the standard "Terms and Conditions", the sending of the documents in relation to the sums which have been challenged do not in my view establish a contract for payment, even when those statements have been produced for a length of time.

 

UNFAIR RELATIONSHIP

 

29. I then move on to the question of unfair relationship. This is relied upon by the Defendant, effectively to challenge the whole of the Consumer Credit Agreement and the PPI. This was an ordinary credit card agreement. It is with one of the High Street lenders. It is not a sub-prime lender. It is not an unlicensed lender. It has not been targeted at vulnerable categories of consumer. It was being proferred in a store with related benefits, albeit a store to which a customer might exhibit some loyalty. Before we get to specific elements of it, the general structure of the obligation is one where all or none of the credit can be used. The structure of the charging provisions, charging interest on capital not so paid with no period of credit given, or the amount

of credit given, even if I found the clauses proved in relation to standard charges, was not out of line with regularly undertaken such credit agreements. It is an agreement where the person undertaking it is free to cancel it at any time, albeit repaying the balance. I do not regard the nature of the agreement and the circumstances of its selling of itself as something which resulted in an unfair relationship between the Claimant and the Defendant.

 

30. If any finding was likely to be operative in relation to this, there is one aspect of this in respect of which I would be prepared in this context to say that there was an unfair relationship. Going to section 140(a):

 

"The court may make an order under s. 140(b) in connection with a credit agreement if it determines the relationship between the creditor and the debtor arising out of the agreement is unfair to the debtor because of one or more of the following:

 

any of the terms of the agreement, or of any related agreement."

 

31. I would take that view, in this particular case, in respect of the related agreement, which is the PPI agreement.

 

32. The Agreement actually encourages acceptance of the PPI by the debtor. It does so on the face of the application for payment protection cover --

 

"Safeguard your payments against life’s unpredictable events

with our Payment Protection cover for just 68p per £100. Our

payment protection cover is designed to protect your ability to

make repayments of your MBNA credit card in the event you

are unable to work due to accident, sickness or involuntary

unemployment …. We strongly recommend you take out this

cover. For cover just tick the ‘yes’ box to confirm that you are

eligible and have read and understood the terms and

conditions."

 

33. There is no evidence the terms and conditions of the cover were actually produced or available at the time somebody was invited to take out the payment protection cover. There is a strong encouragement to the person signing the form in terms which I do not think can be regarded as a mere puff in the context of the explanation in the Agreement of the benefits of that PPI. That would not in itself, in my view, be enough for a challenge; but what the Agreement does not explain is that there is a benefit to the Claimant from commission, which is undisclosed, and they are in a position where it is in their interests to get the particular debtor signed up. So effectively at the time this agreement is entered into there is a lack of transparency of the relevant positions of the debtor and the creditor of the terms of the PPI and not enough information provided for the debtor to be aware that the Claimant has a financial benefit from this. That is in a context where there is also no explanation of the freedom to look elsewhere.

 

34. When you are able to look at PPI as in this case as a linked transaction, or particular terms of a contract, I take the view that in respect of that particular part of the transaction there was an unfair relationship. But if I was considering the remedy for that, I would be considering the benefit to the Claimant compared to any detriment and benefit to the debtor. I would take the view that the debtor has not been encouraged to look round. I would also take the view that the financial benefits to the Claimant have not been disclosed. I would have regard to a proportionate order, and it seems to me glaringly obvious in this particular case that an appropriate order would be the restoration of one of two things: either to rebate the premiums or to set

off the commission against the premiums. But that of course would only be relevant if I found that the PPI had effectively been entered into. And it is unnecessary to go further into the question of an unfair transaction and remedies because of my findings on the issue of imposition below. I should add that on the issue of unfair relationship it is accepted by both counsel that because of the unique nature of the transitional provisions applied to an application made after the transitional one year period, the relevant provisions can apply to the Agreement and PPI in this case.

 

35. I turn to the Consumer Credit Regulations. I have already referred at the start of the judgment to the fact that in principle it has been held that the nature of the provisions in relation to fixed charges fall outside the core terms in relation to provision of credit so that they can be considered under Regulation 5. Terms which may be unfair are those which require any customer who fails to fulfil his obligation to pay a disproportionately high sum in compensation. Under Regulation 5:

 

"A contractual term which had not been individually negotiated

shall be regarded as unfair if, contrary to the requirement of

good faith, it causes a significant imbalance in the parties’

rights and obligations arising under the contract to the

detriment of the customer."

 

36. There are two elements to that. First, there has to be a significant imbalance in the parties’ rights and obligations arising out of the contract and that imbalance is to the detriment of the consumer; then, second, that has got to be contrary to the requirement of good faith. In relation to fixed penalty charges, putting it very broadly, they are fixed sums imposed, in this case starting at £25 and then reducing to I think £12.50, in two types of circumstances. The first is where somebody has not made the minimum

payment by the due date, the second, where a credit limit has been exceeded. That means that the same amount of money can be recovered whether somebody is one day late or twenty-eight days late, whether the amount due under the credit agreement is £5 or £5,000, and where a credit agreement is exceeded by £1 or by £1,000. On the face of it that operates disproportionately between the detriment suffered having regard to the extent of the breach of obligation by the consumer and the amount of charge to be paid by the debtor.

 

37. The question is whether that occurs contrary to the requirement of good faith. Good faith appears to be a nebulous concept applied to ensuring that terms are balanced between the Claimant and Defendant. I take the view that a threshold of breach of regulation 5 has been raised in relation to fixed penalty charges of £25 and later on, more significantly, £100 or more in relation to legal and administrative expenses. I am in a position where the Claimant has not led any evidence or provided any explanation to counter the rigidity of the effect of those charges on the debtor. For the purposes of this particular case in the state of the evidence before me I would incline to the view that those charges -- that is in the alternative to whether or not they are contractually binding -- do breach regulation 5. I make it clear I am confining my decision to this case and the state of the evidence before me. The unfairness extends only to that term, and therefore the remainder of the contract is binding between the Claimant and the Defendant.

 

38. If I were looking at this particular contract in a more general context (and we were considering a particular contract and for example minimum payments of £85.15 late payment of which would allow imposition of a £25 charge) it may very well be the case that over the general operation of fixed charges over the life of credit card agreements it could be established by a balancing exercise, certainly at a reduced rate of £12.50, that fixed charges are not out of line with the cost and reasonable compensation to the Claimant for a breach by a debtor. But I have got to deal with this case on the evidence and information that has been put before me. In fact it is unnecessary to determine formally that point because I found that on the evidence before me it has not been proved that there is a contractual entitlement to recover those sums.

 

BREACH OF FIDUCIARY DUTY

 

39. The next point that has been raised is, was there a fiduciary duty such that there is an obligation on the Claimant to inform and to advise as to commission? The only evidence that the Defendant can point to in this case is the encouragement to take out insurance and her assumption that that was advice and that was advice being given to her in her interests. I am quite satisfied in this case that the Claimants are acting as agents for the insurers. The contractual provision and encouragement is not in my view sufficient to constitute an assumption of responsibility towards the Defendant; nor in any more nebulous form to be a situation in which the court ought to impose an

ad hoc agency or fiduciary relationship between the Claimant and the Defendant. That would be pushing the factual situation far beyond the bounds of the arm’s length transaction between a creditor and a debtor. It was, if anything, a matter to be dealt with under the allegation of unfair relationship in relation to a related transaction.

 

40. I have dealt with the points above going beyond the question of contractual entitlement because I have been asked to do so.

 

41. However, there is a final crucial matter that has been raised which bears on the Claimant’s entitlement to recover, and that is whether or not there has been provision of appropriate information under section 78 of the Consumer Credit Act.

 

42. It may be very simplistic, but I take the view that it is obvious that the appropriate information was not provided. Section 78(1) states in terms that where the request is given in accordance with that section on payment of the requisite fee the creditor shall give the debtor a copy of the executed agreement, if any, and of any other document referred to in it.

 

43. In this particular case the consumer credit agreement refers to the "MBNA Credit Card Terms and Conditions", and there is a partial reproduction of those on the back page which clearly is not complete. The subsequent response to that request provided a copy of the Agreement and the current credit card terms and conditions. It is clear in my view, having regard to the purpose of section 78, to provide the debtor with the information to enable her not just to assess the day to day statement of account and calculation of the liability, but actually the compliance, at the stage the contract was taken out, with the elements of the Consumer Credit Act, and also the heads of liability which could be claimed by the creditor, that in this particular case the documents provided fall short of the statutory requirement and specifically do not include the original terms and conditions referred to in the Agreement. That has become important in this case because of the claim to contractual entitlement to the fixed terms and charges. Without the complete terms and conditions it is impossible for the consumer to assess whether or not those charges are recoverable under the original contract, before you get to any question of entitlement to recover them having regard to any provisions of the Consumer Credit Act.

 

44. Accordingly, I take the view that section 78 has not been complied with and the contractual entitlement to recover the money claimed has been suspended prior to the commencement of proceedings, and remains suspended, pending full compliance with that section.

 

45. On the basis of that last element of my decision there has to be judgment for the Defendant.

 

46. I make it clear that if I had found section 78 complied with, I am satisfied in this case that the original capital is recoverable, by which I mean the purchases and the cash advances, that there is clearly a scheme of recovery of interest proved under the original agreement and that the interest would be recoverable including as varied.

 

47. The result of my decision is that the Defendant has won on a little, but merely postponed liability for the majority

[haggis1984]

Im still puzzled by 47

[diddydicky]

post 47 or just the number??

[the_shadow]

post 47 or just the number??

 

haha silly!

 

47. The result of my decision is that the Defendant has won on a little, but merely postponed liability for the majority

 

S.

[Peterbard]

haha silly!

 

 

 

S.

 

 

Hi

 

I presume this was an indication that the breach was expected to br cured by production of a true copy.

 

Peter

[oilyrag]

removed

Edited January 27, 2010 by oilyrag
professional advice to do so

[haggis1984]

post 47 or just the number??

 

Sarcasm is the lowest form of wit

[haggis1984]

Hi

 

I presume this was an indication that the breach was expected to br cured by production of a true copy.

 

Peter

 

Just something about the statement in 47 that sounds really ominous to me. Seems a bit dramatic for a court judgement

 

47. The result of my decision is that the Defendant has won on a little, but merely postponed liability for the majority

[haggis1984]

Seriously empty vessels make the most noise.

I have better things to expend energy on than banter words with those so blind they will not see.

 

Anyone remember when Steven Fry quit Twitter for a day?