Dissecting the Manchester Test Case....

[paulwlton]

HH Judge Langan QC stated:

 

 

"The key words in Section 61(1)(a) are the reference to a document

itself containing all the prescribed terms, and conforming to the

regulations under Section 61. This language is clear and specific, and

ensures that mere reference to terms contained in another document

will not suffice. The document must contain the prescribed terms, just

as the signed document referred to in Section 127(3), which might save

the day, must however contain the prescribed terms. The construction

contended for by the defendant is entirely consistent with the language

of Section 61(1), and is also supported by Professor Good in his

encyclopaedic work - see Good & Consumer Credit Law and Practice

volume 2, 2B 5.121, and see also the comments at 2B 5.247. There the

learned author draws a distinction between the language of paragraph

(a) contain and paragraph (b) embody. It is respectfully submitted that

the court should adopt the same reasoning in determining this issue in

favour of the defendant, irrespective of whether or not it finds that the

defendant was supplied with documents other than the credit

agreement itself".

[seriously fed up]

It might be important to clarify here - bearing in mind the bit about "It is respectfully submitted that the court should adopt the same reasoning" - that this is from a submission by Mitchell's solicitor which Langan is quoting from WITH APPROVAL. He actually says preceding this quote

"6. The thrust of Miss Gardner's submission is that the issue directed by the District Judge, and on which the evidence has been focussed, is whether the bank supplied the defendant at the time of signing the application form for credit with documents which contained all the terms of the agreement between them. I shall elaborate a little further on this. It has been the defendant's case that he was supplied with nothing more than the application form which he signed. It has been the bank's case that in accordance with the usual practice of the bank the defendant would have been, and must have been, supplied with other documents, including a pack which will have contained all the terms and conditions of the agreement made between the parties. Miss Gardner goes on to say that the defendant has at the last moment taken a new and radically different point, namely that the document signed by the defendant did not contain all the prescribed terms of the agreement. I must again elaborate on this. It is common ground that the only document signed by the defendant was the application form. It is also common ground that the application form did not, on its face, set out the prescribed terms of the agreement between the parties. The point which is treated by Miss Gardner as a new point is dealt with in paragraphs 22 and 23 of Mr Berkley's written argument, and it will, I think, be more economical if I simply quote those two paragraphs in full rather than attempt,in my own words, to expand on them:" The quote in Paul's last post then follows.

[means2anend]

I seem not to have this case.Can anyone put this up for me so that I can read it.

 

Was it BOS v Mitchell?

 

Thnks

[seriously fed up]

Also wanted to add a few observations about © - see Paul's earlier post

"or © where that sheet is separate from but was supplied with the piece of paper signed by the debtor?” being the one that is causing headaches.

First of all it is causing headaches - I fully acknowledge this. But at the same time, I would suggest that we need to remember that its not ONLY our headache, but the other side's as well. Do they want to take the chance in any particular case? In other words its an area of doubt for the banks as well, and I suspect if we seem well informed they are more likely (by no means certain though ) to back off.

The second point - and this reinforces the above - is that when a bank seeks enforcement - the burden of proof to show that there was a "sheet separate but supplied with ...." is on THEM. If you have a look at the Mitchell case there were four "bits" of evidence supplied as to whether the T&Cs were supplied there - from Mitchell himself twice (no they werent); from the bank (yes they were); an "expert" statement from another firm of solicitors (no they werent). Langan concludes (at para 8 in my copy) "8. The absence of further reference to the point in the evidence is hardly surprising, since the point is one of law, on which there was no controversy as to the facts." In other words, the bank had said what you would expect them to say, but that was inadequate. (its probably important to keep in mind about this case that the bank wanted to withdraw at the last minute - one can see why)

Thirdly, its not just any old set of T&Cs that they have to show are part of the sig document, but the T&Cs in force at the time the agreement was signed - indeed its arguable that for s78, there needs to be a quite a paper chase - ALL the T&Cs going back from now to whenever the agreement was signed. If banks do indeed not keep T&Cs older than 6 years (not sure about this, but i have seen it mentioned) this is going to be quite a problem for them. Its fair, I think, to say that information on this forum suggests its something they are not very good at.

Lastly, Waksman is the focus of this. But its important to remember that Waksman's case involved s78 and not specifically s60/61 and enforceability issues (though I agree he strayed into them). The Mitchell case concerns enforceability at its core. The only pity about that one is that the Bank by withdrawing, forestalled a full hearing of the issues, though those discussed are anything but helpful to them.

[seriously fed up]

m2ae you can find it here http://www.consumeractiongroup.co.uk/forum/show-post/post-2264418.html

[means2anend]

Thanks SFU!!!

[means2anend]

Also wanted to add a few observations about © - see Paul's earlier post

"or © where that sheet is separate from but was supplied with the piece of paper signed by the debtor?” being the one that is causing headaches.

First of all it is causing headaches - I fully acknowledge this. But at the same time, I would suggest that we need to remember that its not ONLY our headache, but the other side's as well. Do they want to take the chance in any particular case? In other words its an area of doubt for the banks as well, and I suspect if we seem well informed they are more likely (by no means certain though ) to back off.

The second point - and this reinforces the above - is that when a bank seeks enforcement - the burden of proof to show that there was a "sheet separate but supplied with ...." is on THEM. If you have a look at the Mitchell case there were four "bits" of evidence supplied as to whether the T&Cs were supplied there - from Mitchell himself twice (no they werent); from the bank (yes they were); an "expert" statement from another firm of solicitors (no they werent). Langan concludes (at para 8 in my copy) "8. The absence of further reference to the point in the evidence is hardly surprising, since the point is one of law, on which there was no controversy as to the facts." In other words, the bank had said what you would expect them to say, but that was inadequate. (its probably important to keep in mind about this case that the bank wanted to withdraw at the last minute - one can see why)

Thirdly, its not just any old set of T&Cs that they have to show are part of the sig document, but the T&Cs in force at the time the agreement was signed - indeed its arguable that for s78, there needs to be a quite a paper chase - ALL the T&Cs going back from now to whenever the agreement was signed. If banks do indeed not keep T&Cs older than 6 years (not sure about this, but i have seen it mentioned) this is going to be quite a problem for them. Its fair, I think, to say that information on this forum suggests its something they are not very good at.

Lastly, Waksman is the focus of this. But its important to remember that Waksman's case involved s78 and not specifically s60/61 and enforceability issues (though I agree he strayed into them). The Mitchell case concerns enforceability at its core. The only pity about that one is that the Bank by withdrawing, forestalled a full hearing of the issues, though those discussed are anything but helpful to them.

 

 

How relevant and effective would using s59 then be within the above context.I have been reading posts referring to this Section and it keeps cropping up but i never gave it much thought.But now with the arguments surrounding signings of Application Forms masquerading AS Consumer Credit Agreements this Section seems to appear more potent.

[seriously fed up]

Yes, I have too, and I completely agree with your view of "application forms masquerading as agreements".

If we look at s59 what it says (or the most relevant part - ss 1) is "An agreement is void if, and to the extent that, it purports to bind a person to enter as debtor or hirer into a prospective regulated agreement"

If we examine the agreements a lot of people have sent back to them by banks, many of these are headed "application form". They include phrases like “I accept that you reserve the right to decline this application” - so its not an agreement at the time that I signed it - its an application. I have one that says there will be an agreement when i have returned the document and then they have signed it. So that document, I would suggest, is purpoting to bind me a prospective regulated agreement and therefore its void.

I THINK what was supposed to happen (as far as the Act was concerned)was that

 

1. potential customer sends in application with usual biog stuff filled out - name, address, bank details and so on
   
2. this goes to the bank who consider the application and if its ok they send back an executable agreement (does this remind you, for instance of taking out a mortgage?) which the lender then signs (or choses not to), the bank having signed already
   
3. on receipt of executed agreement, bank sends out card
   

But what the banks sought to do was to short-circuit this - to send the card out on the back of the application, treating it as an agreement when the bank agreed (though, i have examples with no bank signature). Why would they do this? Two reasons - keep costs down and market share.

So it would seem to me that with certainly some of the so called agreements that we get sent back that there is at the very least an argument that s59 applies, rendering the whole thing void. But there are two problems

 

1. to the best of my knowledge its never been used in court, so no one can say with cast iron certainty that it would be successful (with the judge lottery can you say with cast iron certainty that anything will be successful?)
   
2. if the court agreed it was void how would they dispose of the case. I discussed this with someone on here and we agreed that the court might seek to restore the two parties to where they were before the agreement - ie borrower pays back whatever he has spent, and lender repays all the borrower has paid back. That leaves the issue of how they might dispose of interest. A credit card can be 20% - judicial interest is 8%(?). But with a "long running card" that has been maxed out for some time, it could well be that its the creditor that owes money - even at 8%. Another view is that as the agreement was void, the money was a "gift" by the creditor - though that is about as optimistic as it might get.
   

So not at all clear, is it? But then - its not that clear to them either? But it is something else to chuck at them

[Laura Cooke]

Th e catalogues do this had a large appliance recently on buy now pay later if I pay it up before the date due I`ll pay no interest. They sent out agreement for me to sign and return as they have done on a few occasions I have never ever signed any agreement or sent back the agrement but I still get my goods!!!

[means2anend]

I suppose that the very forms that banks are trying to rely on as ''Credit Agreement Regulated By Consumer Credit Act 1974'' are actually headed Application Form is a straight dead give away...yet they cannot see the wood for the trees..

 

Yet having the application form HEADED ''Credit Agreement Regulated By Consumer Credit Act 1974'' would be insufficient in the absence of ALL the PTs's anyway.

 

I am glad that BOS cost's were assessed on the indemnity basis yet it would be better to have won on that issue though.

 

Although the outcome in Mitchell was in The County Court...it was still 'sat' upon by a QC...would that have some weight attached to it more than in the sense that if it were just a DJ..???

 

HHJ Langan QC did not ACTUALLY decide on that issue because the bank withdrew...but did he not appear to suggest that he should have found for Mitchell had the cowardly withdrawal not taken place.

Edited March 21, 2010 by means2anend
sub 'outcome' for decision

[seriously fed up]

well in terms of the heading - they just dont want to see. In fact they cant afford to see

As for the outcome, it certainly reads to me as if he would indeed have found for Mitchell - in fact he practically says as much. I think the important thing is that its another judgement consistent with the Wilson etc cases heard in more senior courts, but perhaps with the advantage that it was more core to credit agreements (Wilson, for instance involved pawn and some of the others have been lending based on properaty - though in all cases, the Consumer Credit Act).

[CCAMAN]

Am I right in thinking that in the Mitchell case the PT's were in a seperate t & c booklet and the judge commented something along the lines of the agreement only became compliant by reference to this t & c booklet. Is that the case with my HSBC agreement - on its own its a dud but by reference to the t & c booklet (and it is a seperate stand alone booklet) it may make the agreement compliant?

 

I take Basa's point about the use of the word 'accompanying' but all I remember receiving was a prepopulated application form (I just filled in a couple of the blanks) and nothing more. Didn't Waksman talk about evidence of phsyical attachment? Is it enough for them to argue the t & c's normally accompanied the application even though they couldn't prove they were present? Isn't this the argument put forward by BOS in Mitchell which the judge rejected?

In the BOS Mitchell case the bank bottled out at the last moment-The prescibed terms were in a seperate booklet. HH Judge Langan QC. I quote from that case-"In my judgment the point with which I have been dealing is not properly to be characterised as a new point on which the bank can present itself as being taken by surprise"....."previous to that- quoting from Mitchell's counsel -"The key words in Section 61(1)(a) are the reference to a document itself containing all the prescribed terms and conforming to the regulations under Section 61 (presumably S/B 60). This language is clear and specific and ensures that mere reference to terms contained in another document will not suffice. The document must contain the prescribed terms just as the signed document referred to in Section 127(3), which might save the day must however contain the prescribed terms. "-The Judge concludes "The only realistic view of what has happened is that the bank has surrendered on a straightforward point of law to which it has on several occasions been alerted by the defendant or his solicititors".

In the Carey v HsBC case-Judge Waksman keeps referring to a" piece of paper" or peices of paper. If I photocopy War and Peace on one side of a piece of paper and copy on the other side say a picture -in my view these are two seperate documents albeit on 1 piece of paper. Therefore if the agreement does NOT CONTAIN the prescribed terms but may be in Conditions overleaf IMO these are two seperate documents. I would be interested in others opinions on this

[CCAMAN]

Yes, I have too, and I completely agree with your view of "application forms masquerading as agreements".

If we look at s59 what it says (or the most relevant part - ss 1) is "An agreement is void if, and to the extent that, it purports to bind a person to enter as debtor or hirer into a prospective regulated agreement"

If we examine the agreements a lot of people have sent back to them by banks, many of these are headed "application form". They include phrases like “I accept that you reserve the right to decline this application” - so its not an agreement at the time that I signed it - its an application. I have one that says there will be an agreement when i have returned the document and then they have signed it. So that document, I would suggest, is purpoting to bind me a prospective regulated agreement and therefore its void.

I THINK what was supposed to happen (as far as the Act was concerned)was that

 

 

potential customer sends in application with usual biog stuff filled out - name, address, bank details and so on

1. this goes to the bank who consider the application and if its ok they send back an executable agreement (does this remind you, for instance of taking out a mortgage?) which the lender then signs (or choses not to), the bank having signed already
   
2. on receipt of executed agreement, bank sends out card
   

But what the banks sought to do was to short-circuit this - to send the card out on the back of the application, treating it as an agreement when the bank agreed (though, i have examples with no bank signature). Why would they do this? Two reasons - keep costs down and market share.

So it would seem to me that with certainly some of the so called agreements that we get sent back that there is at the very least an argument that s59 applies, rendering the whole thing void. But there are two problems

 

1. to the best of my knowledge its never been used in court, so no one can say with cast iron certainty that it would be successful (with the judge lottery can you say with cast iron certainty that anything will be successful?)
   
2. if the court agreed it was void how would they dispose of the case. I discussed this with someone on here and we agreed that the court might seek to restore the two parties to where they were before the agreement - ie borrower pays back whatever he has spent, and lender repays all the borrower has paid back. That leaves the issue of how they might dispose of interest. A credit card can be 20% - judicial interest is 8%(?). But with a "long running card" that has been maxed out for some time, it could well be that its the creditor that owes money - even at 8%. Another view is that as the agreement was void, the money was a "gift" by the creditor - though that is about as optimistic as it might get.
   

So not at all clear, is it? But then - its not that clear to them either? But it is something else to chuck at them

 

I have been using S59 in my dealings with my credit card providers-needless to say they have side stepped the issue. -As you say it is something else to chuck at them- and My views are the same as yours, however my solicitor does not entirely agree

[combathamster]

If my agreement was in 2000, and bound by the 1974 act, before the amendments, what is the difference in what the lender must show the court compared to an agreement after the amenments, wording please?

[oilyrag]

Hi AA99

 

Sorry for not getting back to you sooner. Working away over the weekend and just catching up, plus an awful lot has been happening on here as well.

 

Firstly I picked something amiss up very early on in a letter from our sols. The original case management conferences in early October, set up these lead cases for HHJW to hear. There were 13 cases in the original bundle. One was pulled on the basis of the bank "suddenly and unexpectedly" producing proper documentation (??), and MBNA folded on two before the hearings. The arithmetic still didn't add up and I went to have a look around cos I don't like loose ends like that. The only reference I found was actually on Cartel's website in that huge press release and fuss they made about the two cases where MBNA had capitulated. It clearly stated quite early in the release that MBNA had lost one case and been lumbered with heavy costs, BOS v Mitchell and Langan's judgment were weighing heavy as well and MBNA were not prepared to risk any more. I did not go looking any further to be honest and just took those statements at face value. I was much more interested at the time about what the remaining cases would reveal for us.

 

I have several things on my lists to look out for and I will add this one to it. However, usually some one closer to it than me on here comes up with the answer before I have got anywhere.

 

regards

oilyrag.

[vint1954]

However, Wacksman then states:

 

173. (4) Additionally, a physical connection (or one or more physical connections) between several pieces of paper does not necessarily constitute them as one document;

 

(5) Accordingly, where the debtor’s signature and the Prescribed Terms appear on separate pieces of paper, the questions of whether those pieces of paper together constitute one document is a question of substance and not form.

 

“Does the document signed by the debtor contain the Prescribed Terms for the purposes of section 61 and/or section 127(3) if:

 

(a) they are on a sheet which is referred to on the piece of paper that was signed by the debtor;

or (b) where that sheet is attached to the piece of paper signed by the debtor;

or © where that sheet is separate from but was supplied with the piece of paper signed by the debtor?”

 

HH Judge Langan QC In Leeds County Court confirms (a) is not sufficient to comply with section 61, his reasoning was the same as in Wilson.

 

I don't think we can argue (b)

 

Imo © is the one that's causing headaches.

And to be remembered, that it appears Waksman was talking about an ideal situation, where the creditor presented you face to face, or by post, with a full agreement to read and sign.

 

In reality, most credit cards were issued with a small application form, details already filled in, just sign here and return. These are the so called contracts that the banks rely on, with the rear only containing adverts or competitions. No wonder they only scanned the front!

[vint1954]

Something that has been forgotten recently, are the words of Farncis Bennion, Author of the act:

 

Consumer Credit Act 1974 s 127(3)

“As the draftsman of the Consumer Credit Act 1974 I would like to thank Dr Richard Lawson for his interesting and well-argued article (30 August 2003) on

Wilson v First County Trust Ltd [2003] UKHL 40, [2003] 4 All ER 97.

Dr Lawson may be interested to know that I included the provision in question (section

127(3)) entirely on my own initiative. It seemed right to me that if the creditor company couldn’t be bothered to ensure that all the prescribed particulars were accurately included in the credit agreement it deserved to find it unenforceable, and that the court should not have power to relieve it from this penalty. Nobody queried this, and it went through Parliament without debate. I’m glad the House of Lords has now vindicated my reasoning and confirmed that nobody’s human rights were infringed.”

 

Clear what his intentions were and also what parliment passed.

[means2anend]

In relation to Application Forms containing THE banks Terms and Conditions AND signature BUT not ALL of the PT's...OR if in that A/f they refer to PT's elsewhere wherein accompanying those PT's there is no signature the only signature being on the A/F itself..is this not a matter that has not been satisfied at an earlier time...S62/63 ss(2)''documents/referred to be sent at same time

 

Instead of pursuing ( or in addition to pursuing) enforceability pursuant to S61(1),s127(1)(2)(3)...why not just say that the purported agreement was not properly executed in the first place....surely the knock on benefits would be benelovent..i.e no contract,no adverse reporting on Credit File/Ratings...

 

Seems straightforward???

 

I may be well of the mark here...just being a little radical!!!

 

The S62 and 63 says a copy of the un/executed agreement and any document referred to in IT

 

The section does NOT authorise the 'REVERSE' i.e a copy of the un/executed agreement may be referred to in a document...or that a document may refer to a copy of the un/executed agreement

 

I am assuming that THE AGREEMENT contains ALL PT's and that signature as required is on the agreement.

 

If PT's are missing well than that is even better!!!

 

A subtle but important distinction in the light of all this REFFERAL business

 

The Language of THE PARENT ACT is straightforward and unequivocal and I know of no Regulations or powers that authorise any reversal..unless anyone can point me to them

Edited March 22, 2010 by means2anend

[means2anend]

If the language in s62/63 HAD been followed I am sure that there would have been no need for the concept of 'present at point of signature' formulated by HHJ precisley to remedy the effects of not following the above .

 

I think that 'present' means Prescribed Terms present at point of signature.It follows then that this could all have been avoided if Parliament's language had been respected.

 

The signature would always have been present with the PT's .because being on the same document and immediately succeeding the PT's

 

All other documents..A/F's which is exactly just that..an application form and documents containing T&C's would then have been referred to from within the document containing the PT's and signature.Not the other way around..ie A/F with signature and T&C's referring to PT's

 

A re-reading of s62 unexecuted and s63 executed makes more sense when read in this context

 

Reasoning along these lines makes the agreements improperly executed which is the consequence determined within both those sections

Edited March 22, 2010 by means2anend

[means2anend]

An application form does not contain (as the actual un/executed agreement states..''sign this only if you wish to be legally bound'')..this statement is actually found only on the un/executed agreement itself....Indeed by it's very nature the application form would if signed have only one signature on it...therefore at that point there is no actual agreement.

 

On the other hand an actual unexecuted agreement is almost if not always already accompanied with a counter-signature by the authorised person from the Bank and BECOMES executed upon signature of debtor..On that analysis alone an Application Form cannot be an unexecuted agreement and turned into an executed agreement by a unilateral signature because s/he at that point and in contradiction to the legally bound statement would not be legally bound..

 

This gives further strength to the notion that A/f's and other documents are NOT legally binding ''Consumer Credit Agreements Regulated By The 1974 Consumer Credit Act''

 

It is at this juncture that a compelling argument exists for s59 against application forms ''masquerading as agreements''

Edited March 22, 2010 by means2anend

[means2anend]

I seem to remember A judge from the House of Lords saying something to the effect of ''nor can prescribed terms be incorporated by reference'' which is in total harmony with the construction of the language in ss62/63

 

Indeed the very desperation ( if the choice of this word is not too extreme) of banks to resort to incorporating by reference PT's may actually be key indices that the agreement has indeed been improperly executed ab initio and that this is a cynical attempt to 'remedy the defect' under cover

Edited March 22, 2010 by means2anend

[basa48]

An application form does not contain (as the actual un/executed agreement states..''sign this only if you wish to be legally bound'')..this statement is actually found only on the un/executed agreement itself....Indeed by it's very nature the application form would if signed have only one signature on it...therefore at that point there is no actual agreement.

 

On the other hand an actual unexecuted agreement is almost if not always already accompanied with a counter-signature by the authorised person from the Bank and BECOMES executed upon signature of debtor..On that analysis alone an Application Form cannot be an unexecuted agreement and turned into an executed agreement by a unilateral signature because s/he at that point and in contradiction to the legally bound statement would not be legally bound..

 

This gives further strength to the notion that A/f's and other documents are NOT legally binding ''Consumer Credit Agreements Regulated By The 1974 Consumer Credit Act''

 

It is at this juncture that a compelling argument exists for s59 against application forms ''masquerading as agreements''

 

I had many exchanges with Stubie One on this and another forum and by email over this very issue. He was convinced it was a good argument. I think it is too, but with one very major concern that has already been raised.

 

If an agreement / contract is voided under s59 it is quite possible a court would wish to reinstate the status quo to day one (as the law is designed to do). In which case the creditor would be expected to return all monies paid and the debtor all monies borrowed!

 

I dunno how that would work out.

[RobinWayRobinme]

Exactly what I am pleading ie A/F without sig of creditor (unexecuted agreement). Not supplied with a copy when I signed and not supplied with a copy of executed agreement when signed by creditor. Therefore, IEA S62 and S63. Copy of executed agreement only supplied (SAR) after commencement of proceedings. From SAR not all PT's then S61 kicks in.

 

Will know outcome during course of next month and will post up on my thread, and here if still current topic.

 

R

 

In relation to Application Forms containing THE banks Terms and Conditions AND signature BUT not ALL of the PT's...OR if in that A/f they refer to PT's elsewhere wherein accompanying those PT's there is no signature the only signature being on the A/F itself..is this not a matter that has not been satisfied at an earlier time...S62/63 ss(2)''documents/referred to be sent at same time

 

Instead of pursuing ( or in addition to pursuing) enforceability pursuant to S61(1),s127(1)(2)(3)...why not just say that the purported agreement was not properly executed in the first place....surely the knock on benefits would be benelovent..i.e no contract,no adverse reporting on Credit File/Ratings...

 

Seems straightforward???

 

I may be well of the mark here...just being a little radical!!!

 

The S62 and 63 says a copy of the un/executed agreement and any document referred to in IT

 

The section does NOT authorise the 'REVERSE' i.e a copy of the un/executed agreement may be referred to in a document...or that a document may refer to a copy of the un/executed agreement

 

I am assuming that THE AGREEMENT contains ALL PT's and that signature as required is on the agreement.

 

If PT's are missing well than that is even better!!!

 

A subtle but important distinction in the light of all this REFFERAL business

 

The Language of THE PARENT ACT is straightforward and unequivocal and I know of no Regulations or powers that authorise any reversal..unless anyone can point me to them

[means2anend]

I had many exchanges with Stubie One on this and another forum and by email over this very issue. He was convinced it was a good argument. I think it is too, but with one very major concern that has already been raised.

 

If an agreement / contract is voided under s59 it is quite possible a court would wish to reinstate the status quo to day one (as the law is designed to do). In which case the creditor would be expected to return all monies paid and the debtor all monies borrowed!

 

I dunno how that would work out.

 

s59 is silent on that ..ie. return of monies 'quid pro quo'...unless someone can kindly update me I should be humbly grateful.

 

However your concern is reasonable in that Equitable Remedies do exist at Common Law Contract that may well operate to effect this outcome.

 

But there is an overlap here in Contract law and Tort Law and Judges have been keen in recent years to keep the remedies of the two pretty distinct...

 

The Overarching Principle in TORT is to put the parties BACK into the position they were BEFORE the tortious act occured as far as is financially possible...

 

..Whereas in Contract the main thrust was to compensate for the loss of an 'EXPECTATIONAL BENEFIT or the objective of the contract HAD the contract been actually performed including losses/costs(Reliance Loss) incurred by the non breaching party in preparing itself to carry out the contract.

 

There is also a maxim in Equitable Principles that says ''let the loss lie where it falls''.

 

I think that in our case the deciding factor would be to look to WHO was at fault here...and there is no issue there.The Court may then decide to ''let the loss lie where it falls''

 

After all any monies that were drawn upon would have been drawn upon by the debtor in good faith..There already exist legislation in Housing and Council Tax Benefit provisions that demand repayment including overpayment ONLY IF the recipient was aware that he was not entitled to it AT THE MATERIAL TIME...However this is the realms of PUBLIC LAW but I should see no reason in principle why these PRINCIPLES should not also apply to the realms of PRIVATE LAW

 

If anyone has any existing case law on this point it would be of immense help as it would remove that uncertainty to bring or defend but mostly in bringing an action for obvious (financial) reasons...Reading s59 does not of itself offer any statutory reason for repayment from both parties back to day 1.It is short clear plain and straightforward.

 

But for now we are tending to lean towards a consensus that in principle S59 may indeed have potent implications.

 

In addition to S62 and 63...S78 also expressly states that any documents must be referred to and from within the un/executed agreement itself and not the other way around.

 

All very consistent right from the inception of the agreement per s62/63

Edited March 23, 2010 by means2anend

[vint1954]

I think you can use s59 as part of a defence, but would not be solid enough on it's own.

 

The implication is to return the parties to a state prior to the agreement. You pay back what you have borrowed and they pay back the interest accrued on your account.

 

In a loan agreement, obviously the interest is far less than the sum borrowed, but a running account would generally be the other way around, as payments are mostly interest. You would need to be sure though.

 

If you search the forums, it has been discussed before.