Dissecting the Manchester Test Case....

[satnewbie]

Again, here is the full response from the OFT. A similar response was issued by the Director of OFT, in reply to a letter from the Chancellor.

 

THE CONSUMER CREDIT ACT 1974 - Sections 77 and 78

 

Summary

On request and when accompanied by £1, a consumer has the right to:

 

• a copy of their executed agreement

• any other document referred to in it

• a statement showing

- the total sum paid under the agreement by the debtor

- the total sum which has become payable under the agreement by the debtor but remains unpaid, and the various amounts comprised in that total sum, with the date when each became due, and

- the total sum which is to become payable under the agreement by the debtor, and the various amounts comprised in that total sum, with the date, or mode of determining the date, when each becomes due. If the creditor is unable to give this information, he can state instead how the dates and amounts fall to be ascertained.

 

The copy of the executed agreement need not be an exact copy but it must be a ‘true copy’ and not some reconstruction of what the original might have been and it must contain the same terms as the original. Where the terms have been varied as provided for within the agreement, the copy of the original agreement must be accompanied by a document setting out the current terms, as varied. Certain details may be omitted from the original agreement eg the signature but the debtor must be in no doubt as to the true nature of his obligations under the loan.

 

Should no original agreement be in existence it is very hard to say that the copy the creditor offers to the debtor is, in fact, a true copy as there would be no original with which to compare it. In our view the onus of proof would be on the creditor to show that the copy is a true one and where none existed he may have difficulty discharging this. Neither should creditors suggest that a consumer has signed a credit agreement where they are unable to provide evidence to support this — to do so is likely to be a misleading action under Regulation 5 of the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs) and would also constitute an unfair or improper business practice.

 

In our view a debt collector who has bought the debt is the ‘creditor’ and as such takes on the liabilities of section 77.

 

Under section 77(4), if the creditor is unable to provide this information, he is not entitled to enforce the debt while he remains in default (Decriminalised from 26 May 2008 on the coming into force of the CPRs).

 

Legal Argument

 

A copy of the executed agreement

 

Under the prescribed condition, section 77 of the Act requires the debtor to (Typo, she means Creditor I think)‘...give the debtor a copy of the executed agreement (if any)....‘. The ‘if any’ most naturally refers to the exception for agreements older than 1985 (Not sure this is correct, "if any" was inserted to cover Verbal Agreements).

 

Where a creditor receives a request to supply a copy of the executed agreement, the Consumer Credit (Cancellation Notices and Copies of Documents) Regulations 1983 (‘1983 regs’) apply. Regulation 3(1) sets out the basic position that ‘every copy of an executed agreement... shall be a true copy’.

 

Regulation 3(2) goes on to concede that there may be omitted from this true copy various information such as details which are not required to be in the agreement by law: the signature box, signature (it should be noted that sub-ss 3-5 of section 127 do not apply to agreements entered into after 1 April 2007.A Court may then, for example, enforce unsigned agreements if it considers it is just to do so.) and date of signature. In our view the effect of Regulation 3(2) is that the creditor is only obliged to send out a generic copy of the agreement the debtor has signed up to. The creditor is not obliged to make an actual photocopy of the agreement.

 

However, the copy does have to be a ‘true copy’. This is a technical term, which has been discussed in a number of cases, mostly relating to bills of sale and the need to register a ‘true copy’ of the bill with the High Court. These cases come from the days before typewriters, when copies were made by hand. The consequences of filing a copy which was not a true copy were severe, since the bill would then be void and the creditor deprived of his security.

 

Meaning of ‘true copy’

 

In this context, the courts decided that a ‘true copy’ need not necessarily be an ‘exact copy,’ but it must be ‘so true that nobody reading it can by any possibility misunderstand it’ or be misled by it (In re Hewer ex parte Kahen (1882) LR 21 Ch.D. 871 at 875). The copy must contain ‘every material provision which is contained in the original’ (except that if the defect is made good by reading the document as a whole, the omission will not be fatal) (Court of Appeal in Burchell v Thompson [1920] 2 KB 80 at 98-99). Further, it is not sufficient for the copy merely ‘to state with complete accuracy in a summary form the effect of the stipulations contained in the original. It is not merely a document that is to state the true legal effect of the original; it is to be a copy of the original’ (per Atkin LJ in Burchell at 105).

 

Hewer, ex parte Kahen - the filed copy of the bill omitted the precise day of the month on which payment was to be made. The court held this was trivial, and no debtor would be misled by it.

Sharp v McHenry (1888 ) LR 38 Ch.D. 427- the copy contained blanks which were not in the original. The court decided that the blanks were unimportant, since the omitted words were not required for the original bill to be valid.

Burchell v Thompson [1920] 2 KB 80 - the copy failed to include the words ‘per annum’ after the interest rate of 55%. The reader of the copy would have to guess whether the interest was per annum, per month or something else but as one could sensibly assume, correctly, that it was per annum it was a true copy.

Commercial Credit Company of Canada Ltd v Fuiton [1923] AC 798 - suggested further that where there are a raft of smaller differences in a bill of exchange copy, this could prevent it being a true copy. However where the differences were such as to make the copy contract actually different to the original, the copy will not be true. Lord Sumner, speaking of the man who may wish to refer to the copy, concluded that ‘the Act promises him ... a true copy, not a puzzle. He is to inspect it, not to recover the original by a process of conjectural emendation’ (at 807).

 

Terms and Conditions

 

Regulation 7(1) of the 1983 Regs requires that a requested copy of an agreement which has been unilaterally varied under section 82(1) of the Act, shall be accompanied either by the latest notice of variation or a copy of the terms and conditions as varied. Regulation 7(2) extends the principle to copies of varied securities supplied either to the consumer or the surety.

 

Debt collectors as creditors

 

A consumer credit debt can be assigned in two ways: in law under the Law of Property Act 1925 or in equity but in practice we need to be concerned only with statutory assignments.

 

For a debt to be assigned in law, there are three conditions:

 

• the assignment must be absolute.

 

• the assignor must make the assignment in writing.

 

• express notice of the assignment must be given in writing to the debtor (see section 136 of the Law of Property Act 1925).

 

The reason the debt is assigned is immaterial. For instance, books of loans may be sold on to be collected as an asset rather than as a discounted debt.

 

In some instances, the debt collector may have purchased a debt but not have the relevant agreement. Whilst, in general, ‘liabilities’ cannot be assigned there must be a question mark over whether ‘duties’ are the same. This is important since there is a rule, expressed in Tito v Waddell (No 2) [1977] Ch 106 at 289 to 302, that where a benefit is conditional upon some burden, the assignee must also take the burden. An example is where the contractor has the right to mine on condition that they pay compensation to those disrupted by the mining. If they assign their right to mine, the assignee takes this right subject to the duty to pay compensation.

 

Therefore, there is a strong argument that under the Act, the right to payment is never absolute. It is always subject to duties (many of which are imposed under the Act). For instance, the right to enforce the credit agreement at all is subject to the duty to comply with section 77 or 78. This duty is not a ‘liability’ as such under the credit agreement but is a condition of the right to repayment.

 

There has been a suggestion that debt collectors can avoid complying with section 77 and 78 by claiming that the agreement is no longer `live’ in some way as it has been ‘terminated’ based on section 103 of the Act. This talks of a ‘trader’ who was the creditor under a regulated agreement, implying that ‘trader’ is no longer a creditor once an agreement is ended. Section 103, however, deals with where the customer no longer owes any money at all and therefore it is correct to say that he is no longer a debtor and the trader is no longer his creditor. Where money is still owed, section 103 would not apply, since the consumer would not be entitled to a termination statement.

 

The first issue on when the debt collector becomes the creditor is relatively simple. Section 189(1) of the Act defines ‘creditor’ as ‘the person providing credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law.’

 

Where the debt collector is not acting as the creditor’s agent, or otherwise on his behalf, the only legal basis he can have for demanding payment from the debtor is if the creditor’s rights and duties have been assigned to him. Therefore we can be reasonably confident that a debt collector who has bought the debt is the ‘creditor’.

 

Unpalatable though section 77 and 78 may be for some creditors, if the debt collector is unable to prove the debt, they should be more careful about the debts they buy. They cannot complain that the sections are somehow unfair as it is in the Act and so must be complied with. It is up to them to ensure they purchase and maintain sufficient records to be able to prove the debt and comply with the other requirements of the Act.

 

Misleading statements to debtors

 

Sections 77 and 78 refer to supplying a copy of the ‘executed’ agreement within 12 working days of receiving a written request from the debtor. Failure to do so makes the agreement unenforceable against the debtor until a copy is provided. In addition, if the default continues for a period of 1 month the creditor is in breach of the Act.

 

Execution involves signing the agreement. If no agreement has been executed, it is impossible to supply a true copy of the agreement. Should a creditor supply a copy agreement, even though the debtor has never signed any agreement with that creditor, no indication should be given that it is a true copy or a copy of an executed agreement. To do so may contravene Regulation 5 of the CPRs and be an unfair or improper business practice.

 

The consequence of the debtor not having signed a credit agreement with the creditor is that the agreement is unenforceable except where the court orders that enforcement may take place. Where the agreement was made before 6th April 2007 the court is not able to make such an order unless the agreement was signed by the debtor.

 

Therefore it is misleading to state, when complying with a section 77 or 78 request, that the debtor has signed or would have signed (or similar) the enclosed agreement where the debtor has not done so. From 26 May 2008 such a statement will be a breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). Regulation 5 of the CPRs states that a commercial practice is a misleading action if it contains false information in relation to the main characteristics of the product (amongst other matters) and is likely therefore to cause the average consumer to take a transactional decision he would not have taken otherwise. The product in question is the credit agreement and the main characteristics include the ‘execution of the product’ (Regulation 5(5)(d) of the CPRs).

 

Telling a consumer that he signed such an agreement is also a misleading statement about his rights and the risks he might face as covered by Regulation 5(4)(k) of the CPRs. It is our view that it is likely that a consumer will take a transactional decision to make a payment under the credit agreement or to refrain from exercising his rights under the agreement as a result of being misled about whether he signed it.

 

Breach of Regulation 5 of the CPRs is a criminal offence under Regulation 9 and can also be enforced under Part 8 of the Enterprise Act 2002. Under section 218A of the Enterprise Act, where an application for an Enforcement Order is made the court may require the Respondent ‘to provide evidence of the accuracy of any factual claim’ (such as a claim that a debtor has signed a credit agreement).

 

In addition, it should be noted that threats to take action that cannot be taken is listed as one of the factors that will be considered in assessing aggressive practices in Regulation 7(2) of the CPRs.

 

May 2008

 

Susan Edwards

Head of Credit Investigations and Enforcement, Office of Fair Trading

@vint 1954

 

Re your post 2412 can you please give me the link where to download it from?

 

TIA

[satnewbie]

http://www.bailii.org/ew/cases/EWHC/Comm/2010/1900.html

 

https://www.eversheds.com/uk/home/articles/index1.page?ArticleID=templatedata\Eversheds\articles\data\en\Financial_institutions\Alan_Kneale_v_Barclays_Bank_plc

[satnewbie]

but then doesnt that mean for those of us who actually want to genuinely question our agreement its just no longer possible as any recon agreement will do for the courts?

Effectively what you have to do is to start, and it means FROM THE START, query as to whether or not you DID sign any agreement or not. You CANNOT leave it till the end. You have to START querying this as soon as you even send the s.77/78 request and make it specific in your letter that this is one of the things you are quering. Read the Carey v HSBC judgement. As an answer to a s.78 request then a recon is ok. As to an IEA then Wakesman says "this is something different and if a properly made application is made then..........." (might not be exact words but basically what he said)

[satnewbie]

I had a claim where the bank tried to use Carey v HSBC and the agreement was a s.77 agreement!!!!! That shows how much some solicitors do not even understand the drivel they spout.

[satnewbie]

A claim with you as Defendant, I assume.

 

Nope. I sued them. Got the judgement order today in the post. They settled out of court. Now just got to wait for the cheque.

[satnewbie]

Got another hearing in about 2 weeks time against another bank. Exact copy of Kpharor v Woolwich as to what happened except in my case it was a withdrawal at an ATM that was refused to be honoured when there was more then sufficient funds in the current account. Had made two large transactions and the bank inserted them as withdrawals twice by mistake. When I called to see what was the problem was told that I have even gone over the overdraft limit! Took them two days to realise where the mistake was.

[satnewbie]

About 12 years ago, my bank duplicated 2 withdrawals on my account.... but months after the first ones were made. They did compensate but only after a complaint was fired off to HO. They couldn't see how the mistake had occurred... I had to track it myself. Computer error, they said. How many others has this happened to, I wonder?

Problem was I was abroad when this happened and it was my last night there. If I had not been able to transfer money from savings to current would have had no money to even go back to the airport!!!!!! They admitted the mistake two days later after I arrived and tried to keep me happy with a bottle of brandy.

[satnewbie]

It always boils down to the Judge Lottery. You may find a Judge that will say No. You may find a Judge that will say Yes. I had a claim against HSBC. The Judge ruled in my favour that what they had done was give a lousy service, yes it did ruin my holiday, yes it did cause me inconvience. When it came to damages he said that he could not see how I have lost out and awarded no damages. Then again, he did tell the solicitor when asked about costs to not be silly. They had given a shotty service. In your case, I would more look at possible faulty DN or........... considering that you say it is a DCA the fact that it was not properly assigned and therefore they have no right to sue you in the first place.

[satnewbie]

Note to CAggers..... do not contemplate being a Claimant unless you're d*mn sure you know what you're doing.....

Or you are mad like me.

[satnewbie]

What members on here have to understand is that these forums are monitored. Now let us be honest....... somebody puts up a scan, covers the name and address and the reference BUT leaves the name of the bank or the name of the solicitor etc......... then they leave the amount claimed.

 

So simple logic. X bank has been referred to. They check who owes (let us say) £12,0354.11p (a unique figure which to find one the same will be I would say 1 in one trillion) and bingo. They know what is being asked, what the reply is to be expected, they can work out the IQ of the person involved (how a post is made, the english, there are a lot of things that give a game away).

 

You aint got a chance. The "brief" (barrister) will be told all of this so he can run you round his little finger. Solicitor rules of conduct state that a solicitor CANNOT mislead the court. So most judges will believe "him/her" and not "you". In my experience, most judges also are in favour of banks and institutions and against the "man in the street". They look at you as "the person trying to get out of a contractual agreement".

 

Read your "story". Understand it. Read the draft letters. Understand them. Jeez if you read McGuffick v RBS the letter sent for the s.77 application is the same as on here!!!! Read the posts on here. Read AND MOST OF ALL understand the CCA1974. Read the case law referred to. Read them again. See which parts of the Act and of the case law referred to apply to you. Most of all, stop trying to take the easy route. i.e. I post a question. I get a reply quoted letter and I just cut and paste. Most probably they have read it and will be expecting it.

 

IF you are not capable of "the fight" then arrange a monthly minimal payment. Look at all the pros and cons. Look at every angle.

 

Most of all, after having read the caselaw, the cases they will use, the Act etc try and make a statement for court which will show that they have no reasonable prospect of success and make them discontinue.

 

p.s. Just some advise