Legal Action: how to start off. IMPORTANT IF YOURE BEING SUED

[diddydicky]

eversheds have told me that the agreement that was already sent to me "is the agreement" (although they have not specifically stated that it is the one they will rely on in court) and that i have the DN (which i sent them a copy of) but they have not complied with 31.14 to produce details of how the amount in the poc was arrived at

 

i have an embarrased defence lodged

 

do i have to amend my defence based on the docs i do have or can i wait until they comply with the bit that they haven't yet complied with?

 

In restons case (another card) i made a cpr 31.14 and 18 request to them on 4 jan (having corresponded with them for three months already)

 

they responded on 7 jan acknowledging the letters but refusing to act on them as they no longer respond to unsigned letters (backdated to 1st Jan)

 

the claim is just shy of 5000 but i had pointed out it is trackless until AQ's anyway, and as they gave ANOTHER reason for non compliance i take it they would now find it difficult to say the reason is due to their beleif that it would be Small claims?

[diddydicky]

yep agreed-site team is no stranger to dd-he never bloody asked on this one..

 

is there a crossed wire here?

 

I'm not particularly worried about eversheds and did not ask a question re the agreement itself (its a one sided application form with no prescribed terms)

 

The DN is fatally flawed- 10 days to remedy full balance of account claimed, not in prescribed format. missing prescribed important text and a further attempt to DN after i accepted their unlawful repudiation so i am trying to knock up a strike out application now (its on a thread which i have asked for help with!)

 

the queery was a concern that i might be accused of "sitting " on my embarrassed defence in the meantime

 

why did i send them a copy of the DN?

 

because i know they don't have a hard copy and included it in my invitation to withdraw without costs so that if they do not and it goes to court i can use that letter in defence of any costs applicatons and to show in my strike out application that i consider their continuation of the claim toi be vexatious and an abuse of the court process!

 

i assume that the above aint a bad move - i am happy to be shown any error of my ways!!

 

 

with restons - just wanted re assurance that i had not made a faux pas and they could not pop up and say they did not comply because they thought it would be small claims

 

dick

Edited January 20, 2010 by diddydicky

[diddydicky]

I did like Martins comment about being known to the site team... is that a good thing or a bad thing? :-D

 

 

I believe the CPR is quite clear that until the court decides what track to allocate to its multi-track and full CPR and costs are in effect, thus they(solicitors) may give an opinion that it'll be small claims but there is no guarantee. I'm 100% sure you know the next steps tho even if you dont go for Strike out and put in an AQ ;-)

 

S.

 

don't know

 

I'm "known " the the police too!!

[diddydicky]

i've decided after careful consideration to wait until AQ's and then suggest draft orders and ask the court to use its own powers to strike out

 

far simpler i think

 

in the meantime have spoken/written to the court under the guise of confirming our telephone call as to why the AQ's have not been sent (they didnt have an answer to that-) and reminding them that the claimant has refused to comply with 31.14 unless ordered by the court so i need to make any applications for draft orders with the AQ's

[diddydicky]

Did you put on your CPR request that if they did not comply, then you would go for strike out? If so, then they know the score.

 

Remember that pt2537 said to be proactive - so you could go straight ahead and ask for strike out on a number of counts by the sound of it. £75.00 well spent. Why do you have to wait til AQ if they have not supplied the docs? Maybe I am wrong on this. I am sure that someone will put me right if so.

 

If it does get that far, then in the AQ, could you ask the court to give directions regarding whether you could go for a strike out if the court would not do it automatically? - which they apparently don't like to... Just a thought as it might save you £75.00.

 

Would be even better if you put a corkin AQ additional info in, copied to them and then they discontinued before you had to pay for a strike out. Stranger things have happened!

 

i dont think it would be advisable or of any value to make that threat within a CPR request

 

merely from my experience on this and other sources of study it would appear that courts go out of their way to avoid striking out out much at all and you could end up with egg (and bills) on your face

[diddydicky]

DD, request a Draft for for Directions on your AQ!

 

thanks AC yes thats what i decided

 

i came to the conclusion that at the moment it seems to be "open season" on LIP's taking creditors to court.

 

I feel much more comfortable with the bat than the ball

Edited January 25, 2010 by diddydicky

[diddydicky]

you could write to optima with a copy of this and suggest that they might like to discontinue

 

its only persausive but they would IMO be foolish to continue

 

 

MBNA -v- LYNNE THORIUS - SOLICITORS OPTIMA LEGAL SERVICES

 

*** TRANSCRIPT OF JUDGMENT APPEARS BELOW ***

 

Hope this is of assistance to CAGGERS who are having problems with documentation provided by MBNA or Optima.*

 

Some people might recall last Autumn the outcome of this case. It got quite a bit of media coverage at the time – just do a Google search on the phrase "Lynne*Thorius" and see what comes up.*

 

Google

 

I was tipped off a couple of weeks ago by a little birdy (or should that be, "little mole"…) "in the know" that the solicitors who took this case to trial were none other than our old friends Optima Legal Services Limited. This person told me that Optima had "dealt with" the case for MBNA. My understanding is that not surprisingly the outcome of this case was not received particularly well in the corridors of power especially when the BBC got wind of it and it was so widely reported!*

 

I am reliably informed that the sh1t hit the fan if you'll pardon the language!

 

Anyway, as this is the forum dedicated to problems with MBNA I feel myself to have a moral, legal or social duty to share the following observations and information with you as well as the judges comments.

 

I hope that this will assist in the event that any of you face similar issues or have doubts that the documentation you are being provided with is complete or correct.

 

First, note MBNA’s comment to the press here*http://www.guardian.co.uk/money/2009...stomer-refunds*and in particular the part which states*

 

"This case was brought by one of MBNA's agents who appears not to have been provided with full documentation. As such, the case was lost by MBNA, as MBNA was not able to rely on materials that it would ordinarily rely on in these circumstances. The case was not lost on any finding that there had been any unfair relationship." …..*

 

…… hmmm*

 

Well, I’ve since come into possession of a transcript of the judgment which is reprinted in its entirety below. The first observation is that regardless of any smokescreen put up by MBNA it is interesting to see from the quote above that MBNA seemed to be at pains to disassociate themselves by the emphasis that the case was brought not by MBNA but one of their "agents"! As MBNA were the claimant in the case and "brought it", the clear implication of the above seems to be that MBNA appear to be blaming their solicitors, Optima for either messing it up themselves or failing to ensure that the person they (Optima) instructed to present their case for them (Mr McGee) had all of the documentation.*

 

For what it’s worth, my opinion, as somebody who has worked in the profession is that the reason why the judge came to the decision she did was entirely due to what seems to have been a woeful lack of care in checking of documentation by Optima, the solicitors as it should have been relatively simple to establish and advise on the documentation required to prove the claim!

 

On the question of the MBNA Spokespersons assurance regarding the unfair relationship aspect…

"The case was not lost on any finding that there had been any unfair relationship."….

 

ACTUALLY, WHILST THE CASE LARGELY SEEMS TO HAVE BEEN LOST DUE TO WHAT SEEMS TO BE INCOMPETENCE ON THE PART OF THOSE RESPONSIBLE AT MBNA AND OPTIMA FOR PREPARATION AND EVIDENCE GATHERING AND FAILURE TO PROVIDE THE CORRECT TERMS AND CONDITIONS…. IF YOU MAKE THE EFFORT TO ACTUALLY READ THE TRANSCRIPT OF THE JUDGMENT IT IS CLEAR THAT THE JUDGE DID HAVE SOME VIEWS ON THE UNFAIR RELATIONSHIP POINT IN CONNECTION WITH CERTAIN ASPECTS OF THE CLAIM. HAVE A LOOK AT WHAT THE JUDGE ACTUALLY SAID ON THIS….. ITS AT PARAGRAPH 33-34 WHERE THE JUDGE FINDS THAT THE PPI CONSTITUTED AN "UNFAIR RELATIONSHIP" AND AT PARAGRAPH 37 WHERE SHE EXPRESSLY STATES THAT ON THE BASIS OF WHAT MBNA AND OPTIMA PUT BEFORE THE COURT, SHE WAS HOLDING THAT SOME OF THE CHARGES BREACHED REGULATION 5 OF THE UNFAIR TERMS IN CONSUMER CONTRACT REGULATIONS 1999.*

 

NOTE that Optima seem to have failed to produce any witness evidence for trial other than a witness statement by their own case worker! (see paragraphs 6, 13, 16, 22, 25, 37 and 38 of the judgment where the judge makes comments about the absence or shortcomings in the evidence).

 

Note also that Optima seem to have failed to spot that the terms and conditions in the bundle were not the terms which the card was taken out under and that the judge (a very aptly named lady.. "Deputy District Judge Smart") held true to the maxim that it is for the CLAIMANT to prove their case!

 

This is very important to bear in mind for anybody faced with a claim from MBNA, particularly as they almost never actually seem to send a live witness to give evidence at trial and seem to have great difficulties in production of documents etc. See in particular paragraphs 22 and 25 of the Judgment (and love the comments regarding the magnifying glass and the incompleteness of the documents, in particular this little gem of a quote at para 25)…*

 

"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"………..*

 

Absolutely delicious! The judges comments seem to be positively dripping with a mixture of disbelief and incredularity.*

 

It seems crystal clear that the solicitors seem not to have checked the evidence thoroughly before sending it to court. The judges comments would seem all the more scathing when you consider that Optima seem to have done much work for MBNA in debt recovery and had been doing so for years!*

 

See also the comments made at paragraphs 42-44 of the judgment regarding MBNA and their non compliance with Section 78 Consumer Credit Act 1974. I think that the general thrust of those comments continue to be correct after Carey –v- HBOS as there is no way that you can properly argue that the 2009 conditions which would be clearly marked as being so, would have applied to an agreement taken out beforehand.

 

It is only a*County Court*case and, as such is not precedent setting but it is going to be persuasive for any*County Court*cases with similar issues and is well worth reading, printing out and referring to if anybody is facing a situation where the claimant has not produced all of the contemporaneous documentation and seems to be relying on a different set of terms and conditions than the ones in force at the time of the contract… it is for the claimant to prove their case and, if they are advised by Solicitors, there can be no excuse for any shoddiness or gaps in presentation of their evidence or the documentation.*

 

It always surprises me that some solicitors are not as robust in advising their clients of the pitfalls in pursuing claims on the quality of evidence they have as they should be. I remember when I was working in the business I always was a pain in the a*se with my clients being, as I was, something of a stickler for attention to detail. One of the first things I checked was that the terms in my possession were the ones which had actually governed the contract. I also used to actually read the damned things and cross reference the documents to ensure that there were no gaps or that any gaps could be explained.*

 

Part of ones duty in being a solicitor is to recognize when your client is on dodgy ground and advise accordingly. It is interesting that the claims company who acted for Ms*Thorius*are at pains to stress that the other cases they dealt with in similar circumstances settled before coming to court which would suggest that the solicitors may have advised their clients to take a pragmatic view and to cut a deal rather than risk coming a cropper at trial!

 

As an aside, the Whistle Blower who is somebody on the inside track at Optima also tells me with some glee that these same solicitors may have recently came unstuck again in Geordieland on an unrelated matter (suing a conveyancer for alleged professional shortcomings). Can’t put up any party details here unfortunately as it is irrelevant to MBNA but if nothing else though, it shows that the judges in the North East are well clued up and not afraid to adhere to the maxim "it’s your claim….. prove it" even if the claimant is represented by a top 100 firm of solicitors!

 

Anyway, the transcript of the Judgment is below but, just one last observation.*

 

Capita.... major PLC and massive investment in Optima.... publicly accountable to shareholders etc.... £40,000,000 well spent? (see footnote 2)http://www.capitareport2008.co.uk/ac...ts/note15.aspx

 

Enjoy.

 

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

[diddydicky]

To be honest, with most of the letters from DCA's and sols, I am shortening them to basically put up or shut up. You cannot keep arguing with morons.

 

Most of them seem unprofessional or incompetent, so why waste your breath:(

 

the case for puttng points of law across to them pre trial is to bugger them up in costs

 

stick this in your file as well Vint, as it is pertinent to the point just made

 

 

 

BANK OF SCOTLAND -v- ROBERT MITCHELL

1st June 2009

APPROVED JUDGMENT

JUDGE LANGAN:

 

1. I have to deal with an issue as to costs which has arisen on the informal discontinuance of an action.

 

2. The action was commenced on 21st May 2008. The claimant bank had, in December 2003, issued a credit card to the defendant, and the claim was for £15,417.23, being the amount said to be due on the defendant's account. Judgment in default, for a total sum of £15,727.23, was obtained on 4th July 2008. The defendant subsequently applied to have the judgment set

aside. That application came before District Judge Jordan on 29th January this year and was successful. The recitals to the District Judge's order say this:

"And upon the defendant's proceedings on the basis of a breach of

Section 61(1)(a) of the Consumer Credit Act, namely that the claimant

failed to comply with the requirements to give copies of all the

documents relevant to the agreement at the time of signing, and upon

the defendant contending that notwithstanding Section 65 of the

Consumer Credit Act 1974, Section 127(3) of the Act preventing the

enforcement".

 

After those recitals it is ordered the court sets judgment aside, and it is ordered that there be, "A determination of the issue set out above". Various procedural directions then follow.

 

3. What has been listed for trial today is, "The determination of issue", referred to in the order which I have just recited.

 

4. The agreement made in relation to the defendant's credit card was a regulated agreement within the Consumer Credit Act 1974. Section 61(1)(a) of that Act provides:

 

"A regulated agreement is not properly executed unless a document in

the prescribed form, itself containing all the prescribed terms and

conforming to regulations under Section 60(1), is signed in the

prescribed manner, both by the debtor or hirer, and by or on behalf of

the creditor or owner".

 

Having regard to the date of the agreement made in this case, which was prior to amendments made to the Act which took effect from 5th April 2007, the result of non compliance with Section 61(1)(a) would be that the credit card agreement would be unenforceable against the defendant, see Consumer Credit Act 1974 Section 127(3).

 

5. This morning I was informed by Miss Gardner, counsel for the bank, that the bank was withdrawing its claim against the defendant. This announcement has been accepted by Mr Berkley QC, who appears for the defendant, as equivalent to the service of a notice of discontinuance under the*Civil Procedure*Rules Part 38.3. By the Civil Procedure Rules Part 38.6.1:

 

"Unless the court orders otherwise, a claimant who discontinues is

liable for the costs which a defendant against whom the claimant

discontinues incurred, on or before the date on which notice of

discontinuance was served on the defendant".

 

Miss Gardner contends that the court should, "Order otherwise", and make no order for costs as between the parties. Mr Berkley contends that the presumption in CPR 38.1.6 should operate, and further that the order for costs to be made in favour of his client should be an order for assessment on the indemnity basis.

 

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 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".

 

7. In my judgment, the point with which I have just been dealing is not properly to be characterised as a new point on which the bank can present itself as being taken by surprise. I refer to four documents. First, on 3rd November 2008, when the defendant was acting as a litigant in person, in the request to have the default judgment set aside he said this:

 

"As the court is aware, in the absence of all the prescribed terms being

embodied, it will render a document unenforceable in court. These

terms must be contained within the agreement, and not in a separate

document headed 'Terms and Conditions', or words to that effect".

Secondly, on 18th February 2009, solicitors, who were by then acting for the defendant, sent to the solicitors acting for the bank a copy of what they called an expert report setting out the reasons why the agreement was in breach of Section 61(1)(a), and they went on:

 

"As you are aware it is our client's position that at the time he entered

into the agreement he was not provided with a copy of the terms and

conditions governing the agreement".

 

If one goes to the so called expert's report, one finds that it is in effect an opinion prepared by another firm of solicitors, and the opinion contains the following:

 

"Based on the information provided, it appears that the prescribed

terms and conditions were not included in the document signed by the

borrower. The agreement would appear to be in breach of the

regulations in that it does not contain within the signed agreement itself

all of the prescribed terms".

 

Thirdly, that point having been taken on behalf of the defendant, it was robustly rejected by the solicitors acting for the bank in their reply of 19th March 2009:

 

"Our client has sought counsel's opinion on this matter and her view is

that the agreement is compliant. We note that your client is arguing

that at the time of signing the agreement, the application for a credit

card, he was not provided with the actual terms and conditions which

were contained in a separate document to the application. Whilst our

client accepts that the application itself does not comply with the

requirements of the Consumer Credit Act 1974, and only becomes

compliant by reference to terms and conditions, there are references in

the agreement to the conditions in which it states that they are provided

in the Halifax credit card application pack".

 

Fourthly, going back in time a little, on 4th March 2009, in the defendant's witness statement made for the purpose of the trial of the issue, at the very beginning of the statement, in paragraph 3, he said this:

 

"It is my position that the agreement is not enforceable by the claimant

as it has failed to comply with its obligations under Section 61 of the

Consumer Credit Act 1974 by failing to include within the document

that I signed all the prescribed terms".

 

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.

 

9. Miss Gardner has given no reason for the withdrawal of the action. She is in no way to be criticised for the omission. She is bound to act in accordance with her instructions, and those instructions were presumably to say no more than she has in fact said. But this does not prevent me from drawing what is in my judgment the only inference which can possibly be drawn from what has happened, which is that the bank realises that if the issue were to be

contested it would either lose on the issue or be at serious risk of losing. There may be hundreds of similar cases and the bank would plainly not wish other defaulting customers to get wind of an adverse decision on the fundamental point which is embodied in the quotation from Mr Berkley's written argument, which I have already set out.

 

10. Accordingly, I conclude, without hesitation, that there is no reason for displacing the presumption as to incidence of costs which is ordinarily applicable in a case of discontinuance. The bank will pay the defendant's costs of the claim, subject only to any existing order for costs in favour of the bank not being disturbed.

 

11. Finally, I have to consider whether the costs of the defendant should be assessed on the standard or on the indemnity basis. In my judgment the assessment should be on the indemnity basis. 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 solicitors. A large commercial enterprise which proceeds with litigation in the face of warning signs of the kind which were erected here, adopts a high risk strategy. The point in question was a simple one. There was no relevant controversy as to the evidence. To choose to abandon the claim on the very day of the hearing is doing a serious disservice to the efficient administration of justice, and comes very close to constituting an abuse of process. At the very least, the bank's conduct of the litigation falls comfortably within the range of cases in which, on the modern authorities, an assessment of costs on the indemnity basis is appropriate

[diddydicky]

Thanks again DD.

 

So a possible course of action after 7 days, could be to write to them, enclose a copy of the original DN and their forged copy, explaining that demanding the ballance in full and not giving enough time to rectify, followed by termination via demanding the ballance in full plus court action means that the cannot claim benefit of s87. Oh and here is my letter of acceptance of that unlawful act.

 

Refer them to Bos v Mitchel.

 

Plus attack the illegible application.

 

Invite them to withdraw.

 

i think i would put the point about the DN to them in a form that will look good if it has to be later put before the court and along these lines,

i would ignore their alleged DN - it is simply what they THINK the computer spewed out rather than a forgery

 

dear Sirs,

 

It has come to my attention, through research, that it is probable that your client does not in fact possess a hard copy of the default notice served upon me and instead seeks to rely upon a computer entry as to the date that a default notice would have been produced.

 

It is therefore possible that your client is unaware of the defective nature of the Default Notice served upon me

 

In order to assist your client i therefore enclose a copy of the aforementioned default notice and ask you to study it carefully as it is clearly defective in several aspects, non of which can be regarded as de minimus.

 

Having not been lawfully entitled, by way of this default notice to claim entitlement to the benefits of s87 of the act, your client does not have a cause of action to claim sums not yet due nor to terminate the agreement lawfully.

 

In fact your Client subsequently unlawfully repudiated the agreement , an action which i accepted and the agreement no longer endures. .

 

I invite your client to study this document and to then discontinue without costs, failing which i will bring this matter to the attention of the court (together with reference to BOS V Robert Mitchell June2009 in which BOS were heavily criticised by the judge for their behaviour in almost identical circumstances) .and invite the court to strike out your clients claim as vexatious and an abuse of the court process.

 

Yours sincerley

 

XXX

[diddydicky]

Hi DD,

 

Yes, all things concidered, a much more measured response.

 

I think the DN was in fact fabricated in order to deceive, but that is probably best kept in case there is a hearing.

 

The new improved DN, mis-spelt my name, had a parragraph removed referring to the full ballance now being due, another parragraph altered from the full sum being due, expressed as a sum, to the arrears being due.

 

I will give them 7 days to again respond to CPR, but then off we go with the above.

 

Vint

 

well yes then i agree- that does sound like a fabrication

 

i might be inclined to add a line to the letter to the effect as to whether, in the light of your DN, they really wish to put their alleged Copy of the DN before the court!!

[diddydicky]

Can I ask where we stand in relation to where creditors blow up or re type agreements to become legible?

 

This is mentioned in section 2.12 of the OFT Draft Guidance

 

http://media.ft.com/cms/b0f62a4e-0031-11df-8626-00144feabdc0.pdf

 

the information that is re constituted must be accurate basically

 

so you need to challenge and probe the source of the information that is used.

 

what the courts and the OFT are saying basically is that there is a presumption that the creditor is right - and that if he gets the information from his other files or computers that must be right too since they are so big and respectable that they could not possibly get anything as serious as a credit agreement wrong - nothing' changed there then

[diddydicky]

I have a poor POC from Restons, I have sent CPR31.14 on 20th Jan, Till now no reply from them.. I got till 09Feb to file my defence.

 

Now should I apply for stike out or file embrassed defence? Your kind expert advice will be much appreciated. The link to my thread is

 

http://www.consumeractiongroup.co.uk/forum/mbna/239030-mbna-reston-threating-court-12.html

 

it is always better to file some sort of defence (embarrassed will do nicely) before you apply for so

 

 

makes it more difficult for them to re issue if at all

[diddydicky]

no you have to attend you do not need to prove the case- just show that there is a triable defence

 

they try this on to "test the water" to see what sort of a case you haev got and what sort of judge they have got

[diddydicky]

i entirely agree with PT

 

an application to strike out surely sends a message to the creditor that you believe yourself to be on solid ground- quite the opposite of what is suggested

[diddydicky]

Been following this and other threads with great interest. But as a bit of a noobie (and slow learner) I hope this question is not too stupid... Am I right in saying that PT's advice to make 'a dual application, in the first instance , apply to strike, if that fails have an unless order in place that requires disclosure and repleading' is made on (the same) N244? And does the 'unless' part mean that you ask for the first (strike out) and in the event that is refused, request the disclosure etc?

 

yes the order you are seeking is to strike out but if the judge does not agree to do that then in the alternative you ask him to order disclosure of docs failing which etc ...............

 

in other words two bites at the cherry

 

not sure if you are doing this with your aq's or before

[diddydicky]

Thanks DD

 

it will cost you 70 quid to make an application if you apply prior to aq's being issued but it incorporated into the Aq's nothing ( i beleive)

[diddydicky]

You just answered a question before I asked it!! Incredible. I didn't know you could use the aq for this. Thanks again.

 

i'm pretty sure you can include it with the aq in a proposed order for directions- no doubt one of the legal bods will confirm

[diddydicky]

if you have acknowledged the claim and shown that you intend to defend it in the whole- you do not need to keep repeating yourself in correspondence

[diddydicky]

All well and good in practice DD, but I seem to have done nothing but in the last 18 months with my OC's:(

 

but once a defence is lodged in court you needn't head letters concerning the court case that way

 

sometimes alleging that you acknowledge no debt can backfire on you because in 99.999% of cases there IS a debt are you ARE liable to the creditor.

 

you need to understand that what you are arguing (mostly) is that the agreement is NOT LEGALLY ENFORCEABLE (or that you have been charged too much) NOT that you never entered into an agreement or borrowed money from the creditor- that fact is easily proven by the creditor

 

for instance, (IMO) in refusing to acknowledge a debt at all, a judge may well (one just did in fact) decide that although you are claiming that a default notice was invalid in some respect- the fact that you made clear that you had not intention of paying the creditor anything anyway - even had the DN been correct- that the creditors DN did not end the claim

 

also the other side will make the most of your total denials in court

[diddydicky]

what would happen- is what the judge says will happen "unless" they obey his instructions!

[diddydicky]

more pertinent would be to start off by asking their age- when they started working for the claimant and when they started working in the archive dept

 

it has been seen on here before that witnesses who have made statements as to the archiving were not even working for the company at the time- and yet another girl who would only have been 14 at the time the file was archived

 

It could be a good idea to ask this witness for an admission of facts before the trial in order to box them in

 

 

you could (IMO) for instance ask the witness for an admission of facts to admit that they cannot in fact remember the archiving of that specific document on that specific day

 

 

it is also possible i believe (in order to save the costs of the witness hanging around court at the main trial )to call such witnesses to court to give evidence in advance of the main trial

Edited May 28, 2010 by diddydicky

[diddydicky]

if they dont make it available within 7 days then you go back to court and ask for an unless order (unless they comply a certain date- whatever it is you ask the court to do in default)

 

once started- you MUST keep the ball rolling and keep THEM on the back foot

[diddydicky]

for those documents or information that you need to compose your defence that are not mentioned in the POC then you use cpr 31.18 and follow the same course

 

the abuse of the system is ocassioned by the party that will not comply with CPR's (which ARE orders of the court) in a manner of speaking - to avoid wasting the courts resources and when one party has to continually seek an order for the court to make the other party comply - it is not he that is likely to feel the wrath of the judge but the offender

[diddydicky]

Do you mean CPR18, DD?

 

yes i did (old age)!

[diddydicky]

as long as a valid notice has been issued then no it doesnt

 

and by the same token- if the OC has served a defective Dn then the assignee is bound by that too!!

 

he buys the debt "lock stock and smoking barrel" " warts and all"