Unenforceability Evolution 2010

[gh2008]

IMHO there is a distinction between 'enforcement of the terms and conditions of an agreement' and 'enforcement of a court judgement'.

 

Now the former can happen without any intervention of the court. A debtor defaults, claimant serves a Default Notice to enforce the T&Cs (e.g. making repayments on time). If the debtor does comply with the DN then the creditor has enforced the T&Cs of the agreement. Hence the wording of the DN.

If it is not enforcement then what is it, what wording is used in the Act that describes the creditor 'compelling observance of' the T&Cs of the agreement.

 

The meaning of the latter (enforcement of a judgement) as I'm sure many of us know about is, IMHO *totally* separate to the enforcement of an agreement.

Edited January 25, 2010 by gh2008
added the e.g.

[gh2008]

Hi

 

No sorry lets be clear enforcement is enforcement.(in its legal sense) It can only take place after a jujdjement and in court.

 

Best regards

Peter

 

What would you call the issuing of a DN citing repayment of arrears required when a creditor is trying to enfor........ sorry errrr 'coerce' (taken from Enforce Synonym | Synonym of Enforce and Antonym of Enforce at Thesaurus.com) the terms and conditions of the agreement.

 

When you have decided what you want to call it - where are the restrictions placed upon the creditor within the CCA as to what and when they can do it.

 

76.—(1) The creditor or owner is not entitled to enforce a term of a regulated agreement by—

(a) demanding earlier payment of any sum, or

(b) recovering possession of any goods or land, or

© treating any right conferred on the debtor or hirer by the agreement as

terminated, restricted or deferred,

That would clearly indicate that the actions of a,b or c are deemed enforcement

 

Reading S142

142.—(1) Where under any provision of this Act a thing can be done by a creditor or owner on an enforcement order only, and either—

(a) the court dismisses (except on technical grounds only) an application for an enforcement order, or

(b) where no such application has been made or such an application has been

dismissed on technical grounds only, an interested party applies to the court for a declaration under this subsection

the court may if it thinks just make a declaration that the creditor or owner is not entitled to do that thing, and thereafter no application for an enforcement order in respect of it shall be entertained.

That seems to clearly indicate that again an enforcement order is not baliffs knocking at the door but rather giving permission to the creditor to e.g. demand the payment of sums not due.

 

IMHO the creditors do not approach the court properly. Their POC should set out what they want and under what sections of the Act they want it. Then the court would know whether they are asking for e.g. an enforcement order

“ enforcement order” means an order under section 65(1), 105(7)(a) or (b), 111(2) or 124(1) or (2);

or whether the creditor thinks everything is perfect and they are demanding early repayment under S87

[gh2008]

It does not matter what you or i think the deffinition of "enforce" is , itthe opinion of the bloke in the wig that matters and that is what we have to work with

 

Now that's where I have to agree with you and I must admit I used your argument on another thread myself tonight. Whether I myself agree with it or not, precedent says that your earlier argument is the one influencing the 'one in the wig' at the moment

 

BUT, good humoured discussion and challenging our own thinking is what a lot of these threads are about ... and long may it continue

 

All the best

gh

[gh2008]

Reproduced here for ease ( from http://www.oft.gov.uk/shared_oft/consultations/OFT1175con.pdf)

5 SANCTIONS FOR NON-COMPLIANCE

 

5.1 If the creditor or owner fails to comply with the duty under section

77(1), 78(1) or 79(1), it is not entitled, while the failure to comply

continues, to enforce the agreement.(*24)

 

5.2 In a recent judgment,(*25) the Commercial Court held, in a case under

section 77 of the Act, that passing details of a debt to a credit reference agency and related activities do not constitute enforcement. It also held that steps taken with a view to enforcement, including demanding payment from a claimant, issuing a default notice, threatening legal action and the actual bringing of proceedings, are not themselves 'enforcement'. On the other hand it confirmed that obtaining judgment against the debtor was enforcement, as were the actions listed under sections 76(1) and 87(1),(*26)notwithstanding that some of the actions 'less obviously' amounted to enforcement. These actions are demanding earlier payment, recovering possession of goods or land, treating any right conferred on the debtor by the agreement as terminated, restricted or deferred, enforcing any security and terminating the agreement.

 

5.3 In drawing a distinction between actions which were and were not enforcement, no definition of enforcement was given the court, but it would appear that it was distinguishing between actions based on the exercise of contractual rights (which would be enforcement) and other actions intended to obtain payment which did not involve the exercise of a contractual right.

 

*24 Sections 77(4), 78(6) and 79(3). A declaration under section 142(1) of the Act (with the consequent application of section 106 (rendering securities ineffective) is not available, as section 142(1) does not apply to unenforceability consequent upon sections 77(1), 78(1) and 79(1).

 

*25 McGuffick –v- The Royal Bank of Scotland plc [2009] EWHC 2386 (Comm) 26 Paragraph 74 of the judgment. OFT1175con

 

*26 Paragraph 74 of the judgment.

Ok, so the ones in blue are NOT considered enforcement

HOWEVER the ones in red are ........

 

demanding earlier payment = enforcement (i.e. demanding anything other than arrears)

terminating the agreement = enforcement

 

in fact any of the things under 87(1)

(a)to terminate the agreement, or

 

(b)to demand earlier payment of any sum, or

 

©to recover possession of any goods or land, or

 

(d)to treat any right conferred on the debtor or hirer by the agreement as terminated, restricted or deferred, or

 

(e)to enforce any security.

although that also means that terminating = enforcement BUT issuing an action does not therefore it may blow apart our hypothesis that in issuing an action the creditor is terminating the agreement.

 

So they can issue a default notice, however cannot act on it

but they can IMO issue a claim for the arrears

 

thoughts?

[gh2008]

but, for the moment, that's what we've got to work with, and it does clearly state that they cannot demand earlier payment.

 

Thinking about this, if they are in default of an S78 request, they cannot terminate under S87 therefore if they do terminate then IMHO they lose the right to the repayment of anything other than the arrears. (i.e. any payments not yet due)

[gh2008]

Also seems even the OFT don't understand their own advice !! from page 30 of the above doc

What if the lender does not comply with the request?

Your lender must provide you with the information within 12 working days of receiving your request. After the 12 days are up, if the lender has not provided the information then the agreement is unenforceable until they do provide the information.

 

'Unenforceable' does not mean that your debt is wiped out. Any outstanding debt is still owed, but there are some consequences for the lender’s ability to enforce the debt.

 

If you do not make payments when your debt is 'unenforceable' it means that:

• Your lender cannot

- demand earlier payments of your debt

- threaten court action

- take possession of anything that you bought on credit, or

which you used as security when you took out the

agreement.

As this is a consultation paper - maybe we should let them know how we feel about it .....