Brandon Case

[DonkeyB]

I understand, but it's the basis of the judge's reasoning.

 

Weird but there you go. Note also that at the end of The Mould's extract and commentary on s87 it also states that the debt remains due but is simply unenforceable - which juxtaposes the 'arrears only' bit. I think people tend to pick and choose the bits that suit their case.

 

The important point is that the statute is there for consumer protection, but not to wipe out due debts on a technicality - but the statute should be followed. Not all of it is set in stone, as every new high-level judgment effectively changes the law. The key is to keep on top of it and react accordingly. It's bugger all to do with what's fair, sadly.

Edited October 31, 2011 by DonkeyB

[dadofholly]

And when they 'terminate' an account after a dodgy DN, is it actually terminated?

when they terminate the account and give it to the DCA you will see you have a nil balance on that account...

it is pretty difficult for the creditor to come back and change that nil balance ,especially if it was a dodgy DN..

 

I know - It is confusing and does sound contradictory - I used to think along the same arguements - but the defining cases are Harrison v Link Financial and now the Brandon case since the appeal.

 

These arguements have been made and decided on. We may not always like it but we can only work within case law

[alangee]

If you default after a non-default termination - perhaps because you had already defaulted and the creditor had decided to take the non-default termination route - what happens to having to have a DN prior to court action? As the account has been terminated, a DN cannot be issued.

 

Alan

[DonkeyB]

Why would one be needed?

[citizenB]

What I really would like explaining is..

 

A defaut notice is issued, either correctly or incorrectly.. the debtor is given a statutory period in which to pay. The language of the notice is, if the debtor pays the amount requested by the remedy date, then it will as if the DN was never issued and everything goes back to normal..

 

However, if the creditor then sells the account onwards before the remedy date and the debtor pays the amount due prior to the remedy date.. how can the account be returned to normal! The new owner is not in the position to offer the credit facility as the original creditor!!

[stone-broke]

What I really would like explaining is..

 

A defaut notice is issued, either correctly or incorrectly.. the debtor is given a statutory period in which to pay. The language of the notice is, if the debtor pays the amount requested by the remedy date, then it will as if the DN was never issued and everything goes back to normal..

 

However, if the creditor then sells the account onwards before the remedy date and the debtor pays the amount due prior to the remedy date.. how can the account be returned to normal! The new owner is not in the position to offer the credit facility as the original creditor!!

 

That is certainly an excellent point for discussion! Perhaps another one of the things the creditors are allowed to do when it suits them! But yes, where does that leave the debtor? That seems a very unfair thing to do, but I am sure it has happened to many.

[DonkeyB]

That would be a big problem for the new owner!

 

Most of the times we’ve seen this happen have been with assignments from MBNA to Lewis/CL Finance, litigated by Howard Cohen. By the time MBNA have bothered to issue a DN (usually ridiculously late in the day) the account has been delinquent for a while, so I guess that’s why we have not seen a case like this (ie. they took a punt that no remedy would be forthcoming).

 

I imagine in these cases that MBNA had already stopped the card being used – again, a default may already have been registered with the CRAs, and the credit facility reduced to zero – but the issue of the DN is to enable enforcement. They might argue that the state of the account when the DN was issued was that the credit limit had been reduced to zero, and this was the state the account was being returned to, enabling the debtor to continue to pay in line with the T&Cs (which the buyer could accommodate as long as it has a CC licence).

 

Bloody complicated, this stuff. I’m not comfortable trying to think like a creditor – but it’s useful!

Edited November 1, 2011 by DonkeyB

[DonkeyB]

Just to add: the problem with the scenario above, in real life, was that as soon as CL Finance got the account from MBNA, they simultaneously issued a Notice of Assignment AND a claim form, via Howard Cohen. There were seldom any pre-action protocols or letters before action.

 

When challenged and defended, they more often than not discontinued – well worth a trawl of the forums to find those cases. Informative reading, and the threads show that these issues re DNs were far from their minds when they took these courses of action. However they didn’t use the argument I’ve suggested above – and I think it holds water, as long as the DN is compliant (which MBNA’s weren’t). The defences against CLF usually cited a non-compliant DN, among other issues, which just demonstrated how cavalier MBNA and CLF/Cohen were in their total contempt for statute and due process.

 

As mentioned elsewhere, a creditor can sell a debt at any time, as a 'chose in action', even in the remedy period of a DN.

[citizenB]

Bloody complicated, this stuff. I’m not comfortable trying to think like a creditor – but it’s useful!

 

 

Perhaps you could go undercover DB

[DonkeyB]

I’d rather stick needles in my hooves.

[rebel11]

Ah, acupuncture, I hope it helps:wink:

 

I’d rather stick needles in my hooves.

[the_shadow]

If you default after a non-default termination - perhaps because you had already defaulted and the creditor had decided to take the non-default termination route - what happens to having to have a DN prior to court action? As the account has been terminated, a DN cannot be issued.

 

Alan

 

 

How can they go down the non-default route IF you have previously defaulted. The cca gives them the method of reclaiming monies due and monies not yet due via the default notice in default situations, to attempt to use non-default when a default has occurred makes a mockery of the CCA imho.

 

S.

[DonkeyB]

How can they go down the non-default route IF you have previously defaulted. The cca gives them the method of reclaiming monies due and monies not yet due via the default notice in default situations, to attempt to use non-default when a default has occurred makes a mockery of the CCA imho.

 

S.

 

I think that’s what the judge in Brandon was getting at when he demurred at Amex’s claim to be able to use (I think) s 98A to terminate.

[the_shadow]

I think that’s what the judge in Brandon was getting at when he demurred at Amex’s claim to be able to use (I think) s 98A to terminate.

 

Yep, as I've just posted on another default notice thread.. I would expect them to try the non-default exit after the first couple of missed repayments rather than the industry norm of three missed repayments and then a default notice as happens now.

 

S.

[emandcole]

All very good stuff. We do seem to have a gap here though, perhaps none of us can explain it yet? Irrespective of the law tolerating breaches such as creditors issuing bad default notices then demanding full balances outstanding and then instructing or assigning absolutely to third party buyers we surely need to examine the wider implications for the consumer.

 

I suspect many of us would be uncomfortable with the notion that a creditor can step outside of statute and regulation but then ignore the last year of third party demands for full payment or else and simply to return to a state where none of that happened. If we accept that termination cannot 'lawfully' happen even though the creditor and any co-hort go on to behave by their letters and demands that it has, what protection does the consumer have if the creditor realises their gaff and suddenly behaves as if nothing was wrong? The obvious question is:

 

January 2010 they default you for failing to pay three months accrued arrears of say £150.

February 2010 they issue a termination letter.

March 2010 an assignment notice arrives to tell you Harold Crapton and Partners now own the account.

April 2010 a DCA letter arrives informing you they are the legal owners of the debt and all future payments are to be made to them.

 

They send a variety of letters on various shades of red paper with selective bold lettering demanding your soul, unicorn hair and fairy dust.

 

Lets say that in November 2011 (post Brandon) the original creditor decides to recall their assignments (as they can't have happened) and the account is 'returned to normal' as after all they never had the right to terminate, therefore for all these months the account has in fact been very much alive. What are the arrears now? Well:

 

Original default amount - £150.00 comprised of three missed monthly installments of £50.00 each.

Add another £50.00 month for the time it was with Craptons and the amount lawfully owing is now a mighty £1100.00...and by the way, you have 14 days to pay us or...yeah, yeah, you know what's coming. They cannot just forget about all of those months as the account was never terminated and to do so would result in a very inaccurate arrears demand on the default notice.

 

In the alternative they can't really forget about that and ask for the same sum as was originally outstanding as that's not how the account is run (unless they've reserved the right to offer you holidays etc on any payment at their discretion perhaps).

 

Added complications arise if you've made payment to Craptons in the interim as technically they've secured monies fraudulently and under threat. Data Protection has also been compromised as the original creditor farmed your private details out where you were then subjected to all manner of harassment for sums they had no lawful right to demand. The original creditor is responsible for any third party it instructs.

 

Harrison v Link is a good start for this type of treatment but the consumer must have grounds to counter claim on any amount the creditor tries to litigate for and I suspect the CPUTRs might be helpful as well as the Unfair Terms In Consumer Contracts Regulations. It must surely be a complete minefield?!

[dadofholly]

What I really would like explaining is..

 

A defaut notice is issued, either correctly or incorrectly.. the debtor is given a statutory period in which to pay. The language of the notice is, if the debtor pays the amount requested by the remedy date, then it will as if the DN was never issued and everything goes back to normal..

 

However, if the creditor then sells the account onwards before the remedy date and the debtor pays the amount due prior to the remedy date.. how can the account be returned to normal! The new owner is not in the position to offer the credit facility as the original creditor!!

 

But the new owner does not need to be able to extend credit to become a creditor.

 

A creditor does not have to be able to extend you credit - just be legally owed the money - as in they have purchased the agreement.

 

Now in the case you mention - as long as the original DN was not faulty i would assume they would simply terminate your account before sale. Rectifying the DN is only in terms of rectifying the breach that you have defaulted on your agreement, and so have stopped further enforcement action being taken against you. Not that by complying with the DN everything is now OK and we will carry on giving you credit

[DonkeyB]

Lets say that in November 2011 (post Brandon) the original creditor decides to recall their assignments (as they can't have happened)

 

Why can’t they have happened? The right to assign has diddly squat to do with default notices. As I’ve said now umpteen times, a debt owner can sell a debt at any time it chooses.

 

You do not have to terminate an account or issue a DN to assign an account. If that were the case, the whole factoring industry would not be able to exist.

[emandcole]

Why can’t they have happened? The right to assign has diddly squat to do with default notices. As I’ve said now umpteen times, a debt owner can sell a debt at any time it chooses.

 

You do not have to terminate an account or issue a DN to assign an account. If that were the case, the whole factoring industry would not be able to exist.

 

Can't have happened as in 'we intended to terminate but now we recognise our DN's were bad so we're recalling them all' (can't have happened as in without a valid DN the termination was never lawful so account still live). Understand assignment no probs but not so straight forward when they did that for debtor breach and assigned after adopting a section 87 path.

[DonkeyB]

You have an interesting argument, but this bit simply does not matter. It has no impingement on the ability or right to assign. They can assign whether it was terminated or not, or even whether they mistakenly thought it had been terminated.

 

s87 is irrelevant in such an instance – it is simply a precursor to enforcement. Why would they recall the accounts anyway once they’re sold because of a dodgy DN? It becomes the assignee’s problem, unless there’s a clause in the sale agreement that says otherwise (see below). No one says the assignee HAS to enforce through the courts. And yes, as you say, the account remains live, but would probably have had its facility removed (ie. credit limit set to zero) by then, so the only benefit of going back to the status before the DN was issued is to reestablish a status where the account can only (probably) be repaid anyway, and no further credit is available.

 

Just don’t see where that whole argument is going, as its suppositions are a bit misconstrued, IMO. There would be nothing wrong with an assignment is such a case, and no need to take the accounts back, unless the assignee wanted to give them back.

 

Let’s look at a real life scenario, one that I’m sure you’re aware of (ie. Santander and old GE accounts). The accounts have been sent back to the OC after assignment, after the debtor has pointed out a lack of DN or a bad DN. Why they were sent back, I’m not sure – but it was most probably the assignee implementing a clause about being sold only ‘unencumbered terminated accounts,’ I imagine. They simply don’t want the hassle of litigating accounts that may be a problem.

 

But more often than not, they’ll get a default judgment anyway as most debtors know nowt about statute or their rights.

 

Just looking at the last part of your scenario, cos that is interesting and could easily happen – wondering if it would come under the rules of fairness. Think I’ve seen something like this somewhere else... will try and dig the case out.

 

Edit: Just to add, I’m assuming the imaginary debtor in this case has some sort of account dispute, rather than just they can’t be bothered to pay! By the time a DN arrives, even a duff one, a payment usually hasn’t been made for a while.

Edited November 1, 2011 by DonkeyB

[alangee]

Shadow

I would expect them to try the non-default exit after the first couple of missed repayments rather than the industry norm of three missed repayments and then a default notice as happens now

 

This is what I meant when I said

If you default after a non-default termination - perhaps because you had already defaulted and the creditor had decided to take the non-default termination route - what happens to having to have a DN prior to court action? As the account has been terminated, a DN cannot be issued.

although I put it rather badly.

 

Alan

[emandcole]

Cool. Look forward to anything you can post on that

 

Appreciate that section 87 has nothing to do with right to assign and done seperately or even together (properly) then no problem. However, if the creditor assigned with the default situation having nothing to do with it then all the new owner could demand was the monthly installment as the account itself would be live, the debtor still bound to make payments as per agreement terms. Assignment then to the debtor is of no great consequence as nothing really changes that much.

 

The complications surely arise when the bad DN is issued, the (implication of) termination occurs (whether by letter or by demand of full balance) and then the DCA/new owner goes on to demand full balance 'or else' clearly relying on the belief that the account was defaulted and terminated correctly by the original creditor, thus now giving them the right to demand full balances. This muddies the simple notion of assignment completely does it not? Would this not be a case of attempting to secure monies by misrepresentation or similar?

 

If it were a matter of simple and absolute assignment then sure, the re-issue of a DN would resolve issues but if the new owner (ever, even once) goes on to make demands for full payment under threat of litigation the bad DN issue becomes an instant problem for them as they can only ever demand lawful arrears/contractual monthly obligation until a valid DN has been issued.

 

This I feel is where many problems will lie.

[DonkeyB]

I think you’ve got that spot on – if the assignee thinks the account is terminated and it is not, then they have the same problem as the creditor would have.

 

But yes, it only muddles it – ie. the understanding. If they acted in good faith (ie. the OC said it WAS terminated), then I don’t think you could claim misrepresentation. That’s why those sellback clauses are written in, I think. The real issue is the poor paperwork and, as I said earlier, the contempt that OCs and DCAs/debt buyers have for due process and statute.

 

For example, I like the law in Scotland – if you make a claim, you have to present the documents you intend to rely on at the time you issue the claim. That would include a DN and CCA, etc. Then maybe they would spot their, er, errors before the problems start. In England and Wales, they simply issue a claim without the proper facts and evidence, and for the most part get default judgments.

 

I detest the fact that creditors can continually bugger up the process and keep sending DNs till they get one right – it simply adds undue stress to a debtor who probably is not in a good place anyway. But, until someone goes to the High Court and gets a judgment that says all of the statute written in to s87 should be taken at face value, then we have to live with the judgments we have got.

[emandcole]

Hmmm, very good point. Scottish Law often seems to be much better than the English equivalent. I suspect if the same were adopted here there would be many opportunistic DCA's without a viable business model. Now, that would be a shame eh?!

 

I believe (although this needs testing certainly) that an excuse that 'they didn't know' or similar is very poor. Given the fact that there are many thousands of very bad DNs floating around out there the professional attitude would actually be to assume that any debt you now own that was defaulted more than 2 years ago (as some have actually got their act together) is likely to have a DN issue.

 

I work in architecture and if I were to adopt a 'I didn't know' excuse I wouldn't get far. You're expected to have taken all reasonable steps to ensure what you're doing is completely correct. As stated above and given the DN mess the appropriate attitude for any DCA should actually be to assume that any default notice is bad and needs investigating rather than being lazy, relying on consumer ignorance (and that of too many lower courts) and crossing your fingers with the proviso that you can just excuse your ineptitude by claiming 'we didn't know' if challenged. Rather lame. I believe it would constitute an unlawful act, misrepresentation by omission.

 

You cannot go round sending litigacious letters demanding money until you've first ensured your house is in order. If I sent you a letter demanding £500.00 and you involved the police could I sit back and go 'Sorry, it was a mistake'? Of course there is a difference as we move from criminal to civil but does that make it ok?

 

Isn't there case law supporting the notion that a man is bound by his writing/actions and claiming afterwards that you didn't actually know is just not good enough? Think I have it somewhere.

 

Moving on to the act of litigation, if they've submitted the full nature of their claim in law on any particulars of claim (as they should do clearly) they make a statement there and then that termination has happened and a valid DN has been served and not complied with. If it isn't that would be grounds to have their claim dismissed woud it not?!

 

All this 'we thought this and we thought that' excuse isn't good enough.

[DonkeyB]

Moving on to the act of litigation, if they've submitted the full nature of their claim in law on any particulars of claim (as they should do clearly) they make a statement there and then that termination has happened and a valid DN has been served and not complied with. If it isn't that would be grounds to have their claim dismissed woud it not?!

 

It’s a good reason to submit a strike out application – but sadly, most judges would just let them change their PoC (on submission of a fee, of course). We even have a case at present where the judge has given judgment PROVIDING the claimant goes away and finds all the ‘correct’ documents (ie. off you go and make them up). But yes, you can only answer the stated case as a defendant.

[emandcole]

Breach of contract. Let's get really messy. Sure, the initial thought is that the debtor breached first. That may be the case, however the CCA allows for this with the default system and where remedy is provided the default can be solved 'as if it never occurred'. Additionally, as long as the creditor reserved contractual right to have ever applied charges by inckuding a schedule of charges applicable in the inception T&C's the creditor can even profit by it. It does not cost them £30.00 to construct and post a naughty letter!

 

In contrast, the creditor by it's own construction offered to contain the operation of the contract within the confines of the CCA. Where the creditor fails to compose a valid DN that doesn't reduce your statutory rights and goes on to act as if the account has been terminated it then involves (we agree unlawfully, technically or otherwise?) a third party who were never privy to any part of the original contract, other than being indirectly referred to by way of assignment perhaps under certain conditions. The OC allows the third party full access to your private details and they use that to perform a number of things.

 

That 'stepping outside' of the contract and the express terms of the CCA that acts as an umbrella for both parties surely constitutes breach of contract? After all, if you try to call the bank for example and have a conversation about someone elses account they'll send you packing. Why? It has nothing to do with you.