Is this abuse of process?

[toymaker1]

Hello

Could anyone tell me if, in the following hypothetical situation, the creditor's claim would be considered to be abuse of process?

 

Suppose a debtor has a genuine dispute with a credit card company. The debtor writes reasonably expressed letters to the creditor, setting out the particulars of the debtor's grievance, which concerns a regulated credit card agreement.

Suppose that the credit card company totally ignores the debtor's letters of complaint.

The debtor informs the creditor that until the dispute is resolved he will suspend repayments to the creditor.

The creditor sells (assigns) the debt to a company which buys credit card debts cheaply.

The debtor continues to write reasonably expressed letters to the debt collection company which has bought the debt, asking for the complaint to be dealt with.

The new creditor ignores totally the debtor's complaint, just as the original creditor did.

The new creditor simply demands payment of the debt, whilst totally ignoring the debtor's letters of complaint.

Eventually, the new creditor issues a county court money claim against the debtor, but makes no mention in his claim of the existence of an unresolved dispute between the creditor (now the claimant) and the debtor (now the defendant).

 

I would like to know if the claimant's claim would be considered to be abuse of process; inasmuch as the purpose of the creditor's claim is to subdue the defendant into settling the claim, rather than the creditor taking the trouble to deal with the debtor's legitimate complaint by means, for example, of fair business practice, as defined by OFT debt guidance, and normal due diligence of professional business practice and normal complaints procedures.

 

Does anyone have any thoughts on that?

-I think it is an interesting matter to consider, because it happens every week in the county courts, that the legitimate complaints of debtor's are totally ignored, and claims are issued, as if a genuine complaint, which has been totally ignored, does not exist.

This is particulary relevant, as from April 1 2013, much stricter CPR rules came into effect, which could potentially prevent creditors taking unfair advantage of a litigant in person. For example, Part of the bullying process which goes on in debt collection cmpanies, is flagrantly manipulating allocation hearing directions etc. to suit the claimant. Usually a very worried and over-indebted litigant in person, is completely outwitted by the creditor, and the existence of a legitimate debtor complaint is just ignored by the court. - But it seems to me that such claims should be considered to be abuse of process.

[AndyOrch]

Been happing for decades Toymaker....its not an abuse of process though......its a process that need abolishing... assignment of debts....wont happen though.

 

Regards

 

Andy

[steampowered]

Not an abuse of process. It is the court's job to resolve disputes. If the parties cannot resolve disputes themselves then the court needs to resolve them. If the debtor has a legitimate complaint which justifies his refusal to pay the debt then he can raise this in his Defence.

[toymaker1]

Not an abuse of process. It is the court's job to resolve disputes. If the parties cannot resolve disputes themselves then the court needs to resolve them. If the debtor has a legitimate complaint which justifies his refusal to pay the debt then he can raise this in his Defence.

 

I understand what you are saying.

 

Why then does andytorch, in post 2 at 14:10 27th April say "it's a process that needs abolishing"?

 

If it is OK for a creditor to totally ignore a debtor's legitimate complaint, and to issue a money claim as an alternative to dealing with the debtor's complaint, and if the issuing of a claim as an alternative to dealing with a complaint would not be considered to be a breach of the statutory requirement placed on a creditor not to contravene the requirements of professional diligence (Regulation 3(3) of Consumer Protection from Unfair Trading Regulations 2008), and if, consequently, the issuing of a claim as an alternative to dealing with a complaint would not be considered to be an aggressive commercial practice under Regulation 7 of the CP Regulations 2008, and if the issuing of a claim as an alternative to dealing with a complaint would not therefore be considered, under Regulation 7(3)(b), to be exploitation of a position of power by the creditor in relation to the debtor (the consumer) so as to apply pressure, in a way which significantly limits the the debtor's ability to make an informed decision ( for example a decision as to whether or not to continue his complaint, or cave in and pay the disputed debt, rather than expend a lot of time and money and stress on defending the claim), then, - you indicate, such an action by a creditor would not be an abuse of the court's process, and it is perfectly reasonable, and legally proper, for a creditor to issue a claim as an alternative to dealing with a debtor's complaint and I am left wondering why andytorch thinks that such a process needs abolishing?

 

If you are right, and the above scenario would not be an abuse of the court's process by the creditor, then it seems to me that a creditor clearly does not need to spend money setting up a complaints handling department, - just let the court system handle all complaints from debtors.

Edited April 28, 2013 by toymaker1
grammer

[steampowered]

I understand what you are saying.

 

Why then does andytorch, in post 2 at 14:10 27th April say "it's a process that needs abolishing"?

 

There is a distinction to be drawn between the law as it stands, and the law as people think it should be. As both myself and andyorch have said, this is not an abuse of process under the law as it stands.

 

Whether the law should be changed to require companies to deal with complaints before going to court is a different question to which people will have different opinions. Personally, I do not think a restriction of this nature would be workable and would serve no purpose other than to make small claims proceedings more complicated but others are entitled to their opinions. Also remember that it is expensive for companies to bring small claims proceedings - hundreds of pounds at least - which they will not recover from the consumer even if successful. It is MUCH cheaper for them to resolve complaints without court.

[toymaker1]

There is a distinction to be drawn between the law as it stands, and the law as people think it should be. As both myself and andyorch have said, this is not an abuse of process under the law as it stands.

 

Whether the law should be changed to require companies to deal with complaints before going to court is a different question to which people will have different opinions. Personally, I do not think a restriction of this nature would be workable and would serve no purpose other than to make small claims proceedings more complicated but others are entitled to their opinions. Also remember that it is expensive for companies to bring small claims proceedings - hundreds of pounds at least - which they will not recover from the consumer even if successful. It is MUCH cheaper for them to resolve complaints without court.

 

You say that the scenario I have described, which occurs every week in the county courts, is not an abuse of process under the law as it stands.

I'm sure that you are correct, and experience of what happens in the courts would seem to support your view of the matter.

 

However, for the sake of giving this issue further consideration, under the law as it stands, in Connelly v DPP [1964] AC 1254 at p.1354, Lord Devlin said that the courts have

'an inescapable duty to secure fair treatment for those who come or are brought before them'

In R v Derby Crown Court ex p. Brooks [1985] 80 cr. App. R 164 DC, Sir Roger Ormrod said that it may be an abuse of process if the prosecution

'have manipulated or misused the process of the court so as to deprive the defendant of a protection provided by the law or to take unfair advantage of a technicality'

I would suggest that where a creditor has deliberately ignored a debtor's letters of complaint, and instead of dealing with the complaint via the creditor's complaints department, using normally expected standards of due diligence and fair business practices, of which the debtor has a legitimate expectation when he makes his complaint, and, rather than dealing with the complaint, issues a money claim, on the basis that the debtor is likely to be intimidated into paying the legitimately disputed debt, then in such a case I suggest that it can be argued that the creditor has manipulated and misused the process of the court with the intention of depriving the debtor of the protection provided by, for example, the Consumer Protection From Unfair trading Regulations 2008, and has exploited his position and power as the creditor in relation to the debtor, (regulation 7(3)(b)) so as to apply pressure in a way which significantly limits the debtors ability to make an informed decision, such as a decision to continue his complaint, or to abandon his complaint and pay the legitimately disputed debt rather than go to court, because the debtor is frightened and has no money.

 

In the scenario I have described, I cannot see how it is possible for the court to comply with Rule 1.1 of Civil Procedure Rules, the requirement to deal with cases justly, ensuring that the parties are on an equal footing.

 

 

 

In Ahmed [2011] EWCA Crim 184, Hughes LJ said that the jurisdiction to stay for abuse of process may be exercised

'where, by reason of gross executive misconduct manipulating the process of the court, the defendant has been deprived of the protection of the rule of law and it would as a result be unfair to put him on trial at all'

In R v Horseferry Road Magstrates Court, ex p Bennett [1994] 1 AC 42, HL, Lord Griffiths said,

'If it comes to the attention of the court that there has been a serious abuse of power it should, in my view, express it's disapproval by refusing to act upon it'

 

In R v Beckford [1996] Cr. App R. 94, Lord Neill said that the jurisdiction to stay can be exercised

'in cases where the court concludes that it would be unfair for the defendant to be tried'

 

If a trial went ahead in the hypothetical situtation I have outlined in these posts, I would say that is is clear that, in such a situation the creditor has exploited his power, as the creditor, and has taken unfair advantage of the debtor, and, in so doing, has therefore abused the process of the court.

 

 

 

Edited April 28, 2013 by toymaker1

[postggj]

If you have a complaint against the creditor, and you are not happy with any response, if any

 

You then pass that complaint up to the Financial Ombudsman who will inform the creditor

 

It will be a brave creditor to go into a court if the Financial Ombudsman in involved and not given his decision yet.

 

The judge will not be impressed

 

As always, correct procedure needs to be followed with a paper trail

[toymaker1]

If you have a complaint against the creditor, and you are not happy with any response, if any

 

You then pass that complaint up to the Financial Ombudsman who will inform the creditor

 

It will be a brave creditor to go into a court if the Financial Ombudsman in involved and not given his decision yet.

 

The judge will not be impressed

 

As always, correct procedure needs to be followed with a paper trail

 

I take your point , that one can always take the matter up with the Ombudsman. But that is not the situation I have described.

On the hypothetical scenario I described;

1.

Debtor writes several letters to the creditor, setting out a legitimate complaint.

2.

Creditor ignores debtor's complaint, and simply demands repayment of the debt.

(Note, that in the scenario I described, the 'creditor' is not the original creditor, but a company which buys credit card debts cheaply, for the sole purpose of collecting the outstanding debts, and normally has no interest whatsoever in dealing with any complaints which have been made by the debtor to the original creditor. - this is a normal practice of such companies.)

3. Having totally ignored the debtor's complaint, the creditor issues a money claim.

4 The creditor calculates that in 8 out of 10 cases, the defendant, usually a litigant in person with no financial means to pay counsel, and no legal knowledge, will pay up rather can continue with their dispute.

 

Leaving aside all the other potential scenario's, such as the Ombudsman stepping in etc., my point is that in such a case as I have described, the purpose of the creditor;s claim is to subdue the debtor, and intimidate him, by unfair exploitation of the creditor's power over the debtor, into settling the disputed debt. - In my opinion that is abuse of the court's process.

The fact that it is not normally recognised as abuse of process, is because the creditor of the type I have described is an experienced professional litigant, and the debtor is usually a fearful litigant in person who does not know the law. Therefore the creditor's unfair issue of a claim (i.e. unfair because the claim is issued as an alternative to dealing with the complaint, and deprives the debtor of his rights under the Consumer Protection from Unfair practices Act.) does not clearly come out at the trial.

[postggj]

You can tell the court that the creditor has breached the OFT guide lines, you can even report them to the OFT, BUT IT WILL NOT MAKE ONE IOTA OF DIFFERENCE

 

The judge will take into consideration the inexperience of a LIP, but not liberties.

 

If you need a defence along the lines of unfair contractual agreement and procedures in dealing with a complaint , then you need to look up CASE LAW to support any application in the defence

 

Might i suggest looking up CPUTR 2008 As a point of reference and the OFT guide lines on debt collection

[toymaker1]

You can tell the court that the creditor has breached the OFT guide lines, you can even report them to the OFT, BUT IT WILL NOT MAKE ONE IOTA OF DIFFERENCE

 

I think you have made my point for me, - much more clearly.

You are quite right.

In the scenario I have described, which illustrates how creditor's frequently issue claims which are effectively an abuse of process, for the reasons I mentioned, where a claim is issued to intimidate and subdue the debtor, then, if the debtor is a litigant in person, the fact of the claim being effectively an abuse of the court's process, inasmuch as the legal process is not intended to be a substitute for a proper complaints handling procedure by a creditor, within OFT guidelines of fair business practices, and normal professional due diligence, then,

as you accurately point out, IT WILL NOT MAKE ONE IOTA OF DIFFERENCE.

[steampowered]

I agree with the law you outlined. However, you seem to be making the assumption that starting legal proceedings is inherently unfair/oppressive to the consumer and this is where I do not agree. Certainly improvements could be made to the court process to make it easier for members of the public, but in general I think small claims is accessible to the average consumer. I actually think it can be easier for consumers to deal with a neutral body like their local county court rather than company complaints departments, many companies do all they can to fob consumers off.

 

Personally I would actually like to see more complaints end up in small claims court. If more consumers would start small claims proceedings when they have been wronged companies would have to take complaints much more seriously, it costs peanuts to fob off a legitimate complaint but is very expensive for companies to defend small claims proceedings.

[AndyOrch]

And of course its all about weeding out the vexatious claimants and District Judges having a greater knowledge of the CCA1974 with Litigants in Person having more support...rather than the one sided process at the moment.

 

Regards

 

Andy

[toymaker1]

you seem to be making the assumption that starting legal proceedings is inherently unfair/oppressive to the consumer and this is where I do not agree.

 

You are completely missing my point. - I am to blame for that, because I have apparently not made myself clear.

I am not saying that for a creditor to start legal proceedings is inherently unfair to the consumer; I am saying that it is inherently unfair to the consumer (and therefore an abuse of the court's process) for a creditor to start legal proceedings where the debt is disputed (that is, disputed on substantial grounds).

It does not require a change in the law, as was suggested by steampowered in post 5 of this thread. It requires a judge in the High Court or the Court of appeal to state that a claim such as the one I have described in this thread (i.e. a claim where the debt is legitimately disputed) is an abuse of process.

There is well established case law regarding this in insolvency cases involving statutory demands.

For example, in Mann v Goldstein [1968] 1 WLR 1091, Judge Ungoed-Thomas held that it would be an abuse of process to ask for a winding up petition when a debt was bona fide under dispute. Judge Ungoed Thomas said;

'What then is the course for this court to take... when the debt is disputed on substantial grounds?..... When the debt is disputed by the company on some substantial ground (and not just on some ground which is frivolous or without substance and which the court should, therefore, ignore) and the company is solvent, the court will restrain the prosecution of a petition to wind up the company'

and,

'until a creditor is established as a creditor he is not entitled to present the petition and has no locus standi in the Companies Court; and that, therefore, to invoke the winding up jurisdiction when the debt is disputed (that is, on substantial grounds)or after it has become clear that it is so disputed is an abuse of the process of the court'

 

It seems to me that the same principle should apply in money claims in the county courts, in cases such as I have described, i.e where there exists a genuine disputed debt, but the creditor totally ignores the fact that the debt is disputed, and issues a money claim which contains no reference to the fact that the debt is legitimately disputed, and the creditor's particulars of claim simply says something like

' despite demand for payment, £xxxx remains due."

That seems to me to be effectively an abuse of the court's process, in cases where the debtor is a litigant in person. Where the debtor is represented by counsel, the creditor will not usually be allowed to get away with it, but most litigants in person lose such case, because they have been taken advantage of by debt companies, who are professional litigants who know how to work the system.

 

 

 

[steampowered]

SDs are different - SDs are only supposed to be used for undisputed debts because they do not go through the normal court process. The normal court process is designed to resolve disputes, so appropriate for disputed debts to be submitted to it. I think it would be very difficult to convince a judge, whose job it is to resolve disputes, that disputes should be sent to him.

 

People should not be afraid to take their disputes to small claims court or to fight creditors all the way where their objections are genuine and justified, though agreed the courts should do a better job of assisting litigants in person.

[toymaker1]

The normal court process is designed to resolve disputes, so appropriate for disputed debts to be submitted to it. ........................

 

People should not be afraid to take their disputes to small claims court or to fight creditors all the way where their objections are genuine and justified,

 

Having carefully considered post 2 by andytorch, and posts 3 and 5 by steampowered, IMO the situation which I outlined in my post 1 does amount to abuse of process by the creditor/claimant.

Andytorch is correct to say it has 'been happening for decades', and that it' needs abolishing.

IMO the reason it needs abolishing is that it is an abuse of the court's process. - that is to say, it is an abuse of the court's process for a creditor in a regulated agreement, in flagrant contravention of the obligations imposed by the OFT, and by the Consumer Protection from Unfair trading regulations, and by the Banking Code, and by the requirements of normal standards of professional diligence, to totally ignore a debtor's legitimate complaint, and instead of addressing the complaint, to issue a county court claim against the debtor. IMO it is clearly not the function of the court to deal with disputes which, before coming to court, ought to have been addressed by the creditor through their normal complaints procedures, and such disputes should not be put before a court as an alternative to being dealt with by the creditor through normal complaints procedures, and as required by OFT debt guidance. Apart from being an abuse of process, for a creditor to act in this manner would, IMO, also fall within being an unfair relationship under section 140 of CCA 1974.

IMO the reason it is not considered to be abuse of process (as andytorch and steampowered have correctly observed), is for the simple reason that so far the situation I outlined in post 1 has not yet been challenged at Court of Appeal level, therefore there is so far no precedent for a judge to quote. - abuse of process fall under common law, so it needs a judge to set a precedent and create relevant law for future cases.

I hope that one day the situation I outlined in post 1 comes before the Court of Appeal, and is pronounced by a senior judge to be what it actually is - an abuse of the court's process.

Until such time, banks and debt collection companies wll continue to get away with taking grossly unfair advantage of debtor's, in the situation outlined by me in post 1.

 

Thats how I see it anyway.

Edited May 8, 2013 by toymaker1
tidying up

[AndyOrch]

And any defence must challenge the claim and inform the court as to why the claim should not be brought...the court only processes the claim you the defendant must challenge it.

[toymaker1]

And any defence must challenge the claim and inform the court as to why the claim should not be brought...the court only processes the claim you the defendant must challenge it.

I agree.

Unfortunately, the situation I outlined in post 1 usually goes unchallenged, because the debtor is often a very worried litigant in person, who just wants to get it over with as quickly as possible. I belive that one day this issue will be challenged in the Court of appeal,