50% liability or not on termination

[Peterbard]

Yes indeed, I have some case law on this subject, but to be honest I have not looked at it for ages, and I cannot find it on Bailli

 

Anything to do with wrongful termination on HP agreements would probably help.

[applecart]

I have started this thread as my grey cells are in overdrive at the moment. just been having a short discussion on this and do not wish to hijack that thread

 

This is all to do with the termination of a HP agreement by the creditor for failure to keep to the agreed payments, and the creditor demanding back the full contractual value of the agreement contract.

 

In Yeoman Credit, Ltd. v. Waragowski

 

A clause is written into an agreement that the creditor can claim back the full contractual payments on any breach by the debtor on termination of that agreement. The Waragowski judgement is known as the Wargowski clause.

 

The Wargowski case can now legitimately be applied only to unregulated agreements. The Consumer Credit Act 1974 now affirms that the Wargowski clause has no relation to agreements Regulated by the CCA 1974

 

The Judgment in Rover v Siddons

 

The case in question involved a consumer who bought a car on hire purchase, but then fell behind with his payments. The consumer did not understand, or try to exercise, his right to terminate at any point. Eventually the finance company served a default notice and terminated the agreement. The finance company repossessed and sold the car. Some time later they sued the consumer for the full cost settlement, making reference to a liquidated damages clause in the agreement. The District Judge also made it clear that the consumer’s entitlement to terminate the agreement was only extinguished at moment when the creditor terminated. It was therefore right to assess the finance company’s losses by reference to sections 99 and 100 of the Consumer Credit Act. The liquidated damages clause was found to be an unenforceable penalty clause and the claim was dismissed.

 

The judgment in Rover v Siddons shows where a finance company terminates a hire purchase agreement and then tries to rely on a liquidated damages clause, will help the debtor offer a robust defence to their claim

 

The District Judge also made it clear that the consumer’s entitlement to terminate the agreement was only extinguished at moment when the creditor terminated. It was therefore right to assess the finance company’s losses by reference to sections 99 and 100 of the Consumer Credit Act. The liquidated damages clause was found to be an unenforceable penalty clause and the claim was dismissed.

 

SO I WILL ASK THE QUESTION

 

Why have civil claims placed before the courts not been challenged on creditors claiming the full liability of any alleged repudiatory breach by the debtor of a Hire Purchase agreement.

 

The law as it stands only supports a 50% liability ????[/quote

 

Hi Postggj

 

I've been looking into this too to assist a cagger on another thread...

 

I went back to the case between the Banks and the OFT to increase my understanding of the 'liquidated damages' claims in a search for similarities to do with HP Agreements....

 

This link is useful: http://www.journalonline.co.uk/Magazine/53-3/1005035.aspx#.Uc6svOmjKSo

 

It highlights that OFT relied on the case of Dunlop Pneumatic Tyre Co v New Garage and Motor Co

 

The full case is available on bailli and may possibly be the one that Dodgeball was looking for?

 

http://www.bailii.org/uk/cases/UKHL/1914/1.html

 

It may be of use to you?

 

Apple

[postggj]

Is that judgement not about a cause of action being a penalty, that is the claimants action wanted more than was due under common law contract as liquidated damages

 

Private parking firms fall foul of this judgement i believe

 

I will look over it now and many thanks for looking in

 

This is what i am after, an opinion backed up through CASE LAW

Many thanks

Edited June 29, 2013 by postggj

[Peterbard]

I have started this thread as my grey cells are in overdrive at the moment. just been having a short discussion on this and do not wish to hijack that thread

 

This is all to do with the termination of a HP agreement by the creditor for failure to keep to the agreed payments, and the creditor demanding back the full contractual value of the agreement contract.

 

In Yeoman Credit, Ltd. v. Waragowski

 

A clause is written into an agreement that the creditor can claim back the full contractual payments on any breach by the debtor on termination of that agreement. The Waragowski judgement is known as the Wargowski clause.

 

The Wargowski case can now legitimately be applied only to unregulated agreements. The Consumer Credit Act 1974 now affirms that the Wargowski clause has no relation to agreements Regulated by the CCA 1974

 

The Judgment in Rover v Siddons

 

The case in question involved a consumer who bought a car on hire purchase, but then fell behind with his payments. The consumer did not understand, or try to exercise, his right to terminate at any point. Eventually the finance company served a default notice and terminated the agreement. The finance company repossessed and sold the car. Some time later they sued the consumer for the full cost settlement, making reference to a liquidated damages clause in the agreement. The District Judge also made it clear that the consumer’s entitlement to terminate the agreement was only extinguished at moment when the creditor terminated. It was therefore right to assess the finance company’s losses by reference to sections 99 and 100 of the Consumer Credit Act. The liquidated damages clause was found to be an unenforceable penalty clause and the claim was dismissed.

 

The judgment in Rover v Siddons shows where a finance company terminates a hire purchase agreement and then tries to rely on a liquidated damages clause, will help the debtor offer a robust defence to their claim

 

The District Judge also made it clear that the consumer’s entitlement to terminate the agreement was only extinguished at moment when the creditor terminated. It was therefore right to assess the finance company’s losses by reference to sections 99 and 100 of the Consumer Credit Act. The liquidated damages clause was found to be an unenforceable penalty clause and the claim was dismissed.

 

SO I WILL ASK THE QUESTION

 

Why have civil claims placed before the courts not been challenged on creditors claiming the full liability of any alleged repudiatory breach by the debtor of a Hire Purchase agreement.

 

The law as it stands only supports a 50% liability ????[/quote

 

Hi Postggj

 

I've been looking into this too to assist a cagger on another thread...

 

I went back to the case between the Banks and the OFT to increase my understanding of the 'liquidated damages' claims in a search for similarities to do with HP Agreements....

 

This link is useful: http://www.journalonline.co.uk/Magazine/53-3/1005035.aspx#.Uc6svOmjKSo

 

It highlights that OFT relied on the case of Dunlop Pneumatic Tyre Co v New Garage and Motor Co

 

The full case is available on bailli and may possibly be the one that Dodgeball was looking for?

 

http://www.bailii.org/uk/cases/UKHL/1914/1.html

 

It may be of use to you?

 

Apple

 

HI Apple

 

Yes most of these cases are either in the lower court or settled on the court steps, possibly to avoid precedent being set, an so these cases usually turn on their own evidence. This is what was alluded to in the piece you placed earlier on here.

 

In a former life I had access to many of these "unofficial" transcripts however no more sadly, the Dunlop case did indeed confirm the common law principle regarding the unenforceability of penalties on a breach of contract, however the main authority drawn from it was that penalties can be agreed to an extent, and as long as not "unconscionable" to the bargain be legally enforceable.

[postggj]

Rover v Siddons

 

That is the only case that did not set a precedent as it was a county court claim

 

Dunlop was a court of appeal and did set precedent

 

you state most of these cases were lower court decisions which is untrue, and misleading

 

This thread is about HP agreements, not bank charges, PPI etc

 

Only established case law

Edited June 29, 2013 by postggj

[Peterbard]

Rover v Siddons

 

That is the only case that did not set a precedent as it was a county court claim

 

Dunlop was a court of appeal and did set precedent

 

you state most of these cases were lower court decisions which is untrue, and misleading

 

Please support you contentions with case law and/or legislation. Whch are the cases which you think set authoritative precedent.

[postggj]

Yeoman Credit, Ltd. v. Waragowski

 

Dunlop Pneumatic Tyre Co v New Garage and Motor

ALL APPEAL COURT DECISIONS THAT SET PRECEDENT

The Consumer Credit Act 1974 now affirms that the Wargowski clause has no relation to agreements Regulated by the CCA 1974

 

UTCCR, which implemented Council Directive 93/13/EEC on Unfair Terms in Consumer Contracts.

 

[Peterbard]

Yeoman Credit, Ltd. v. Waragowski

 

Dunlop Pneumatic Tyre Co v New Garage and Motor

ALL APPEAL COURT DECISIONS THAT SET PRECEDENT

The Consumer Credit Act 1974 now affirms that the Wargowski clause has no relation to agreements Regulated by the CCA 1974

 

UTCCR, which implemented Council Directive 93/13/EEC on Unfair Terms in Consumer Contracts.

 

 

The first case you quote clarifies the position on the enforceablilty of a liquidated penalty clause on agreements, this is widely believed to only apply to unregulated agreements , although this is not proven in a higher court, it is believed to be the case.

 

Dunlop is concerned with agreed penalty clauses

 

So you see there is nothing.

 

Indecently the opinion regarding the lack of authority in this is not just mine you will find that all the advice agencies share it.

[postggj]

Credit companies jumped on the bandwagon of including the waragowski clause into their agreements/contracts until the CCA 1974 came into force,

regulated or not.

 

Dunlop is relevant as anything else charged above the 50 % termination mark will be seen as a penalty and an Unjust Enrichment to the creditor

 

The UTTCR will then be then relevant to the above

 

I have quoted the authority that the creditor is only entitled to claim up to the 50% termination figure in the agreement, any more is a penalty

 

i am looking for statutory legislation/case law which states that they can charge 100% of the agreement ON TERMINATION, AND NOT BE A PENALTY

Edited June 29, 2013 by postggj

[Peterbard]

Credit companies jumped on the bandwagon of including the waragowski clause into their agreements/contracts until the CCA 1974 came into force

 

Dunlop is relevant as anything else charged above the 50 % termination mark will be seen as a penalty and an Unjust Enrichment to the creditor

 

The UTTCR will thenbe then relevant to the above

 

I have quoted the authority that the creditor is only entitled to claim up to the 50% termination figure in the agreement, any more is a penalty

 

i am looking for statutory legislation/case law which states that they can charge 100% of the agreement ON TERMINATION, AND NOT BE A PENALTY

 

Your first statement is incorrect.

 

Before the CCA repealed the earlier HP act 1965 all terminations had to be limited to 50% the CCA in fact enabled the liquidated damages issue to rear its head again.

 

The penalty situation regarding contract law is due to common law precepts and not any individual case. The Donlop refereed to this however its main argument was regarding the practice of agreed contractual penalties. "READ IT".

[postggj]

I am looking for statutory legislation/case law which states that the creditor can charge 100% of the agreement ON TERMINATION, AND NOT BE A PENALTY

 

i am not looking for common law principles as such, just case law/legislation that has to be compatible with common law concepts to support the argument

 

Answer my question

 

Simples

[Peterbard]

Credit companies jumped on the bandwagon of including the waragowski clause into their agreements/contracts until the CCA 1974 came into force,

regulated or not.

 

Dunlop is relevant as anything else charged above the 50 % termination mark will be seen as a penalty and an Unjust Enrichment to the creditor

 

The UTTCR will then be then relevant to the above

 

I have quoted the authority that the creditor is only entitled to claim up to the 50% termination figure in the agreement, any more is a penalty

 

i am looking for statutory legislation/case law which states that they can charge 100% of the agreement ON TERMINATION, AND NOT BE A PENALTY

 

You will not find any, because it is a common law principle that all sums due under a contract become due on repudiatory breach, the question is, does this apply to HP/ conditional sales agreements, what you need to find is something that says it does not.

This does not exisst.

[sequenci]

I am looking for statutory legislation/case law which states that the creditor can charge 100% of the agreement ON TERMINATION, AND NOT BE A PENALTY

 

i am not looking for common law principles as such, just case law/legislation that has to be compatible with common law concepts to support the argument

 

Answer my question

 

Simples

 

Would Wadham Stringer v Meaney be of use?

 

Wish I had more time to devote to helping guys, I'm massively busy right now (in the office as I'm typing this - on a Saturday. Pah.)

[postggj]

quote

what you need to find is something that says it does not.

This does not exist.

NOW WE ARE GETTING SOMEWHERE

 

if it does not exist, only under common law principles, yet statutory legislation/case law which has to be compatible with English common law states it is a penalty/unjust enrichment this practice

 

WHY HAS IT NOT BEEN CHALLENGED, OR EVEN RECORDS OF CLAIMS BEEN MADE AVAILABLE

 

Is it that no one has challenged the Status Quo on this and when a creditor is challenged, they capitulate rather than haveing a definitive case law judgement go against them, which will have an impact on the whole finance industry practice

Edited June 29, 2013 by postggj

[postggj]

Would Wadham Stringer v Meaney be of use?

 

Wish I had more time to devote to helping guys, I'm massively busy right now (in the office as I'm typing this - on a Saturday. Pah.)

 

i will have a nose

 

many thanks

[sequenci]

I've got a couple of articles that argue exactly this point - the one I posted up earlier goes some way to argue for it - there was a response from the FLA arguing the other. I'll see if I can get them for you

[sequenci]

This looks good: http://www.bermans.co.uk/publications.php?10.articles.view.605

[postggj]

FlA is just their to support its fee paying members

 

i will expect them to be prejudiced in favour of the creditor, and they are only advisory, not a regulator

[sequenci]

FlA is just their to support its fee paying members

 

i will expect them to be prejudiced in favour of the creditor, and they are only advisory, not a regulator

 

100% agree mate.

[postggj]

this looks good: http://www.bermans.co.uk/publications.php?10.articles.view.605

 

 

just what the doctor ordered

 

keep it coming

[Peterbard]

Yes many of the cases I was referring to ,thanks.

 

As said though there are argument on both sides. And little or no legal authority.As far as I can se the only reason for limiting damages is the legacy of the HP act, which showed that at least at that time parliament had it in mind that reclaiming all sums due under a HP agreement was unfair.

 

Much is said about contractual clauses within the agreement being of great importance regarding the claiming of contractual damages on a repudiated agreement, I can see no reason why these should be even needed, to be honest, unless there is something that distinguishes HP agreements from a conventional contract.

[postggj]

I think we are finding common ground

[Peterbard]

I think we are finding common ground

 

Just got off on the wrong foot I think

[Peterbard]

I think , and this is purely a theory because I have not read it anywhere else.

 

That the reason the CCA discontinued the 50% rule for creditors termination was because of the introduction of the early settlement regs.

 

If the creditor terminates within the term of the agreement the debtor can reclaim a sum equivalent to the unpaid interest under the agreement(roughly).

 

The difference is that the bill has to be paid and then the settlement taken off(although this is usually part of the same calculation), unless a part exchange is in the pipeline, whereas in a VT any additional settlement liability occurs post termination.

Edited June 29, 2013 by Dodgeball

[Gaston Grimsdyke]

I think , and this is purely a theory because I have not read it anywhere else.

 

That the reason the CCA discontinued the 50% rule for creditors termination was because of the introduction of the early settlement regs.

 

I'll ask Francis Bennion next time I see him, but in the meantime you have to remember that the liability following a creditor termination is not per se a penalty. It represents the creditor's actual loss on breach i.e. the return of its capital outlay and compensation for loss of bargain, being the interest on that capital outlay (less of course a discount for early payment in the form of a rebate at the date of actual payment, not the date of termination). It that respect it is no different to the sums due on termination on a motorloan or personal loan, or indeed a mortgage where there is a shortfall after repossession and sale of the property. It is only a penalty when directly compared to a VT liability in that a customer in breach pays more than a customer not in breach. The notion that Parliament deliberately removed the 50% liability for creditor terminations in 1974 to endorse full liability is reinforced by the changes to the more recent Default Notice Regulations which brought into force the requirement that the debtor's right to terminate is set out in the Default Notice, thereby informing the debtor who is in breach that he still has the right to avoid full liability by exercising his right to terminate before the creditor can get in. That is also why the exact amount to be paid on a VT is required to be inserted into the Default Notice, so that a debtor can evaluate whether to allow the creditor to terminate or terminate himself. All this happened post Siddons so no judge is now going to follow Siddons because now a debtor in breach who nevertheless fails to then exercise his right to VT is bringing the "penalty" upon himself.