Cause of action/statute barred

[charharp]

That Pinsent Masons page seems to support an overdraft limitation being 6 years from missed payment not 6 years from when the overdraft was revoked.

 

''The cause of action occurs as soon as the contract is breached''

 

If you go over your overdraft limit and then do not make a payment ever again would the contract not be breached when the payment was due on the unplanned overdraft?

 

From lloyds terms and conditions...

 

''When your account goes into Unplanned Overdraft (but not when we increase one you already

have), we will write to tell you we have agreed to

it, but we will ignore any Unplanned Overdrafts which are repaid by the end of that day when our accounting systems are updated (this is not usually before 10pm) or any overdrafts that are within the

buffer amount described above. We only provide Unplanned Overdrafts for a limited period and we tell you when you must repay one. Your Unplanned Overdraft will in any case end as soon as you have available funds again in your account (but this does not stop you requesting a new Unplanned Overdraft in future). Details of the charges that apply to Unplanned Overdrafts are set out in our Banking Charges guide.''

 

The ''we only provide unplanned overdrafts for a limited time'' suggests they would expect it to be paid back within 30 days. If this is true cause of action would be 30 days after you went into an unplanned overdraft would it not?

 

Brig seems very sure of his position on this subject. After reading his posts on this forum for many months and seeing the time and effort he puts into helping people on here coupled with his knowledge I don't think he would have been so abrupt unless he was sure in his mind that he is correct beyond all doubt.

[fletch70]

As I said I think that is far too simplistic and in any case that could only be for the amount of unplanned overdraft.

IMHO it will be when the make a demand for the full repayment of the O/D

I am sure Dodge will be able to back that up with legal jargon which I am afraid sometimes goes over my head

 

While Brig has many good qualities patience and tact are not two that spring to mind. My belief is that he is mistaken and he has been mistaken on previous occasions as well such as when he used to say it was a waste of time sending CCA requests even for older debts and to just pay what you could afford.

The general consensus amongst those who are in the business not just on here but other forums is that he is in error

[charharp]

Under the circumstances of having an overdraft and being within your limit then just abandoning the account, then say 12 months later the bank recalling it because the account is dormant the limitation would start from the time the overdraft was recalled. However in the scenario where you have an overdraft and you exceed your limit so you have an unauthorized overdraft and the bank demands you make payment to bring your account back into order and you have a set time to do so as set out in the terms and conditions and you then fail to make that payment then the contract is breached at that point and the limitations starts from that date as long as no further payments and the account is never brought back into order. This interpretation seems watertight to me.

[charharp]

As I said I think that is far too simplistic and in any case that could only be for the amount of unplanned overdraft.

 

I think cause of action refers to the account as a whole, it doesn't seem likely to me that a single debt on the same account can be split into different factions with separate rules.

[charharp]

The account has one contract, non repayment of unplanned overdraft in the time set out in the terms and conditions is a breach of that contract and limitations begins from that point. I see no possible counter argument to this.

[sequenci]

Yup, big differences between a planned and unplanned overdraft. Unplanned = automatic breach of terms and conditions. Planned = time runs from when demand is made) see Lloyds Bank Ltd v Margolis)

[Peterbard]

Overdrafts have no set repayment regime unlike fixed sum or credit cards, so following your argument, when would you say a payment was missed anyway?

 

Personally I have an overdraft with the CO-OP for about £5 for about ten years, it is just an account I do not use, they do not bother me(probably because I have another account with them) but I get a statement every six months. The OD is still live I could pay into it any time i like,i n other words they have no cause of action.(Action according to section 38 of the SOL meaning action in court). Until the debt is recalled they cannot demand repayment.

 

THis is from the BMW judgment which covers much of the same ground.

 

That was a right that he could choose to exercise

or not, but unless he elected to do so, the contract continued in existence and instalments of

hire would have fallen due at the stipulated intervals. Under section 5 of the Limitation Act

1980 time in a case of this kind runs from the date when the cause of action accrues. In this

case, the cause of action to recover the amounts claimed under clause 12 did not accrue on

the customer's default alone, but only upon the election of the hirer to terminate the contract.

26. In my view, therefore, the claim is not time-barred. For those reasons, as well as the

reasons given by Rix L.J., I agree that the appeal should be allowed.

 

Some try to dismiss this by saying it is for an unregulated agreement, this is not good enough, if you are going to say that this reasoning does not apply then you must say why a regulated agreement is distinguished from this.

 

Being a regulated agreement actually contributes to the argument, because a termination clause cannot be be actionable without the issuance of a DN unlike in unregulated agreements where acceleration(termination) clauses are common place on defaulted payments. This means that the COA cannot take place until the termination of the agreement.

[charharp]

Yup, big differences between a planned and unplanned overdraft. Unplanned = automatic breach of terms and conditions. Planned = time runs from when demand is made) see Lloyds Bank Ltd v Margolis)

 

Read the lloyds terms and conditions on post 101...

 

''When your account goes into Unplanned Overdraft, we will write to tell you we have agreed to it......We only provide Unplanned Overdrafts for a limited period and we tell you when you must repay one.''

 

Unplanned overdraft is not automatic breach of t&c's, not making payment to correct it in the time set out is. You can not separate the planned and unplanned sections of the overdraft, they are as one in the same account governed by the same contract. If that contract is breached it applies to the whole account.

[charharp]

Overdrafts have no set repayment regime unlike fixed sum or credit cards, so following your argument, when would you say a payment was missed anyway?

 

Personally I have an overdraft with the CO-OP for about £5 for about ten years, it is just an account I do not use, they do not bother me(probably because I have another account with them) but I get a statement every six months. The OD is still live I could pay into it any time i like,i n other words they have no cause of action.(Action according to section 38 of the SOL meaning action in court). Until the debt is recalled they cannot demand repayment.

 

THis is from the BMW judgment which covers much of the same ground.

 

That was a right that he could choose to exercise

or not, but unless he elected to do so, the contract continued in existence and instalments of

hire would have fallen due at the stipulated intervals. Under section 5 of the Limitation Act

1980 time in a case of this kind runs from the date when the cause of action accrues. In this

case, the cause of action to recover the amounts claimed under clause 12 did not accrue on

the customer's default alone, but only upon the election of the hirer to terminate the contract.

26. In my view, therefore, the claim is not time-barred. For those reasons, as well as the

reasons given by Rix L.J., I agree that the appeal should be allowed.

 

Some try to dismiss this by saying it is for an unregulated agreement, this is not good enough, if you are going to say that this reasoning does not apply then you must say why a regulated agreement is distinguished from this.

 

Being a regulated agreement actually contributes to the argument, because a termination clause cannot be be actionable without the issuance of a DN unlike in unregulated agreements where acceleration(termination) clauses are common place on defaulted payments. This means that the COA cannot take place until the termination of the agreement.

 

You do not not know the particulars of that agreement, without seeing the contract you can not judge if that ruling applies to an overdraft.

[charharp]

Overdrafts have no set repayment regime unlike fixed sum or credit cards, so following your argument, when would you say a payment was missed anyway?

 

A planned overdraft does not have a set repayment but an unauthorized overdraft does.

[sequenci]

Read the lloyds terms and conditions on post 101...

 

''When your account goes into Unplanned Overdraft, we will write to tell you we have agreed to it......We only provide Unplanned Overdrafts for a limited period and we tell you when you must repay one.''

 

Unplanned overdraft is not automatic breach of t&c's, not making payment to correct it in the time set out is. You can not separate the planned and unplanned sections of the overdraft, they are as one in the same account governed by the same contract. If that contract is breached it applies to the whole account.

 

I get that, and as I've harped on since day one when it comes to limitations - the devil is often in the detail - i.e. the contractual terms.

[charharp]

I get that, and as I've harped on since day one when it comes to limitations - the devil is often in the detail - i.e. the contractual terms.

 

I'm not sure, but as an educated guess I can not see any bank allowing you more than till the end of the following month to correct an unauthorized overdraft.

[sequenci]

I'm not sure, but as an educated guess I can not see any bank allowing you more than till the end of the following month to correct an unauthorized overdraft.

 

I think you're right.

[charharp]

We may be close to a consensus, maybe Brig will come back from his self imposed isolation to settle it!

[fletch70]

Well they are interesting times and it will take a brain far more persuasive than mine to sort this out. I think there are plenty of counter arguments to that and I would rather be safe than sorry. The thread was started to discuss this topic and at least two very knowledgeable people have tried to explain the whys and wherefores. I admit I do not fully understand some of the points raised but I am prepared to take their word for it based on past experience and some knowledge of their skills. My belief is that until they claim repayment there is no start to the limitations period and as such the last date of credit to the account can not be classed as the cause of action.

 

In any event even if we accepted the scenario you present you have yourself discredited the argument presented by the Brig of last payment being the start

 

Personally I would never send a SB letter unless i knew for 100% that it was so....although if I had no other option I might use it as a defence in court and let a judge decide. I am sure Mr Hart thought he had a clear cut argument. Sadly for him he didn't. Judges are funny people

[Peterbard]

Read the lloyds terms and conditions on post 101...

 

''When your account goes into Unplanned Overdraft, we will write to tell you we have agreed to it......We only provide Unplanned Overdrafts for a limited period and we tell you when you must repay one.''

 

Unplanned overdraft is not automatic breach of t&c's, not making payment to correct it in the time set out is. You can not separate the planned and unplanned sections of the overdraft, they are as one in the same account governed by the same contract. If that contract is breached it applies to the whole account.

 

As said frequently cause of action occurs when the creditor is entitled to demand full repayment of the loan, on an unplanned overdraft that has been allowed to continue, there is a "tacit agreement" in place, this is covered by section 74 of the consumer credit act, and the terms of any agreement should be sent , until the debt is actually recalled the sum issued under this is not due for repayment, so the COA has not occurred.

When the bank says this must be re-payed , that is when the COA commences.

Edited December 6, 2013 by Dodgeball

[Peterbard]

Overdrafts have no set repayment regime unlike fixed sum or credit cards, so following your argument, when would you say a payment was missed anyway?

 

A planned overdraft does not have a set repayment but an unauthorized overdraft does.

 

It may well do but the point is that the amount due under it will not be due until the facility is withdrawn, which is the same scenario, the OD will be terminated.

 

Usually in this case no default notice is required , but a termination notice is. This will be the cause of action.

[charharp]

My understanding is it occurs from the date of the first missed payment not the last payment made. If Brig is reading maybe he can clarify his point.

 

As said frequently cause of action occurs when the creditor is entitled to demand full repayment of the loan, on an unplanned overdraft that has been allowed to continue, there is a "tacit agreement" in place, this is covered by section 74 of the consumer credit act, and the terms of any agreement should be sent , until the debt is actually recalled the sum issued under this is not due for repayment, so the COA has not occurred, when the bank says this must be re-payed , that is when the COA commences.

 

That holds true for an overdraft under normal conditions, but limitations applies from when the contract is breached. When you go into an unplanned overdraft and you do not make repayment as set out in terms and conditions you have breached the contract for the account and that is cause of action. You can not separate the planned and unplanned overdrafts, they are one.

[fletch70]

It actually took santander several months to demand full repayment from me on my unarranged OD. I had several letters saying you need to repay but no restriction to facilities . To be honest they seemed quite happy just to keep banging on more charges.

[charharp]

My credit file also has me 1 month in arrears the month after I went into unplanned overdraft, 2 months later they could have defaulted me and that would have been at least 6 months before they demanded the overdraft back. Having an overdraft recalled and having an unplanned overdraft which is not repayed is the key difference.

[sequenci]

We may be close to a consensus, maybe Brig will come back from his self imposed isolation to settle it!

 

He's welcome to join the party - though I disagree with some of his ideas on limitations and the like, as I'm sure he & others may disagree with mine

[Peterbard]

You do not not know the particulars of that agreement, without seeing the contract you can not judge if that ruling applies to an overdraft.

 

The point of the ruling is the COA is not derived solely from the default, it illustrates that the default alone is not sufficient to trigger the COA.

 

The requirement for COA is the ability to demand payment, not the default. In some agreements they will be one of the same because all sums will become due immediately upon a defaulted payment. In the BMW case this was not the case because of a clause in the agreement, in regulated loans it is because the way the CCA works( sums cannot be demanded until the agreement is properly terminated).

[fletch70]

It seems the Brig maybe taking a back seat as he has removed his avatar and not posted since wednesday evening which is most unlike him.

 

 

BTW sequenci that would be why you never got my emails lol

[sequenci]

It seems the Brig maybe taking a back seat as he has removed his avatar and not posted since wednesday evening which is most unlike him.

 

 

BTW sequenci that would be why you never got my emails lol

 

Sorry!

 

The back story is that since the CAG mails got hacked I was being sent about 100 spam e-mails a day. In the end I just gave up with e-mail altogether!

[charharp]

The point of the ruling is the COA is not derived solely from the default, it illustrates that the default alone is not sufficient to trigger the COA.

 

The requirement for COA is the ability to demand payment, not the default. In some agreements they will be one of the same because all sums will become due immediately upon a defaulted payment. In the BMW case this was not the case because of a clause in the agreement, in regulated loans it is because the way the CCA works( sums cannot be demanded until the agreement is properly terminated).

 

Default is not cause of action the two are independent. COA is breach of contract, not when they are entitled to demand full payment. Although breach of contract may allow them to demand full payment.