wescot/Nelson Guest - bank of Scotland

[cleo4patra]

Please see this threadhttp://www.consumeractiongroup.co.uk/forum/general-debt-issues/169546-bank-scotland-credit-cards-11.html#post2257010

 

I have recieved a notice of intended legal action from Blair oliver Scott for Mastercard bank of scotland credit card.

 

Challenged documents received under s77/78 - received DSN - not fourteen days to remedey - then terminated.

 

Please can anyone help with a CPR request - Citizen b has posted a letter to send but am unsure of practice directions - proceedings have not been issued yet

 

thanks

 

clkeo

[cleo4patra]

Help!!!!

 

Have posted previously regarding Bank of Scotland Mastercard - DN notice didn't give me 14 days after service to remedy - then terminated in writing.

 

Has been passed on to several debt collectors who have all returned it to BOS - however Wescot are pestering us - insisting there is no dispute.

 

All of a sudden BOS cannot provide a copy of the DN notice - also agreement dodgy.

 

Have now received letter from Nelson Guest solicitors (in a Wescot envelope)threatening legal action.

 

Have tried every letter dodgy DN, bad agreement but they are not listening and insist there is no dispute. Ay ideas please???

 

thanks

 

cleo

[Pinky69]

It is not for them to dispute your dispute and they are just trying to force you to make payment. Send a copy of the Account in Dispute letter to their Complaints Department and mark it at the bottom "Cc The Office of Fair Trading Consumer Credit Licence Fitness Department". Send a copy to the OFT then completely ignore Wescot after that. They will eventually go away.

[cleo4patra]

thanks - will give it a go

[cleo4patra]

thanks - will give it a go

Have now received a further letter from Wescot - informing me of balance due yet again!!!!!! I have written another response emphasising dispute, that they should not be chasing it whilst in dispute, questioning their fitness for a credit licence, and have copied Nelson Guest (Wescot?) in - this is their last chance then its the OFT.

[diddydicky]

i suggest you refer them to the judges comments in BOS v Robert mitchell 2009 and ask them if they really want to push their luck again

 

 

 

IN THE LEEDS COUNTY COURT

HIS HONOUR JUDGE LANGAN QC

BETWEEN:-

BANK OF SCOTLAND PLC

Claimant

-and-

ROBERT MITCHELL

Defendant

SKELETON ARGUMENT

ON BEHALF OF THE DEFENDANT

1. This is the trial of the issue directed to be heard by the Order of District Judge

Jordan dated 29th January 2009 [4]. That order set aside the default judgment in

the action and directed that there be a trial of the issue identified in the recitals to

the Order.

The Issues to be Determined at the Hearing

2. Since the Defendant was then acting in person and it appears that there was no

attendance on that occasion on behalf of the Claimant the precise definition of the

issue is derived from the following words namely the recording by the District

Judge that the Defendant was “proceeding (sic) on the basis of a breach of s.

61(1)(a) of the Consumer Credit Act 1974, namely that the Claimant failed to

comply with the requirements to give copies of all the documents relevant to the

agreement at the time of signing” and the Defendant “contending that

2

notwithstanding s. 65 of [the] Consumer Credit Act 1974 s. 127(3) of the Act

preventing the enforcement.”

3. Having regard to those recitals and the evidence filed by the parties prior to and

after the making of the Order directing this hearing a sharper yet faithful

definition of the issues would be as follows: -

(1) Was the Credit Agreement improperly executed by reason of a failure to

comply with the requirements of section 61(1)(a) of the Consumer Credit Act

1974 (“the 1974 Act”)?

(2) If so, does section 127(3) of the 1974 Act preclude the granting by the Court

of an enforcement order, so as to render the Credit Agreement irredeemably

unenforceable?

4. Pursuant to District Judge Jordan’s Order the following witness statements were

exchanged, namely:-

(1) the Statement of Robert Mitchell, the Defendant dated the 4th March 2009; and

(2) the Statement of Neil William Russell, a legal assistant employed by the

Claimant dated the 3rd April 2009.

5. It is common ground that on the 2nd December 2003 the Defendant signed the

document, which is headed “CREDIT CARD APPLICATION” [11]. The

document was also signed on behalf of the Claimant on the 2nd December 2003

3

whereby it became an executed credit agreement. For convenience the document

is henceforth referred to as “the Credit Agreement”.

The Statutory Framework

6. The Credit Agreement is for running-account credit within the meaning of section

10 (1) (a) of the 1974 Act and is a regulated agreement.

7. By section 60 of the 1974 Act, the Secretary of State is required to make

regulations as to the form and content of regulated agreements.

8. There are very detailed requirements, which prescribe the form and contents and

manner of signing of regulated agreements. What is important for the present is

the requirement in section 61(1)(a) for there to be in existence a signed document

containing all the prescribed terms.

9. Section 61(1) of the 1974 Act provides that

A regulated agreement is not properly executed unless – (a) a document in the

prescribed form itself containing all the prescribed terms and conforming to

regulations under section 60(1) is signed in the prescribed manner both by the

debtor …and by or on behalf of the creditor…

4

10. Amongst the regulations made under section 60(1) the most important for the

present purposes is the Consumer Credit (Agreements) Regulations 1983 (SI

1983/1553) (“the Agreement Regulations”).

11. The reference to “the prescribed terms” is to those terms which are set out in

Schedule 6 to the Agreement Regulations. In the case of running-account credit

agreements are prescribed terms are those which specify:

(a) the credit limit or the manner in which it will be determined or a statement that

there is no credit limit;

(b) the rate of interest;

© the repayments, which may be described by reference to a combination of any

of the number, amount, frequency and timing of payments, date of repayments

and the manner in which any of the foregoing may be determined; and any

power of the creditor to vary what is payable.

12. If the document, which is the regulated agreement, does not contain all the

prescribed term then it an improperly executed agreement. In the present case it is

contended that the Credit Agreement did not contain any of the prescribed terms

and was therefore improperly executed for that reason.

13. Section 65 (1) of the 1974 Act provides that

An improperly-executed regulated agreement is enforceable against the

debtor…on an order of the Court only.”

5

14. However such specific form of improper execution presents an insurmountable

difficulty for a creditor such as the Claimant in circumstances where the relevant

agreement was executed prior to the 6th April 2007.

15. Prior to the amendments introduced by the Consumer Credit Act 2006 section

127(1) of the 1974 Act provided as follows: -

In the case of an application for an enforcement order under section 65(1)

(improperly executed agreements)… the court shall dismiss the application if, but

(subject to subsections (3) and (4)) only if, it considers it just to do so having

regard to the prejudice caused to any person by the contravention in question, and

the degree of culpability for it; and the powers conferred on the court by

subsection (2) and sections 135 and 136.

16. The underlined words together with the subsections (3) and (4) were removed by

the amending statute in 2006 with effect from the 6thApril 2007 but those repeals

were not made retrospective in effect. Accordingly in relation to relevant Credit

Agreement the subsection 127(3) still applies and provides that:

The Court shall not make an enforcement order under section 65(1) if section

61(1) (a) was not complied with unless a document (whether or not in the

prescribed form and complying with regulations under section 60 (1) itself

containing all the prescribed terms of the agreement was signed by the debtor

whether or not in the prescribed manner.

17. There is no doubt that the practical effect of a failure to comply section 61(1)(a) is

to render the relevant credit agreement irredeemably unenforceable since the

Court is bound to dismiss the application for an enforcement order unless the

credit is able to produce a document containing all the prescribed terms signed by

the debtor. This proposition is unlikely to be challenged and is entirely supported

6

by two House of Lords decisions: Dimond v Lovell [2002] 1 AC 384 and Wilson v

First County Trust (No 2) [2004] 1 AC 816.

Has there been a failure to comply with section 61(1)(a) of the 1974 Act?

18. According to the Defendant he was provided with a copy of the executed credit

agreement, which comprised nothing more that the signed document itself and

which appears at [11]. He is adamant that he was not supplied with any other

documents or terms and conditions.

19. There is no direct challenge to the Defendant’s evidence. Mr. Russell in his

statement refers to standard procedures and expresses his belief that a copy of a

further document comprising terms and conditions would have been provided to

the Defendant (a) at the time of signing as well as (b) together with further copy

of the executed credit agreement by post.

20. Mr. Russell also makes the point in paragraphs 12 and 13 of this statement (which

it is assumed will be developed in legal submissions) that there was a reference to

the Conditions in the credit agreement and that they were also the subject-matter

of a declaration by the Defendant so that presumably it is said that those

Conditions were incorporated into the credit agreement.

7

21. Whilst there would appear to be a factual issue to be determined in the present

case and one in which we invite the Court to believe the Defendant, it is

submitted, irrespective of the finding made by the Court, that as a matter of

objective reality the Credit Agreement failed to comply with section 61(1)(a) of

the 1974 Act since it does not contain the prescribed terms. The writer is quite

willing to advance this submission by way of a preliminary point of law and

construction because if he is correct then strictly no live evidence will be

necessary to be heard.

22. The key words in section 61(1)(a) are the reference to a “document” “itself

containing all the prescribed terms and conforming to the regulations under

section 60(1)”. This language is clear and specific and ensures that mere reference

to terms contained in another document will not suffice. The document must

contain the prescribed terms just as the signed document referred to in section

127(3), which might save the day, must however contain the prescribed terms.

23. The construction contended for by the Defendant is entirely consistent with the

language of section 61(1) and is also supported by Professor Goode in his

encyclopaedic work (cf. Goode: Consumer Credit Law and Practice Vol. 2

IIB[5.121] and see also the comments at IIB[5.247). There the learned author

draws a distinction between the language of paragraph (a) (“contain”) and

paragraph (b) (“embody”). It is respectfully submitted that the Court should adopt

the same reasoning in determining this issue in favour of the Defendant

8

irrespective of whether or not it finds that the Defendant was supplied with

documents other than the Credit Agreement itself.

24. It is submitted that the first of the two issues to be determined must be answered

as follows: The Credit Agreement was improperly executed by reason of a

failure to comply with the requirements of section 61(1)(a) of the Consumer

Credit Act 1974.

Is the Credit Agreement Irredeemably Unenforceable?

25. It follows as a matter of law from the determination of the first of the issues that

the particular non-conformity is in relation to prescribed terms and that the Court

can be satisfied that the Claimant will be unable ever to produce a document

containing those prescribed terms signed by the Defendant.

26. Accordingly the determination of the second issue is also in favour of the

Defendant and the Court must find that as section 127(3) of the 1974 Act

precludes the granting by the Court of an enforcement order the Credit

Agreement irredeemably unenforceable.

David Berkley QC

St John’s Buildings Barristers Chambers

24a-28 St John Street

Manchester M3 4DJ

31st May 2009

 

 

 

 

BANK OF SCOTLAND -v- ROBERT MITCHELL

1st June 2009

APPROVED JUDGMENT

JUDGE LANGAN:

 

1. I have to deal with an issue as to costs which has arisen on the informal discontinuance of an action.

 

2. The action was commenced on 21st May 2008. The claimant bank had, in December 2003, issued a credit card to the defendant, and the claim was for £15,417.23, being the amount said to be due on the defendant's account. Judgment in default, for a total sum of £15,727.23, was obtained on 4th July 2008. The defendant subsequently applied to have the judgment set

aside. That application came before District Judge Jordan on 29th January this year and was successful. The recitals to the District Judge's order say this:

"And upon the defendant's proceedings on the basis of a breach of

Section 61(1)(a) of the Consumer Credit Act, namely that the claimant

failed to comply with the requirements to give copies of all the

documents relevant to the agreement at the time of signing, and upon

the defendant contending that notwithstanding Section 65 of the

Consumer Credit Act 1974, Section 127(3) of the Act preventing the

enforcement".

 

After those recitals it is ordered the court sets judgment aside, and it is ordered that there be, "A determination of the issue set out above". Various procedural directions then follow.

 

3. What has been listed for trial today is, "The determination of issue", referred to in the order which I have just recited.

 

4. The agreement made in relation to the defendant's credit card was a regulated agreement within the Consumer Credit Act 1974. Section 61(1)(a) of that Act provides:

 

"A regulated agreement is not properly executed unless a document in

the prescribed form, itself containing all the prescribed terms and

conforming to regulations under Section 60(1), is signed in the

prescribed manner, both by the debtor or hirer, and by or on behalf of

the creditor or owner".

 

Having regard to the date of the agreement made in this case, which was prior to amendments made to the Act which took effect from 5th April 2007, the result of non compliance with Section 61(1)(a) would be that the credit card agreement would be unenforceable against the defendant, see Consumer Credit Act 1974 Section 127(3).

 

5. This morning I was informed by Miss Gardner, counsel for the bank, that the bank was withdrawing its claim against the defendant. This announcement has been accepted by Mr Berkley QC, who appears for the defendant, as equivalent to the service of a notice of discontinuance under the Civil Procedure Rules Part 38.6.1:

 

"Unless the court orders otherwise, a claimant who discontinues is

liable for the costs which a defendant against whom the claimant

discontinues incurred, on or before the date on which notice of

discontinuance was served on the defendant".

 

Miss Gardner contends that the court should, "Order otherwise", and make no order for costs as between the parties. Mr Berkley contends that the presumption in CPR 38.1.6 should operate, and further that the order for costs to be made in favour of his client should be an order for assessment on the indemnity basis.

 

6. The thrust of Miss Gardner's submission is that the issue directed by the District Judge, and on which the evidence has been focussed, is whether the bank supplied the defendant at the time of signing the application form for credit with documents which contained all the terms of the agreement between them. I shall elaborate a little further on this. It has been the defendant's case that he was supplied with nothing more than the application form which he signed. It has been the bank's case that in accordance with the usual practice of the bank the defendant would have been, and must have been, supplied with other documents, including a pack which will have contained all the terms and conditions of the agreement made between the parties. Miss Gardner goes on to say that the defendant has at the last moment taken a new and radically different point, namely that the document signed by the defendant did not contain all the prescribed terms of the agreement. I must again elaborate on this. It is common ground that the only document signed by the defendant was the application form. It is also common ground that the application form did not, on its face, set out the prescribed terms of the agreement between the parties. The point which is treated by Miss Gardner as a

new point is dealt with in paragraphs 22 and 23 of Mr Berkley's written argument, and it will, I think, be more economical if I simply quote those two paragraphs in full rather than attempt,in my own words, to expand on them:

 

"The key words in Section 61(1)(a) are the reference to a document

itself containing all the prescribed terms, and conforming to the

regulations under Section 61. This language is clear and specific, and

ensures that mere reference to terms contained in another document

will not suffice. The document must contain the prescribed terms, just

as the signed document referred to in Section 127(3), which might save

the day, must however contain the prescribed terms. The construction

contended for by the defendant is entirely consistent with the language

of Section 61(1), and is also supported by Professor Good in his

encyclopaedic work - see Good & Consumer Credit Law and Practice

volume 2, 2B 5.121, and see also the comments at 2B 5.247. There the

learned author draws a distinction between the language of paragraph

(a) contain and paragraph (b) embody. It is respectfully submitted that

the court should adopt the same reasoning in determining this issue in

favour of the defendant, irrespective of whether or not it finds that the

defendant was supplied with documents other than the credit

agreement itself".

 

7. In my judgment, the point with which I have just been dealing is not properly to be characterised as a new point on which the bank can present itself as being taken by surprise. I refer to four documents. First, on 3rd November 2008, when the defendant was acting as a litigant in person, in the request to have the default judgment set aside he said this:

 

"As the court is aware, in the absence of all the prescribed terms being

embodied, it will render a document unenforceable in court. These

terms must be contained within the agreement, and not in a separate

document headed 'Terms and Conditions', or words to that effect".

Secondly, on 18th February 2009, solicitors, who were by then acting for the defendant, sent to the solicitors acting for the bank a copy of what they called an expert report setting out the reasons why the agreement was in breach of Section 61(1)(a), and they went on:

 

"As you are aware it is our client's position that at the time he entered

into the agreement he was not provided with a copy of the terms and

conditions governing the agreement".

 

If one goes to the so called expert's report, one finds that it is in effect an opinion prepared by another firm of solicitors, and the opinion contains the following:

 

"Based on the information provided, it appears that the prescribed

terms and conditions were not included in the document signed by the

borrower. The agreement would appear to be in breach of the

regulations in that it does not contain within the signed agreement itself

all of the prescribed terms".

 

Thirdly, that point having been taken on behalf of the defendant, it was robustly rejected by the solicitors acting for the bank in their reply of 19th March 2009:

 

"Our client has sought counsel's opinion on this matter and her view is

that the agreement is compliant. We note that your client is arguing

that at the time of signing the agreement, the application for a credit

card, he was not provided with the actual terms and conditions which

were contained in a separate document to the application. Whilst our

client accepts that the application itself does not comply with the

requirements of the Consumer Credit Act 1974, and only becomes

compliant by reference to terms and conditions, there are references in

the agreement to the conditions in which it states that they are provided

in the Halifax credit card application pack".

 

Fourthly, going back in time a little, on 4th March 2009, in the defendant's witness statement made for the purpose of the trial of the issue, at the very beginning of the statement, in paragraph 3, he said this:

 

"It is my position that the agreement is not enforceable by the claimant

as it has failed to comply with its obligations under Section 61 of the

Consumer Credit Act 1974 by failing to include within the document

that I signed all the prescribed terms".

 

8. The absence of further reference to the point in the evidence is hardly surprising, since the point is one of law, on which there was no controversy as to the facts.

 

9. Miss Gardner has given no reason for the withdrawal of the action. She is in no way to be criticised for the omission. She is bound to act in accordance with her instructions, and those instructions were presumably to say no more than she has in fact said. But this does not prevent me from drawing what is in my judgment the only inference which can possibly be drawn from what has happened, which is that the bank realises that if the issue were to be

contested it would either lose on the issue or be at serious risk of losing. There may be hundreds of similar cases and the bank would plainly not wish other defaulting customers to get wind of an adverse decision on the fundamental point which is embodied in the quotation from Mr Berkley's written argument, which I have already set out.

 

10. Accordingly, I conclude, without hesitation, that there is no reason for displacing the presumption as to incidence of costs which is ordinarily applicable in a case of discontinuance. The bank will pay the defendant's costs of the claim, subject only to any existing order for costs in favour of the bank not being disturbed.

 

11. Finally, I have to consider whether the costs of the defendant should be assessed on the standard or on the indemnity basis. In my judgment the assessment should be on the indemnity basis. The only realistic view of what has happened is that the bank has surrendered on a straightforward point of law, to which it has on several occasions been alerted by the defendant or his solicitors. A large commercial enterprise which proceeds with litigation in the face of warning signs of the kind which were erected here, adopts a high risk strategy. The point in question was a simple one. There was no relevant controversy as to the evidence. To choose to abandon the claim on the very day of the hearing is doing a serious disservice to the efficient administration of justice, and comes very close to constituting an abuse of process. At the very least, the bank's conduct of the litigation falls comfortably within the range of cases in which, on the modern authorities, an assessment of costs on the indemnity basis is appropriate

[cleo4patra]

i suggest you refer them to the judges comments in BOS v Robert mitchell 2009 and ask them if they really want to push their luck again

 

 

 

IN THE LEEDS COUNTY COURT

HIS HONOUR JUDGE LANGAN QC

BETWEEN:-

BANK OF SCOTLAND PLC

Claimant

-and-

ROBERT MITCHELL

Defendant

SKELETON ARGUMENT

ON BEHALF OF THE DEFENDANT

1. This is the trial of the issue directed to be heard by the Order of District Judge

Jordan dated 29th January 2009 [4]. That order set aside the default judgment in

the action and directed that there be a trial of the issue identified in the recitals to

the Order.

The Issues to be Determined at the Hearing

2. Since the Defendant was then acting in person and it appears that there was no

attendance on that occasion on behalf of the Claimant the precise definition of the

issue is derived from the following words namely the recording by the District

Judge that the Defendant was “proceeding (sic) on the basis of a breach of s.

61(1)(a) of the Consumer Credit Act 1974, namely that the Claimant failed to

comply with the requirements to give copies of all the documents relevant to the

agreement at the time of signing” and the Defendant “contending that

2

notwithstanding s. 65 of [the] Consumer Credit Act 1974 s. 127(3) of the Act

preventing the enforcement.”

3. Having regard to those recitals and the evidence filed by the parties prior to and

after the making of the Order directing this hearing a sharper yet faithful

definition of the issues would be as follows: -

(1) Was the Credit Agreement improperly executed by reason of a failure to

comply with the requirements of section 61(1)(a) of the Consumer Credit Act

1974 (“the 1974 Act”)?

(2) If so, does section 127(3) of the 1974 Act preclude the granting by the Court

of an enforcement order, so as to render the Credit Agreement irredeemably

unenforceable?

4. Pursuant to District Judge Jordan’s Order the following witness statements were

exchanged, namely:-

(1) the Statement of Robert Mitchell, the Defendant dated the 4th March 2009; and

(2) the Statement of Neil William Russell, a legal assistant employed by the

Claimant dated the 3rd April 2009.

5. It is common ground that on the 2nd December 2003 the Defendant signed the

document, which is headed “CREDIT CARD APPLICATION” [11]. The

document was also signed on behalf of the Claimant on the 2nd December 2003

3

whereby it became an executed credit agreement. For convenience the document

is henceforth referred to as “the Credit Agreement”.

The Statutory Framework

6. The Credit Agreement is for running-account credit within the meaning of section

10 (1) (a) of the 1974 Act and is a regulated agreement.

7. By section 60 of the 1974 Act, the Secretary of State is required to make

regulations as to the form and content of regulated agreements.

8. There are very detailed requirements, which prescribe the form and contents and

manner of signing of regulated agreements. What is important for the present is

the requirement in section 61(1)(a) for there to be in existence a signed document

containing all the prescribed terms.

9. Section 61(1) of the 1974 Act provides that

A regulated agreement is not properly executed unless – (a) a document in the

prescribed form itself containing all the prescribed terms and conforming to

regulations under section 60(1) is signed in the prescribed manner both by the

debtor …and by or on behalf of the creditor…

4

10. Amongst the regulations made under section 60(1) the most important for the

present purposes is the Consumer Credit (Agreements) Regulations 1983 (SI

1983/1553) (“the Agreement Regulations”).

11. The reference to “the prescribed terms” is to those terms which are set out in

Schedule 6 to the Agreement Regulations. In the case of running-account credit

agreements are prescribed terms are those which specify:

(a) the credit limit or the manner in which it will be determined or a statement that

there is no credit limit;

(b) the rate of interest;

© the repayments, which may be described by reference to a combination of any

of the number, amount, frequency and timing of payments, date of repayments

and the manner in which any of the foregoing may be determined; and any

power of the creditor to vary what is payable.

12. If the document, which is the regulated agreement, does not contain all the

prescribed term then it an improperly executed agreement. In the present case it is

contended that the Credit Agreement did not contain any of the prescribed terms

and was therefore improperly executed for that reason.

13. Section 65 (1) of the 1974 Act provides that

An improperly-executed regulated agreement is enforceable against the

debtor…on an order of the Court only.”

5

14. However such specific form of improper execution presents an insurmountable

difficulty for a creditor such as the Claimant in circumstances where the relevant

agreement was executed prior to the 6th April 2007.

15. Prior to the amendments introduced by the Consumer Credit Act 2006 section

127(1) of the 1974 Act provided as follows: -

In the case of an application for an enforcement order under section 65(1)

(improperly executed agreements)… the court shall dismiss the application if, but

(subject to subsections (3) and (4)) only if, it considers it just to do so having

regard to the prejudice caused to any person by the contravention in question, and

the degree of culpability for it; and the powers conferred on the court by

subsection (2) and sections 135 and 136.

16. The underlined words together with the subsections (3) and (4) were removed by

the amending statute in 2006 with effect from the 6thApril 2007 but those repeals

were not made retrospective in effect. Accordingly in relation to relevant Credit

Agreement the subsection 127(3) still applies and provides that:

The Court shall not make an enforcement order under section 65(1) if section

61(1) (a) was not complied with unless a document (whether or not in the

prescribed form and complying with regulations under section 60 (1) itself

containing all the prescribed terms of the agreement was signed by the debtor

whether or not in the prescribed manner.

17. There is no doubt that the practical effect of a failure to comply section 61(1)(a) is

to render the relevant credit agreement irredeemably unenforceable since the

Court is bound to dismiss the application for an enforcement order unless the

credit is able to produce a document containing all the prescribed terms signed by

the debtor. This proposition is unlikely to be challenged and is entirely supported

6

by two House of Lords decisions: Dimond v Lovell [2002] 1 AC 384 and Wilson v

First County Trust (No 2) [2004] 1 AC 816.

Has there been a failure to comply with section 61(1)(a) of the 1974 Act?

18. According to the Defendant he was provided with a copy of the executed credit

agreement, which comprised nothing more that the signed document itself and

which appears at [11]. He is adamant that he was not supplied with any other

documents or terms and conditions.

19. There is no direct challenge to the Defendant’s evidence. Mr. Russell in his

statement refers to standard procedures and expresses his belief that a copy of a

further document comprising terms and conditions would have been provided to

the Defendant (a) at the time of signing as well as (b) together with further copy

of the executed credit agreement by post.

20. Mr. Russell also makes the point in paragraphs 12 and 13 of this statement (which

it is assumed will be developed in legal submissions) that there was a reference to

the Conditions in the credit agreement and that they were also the subject-matter

of a declaration by the Defendant so that presumably it is said that those

Conditions were incorporated into the credit agreement.

7

21. Whilst there would appear to be a factual issue to be determined in the present

case and one in which we invite the Court to believe the Defendant, it is

submitted, irrespective of the finding made by the Court, that as a matter of

objective reality the Credit Agreement failed to comply with section 61(1)(a) of

the 1974 Act since it does not contain the prescribed terms. The writer is quite

willing to advance this submission by way of a preliminary point of law and

construction because if he is correct then strictly no live evidence will be

necessary to be heard.

22. The key words in section 61(1)(a) are the reference to a “document” “itself

containing all the prescribed terms and conforming to the regulations under

section 60(1)”. This language is clear and specific and ensures that mere reference

to terms contained in another document will not suffice. The document must

contain the prescribed terms just as the signed document referred to in section

127(3), which might save the day, must however contain the prescribed terms.

23. The construction contended for by the Defendant is entirely consistent with the

language of section 61(1) and is also supported by Professor Goode in his

encyclopaedic work (cf. Goode: Consumer Credit Law and Practice Vol. 2

IIB[5.121] and see also the comments at IIB[5.247). There the learned author

draws a distinction between the language of paragraph (a) (“contain”) and

paragraph (b) (“embody”). It is respectfully submitted that the Court should adopt

the same reasoning in determining this issue in favour of the Defendant

8

irrespective of whether or not it finds that the Defendant was supplied with

documents other than the Credit Agreement itself.

24. It is submitted that the first of the two issues to be determined must be answered

as follows: The Credit Agreement was improperly executed by reason of a

failure to comply with the requirements of section 61(1)(a) of the Consumer

Credit Act 1974.

Is the Credit Agreement Irredeemably Unenforceable?

25. It follows as a matter of law from the determination of the first of the issues that

the particular non-conformity is in relation to prescribed terms and that the Court

can be satisfied that the Claimant will be unable ever to produce a document

containing those prescribed terms signed by the Defendant.

26. Accordingly the determination of the second issue is also in favour of the

Defendant and the Court must find that as section 127(3) of the 1974 Act

precludes the granting by the Court of an enforcement order the Credit

Agreement irredeemably unenforceable.

David Berkley QC

St John’s Buildings Barristers Chambers

24a-28 St John Street

Manchester M3 4DJ

31st May 2009

 

 

 

 

BANK OF SCOTLAND -v- ROBERT MITCHELL

1st June 2009

APPROVED JUDGMENT

JUDGE LANGAN:

 

1. I have to deal with an issue as to costs which has arisen on the informal discontinuance of an action.

 

2. The action was commenced on 21st May 2008. The claimant bank had, in December 2003, issued a credit card to the defendant, and the claim was for £15,417.23, being the amount said to be due on the defendant's account. Judgment in default, for a total sum of £15,727.23, was obtained on 4th July 2008. The defendant subsequently applied to have the judgment set

aside. That application came before District Judge Jordan on 29th January this year and was successful. The recitals to the District Judge's order say this:

"And upon the defendant's proceedings on the basis of a breach of

Section 61(1)(a) of the Consumer Credit Act, namely that the claimant

failed to comply with the requirements to give copies of all the

documents relevant to the agreement at the time of signing, and upon

the defendant contending that notwithstanding Section 65 of the

Consumer Credit Act 1974, Section 127(3) of the Act preventing the

enforcement".

 

After those recitals it is ordered the court sets judgment aside, and it is ordered that there be, "A determination of the issue set out above". Various procedural directions then follow.

 

3. What has been listed for trial today is, "The determination of issue", referred to in the order which I have just recited.

 

4. The agreement made in relation to the defendant's credit card was a regulated agreement within the Consumer Credit Act 1974. Section 61(1)(a) of that Act provides:

 

"A regulated agreement is not properly executed unless a document in

the prescribed form, itself containing all the prescribed terms and

conforming to regulations under Section 60(1), is signed in the

prescribed manner, both by the debtor or hirer, and by or on behalf of

the creditor or owner".

 

Having regard to the date of the agreement made in this case, which was prior to amendments made to the Act which took effect from 5th April 2007, the result of non compliance with Section 61(1)(a) would be that the credit card agreement would be unenforceable against the defendant, see Consumer Credit Act 1974 Section 127(3).

 

5. This morning I was informed by Miss Gardner, counsel for the bank, that the bank was withdrawing its claim against the defendant. This announcement has been accepted by Mr Berkley QC, who appears for the defendant, as equivalent to the service of a notice of discontinuance under the Civil Procedure Rules Part 38.6.1:

 

"Unless the court orders otherwise, a claimant who discontinues is

liable for the costs which a defendant against whom the claimant

discontinues incurred, on or before the date on which notice of

discontinuance was served on the defendant".

 

Miss Gardner contends that the court should, "Order otherwise", and make no order for costs as between the parties. Mr Berkley contends that the presumption in CPR 38.1.6 should operate, and further that the order for costs to be made in favour of his client should be an order for assessment on the indemnity basis.

 

6. The thrust of Miss Gardner's submission is that the issue directed by the District Judge, and on which the evidence has been focussed, is whether the bank supplied the defendant at the time of signing the application form for credit with documents which contained all the terms of the agreement between them. I shall elaborate a little further on this. It has been the defendant's case that he was supplied with nothing more than the application form which he signed. It has been the bank's case that in accordance with the usual practice of the bank the defendant would have been, and must have been, supplied with other documents, including a pack which will have contained all the terms and conditions of the agreement made between the parties. Miss Gardner goes on to say that the defendant has at the last moment taken a new and radically different point, namely that the document signed by the defendant did not contain all the prescribed terms of the agreement. I must again elaborate on this. It is common ground that the only document signed by the defendant was the application form. It is also common ground that the application form did not, on its face, set out the prescribed terms of the agreement between the parties. The point which is treated by Miss Gardner as a

new point is dealt with in paragraphs 22 and 23 of Mr Berkley's written argument, and it will, I think, be more economical if I simply quote those two paragraphs in full rather than attempt,in my own words, to expand on them:

 

"The key words in Section 61(1)(a) are the reference to a document

itself containing all the prescribed terms, and conforming to the

regulations under Section 61. This language is clear and specific, and

ensures that mere reference to terms contained in another document

will not suffice. The document must contain the prescribed terms, just

as the signed document referred to in Section 127(3), which might save

the day, must however contain the prescribed terms. The construction

contended for by the defendant is entirely consistent with the language

of Section 61(1), and is also supported by Professor Good in his

encyclopaedic work - see Good & Consumer Credit Law and Practice

volume 2, 2B 5.121, and see also the comments at 2B 5.247. There the

learned author draws a distinction between the language of paragraph

(a) contain and paragraph (b) embody. It is respectfully submitted that

the court should adopt the same reasoning in determining this issue in

favour of the defendant, irrespective of whether or not it finds that the

defendant was supplied with documents other than the credit

agreement itself".

 

7. In my judgment, the point with which I have just been dealing is not properly to be characterised as a new point on which the bank can present itself as being taken by surprise. I refer to four documents. First, on 3rd November 2008, when the defendant was acting as a litigant in person, in the request to have the default judgment set aside he said this:

 

"As the court is aware, in the absence of all the prescribed terms being

embodied, it will render a document unenforceable in court. These

terms must be contained within the agreement, and not in a separate

document headed 'Terms and Conditions', or words to that effect".

Secondly, on 18th February 2009, solicitors, who were by then acting for the defendant, sent to the solicitors acting for the bank a copy of what they called an expert report setting out the reasons why the agreement was in breach of Section 61(1)(a), and they went on:

 

"As you are aware it is our client's position that at the time he entered

into the agreement he was not provided with a copy of the terms and

conditions governing the agreement".

 

If one goes to the so called expert's report, one finds that it is in effect an opinion prepared by another firm of solicitors, and the opinion contains the following:

 

"Based on the information provided, it appears that the prescribed

terms and conditions were not included in the document signed by the

borrower. The agreement would appear to be in breach of the

regulations in that it does not contain within the signed agreement itself

all of the prescribed terms".

 

Thirdly, that point having been taken on behalf of the defendant, it was robustly rejected by the solicitors acting for the bank in their reply of 19th March 2009:

 

"Our client has sought counsel's opinion on this matter and her view is

that the agreement is compliant. We note that your client is arguing

that at the time of signing the agreement, the application for a credit

card, he was not provided with the actual terms and conditions which

were contained in a separate document to the application. Whilst our

client accepts that the application itself does not comply with the

requirements of the Consumer Credit Act 1974, and only becomes

compliant by reference to terms and conditions, there are references in

the agreement to the conditions in which it states that they are provided

in the Halifax credit card application pack".

 

Fourthly, going back in time a little, on 4th March 2009, in the defendant's witness statement made for the purpose of the trial of the issue, at the very beginning of the statement, in paragraph 3, he said this:

 

"It is my position that the agreement is not enforceable by the claimant

as it has failed to comply with its obligations under Section 61 of the

Consumer Credit Act 1974 by failing to include within the document

that I signed all the prescribed terms".

 

8. The absence of further reference to the point in the evidence is hardly surprising, since the point is one of law, on which there was no controversy as to the facts.

 

9. Miss Gardner has given no reason for the withdrawal of the action. She is in no way to be criticised for the omission. She is bound to act in accordance with her instructions, and those instructions were presumably to say no more than she has in fact said. But this does not prevent me from drawing what is in my judgment the only inference which can possibly be drawn from what has happened, which is that the bank realises that if the issue were to be

contested it would either lose on the issue or be at serious risk of losing. There may be hundreds of similar cases and the bank would plainly not wish other defaulting customers to get wind of an adverse decision on the fundamental point which is embodied in the quotation from Mr Berkley's written argument, which I have already set out.

 

10. Accordingly, I conclude, without hesitation, that there is no reason for displacing the presumption as to incidence of costs which is ordinarily applicable in a case of discontinuance. The bank will pay the defendant's costs of the claim, subject only to any existing order for costs in favour of the bank not being disturbed.

 

11. Finally, I have to consider whether the costs of the defendant should be assessed on the standard or on the indemnity basis. In my judgment the assessment should be on the indemnity basis. The only realistic view of what has happened is that the bank has surrendered on a straightforward point of law, to which it has on several occasions been alerted by the defendant or his solicitors. A large commercial enterprise which proceeds with litigation in the face of warning signs of the kind which were erected here, adopts a high risk strategy. The point in question was a simple one. There was no relevant controversy as to the evidence. To choose to abandon the claim on the very day of the hearing is doing a serious disservice to the efficient administration of justice, and comes very close to constituting an abuse of process. At the very least, the bank's conduct of the litigation falls comfortably within the range of cases in which, on the modern authorities, an assessment of costs on the indemnity basis is appropriate

thanks for that - Incidentally I copied HBOS in on my last two letters to Wescot and Nelson Guest - HBOS inform me the complaint is being thoroughly investigated (hand signed letter) however Wescot insist they have contacted HBOS and that there is no dispute??????? Doesn't tie up at all. Also no response from Nelson Guest (their letters were sent in Wescot envelopes!!)

Edited July 26, 2010 by cleo4patra
ommission

[cleo4patra]

DESPAIR DESPAIR DESPAIR!!!!!!

 

received letter from HBOS today informing me default not illegal, therefore no dispute Wescot acting lawfully and I need to pay. Incidentally they cannot provide a copy of the default notice.

 

They say that they had asked me for documents proving a dispute back in July 2009 but as I did not supply them they closed the dispute and therefore I need to pay. They have totally ignored all of my points including unlawful termination of agrement. and I reckon Wescot will be on my back in no time yet again. This has been to several DCA 's now. any suggestions

[diddydicky]

well, what did you expect?

 

dear cleopatra

 

thank you for your letter, we see now that our DN is hopelessly invalid and that we have acted in a disgraceful manner towards you so please dont feel obliged to repay us and here is a bunch of flowers by way of an apology...

 

 

 

 

Of course they will deny that everything is not in apple pie order-

 

sit tight, relax and stop panicking- it's the response that was expected

 

the point is........that you have brought points of law to their attention - which will(can) have a significant effect on costs awards if they then continue, in the light of what you have pointed out.........they are a large commercial organisation and are expected to KNOW what your points of law mean to their case

[cleo4patra]

well, what did you expect?

 

dear cleopatra

 

thank you for your letter, we see now that our DN is hopelessly invalid and that we have acted in a disgraceful manner towards you so please dont feel obliged to repay us and here is a bunch of flowers by way of an apology...

 

 

 

 

Of course they will deny that everything is not in apple pie order-

 

sit tight, relax and stop panicking- it's the response that was expected

 

the point is........that you have brought points of law to their attention - which will(can) have a significant effect on costs awards if they then continue, in the light of what you have pointed out.........they are a large commercial organisation and are expected to KNOW what your points of law mean to their case

Thanks diddydicky - when I say despair I mean it is frustrating when I have made the point OVER and OVER again. They cannot provide a copy of the default either. In this sort of situation is it best to ignore further letters or respond? thanks

[LarissaJ]

They are "banking" on your despair Cleo and then hoping that it makes you throw some cash (that they're not entitled to) their way, they will sink to the lowest of the low to get your money. DO NOT fall for it.

[diddydicky]

Thanks diddydicky - when I say despair I mean it is frustrating when I have made the point OVER and OVER again. They cannot provide a copy of the default either. In this sort of situation is it best to ignore further letters or respond? thanks

 

i would just sit back and wait

[cleo4patra]

have had further letter from BOS saying they are now sending me a copy of the DN notice (which they say they haven't made a mistake with) (and that they had previously said was unavailable) they say I have to pay and Wescot can chase the debt. Nothing else at all from Wescot - are they intending court? thanks

[cleo4patra]

well - letter received from Wescot today - apologies sending back to HBOS acting in good faith etc etc

 

thanks