"Joint and Several Liability"

[Movingon]

I'm just musing to start with... consider the situation where Jane and Andrew get together and seemingly get along great, have a great life together etc. Until it appears that Jane hasn't been paying her bills as they agreed at the start. Everything's in joint names. All the statements for the things she's not paying are being hidden away or chucked. One day he finds out and goes absolutely ballistic. They split up and she does a complete runner; disappears off the face of the Earth, leaving him with all these letters and demands, DCA's, solicitors, summonses etc.

 

Now - in most Utility bills for certain, and I suspect in most Joint Accounts of any kind, both parties are "joint and severally liable" for the debt; i.e. they are both responsible for ensuring payment but one of them can be pursued for all of it in the absence of the other.

 

Is this "fair" in a Legal context? I understand that in Real Life it's not fair; Jane gets off scott free, and Andrew has to pay the lot; and all the crap she left him in means that his credit rating is shot for years and years. But legal "Fair" and real life "fair" are two different things; is the principle of Joint and Several Liability "Fair" in a legal sense, or under legal "fairness" should the organisation only be allowed to recover half the debt from one party, and the burden of tracking the other party down fall to them?

 

In the hypothetical story above, Andrew would have to pay it all, and then locate Jane and use the Small Claims Court to recover the rest. In the emotional state she left him in, it's likely that he wouldn't want to pursue it because he would feel like he was dragging himself through all that pain all over again - and so she literally would be scott free. Free to do the same to someone else.

 

ZootScoot? RosieCotton?

[alymac]

its certainly not fair Ive just had the same happen to me with council tax from 2002 which i believed my now ex should have paid, leaving me to pay the lot, they have traced me but are unable to trace ex, i would have no qualms about paying half but i how have to pay the full amount, we should start a campaign to have a fairer system as you can be made to pay twice

[Movingon]

its certainly not fair Ive just had the same happen to me with council tax from 2002 which i believed my now ex should have paid, leaving me to pay the lot, they have traced me but are unable to trace ex, i would have no qualms about paying half but i how have to pay the full amount, we should start a campaign to have a fairer system as you can be made to pay twice

 

We've already established that it's not fair on real people in real life; however this is the legalities forum and I'm trying to establish how it sits in a legal fairness test - which is something else entirely.

[sequenci]

i would love to know more on this subject, in my job i speak to at least three people a day who live in that exact scenario.

 

it's not nice.

[Bookworm]

Ok, but look at it from another perspective. What if Andrew is the one who spent all the money, they split up, Jane disappears to rebuild her life in the Outer Hebrides, Andrew is left to pay -right enough- all his debts. Except that if he's only liable for 1/2, he will do that, the financial institutions will then pursue Jane, who had nothing to do with it, for the other 1/2. Not any fairer, is it... Not only it will cost more to the institution, in either tracking and harassing the innocent party or writing off 1/2 the debt, they will invariably pass on the cost across the board to all of their customers (look at the rates going up now to cater for all the additional bankrupcies).

 

From a legal point of view, I think that where there has been joint enjoyment (!) of the facilities, it is simply not realistic to expect the institution to try and untangle who spent what and where and when. If they tried, the personal liberties extemist would be screaming blue murder!

[rosiecotton]

My initial thought is that Joint and Several liability makes each individual liable for the entire debt, not just their share of it. So yes they would be entitled to pursue whichever party they can find for the entire amount.

 

I know it doesn't seem fair, but I guess the only way around this is to have bills solely in your name - maybe signifying a lack of trust, but we're all cynical these days!

[zootscoot]

I may be wrong but I thought that utility bills generally were in the name of one person.

 

In the case of credit cards also you generally have one name although the right to have another named person given a card under the account and this may give rise to joint or severable liability. Loans and mortgages are available jointly and will have joint and several liability.

 

In the case of married couples this will not give rise to too much difficulty as any debt owed can be taken into account in any settlement agreement. The difficulty arises with unmarried couples.

 

The question of whether terms relating to joint and several liability are unfair legally would involve consideration of the Unfair Contracts Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999. These are the only provisions which can render a contractual term unfair in a legal sense.

 

S.4 of UCTA could possibly apply:

 

4. Unreasonable indemnity clauses.

(1) A person dealing as consumer cannot by reference to any contract term be made to indemnify another person (whether a party to the contract or not) in respect of liability that may be incurred by the other for negligence or breach of contract, except in so far as the contract term satisfies the requirement of reasonableness.

(2) This section applies whether the liability in question-

(a) is directly that of the person to be indemnified or is incurred by him vicariously;

(b) is to the person dealing as consumer or to someone else.

 

This is subject to whether or not the clause is reasonable under s.11:

 

S.11 Reasonableness test is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.

 

I would imagine that joint and several liability clauses would be classed as reasonable. Where the courts are faced with weighing the competing interests of two innocent parties it is likely that they will take into account who accepted the risk of liability. The bank had clearly shown it did not want to accept the risk whereas the person who had signed the agreement had. The courts are also likely to consider the result on future lending practises and if they put responsibility on the banks this is likely to impact on their future lending practices in refusing credit to joint unmarried applicants or asking over intrusive questions in reaching their lending decisons. Also the fact that the applicant is in a better position than the bank to make a judgement as to risk of relationship break up and had freely accepted a financial link and commitment to the absent party.

 

 

UTCCR 1999 would also apply as credit agreements are consumer contracts which are not individually negotiated. The assessment of unfair terms is set out in Reg 6:

 

Assessment of unfair terms

6. - (1) Without prejudice to regulation 12, the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent.

 

 

I would imagine that the same reasons outlined above in relation to whether the term is unreasonable would be applicable here.

 

So whilst the scenario is unfair in a general sense, I don't think that it would be regarded as unfair in a legal sense.

 

[Movingon]

Thank you Zoot; that (the end result) is what I thought you would say but I had no idea how to apply the Law or the legal tests.

 

In these cases, as Bookworm has so cleverly shown, it's not always easy (or even possible) to point out the actual facts as they happened, in fact it's not always easy for the parties involved to recollect the facts accurately or even if they do, to honestly and accurately report them. This is why a legal fairness test is required, and not a moral one.

 

One thing I will point out (which is an area of slight haziness in your understanding perhaps) is that when two persons live together and the Utilities are in one of their names, Joint and Several Liability can be inferred from their living together if it is discovered. So someone told British Gas in good faith that they had been dumped with the bills, and also told BG where to find the other party. They made a half-hearted effort to find that party, and then lumped the entire bill on the person who had advised them of the situation in the first place because they had established evidence for their cohabitation.... thus resulting in the ever-familiar debt spiral.

[gizmo111]

 

One thing I will point out (which is an area of slight haziness in your understanding perhaps) is that when two persons live together and the Utilities are in one of their names, Joint and Several Liability can be inferred from their living together if it is discovered. So someone told British Gas in good faith that they had been dumped with the bills, and also told BG where to find the other party. They made a half-hearted effort to find that party, and then lumped the entire bill on the person who had advised them of the situation in the first place because they had established evidence for their cohabitation.... thus resulting in the ever-familiar debt spiral.

 

If a bill is in one persons name doesn't mattter who lived in the property the person named on the bill is responsible. Same as credit cards where you have a second named user, a CC can only be issued in a single name. The card holder is responsible for debt and unless you give them written permission they cannot even ring up for balance. As zoot points out if you have joint loans etc then unless an agreement is made between the 2 parties then whoever is traceable is liable.

 

Frequently in divorce with children you will find the courts awarding mesher orders - (basically a order that the non residentila parent has a charge on % of equity until certain trigger points - usually child reaching age 18) if the mortgage is joint - the resident parent only has to make reasonable endeavours to relaese the NRP from mortgage. If still on the mortgage the NR has no chance of getting another and if the PWC falls into financial difficulties then the NRP is still jointly liable. How unfair is that!

[stan5131]

Tom. I have a thread going on Bradford and Bingley for my sister. She and her husband separated and six years later they contacted her to say that the house he lived in had just been repossessed and he had disappeared. We actually know he was in Cyprus - not that this helps. Anyway, the stung her for the shortfall on the mortgage. She hadnt even lived in the house for 6 years and had her own mortgage. She was caught with the jointly and severally and has been paying it back for 6 years. Anyway, she recently found out that he was back and they had found him. Not only that, but he had been paying also for quite some time. They will not give her any details of how much he has been paid and have smugly told her that she still owes the full balance and what he has paid is nothing to do with her. The shortfall was £5,000 and she still has to pay the whole amount even though he is paying. Hows about that then for jointly and severally!!!!

 

Court action filed today.

[Movingon]

If a bill is in one persons name doesn't mattter who lived in the property the person named on the bill is responsible. Same as credit cards where you have a second named user, a CC can only be issued in a single name. The card holder is responsible for debt and unless you give them written permission they cannot even ring up for balance. As zoot points out if you have joint loans etc then unless an agreement is made between the 2 parties then whoever is traceable is liable.

 

Frequently in divorce with children you will find the courts awarding mesher orders - (basically a order that the non residentila parent has a charge on % of equity until certain trigger points - usually child reaching age 18) if the mortgage is joint - the resident parent only has to make reasonable endeavours to relaese the NRP from mortgage. If still on the mortgage the NR has no chance of getting another and if the PWC falls into financial difficulties then the NRP is still jointly liable. How unfair is that!

 

I think you'll find that I have experience in this matter, and that I am in fact correct.

[Movingon]

Tom. I have a thread going on Bradford and Bingley for my sister. She and her husband separated and six years later they contacted her to say that the house he lived in had just been repossessed and he had disappeared. We actually know he was in Cyprus - not that this helps. Anyway, the stung her for the shortfall on the mortgage. She hadnt even lived in the house for 6 years and had her own mortgage. She was caught with the jointly and severally and has been paying it back for 6 years. Anyway, she recently found out that he was back and they had found him. Not only that, but he had been paying also for quite some time. They will not give her any details of how much he has been paid and have smugly told her that she still owes the full balance and what he has paid is nothing to do with her. The shortfall was £5,000 and she still has to pay the whole amount even though he is paying. Hows about that then for jointly and severally!!!!

 

Court action filed today.

 

Excellent. No matter what rules they hide behind they CANNOT recover the balance twice, and the balance of her account is VERY MUCH her business, whoever made payments on it.