SLC Cannot Supply The Original Agreement

[InKogneeToh]

Hi

 

Homework for the day - analyse the following (a passage from my appeal skeleton argument for the claim mentioned earlier) and give your interpretation:

 

25-26. The lender has no legal entitlement to receive the money under this agreement, as explained in Kasumu v Baba Edge (have this excerpt somewhere in my paperwork but will have to remember where I put it! :o.) Also the meaning and effect of the word ‘unenforceable’ in these circumstances goes beyond it’s meaning in an ordinary contractual setting. Section 127(4) follows the same principles as the Moneylenders Acts that preceded the CCA. In the Australian case of Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, references are made to the Money Lenders Act (albeit the Australian one, but the principles are the same and this is the only interpretation I could find). Brennan J based his understanding of the term ‘unenforceable’ in the case he was considering as being the same as the meaning in the Moneylenders Act, i.e. ‘The word 'unenforceable' here means that no action can brought on the contract and no debt arises at all, even if the contract is performed.’ Similarly Deane J states: ‘The Moneylenders Act is quite different – a legislative intent is clear that a lender should not recover anything, even after consideration has been executed (that is, even if the loan has been made) – see Kasumu; Mayfair; Deposit v Kaye (each turning on particular words).’

Regards, Pam

[JonCris]

Hi Pam

 

Ave a butchers at this

In a recent decision of the Court of Appeal, Clarke LJ said: “…the Consumer Credit Act 1974 … has recently provided so much work for the courts …this case demonstrates the unsatisfactory state of the law at present. Simplification of a part of the law which is intended to protect consumers is surely long overdue so as to make it comprehensible to layman and lawyer alike. At present it is certainly not comprehensible to the former and is scarcely comprehensible to the latter.” McGinn v Grangewood Securities Ltd. [2002] CA Civ 522

 

Nearly every loan and mortgage of £25,000 or less is caught by the Act. Failure by a lender to observe strictly the intricate requirements of the Act can lead to a loan being completely unenforceable with no right of restitution or other form of relief.

[Guest Battleaxe]

Hi Pam

 

Ave a butchers at this

 

In a recent decision of the Court of Appeal, Clarke LJ said: “…the Consumer Credit Act 1974 … has recently provided so much work for the courts …this case demonstrates the unsatisfactory state of the law at present. Simplification of a part of the law which is intended to protect consumers is surely long overdue so as to make it comprehensible to layman and lawyer alike. At present it is certainly not comprehensible to the former and is scarcely comprehensible to the latter.” McGinn v Grangewood Securities Ltd. [2002] CA Civ 522

 

Nearly every loan and mortgage of £25,000 or less is caught by the Act. Failure by a lender to observe strictly the intricate requirements of the Act can lead to a loan being completely unenforceable with no right of restitution or other form of relief.

 

How can we use this in the POC's when we file our N1's?

[InKogneeToh]

 

Nearly every loan and mortgage of £25,000 or less is caught by the Act. Failure by a lender to observe strictly the intricate requirements of the Act can lead to a loan being completely unenforceable with no right of restitution or other form of relief.

 

Hi

 

Yes, but this still does not specifically say that the borrower has a right to reclaim money already paid. It's the meaning of 'enforcement' that is the key. Most articles and cases I have read seem to interpret this is as suing for, or otherwise taking action to force, payment under an agreement.

 

Most of the big recent cases say that a lender has no right of restitution but that seems to be in respect of any money not already paid to him.

 

Regards, Pam

[Guest Battleaxe]

As I said before, I am quite happy to have the debt wiped. If you look at this way you are still ahead, especially if you still owe several thousand pounds. This money saved in the future.

[InKogneeToh]

You might also like to pick the bones out of this passage taken from

Pavey & Matthews Pty Ltd v. Paul

 

(1987) 162 CLR 221 (1987) 69 ALR 577

 

 

An Australian case but the higher UK courts often refer to their judgments:

 

 

The decisions on the money-lending legislation do not seem to me to be really in point. In the legislation involved in those cases, it was possible to argue, both by reference to the different words used and the quite different history of money-lending legislation, that it was the plain legislative intent that the money-lender should be precluded from recovering any compensation for the loan which had been made and received by the borrower. The relevant provisions went well beyond a mere statement that the agreement was to be unenforceable by the lender and were plainly directed towards imposing unenforceability in the ordinary case at a stage after the consideration had been fully executed by the lender, that is to say, after the money had been lent without an adequate memorandum in writing of the terms of the loan. Thus, the sub-section of the Nigerian Moneylenders Ordinance (s 19(4)) which was before the Privy Council in Kasumu v. Baba-Egbe [1956] AC 539 expressly provided that a money-lender should not be entitled to enforce "any" claim "in respect of" any transaction in relation to which he had made default in complying with the requirement that he should enter certain particulars in a book. Section 9(1) of the Money Lenders Act 1912 (WA), which was before this Court in Mayfair Trading Co. Pty. Ltd. v. Dreyer (1958) 101 CLR 428, provided that no contract for the "repayment by a borrower of money lent to him ... or for the payment by him of interest on money so lent, and no security given by the borrower ... in respect of any such contract" should be enforceable in the absence of the prescribed note or memorandum. In Deposit & Investment Co. Ltd. v. Kaye (1962) 63 SR (NSW) 453, at p 460, Walsh J. expressly drew attention to the fact that the form of the relevant provision did not simply say that "the contract of loan is not to be enforceable" but provided that "the borrower's obligations and the security for the performance of them shall not be enforceable".

 

Regards, Pam

[joneshousehold]

I am trying to read this judgement in JonCris's link (although it is an excellent aid for insomnia!) and I have found this

 

31. These restrictions on enforcement of a regulated agreement are for the protection of borrowers. They do not deprive a regulated agreement of all legal effect. They do not render a regulated agreement void. A regulated agreement is enforceable by the debtor against the creditor. It seems, for instance, that a borrower may insist on making further drawdowns under a regulated agreement even though the agreement is unenforceable against him. Further, section 173(3) expressly permits consensual enforcement against a borrower. A borrower may consent to the sale of a security or to judgment. Moreover, the creditor is entitled to retain any security lodged until either an application for an enforcement order is dismissed or the court makes a declaration under section 142 that the agreement is not enforceable. That is the effect of sections 113(3) and 106.

Not sure if this is part of the final opinion or a just of one that is overridden by the majority of other opinions at the hearing. My reading is that if the agreement is unenforceable it is a one sided affair which suggests the cancellation point could allow recover of all payments without the creditor being able to enforce his side of the agreement on cancellation

[joneshousehold]

Another bit that covers unjust enrichment

49. I consider, however, that there is no relevant restitutionary remedy generally available to a lender in the circumstances now under consideration. The message to be gleaned from sections 65, 106, 113 and 127 of the Consumer Credit Act is that where a court dismisses an application for an enforcement order under section 65 the lender is intended by Parliament to be left without recourse against the borrower in respect of the loan. That being the consequence intended by Parliament, the lender cannot assert at common law that the borrower has been unjustly enriched. That would be inconsistent with the parliamentary intention in rendering the entire agreement unenforceable. True, the Consumer Credit Act does not expressly negative any other remedy available to the lender, nor does it render an improperly executed agreement unlawful. But when legislation renders the entire agreement inoperative, to use a neutral word, for failure to comply with prescribed formalities the legislation itself is the primary source of guidance on what are the legal consequences. Here the intention of Parliament is clear.

 

50. This interpretation of the Consumer Credit Act accords with the approach adopted by the House in Orakpo v Manson Investments Ltd [1978] AC 95, regarding section 6 of the Moneylenders Act 1927 and, more recently, in Dimond v Lovell [2002] 1 AC 384, another case where section 127(3) precluded the making of an enforcement order. In Dimond's case the restitutionary remedy sought was payment of the hire charge for a replacement car used by Mrs Dimond. The House rejected a claim advanced on the basis of unjust enrichment. Lord Hoffmann observed that Parliament contemplated that a debtor might be enriched consequential upon non-enforcement of an agreement pursuant to the statutory provisions. It was not open to the court to say this consequence is unjust and should be reversed by a remedy at common law: [2002] 1 AC 384, 397-398.

This seems to say it was parliament's intention that the debtor is enriched as a consequence of S127(3) CCA74 and so that cannot be reversed using some other law. I think this means not only common law but also Human Rights legislation.

 

Please feel free to shout me down. I am still trying to get to grips with all this.

[InKogneeToh]

Hi Jones

 

Your interpretations of both extracts are quite right but these are both cases where the debtor had not already paid anything to the creditor. I used all of these judgments in my claim but the court still ruled against repayment. It is quite possible that if I had been in a position to take it to a higher court then the outcome may have been different. After all, Mrs Wilson's claim for her agreement to be declared unenforceable was unsuccessful in the county court!!

 

As regards your theory regarding cancellation then this might have the suggested result but only on agreements that are wholly unenforceable under 127(3) or (4). My claim re: cancellation was settled under court ordered arbitration - it never went to hearing so I will never know what the judge's interpretation would have been.

 

Regards, Pam

[joneshousehold]

Hi Jones

 

My claim re: cancellation was settled under court ordered arbitration - it never went to hearing so I will never know what the judge's interpretation would have been.

 

Regards, Pam

 

 

Pam, it must make you smile to see us going back over what to you is old ground. I am grateful for your comments as it really helps to understand what I am looking at. I wonder how the judge in your case got around these extracts and still managed to say the payments you made were voluntary.

 

It would have been interesting to get the judges thoughts though on the final outcome. Did the creditor display the characteristics, albeit suppressed, of a Homer Simpsonesque D'Oh moment!

 

As you have already said, the last laugh most definately. Much respect to you as my children would say!

[joneshousehold]

Here's another quote

122. As Lord Hoffmann pointed out in Dimond at p 398, the conclusion which he reached in that case was consistent with previous authority. In Orakpo v Manson Investments Ltd [1978] AC 95 the transaction entered into under which loans were made to enable the borrower to acquire and develop certain properties were held to be unenforceable under sections 6 and 13(1) of the Moneylenders Act 1927. The effect was to enrich the borrower, who had fallen into arrears of payments of interest and moneys due but was successful in his defence that all the transactions including those which provided security rights to the creditor were unenforceable. Lord Diplock observed that, while the Moneylenders' Acts were designed to protect unsophisticated borrowers from being overreached by unscrupulous moneylenders, they were capable of being used by unscrupulous borrowers to avoid paying their just debts to moneylenders. He considered whether a remedy in subrogation to redress the unjust enrichment might be available. But he concluded that, much as he should have liked to have done so, it was not open to him to mitigate the harshness to the moneylender and the undeserved enrichment of the borrower which had resulted from the technical failure to observe the provisions of the Act.

 

This is reference to another case where payments have been made during the life of the agreement but the outcome seems to be just that the agreement stops as a result of the decision. There is nothing to suggest a repayment of the debtor's payments. However I will read on!

[InKogneeToh]

Did the creditor display the characteristics, albeit suppressed, of a Homer Simpsonesque D'Oh moment!

 

 

Hi again

 

No, I am very pleased that this topic is being discussed on this site because I still think the judges were wrong. I think they were not used to dealing with claims of this nature and my impression was that they were grounding their interpretations on the normal laws of contract and of equity

 

Plus, the appeal judge in particular was quite obviously of the opinion that I shouldn't have been claiming a refund in the first place (unjust enrichment and all that). This is obviously a common response to a situation where you are, or are likely to, get something for next to nothing, but it was still my right under the CCA. to challenge this agreement.

 

The creditor's law firm was an expensive London one but they sent a local barrister in to court. I made him work for his money and challenged every argument he put forward.

 

Regards, Pam

[joneshousehold]

Well I got to the end mainly because a large chunk of the rest deals with Human Rights only and not with the enforceability issue.

 

I have to wholeheartedly agree with you Pam. I cannot see how the judge in your claim could justify his decision based on this wealth of evidence. As you say it must have just been the sense of natural justice and unjust enrichment. The way the Lord's judgment reads however is that this is a deterent for money lenders to prevent them from exploiting the most vulnerable. So far it hasn't worked because the lenders firstly get the debtor to admit the debt. Then the court doesn't get the opportunity to look at the validity of the agreement at all. The legislation hasn't worked so far but perhaps the tide could be turning.

 

Thanks for a fantastic debate. Let's see what anyone else has to say. I'm wrecked now!

 

I'm off on a residential course next week so I shall have to catch up when I get back home. I hope not too much gets posted in the meantime or my weekend will be gone before I know it.

[InKogneeToh]

Hi again

 

The following passage from the judgment of Lord Hope in Kleinwort Benson v LIncoln City Council was one of a few used by me to show that I had made a mistake in paying the creditor because I did not know that the debt was unenforceable. However, the defence interpreted this section in a completely opposite way and the judge agreed with him.

 

I would be very grateful for as much input as possible as to what YOU think it means.

 

Regards, Pam

 

 

What, then, is the function of mistake in the field of restitution on the ground of unjust enrichment? The answer, one may say, is that its function is to show that the benefit which has been received was an unintended benefit. A declaration of intention to confer the benefit, even if unenforceable, will be enough to justify the retention of the enrichment. A mistake, on the other hand, will be enough to justify the restitutionary remedy, on the ground that a benefit which cannot be legally justified should not be retained where it was a mistaken--and thus unintended--benefit.

[joneshousehold]

I read this to support the defence.

a benefit which cannot be legally justified should not be retained where it was a mistaken--and thus unintended--benefit.

which presumably is what they used. The fact that there is an unjust enrichment however is an intended consequence of S127(3) CCA. The two are opposites and the CCA is deliberately written in the way it is to provide a deterrent to the lenders.

 

Is that how you argued it?

[InKogneeToh]

I read this to support the defence.

 

which presumably is what they used. The fact that there is an unjust enrichment however is an intended consequence of S127(3) CCA. The two are opposites and the CCA is deliberately written in the way it is to provide a deterrent to the lenders.

 

Is that how you argued it?

 

Hi

 

No, they weren't arguing that although they had made a mistake they should be entitled to keep the money. The bit they relied on was this:

 

A declaration of intention to confer the benefit, even if unenforceable, will be enough to justify the retention of the enrichment.

 

They claimed that as I had made a 'declaration of intent' to make payments that therefore, even if the agreement was found to be unenforceable, they were entitled to keep the money.

 

I argued that it meant that a declaration of intent to pay whilst knowing that it may be unenforceable, is enough to allow the creditor to keep the money, but that I had paid by mistake because I did not know it was unenforceable.

 

Their interpretation of this passage significantly swung the whole appeal in the creditor's favour and I still think they were wrong.

 

Regards, Pam

[joneshousehold]

Ah, too clever for me. Is the declaration of intent the actual payment. Methinks the judge was just looking for ways to stop you having your payments back. How can you have intended to give the creditor a benefit when you didn't know you were doing so. You thought you were repaying a debt. That does not seem to be a declaration of the intent alleged. Surely you would have to know that was the intent when you made the alleged declaration?

 

Anyway what do we know, we aren't judges or barristers. No wonder we are a little suspicious of the legal process. Here we are faced with strong case law and statute and the judge just says 'I don't like this so I will take another view'. The trouble here is that both the judge and the barrister have gone away thinking they won the argument or were right. I still think it sounds wrong and I can see why you thought so too.

 

What we need is Mrs Wilson on the case. She seems to have the resources to take her cases further. Did you look into how much it would have cost to appeal?

[paulwlton]

Hi

 

Yes, but this still does not specifically say that the borrower has a right to reclaim money already paid. It's the meaning of 'enforcement' that is the key. Most articles and cases I have read seem to interpret this is as suing for, or otherwise taking action to force, payment under an agreement.

 

Most of the big recent cases say that a lender has no right of restitution but that seems to be in respect of any money not already paid to him.

 

Regards, Pam

 

 

www.wragge.com/files/HowMuchCredit_Mar2003.pdf

[InKogneeToh]

www.wragge.com/files/HowMuchCredit_Mar2003.pdf

 

Hi Paul

 

Thanks for the link but I had already found and saved that article at the time. I could not use it in my claim as it was just an opinion. Unfortunately there is no evidence in the article to support the statement about creditors being forced to pay money back but it is a useful piece nonetheless.

 

Regards, Pam

 

[InKogneeToh]

Hi Jones

 

I interpret a declaration of intent to pay as a verbal or written statement that 'you will pay'. I certainly never made a 'declaration' apart from signing to agree the terms of an agreement which later turned out to be unenforceable!

 

As for taking this to the Court of Appeal, I might have been able to meet the court fees but it was the HUGE costs implications if I lost that I couldn't risk. I have limited income but this type of case does not qualify for legal aid so you're on your own!

 

Regards, Pam

[joneshousehold]

Definition of declaration in Cambridge online dictionary

 

an announcement, often one that is written and official

 

Still don't quite get the judges interpretation. Like you say it should be something stronger than actually happened in this case. It doesn't have to be written but it has to intended and knowingly surely.

[un1boy]

Hi Jones

 

I interpret a declaration of intent to pay as a verbal or written statement that 'you will pay'. I certainly never made a 'declaration' apart from signing to agree the terms of an agreement which later turned out to be unenforceable!

 

As for taking this to the Court of Appeal, I might have been able to meet the court fees but it was the HUGE costs implications if I lost that I couldn't risk. I have limited income but this type of case does not qualify for legal aid so you're on your own!

 

Regards, Pam

 

Hi,

 

In terms of acknowledging the debt etc, if the agreement is completely unenforcable (ie, no APR or prescribed terms on the sig doc) can it be nforced if you admit the debt? Even if the agreement sent has your sig etc on it?

 

I have a case at the mo where the agreement has been sent, but not terms...the prescribed terms and the APR are not on the sig doc so it is completely unenforcable - if I admit the debt, can I be forced to pay it? Or does the agreement remain unenforcable?

[m55dlc]

Hi,

 

In terms of acknowledging the debt etc, if the agreement is completely unenforcable (ie, no APR or prescribed terms on the sig doc) can it be nforced if you admit the debt? Even if the agreement sent has your sig etc on it?

 

I have a case at the mo where the agreement has been sent, but not terms...the prescribed terms and the APR are not on the sig doc so it is completely unenforcable - if I admit the debt, can I be forced to pay it? Or does the agreement remain unenforcable?

 

 

Unenforceable without a court order, that is the important bit. The judge can enforce an agreement that doesn't contain all of the prescribed terms, as long as it has your signature on it. This is mentioned somewhere within the Consumer Credit Agreements thread (and you know how long that one is ).

[un1boy]

Unenforceable without a court order, that is the important bit. The judge can enforce an agreement that doesn't contain all of the prescribed terms, as long as it has your signature on it. This is mentioned somewhere within the Consumer Credit Agreements thread (and you know how long that one is ).

 

No, from what I've been told it is unenforcable full stop unless the presribed terms are set out on the sig doc and the APR....

[JonCris]

The court's powers under section 127(1) are subject to significant qualification in two types of cases. The first type is where section 61(1)(a), regarding signing of agreements, is not complied with. In such cases the court 'shall not make' an enforcement order unless a document, whether or not in the prescribed form, containing all the prescribed terms, was signed by the debtor: section 127(3). Thus, signature of a document containing all the prescribed terms is an essential prerequisite to the court's power to make an enforcement order. The second type of case concerns failure to comply with the duty to supply a copy of an executed or unexecuted agreement pursuant to sections 62 and 63, or failure to comply with the duty to give notice of cancellation rights in accordance with section 64(1). Here again, subject to one exception regarding sections 62 and 63, section 127(4) precludes the court from making an enforcement order.

 

Section 65(1) provides that an improperly executed agreement shall be enforceable only "on an order of the court." Section 127 gives the court power to make orders for the enforcement of agreements that are, for various reasons, improperly executed. But subsection (3) provides that a court shall not make an enforcement order for an agreement that does not comply with section 61(1)(a) unless the debtor signed a document containing "all the prescribed ..........

 

61 Signing of agreement

 

(1) 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 or hirer and by or on behalf of the creditor or owner, and

 

(b) the document embodies all the terms of the agreement, other than implied terms, and

 

© the document is, when presented or sent to the debtor or hirer for signature, in such a state that all its terms are readily legible.

 

 

(2) In addition, where the agreement is one to which section 58(1) applies, it is not properly executed unless—

 

(a) the requirements of section 58(1) were complied with, and

 

(b) the unexecuted agreement was sent, for his signature, to the debtor or hirer by post not less than seven days after a copy of it was given to him under section 58(1), and

 

© during the consideration period, the creditor or owner refrained from approaching the debtor or hirer (whether in person, by telephone or letter, or in any other way) except in response to a specific request made by the debtor or hirer after the beginning of the consideration period, and