BMW vs Hart and Statute Barred Debts

Following some interesting debate on another thread, I've started this to discuss the judgment in the Court of Appeal.

For those unfamiliar with the case, here's a few links to read:

http://www.wragge.com/published_articles_9406.asp

http://www.forwarn.com/news/db.asp?P...ance_Companies

http://www.lexology.com/library/deta...7-21b6701a273e

http://www.chanceryhouse.co.uk/pages/news-index.html

http://uk.practicallaw.com/5-522-012...elatedcontent#

I'll make a statement. Please do not lay into me personally, I make it to encourage debate:

This case has defined the Statute Barred period as starting on termination of an agreement, and can be applied across the spectrum of regulated or unregulated agreements.

There we go - Discuss! :beagle:

(previous discussion is HERE)

[Nibbler]

Re: BMW vs Hart and Statute Barred Debts

Nearly a year since that judgement and to my knowledge:

no creditor or DCA has yet sought to rely on it in court for other types of agreement and circumstances, let alone won a case on the back of that.

Odd in itself if this is the 'boon' for the financial/collection industry that has been claimed.

DCAs/creditor can and will quote it. But as we know, DCAs/creditors are prepared to quote a great deal of bollox things of dubious applicability in an attempt to coerce payment.

Stumping up the arguments in court and winning are another matter. So far absolutely nada on that score that I am aware of.

Think PT said on the other thread:

BMW v Hart needs careful consideration. It is NOT a one size fits all case. In Hart much turned on the terms of the contract itself. So before we jump to conclusion that the world has ended we should check to make sure.

Plus I dont believe Hart was a regulated agreement

People can certainly express an "opinion" on how you "think" this case might be applied to other circumstances, but there seems to have been a certain tendency to present that opinion as fact, when as said, it has not been tested outside the narrow confines of that case.

[charitynjw]

Re: BMW vs Hart and Statute Barred Debts

The BMW v Hart ruling flies in the face of most other case law I've read, where the rule usually is that date of the cause of action is held to be when a reasonable person would realise the breach had occurred.

In the case of an agreement under the CCA, this ought to be from the first missed payment which is not rectified as per the DN, or when a diligent creditor would issue the DN.

If it's held to be from termination, this could be indefinitely.

Bollox Ridiculous!

(^^Thanks, Nibbler, love it!)

[Guest]

Re: BMW vs Hart and Statute Barred Debts

The BMW v Hart ruling flies in the face of most other case law I've read, where the rule usually is that date of the cause of action is held to be when a reasonable person would realise the breach had occurred.

In the case of an agreement under the CCA, this ought to be from the first missed payment which is not rectified as per the DN.

If it's held to be from termination, this could be indefinitely.

Bollox Ridiculous!

(^^Thanks, Nibbler, love it!)

Why would anyone presume such a thing ?

It is for the creditor to decide when there has been a breach of the agreement, if he does no accept the breach there is no tort. This is fundamental contract law.

Termination of a consumer credit agreement following a default notice is a requirement of the act, full repayment cannot be demanded prior to this, as said the logic is inescapable, no matter how much stamping of feet and saying on no it isn't is not going to alter the facts.

There are numerous letters form creditors stating this fact when confronted with a claim for SB over many forums, even the Debtline advice forums state that the barr runs from when the creditor is entitled etc.

I shall not be contributing to this thread further unless someone can come up with a reasoned argument that this is not the case.

[charitynjw]

Re: BMW vs Hart and Statute Barred Debts

Why would anyone presume such a thing ?

It is for the creditor to decide when there has been a breach of the agreement, if he does no accept the breach there is no tort. This is fundamental contract law.

Termination of a consumer credit agreement following a default notice is a requirement of the act, full repayment cannot be demanded prior to this, as said the logic is inescapable, no matter how much stamping of feet and saying on no it isn't is not going to alter the facts.

There are numerous letters form creditors stating this fact when confronted with a claim for SB over many forums, even the Debtline advice forums state that the barr runs from when the creditor is entitled etc.

I shall not be contributing to this thread further unless someone can come up with a reasoned argument that this is not the case.

Why should this be allowed to circumvent the Limitation Act?

[labman]

Re: BMW vs Hart and Statute Barred Debts

My comment is not my own, it is what Russell Kessell, a senior associate in the Litigation and Financial Services Practice Groups at Squire Sanders says.

The Court of Appeal's decision is both pragmatic and commercially sound. The Agreement, like many others, stated that the balance became due on termination. If the Agreement had been regulated by the CCA, termination is subject to the lender serving (where appropriate) a notice under the CCA (most commonly a default notice or, for non-default cases, a combined enforcement and termination notice). Notice is specifically required before a lender can become entitled to (among other things) demand "earlier payment of any sum".

If the Court of Appeal had come to any other conclusion it would have been contrary to the wording of the CCA. This envisages that the balance does not become due (and cannot be demanded as being due) until after the expiry of the notice period. The Court of Appeal's decision can also be used in appropriate circumstances by lenders wanting to stop the limitation period running. It seems clear that, subject to an argument that the lender has affirmed the agreement by not taking steps to accept a debtor's repudiation, termination could be delayed until the end of the term of the agreement. This would allow lenders to delay (most obviously where the debtor is in a difficult financial position or cannot be located) issuing proceedings until the last moment, like BMW did, and avoid being time-barred.
(Source: Practical Law)

To me this is commenting on the ability of the lender to use this judgment to take action at the last minute to STOP a debt becoming SB.

[charitynjw]

Re: BMW vs Hart and Statute Barred Debts

My comment is not my own, it is what Russell Kessell, a senior associate in the Litigation and Financial Services Practice Groups at Squire Sanders says.

The Court of Appeal's decision is both pragmatic and commercially sound. The Agreement, like many others, stated that the balance became due on termination. If the Agreement had been regulated by the CCA, termination is subject to the lender serving (where appropriate) a notice under the CCA (most commonly a default notice or, for non-default cases, a combined enforcement and termination notice). Notice is specifically required before a lender can become entitled to (among other things) demand "earlier payment of any sum".

If the Court of Appeal had come to any other conclusion it would have been contrary to the wording of the CCA. This envisages that the balance does not become due (and cannot be demanded as being due) until after the expiry of the notice period. The Court of Appeal's decision can also be used in appropriate circumstances by lenders wanting to stop the limitation period running. It seems clear that, subject to an argument that the lender has affirmed the agreement by not taking steps to accept a debtor's repudiation, termination could be delayed until the end of the term of the agreement. This would allow lenders to delay (most obviously where the debtor is in a difficult financial position or cannot be located) issuing proceedings until the last moment, like BMW did, and avoid being time-barred.
(Source: Practical Law)

To me this is commenting on the ability of the lender to use this judgment to take action at the last minute to STOP a debt becoming SB.

http://www.squiresanders.com/experience/clients/

Clients

Squire Sanders has been counseling leaders in industry and government since our earliest beginnings more than 120 years ago, and we still represent many of their successor companies. We strive for results that exceed expectations and have the track record to prove it.

A sampling of just a few of our clients includes:

3M Company American Electric Power Company, Inc. ArcelorMittal Asahi Glass Co., Ltd. Ashland Inc. Aviva Investor Barclays PLC Bayer Corporation BB&T Corporation BP Bridgestone Corporation Bunge Limited Cardinal Health, Inc. Cedar Fair, L.P. Cintas Corporation CM Equity Partners CNG Financial Corp. Crum & Forster Holdings Corp. Czech Export Bank, a.s. DuPont EaglePicher Corporation Eaton Corporation Electrolux Home Products Inc Enron Committee: Unsecured Creditors I don't see many ordinary consumers amongst their client list!

Forest City Enterprises, Inc. GE Goodrich Corporation Humana Inc. ICF International, Inc. ING Groep N.V. LeBron James Live Nation Entertainment, Inc. MeadWestvaco Corporation National Grid plc NextEra Energy, Inc. Northrop Grumman Corporation Olympus Corporation OM Group, Inc. RAO Unified Energy System of Russia Sugar Association Inc Tesco PLC The Boeing Company The Cleveland Clinic Foundation The Compass Group United States Steel Corporation UOP LLC URS Corporation WPP plc Zurich Insurance Company

[labman]

Re: BMW vs Hart and Statute Barred Debts

Tesco springs out - did they represent Tesco in a certain well known RLP case?

I agree there's no consumers, but it's an impressive list to represent. One assumes (possibly mistakenly) they should know their onions.

[charitynjw]

Re: BMW vs Hart and Statute Barred Debts

To further this debate with an example (of sorts)

A friend bought a new tyre for his car on a debit card & fitted it to his spare wheel.

Some months later, he was going on a long journey, so fitted the spare wheel to his car; it was defective, but not noticeable until fitted.

He tried to claim chargeback, but was knocked back as out of time (more than 120 days from purchase).

We looked into it, decided that he was within his rights, as the rules states 'when a reasonable person would notice'.

As it happened, it was a Visa debit card anyway, which states 540 days from purchase or 120 days from the 'reasonable person' test, whichever is the sooner.

[mystery1]

Re: BMW vs Hart and Statute Barred Debts

The judge thinks posted 26th Aug 2005 deems service on a Sunday :nono:

M1

[pt2537]

Re: BMW vs Hart and Statute Barred Debts

Why would anyone presume such a thing ?

It is for the creditor to decide when there has been a breach of the agreement, if he does no accept the breach there is no tort. This is fundamental contract law.

Termination of a consumer credit agreement following a default notice is a requirement of the act, full repayment cannot be demanded prior to this, as said the logic is inescapable, no matter how much stamping of feet and saying on no it isn't is not going to alter the facts.

There are numerous letters form creditors stating this fact when confronted with a claim for SB over many forums, even the Debtline advice forums state that the barr runs from when the creditor is entitled etc.

I shall not be contributing to this thread further unless someone can come up with a reasoned argument that this is not the case.

The problem i see is, the banks argue (successfully too) that they can contractually terminate without notice and without service of a default, if they elect to rely on the contract terms and not rely on breach by the debtor.

Now you cant have it both ways, you cannot have a contract which can be drawn to a close without notice and at the same time rely on the limitation argument in Hart when it suits you

Law needs to be clear and certain. The service of a default in my opinion is something the creditor does when there is a breach, breach of contract is a cause of action, limitation requires a cause of action to accrue etc

[labman]

Re: BMW vs Hart and Statute Barred Debts

This is what National Debtline says, which makes good sense to me:

Unsecured credit debts

Unsecured credit debts are things like credit cards, store cards, personal loans and catalogues. When using the Limitation Act, these debts are often called ‘simple contract debts’.
The Limitation Act says that the limitation period for simple contract debts is six years.
The cause of action (when the limitation period starts running) for simple contract debts, is usually when your agreement says the creditor is able to take court action because you have fallen behind with payments. This is normally after one or two missed payments.


Other debts are more complex:

http://www.nationaldebtline.co.uk/en...limitation_act

[charitynjw]

Re: BMW vs Hart and Statute Barred Debts

Vigilantibus non dormientibus aequitat subvenit

Chief Young Dede v. African Association Ltd. (1910) 1 N.L.R 130 at 133.

[Guest]

Re: BMW vs Hart and Statute Barred Debts

The problem i see is, the banks argue (successfully too) that they can contractually terminate without notice and without service of a default, if they elect to rely on the contract terms and not rely on breach by the debtor.

Now you cant have it both ways, you cannot have a contract which can be drawn to a close without notice and at the same time rely on the limitation argument in Hart when it suits you

Law needs to be clear and certain. The service of a default in my opinion is something the creditor does when there is a breach, breach of contract is a cause of action, limitation requires a cause of action to accrue etc

Yes there are occasions where a contractual term can terminate an agreement, in such cases as bankruptcy for instance, but here we are talking about termination on default, so this is not relevant in this case.

On termination upon default in a CCA agreement a DN is required and the agreement has to be terminated before action can be taken to recover sums due under the agreement.

Breach of a single contractual term such as the one that requires regular payment to be made is not a a repudiatory breach, it only results in a cause of action for the missed payment, any other charges incurred would be a penalty, so this cannot be the cause of action for a claim of all sums due under the contract, this is self evident.

You cannot disregard the opinion of respected expert lawyers because it does not fit with some misconception or because it is inconvenient.

[charitynjw]

Re: BMW vs Hart and Statute Barred Debts

With reference to post #13, a maxim of equity is 'equity aids the vigilant, not those who slumber on their rights'

How can this be squared with deliberately holding back on enforcement for whatever reason?

& if this is permissible, how does it square with bankruptcy laws, when a creditor could hold a Sword of Damocles over a debtor's head indefinitely?