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Hi All,
i'm new to the site and i am looking for some advice. I had sent the original email below, and their response is also below. Where do i stand on this? The total includes charges for mileage, damages (one wheel and a valet) and also GAP Insurance which i thought was bundled into one but apparently not.
My Original Email
Dear Sir or Madam,
Re: Voluntary termination of hire-purchase agreement
I am writing further to your letter dated 01/04/2019.
In that letter, you mentioned that the hire-purchase agreement refers to excess mileage being charged on a pro-rated basis in the event that the agreement ends early. Whilst I do not dispute this, you will know that the agreement is subject to and regulated by, the Consumer Credit Act 1974 (“CCA 1974”). Therefore, the hierarchy of laws dictate that Acts of Parliament (in this case the CCA 1974) takes precedence over any common law contract. This is further clarified in Section 173 of the CCA 1974 confirming that contracting out of the Act is strictly forbidden and any attempts to do so will render the relevant contractual provision void and unenforceable.
You also stated that Section 99(2) enables you to recover excess mileage charges in addition to one half of the total price payable under Section 100(1). With respect to that view, it is simply wrong for a number of reasons:
“Sections 99 and 100 of the CCA permit a customer who has purchased goods on a HP agreement or CS agreement to hand back the goods to the finance company and have no further liability under the credit agreement provided at least 50% of the total amount due under the agreement has been paid. This is called voluntary termination (“VT”).”
and
“At the time of termination the customer is liable for any amount that has not been paid under the original agreement up to a maximum of 50% of the total amount due to be paid under the Agreement.”
It is clear from the above that upon exercising my voluntary termination right, the ability to recover any sums exceeding one half of the total price payable no longer exist. Had I not exercised this right, and instead continued the agreement until the hire period expired and opting to return the vehicle, then the excess mileage charges would have applied as the limited liability rule would not be engaged.
With regards to Section 100(4), the duty is to take reasonable care of the vehicle and to avoid any negligent act or omission that causes physical damage to it whilst in my possession. I have yet to see any evidence from FCA Automotive Services which indicates that the excess mileage has resulted in physical damage beyond reasonable wear and tear. I would also point out that the same point was raised in the Mercedes-Benz case and failed on the basis that there was no correlation between the excess mileage and a failure to take reasonable care of the vehicle.
I also dispute the charge for GAP insurance which was also part of my contract, bundled in together and was made within the one payment. Half this amount was also paid so nothing further should be required.
I would appreciate your comments to the above and together with any evidence you have in your possession. In the absence of a substantive response, I have nothing further to add and consider this matter to be closed.
FCA Response Email
Thank you for your email.
Our apologies for the delay.
Excess Mileage
In relation to the excess mileage please note the Common Law of Misrepresentation allows a business to recover costs associated with unexpected depreciation in the event that the customer has exceeded the mileage allowance at any point in the contract and terminates early. As such we are within our rights to recover the loss associated with this based on the fact that they potentially misrepresented their intended use of the vehicle. This confirms that we are eligible to charge this for VT customers. Exceeding the agreed mileage allowance can be seen to be the customer contravening the agreement to take care of the goods as agreed. Therefore we are able to charge consumers if they have not adhered to their mileage allowance and have breached the terms of the finance company as well as law of misrepresentation.
Repayment Plan
Our collection work with customers to assist repayment. You may request a repayment plan from our collections
Damages
The BVRLA guidelines state costs maybe the actual repair costs or the loss of value cost.
The inspection conducted by our agents was to determine the degree to how the vehicle was cared for. A tolerance for damage is allowed, but it needs to be
considered Fair wear and tear.
You were sent a VT Request letter that stated if the vehicle is returned then the inspector would use the BVRLA guidelines to determine damages.
The BVRLA set the inspection guidelines, the auction houses set the prices, it's not in their interest to inflate prices as they want the best prices at sale.
Issues should be rectified prior to returning the vehicle.
We have reviewed the inspection report (attached). The Valet has been reduced to £25.00.
Scuffs on wheel trims exceeding 50mm (whole circumference) or any damage to spokes are not permitted by the BVRLA.
Soiled vehicles (Interior/Exterior) is not permitted by the BVRLA.
As a goodwill gesture to settle the dispute we removed £25.00 from your damage charges.
Your O/S balance is £1,282.66.
i'm new to the site and i am looking for some advice. I had sent the original email below, and their response is also below. Where do i stand on this? The total includes charges for mileage, damages (one wheel and a valet) and also GAP Insurance which i thought was bundled into one but apparently not.
My Original Email
Dear Sir or Madam,
Re: Voluntary termination of hire-purchase agreement
I am writing further to your letter dated 01/04/2019.
In that letter, you mentioned that the hire-purchase agreement refers to excess mileage being charged on a pro-rated basis in the event that the agreement ends early. Whilst I do not dispute this, you will know that the agreement is subject to and regulated by, the Consumer Credit Act 1974 (“CCA 1974”). Therefore, the hierarchy of laws dictate that Acts of Parliament (in this case the CCA 1974) takes precedence over any common law contract. This is further clarified in Section 173 of the CCA 1974 confirming that contracting out of the Act is strictly forbidden and any attempts to do so will render the relevant contractual provision void and unenforceable.
You also stated that Section 99(2) enables you to recover excess mileage charges in addition to one half of the total price payable under Section 100(1). With respect to that view, it is simply wrong for a number of reasons:
- The correct interpretation is that sums already paid under the agreement cannot be recovered and not, as you suggest, to allow recovery of further sums under the agreement prior to its termination. Historically, Sections 99 and 100 were introduced for the protection of the debtor against excessive minimum payment clauses as well as those who were in debt, and the halfway rule was seen to strike a balance. On the other hand, your interpretation of Section 99(2) would imply that not only would excess mileage charges apply, it would also extend to any other costs or expenses under the agreement, the result of which, would effectively render the limited liability principle under Section 100 useless.
- In the consultation paper, A Consultation on Voluntary Termination of Hire Purchase and Conditional Sale Agreements Under the Consumer Credit Act 1974, 2 September 2004, URN 04/1557 (enclosed is an extract of this document), the paper sets out a basic definition of voluntary termination:
“Sections 99 and 100 of the CCA permit a customer who has purchased goods on a HP agreement or CS agreement to hand back the goods to the finance company and have no further liability under the credit agreement provided at least 50% of the total amount due under the agreement has been paid. This is called voluntary termination (“VT”).”
and
“At the time of termination the customer is liable for any amount that has not been paid under the original agreement up to a maximum of 50% of the total amount due to be paid under the Agreement.”
- Further to the above, the intention of Section 100(1) is to act as a backstop in that it serves as a limitation of liability for the benefit of the debtor. It imposes a statutory limit on the amount of liability owed by the debtor to the creditor under a hire-purchase agreement which is defined as one half of the total price payable. “total price” is defined (see Section 189) as, “the total sum payable by the debtor under a hire-purchase agreement or a conditional sale agreement, including any sum payable on the exercise of an option to purchase, but excluding any sum payable as a penalty or as compensation or damages for a breach of the agreement”. This position is also aligned with the voluntary termination protection statement you referred to under the Consumer Credit (Agreement) Regulations 2010 and as set out on the first page of the agreement.
- In a recent County Court case between Mercedes-Benz Financial Services (UK) Limited v Cahalane (Willesden County Court, 26 February 2018) District Judge Ellington (as she was then) held that excess mileage charges were not recoverable. Her reasons included, that the definition of total price excluded the recoverability of these charges, the statement “Termination: Your Rights” was explicitly clear that liability was limited and, in any event, she was bound by the Court of Appeal decision in Julian Hodge Bank v Hall [1997] EWCA Civ 1852, which established that “total price” excludes compensation and damages for breach of the agreement for the purposes of calculating the total price payable.
It is clear from the above that upon exercising my voluntary termination right, the ability to recover any sums exceeding one half of the total price payable no longer exist. Had I not exercised this right, and instead continued the agreement until the hire period expired and opting to return the vehicle, then the excess mileage charges would have applied as the limited liability rule would not be engaged.
With regards to Section 100(4), the duty is to take reasonable care of the vehicle and to avoid any negligent act or omission that causes physical damage to it whilst in my possession. I have yet to see any evidence from FCA Automotive Services which indicates that the excess mileage has resulted in physical damage beyond reasonable wear and tear. I would also point out that the same point was raised in the Mercedes-Benz case and failed on the basis that there was no correlation between the excess mileage and a failure to take reasonable care of the vehicle.
I also dispute the charge for GAP insurance which was also part of my contract, bundled in together and was made within the one payment. Half this amount was also paid so nothing further should be required.
I would appreciate your comments to the above and together with any evidence you have in your possession. In the absence of a substantive response, I have nothing further to add and consider this matter to be closed.
FCA Response Email
Thank you for your email.
Our apologies for the delay.
Excess Mileage
In relation to the excess mileage please note the Common Law of Misrepresentation allows a business to recover costs associated with unexpected depreciation in the event that the customer has exceeded the mileage allowance at any point in the contract and terminates early. As such we are within our rights to recover the loss associated with this based on the fact that they potentially misrepresented their intended use of the vehicle. This confirms that we are eligible to charge this for VT customers. Exceeding the agreed mileage allowance can be seen to be the customer contravening the agreement to take care of the goods as agreed. Therefore we are able to charge consumers if they have not adhered to their mileage allowance and have breached the terms of the finance company as well as law of misrepresentation.
Repayment Plan
Our collection work with customers to assist repayment. You may request a repayment plan from our collections
Damages
The BVRLA guidelines state costs maybe the actual repair costs or the loss of value cost.
The inspection conducted by our agents was to determine the degree to how the vehicle was cared for. A tolerance for damage is allowed, but it needs to be
considered Fair wear and tear.
You were sent a VT Request letter that stated if the vehicle is returned then the inspector would use the BVRLA guidelines to determine damages.
The BVRLA set the inspection guidelines, the auction houses set the prices, it's not in their interest to inflate prices as they want the best prices at sale.
Issues should be rectified prior to returning the vehicle.
We have reviewed the inspection report (attached). The Valet has been reduced to £25.00.
Scuffs on wheel trims exceeding 50mm (whole circumference) or any damage to spokes are not permitted by the BVRLA.
Soiled vehicles (Interior/Exterior) is not permitted by the BVRLA.
As a goodwill gesture to settle the dispute we removed £25.00 from your damage charges.
Your O/S balance is £1,282.66.
