Voluntary termination with Mercedes Benz Finance

[Nodbadthebad]

Hi I started the process of voluntary termination through MBFS back in September last year.

I have sent the letters in the VT pack that R0b suggested.

I received a letter from MBFS complaints department saying the following:

You dispute your excess mileage charge as you've stated that as you've voluntary terminated your agreement, you are not liable for the excess mileage charges. Whether you are returning your car at the end of your agreement or upon use of the Voluntary Termination (VT) clause, as you have not exercised your right to purchase the car, an excess mileage charge will be raised should your return mileage exceed your total mileage allowance. This obligation is set out within the first page of your agreement, under key information. The provisions of the Consumer Credit Act that cover a customer’s right to VT their agreement do permit us to include any over mileage when determining what is 'not reasonable' upon the cars return. It is stated in your agreement under ‘Excess Distance’; ‘If the vehicle is returned to us (whether at the end of the period hire or an earlier termination), we will calculate the total distance travelled by the vehicle whilst in your possession (the “Total Distance”)’.
I would also like to kindly refer you to S99 (2) Consumer Credit Act 1974 where it states: ‘Termination of an agreement under S (1) does not affect any liability under the agreement which has accrued before the termination’. As your agreement was subject to a mileage allowance prior to termination and you have exceeded the allowance, the charge has been raised correctly and remains payable. The conditions of the Consumer Credit Act do permit us to determine what is considered reasonable condition. As excess mileage has a negative effect on the value of the vehicle, this is not considered reasonable and Mercedes-Benz therefore retains the right to charge for this following the voluntary termination of an agreement.

I have a week to respond to this.

Can you suggest a suitable response please? Especially to their argument I have highlighted in bold.

Thank you in advance

N

[R0b]

See example below - you may need to adapt it to suit your current positon or to use some or all of the points.

-----------------------------------------------------------------------

Dear Sir or Madam,

Thank you for your email.

In your latest email, you refer to Section 99(2) and suggest that the excess mileage charges accrued prior to termination of the agreement - I disagree. I should point out that that argument was relied upon before Deput District Judge Ellington in the County Court case of Mercedes-Benz Financial Services UK Limited v Cahalane (Willesden County Court, Feb. 28, Claim No. D1CD9N5D). DDJ Ellington rejected Mercedes' argument that the excess mileage charges were rolling throughout the contract on the basis that the excess mileage charges do not accrue at any point in which the mileage was exceeded, but those charges only crystallised on termination of the contract. Her reasons were that:

(a) the factual interpretation of the agreement itself and in particular to the natural reading of the first page which has a heading "default charges";

(b) she was bound by the authority in Julian Hodge Bank v Malcolm John Hall; and

(c) in any event the definition of "total price" as set out in Section 189 of the Consumer Credit Act 1974 excludes any sum payable as a penalty or as compensation or damages for a breach of the agreement and that excess mileage charges do not fall to be included within the definition of total price. DDJ Ellington further supported this point by refering to the wording in the agreement where it states "Termination: Your Rights" which goes on to say that you are only entitled to half the total amount payable as wel las the return of the goods.

The email goes on to say that the Consumer Credit Act allows you determine what is considered a reasonable condition and that because excess mileage has a negative effect on the value of the vehicle, Mercedes is entitled to seek reocver of that lost value. In response to this point, I should point out that the Consumer Credit Act does not allow Mercedes to determine what is and isn't considered to be in a reasonable condition. On the contrary, the duty for the hirer to take reasonable care is an objective one and not, as you suggest, subjective.

It is my understanding that your argument in respect of the vehicle's value is essentially a claim for economic loss, however, the duty to take reasonable care under Section 100(4) is a tortious duty. Put simply, duties in tort are primarily fixed by the law whereas in contract, they are fixed by the parties themselves. I would refer you to a point made by Lord Justice Greer in Jarvis v Moy Davies Smith Vandervell & Co. [1936] 1 K.B. 399 where he stated:

"... where the breach of duty alleged arises out of a liability independently of the personal obligation undertaken by contract, it is tort, and it may be tort even though there may happen to be a contract between the parties, if the duty in fact arises independently of that contract. Breach of contract occurs where that which is complained of is a breach of duty arising out of the obligations undertaken by the contract."

As the duty under Section 100(4) is one of tort, I would also point out that claims for pure economic loss are not recoverable. That poisiton was made clear in White v Jones [1995] 2 A.C. 207 when Lord Browne-Wilkinson said:

"The law of England does not impose any general duty of care to avoid negligent misstatements or to avoid causing pure economic loss even if economic damage to the plaintiff was foreseeable."

In my view, the suggested reasons by Mercedes that excess mileage charges can be recovered are simply flawed in that such arguments have previously been dismissed in court and/or the current law makes it clear that pure economic loss is not recoverable.

I think my position is made clear by the contents of this email but just to be certain, I do not consider the excess mileage charges to be recoverable nor do I intend to pay them. You may wish to consult with your legal team as I am sure they will be aware of the County Court decision I mentioned above.

Now that you know where I stand, I do not expect to hear back from Mercedes in relation to this matter unless the intention is to commence legal proceedings, in which case I expect Mercedes to follow the appropriate pre-action protocols and any claim will be defended with reference to the above case law.

Regards,

[Nodbadthebad]

Thank you Rob.

Would you put any credence in going to the Financial Ombudsman following this?

Cheers

Paul

[R0b]

You could if you wanted to. Since the County Court case, the FOS have been reviewing its decision on excess mileage charges (previously they considered them to be fair and reasonable) but I don't think any new decisions have been reported back to us on here. If you do go the FOS route, expect a template response from them saying that they are looking into decisions on excess mileage charges.

[Nodbadthebad]

Again, thank you Rob. Your continued help and effort on these forums is very much appreciated by all!

Have you seen any evidence at all of MBFS (or indeed other companies) capitulating since the CC case?

[R0b]

Nope, mainly becuase people haven't come back to update us - I assume if there was a problem then they would no doubt speak up. You might get the recycled spiel from Mercedes saying that their contract has been drafted by leading counsel and so it must be legally enforceable but other than that, absolutely zilch. That's not to say they don't take legal action, just more likely against those who haven't stood up against them and don't know their rights.

BMW are now in the habit of marking late payments on your credit file so that's something to be aware of. I believe Barclays also have a habit of doing this but sometimes back track when you threaten them.

It would really help if the FOS finally accepts that excess mileage charges are not recoverable and then everyone can just rely on those decisions and force companies like Mercedes to stop chasing.

I'm with Renault at the moment and I will no doubt have fun with them when I VT mine next year.

[Nodbadthebad]

So, I have now received a letter from Mortimer Clarke, MBFS' solicitors.

They are asking me to fill in a form as to why i dont think the debt applies to me and why i'm not paying it.

Should I just use the same arguments I have been using with Mercedes (see Robs message above from the 4th July)?

They are asking for any information and evidence that I will be using to argue my point(s).

What should I send them? The transcript of the case they lost in Willesden County Court?

is there any wording I could use to them that would make them think about advising their clients to back down, or are they just acting blindly for MBFS knowing they are likely to lose due to previous case law?

Any help here would be greatly appreciated.

Thanking you in advance.

Paul

[Amethyst]

Is the form a reply to letter of claim form ? Similar to the one on this thread https://legalbeagles.info/forums/for...-for-reference ?

[R0b]

Is it a letter before claim? It would be helpful to see it so we can understand what it is they are asking from you.

You don't need to send them any evidence at this point, especially the transcript of the case they lost. They will be fully aware of the circumstances in which they lost the case so there's no reason why you should supply them with anything - reference to the case law and arguments are pretty much the same as before.

There's someone slightly ahead of you in the process and you might want to use the example letter I posted on the thread below - it is one of the last few posts on that thread, although I've noticed there's a few grammatical errors in there that could be amended.

https://legalbeagles.info/forums/for...ination-issues

If you want any feedback, I suggest you post up your draft response for comment.

[Nodbadthebad]

Hi Rob

T^hank you again for your quick response!

It appears I am at a slightly earlier stage as Pootanga in as much as I have received the same letter and form from Mortimer Clarke.

There is a slight difference. Apart from the excess mileage, the damage that Mercedes is claiming for in my case is what the CAP HPI Vehicle condition standards would deem to be a 3-year old car in a "Clean" condition.

I am disputing the damage on the basis that it is fair wear and tear for the age of the car. They have (eventually) supplied me with a video of a lady walking around the car pointing out various things (some of which she says are fair wear and tear), and their damage report which I would argue shows very little damage. That's all their evidence. I have attached their damage report and a link to the video (recorded on my laptop from a link they sent me).

Their original invoice had a charge of £380 for damages (the appraisal form contradicts this at £210 "Total for Recharge") and the excess mileage is another £499.77 + vat.. That's a total they are requesting of £979.72 (inc vat)

I have various photos which I took of the car prior to handing it back which show that the two scratches that they point out on the rear bumper are all within the "tolerance size" using the plastic "gauge" they supply when you receive the vehicle, among other photos showing the car in a generally clean and well kept condition. (I accept one of the wheels is badly kerbed, but again fair wear and tear for a three year old car?)

I am thinking that I will use very similar wording to the sample you have provided to Pootanga unless you think I should word it differently (Draft reply below)?

Video Link: https://1drv.ms/v/s!Ak3SBp4GQDQlv3uE...FH0sm?e=o772Qo

Cheers

Paul

[Nodbadthebad]

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[R0b]

I'll take a look at some point tomorrow and add any comments, bit late now for me to concentrate.

[Nodbadthebad]

Thank you Rob, I look forward to it.

[R0b]

Hello

I've looked at the letter and is generally fine but a couple of comments below.

1. On the second bullet point of the first page talking about excess mileage charges, I would change the date of the County Court reference from "Feb. 28" to "28 February 2019".

2. On the second page in the bullet point which refers to Jarvis v Moy Davies Smith Vandervell & Co. you should delete the words "in which he said" but keep the colon.

3. On the following paragraph it says "As a firm of solicitors specialising in debt collection" I would replace debt collection with litigation.

4. In the letter where it refers to White v Jones [1995] 2 A.C. 207, you should italicise "White v Jones".

5. Where you refer to the "Please Supply" section for the documents you are requesting, I would set it as like below.

Information required
1. The original and signed agreement.
2. An itemised breakdown of the damage your client claims to have been caused whilst the vehicle was in my possession. The breakdown should include evidence from your client proving the damage did not exist prior to entering into the agreement as well as the costs of repair in respect of each of the damage.

Just minor points really, but it is always good to ensure you present it well as you never know it may end up in front of a judge.

On another note, you forgot to remove the meta data from the word document which includes your personal info. Just in case you don't know how to do that, in Word you go to File > Info > Check for Issues > Inspect Document > tick the box for Document Property and Personal Information > click Inspect > click Remove All.

[Nodbadthebad]

Rob,

Again, I thank you for your time and experience in helping people like myself in these matters.

I'll respond to Mortimer Clarke as you have suggested and will post any response as and when I receive it.

Thanks again

Paul