VT with SMF

[R0b]

174 is a typo, it should be 173 referring to this link below

Consumer Credit Act 1974 (legislation.gov.uk)

[Dunky2k]

Hi R0b

Thanks for the clarification, I have hopefully attached below 2 sections from the credit agreement.

a) Termination: Your Rights
b) Termination by you and delivery up of the vehicle.

Does any of what it says affect anything that I would be replying with?

[R0b]

The first one. That wording is mandatory language that must be inserted into every HP agreement which is a protective right but it looks like SMF have unlawfully modified that wording by adding the last sentence.

Just as an FYI, The Consumer Credit (Agreements) Regulations 2010 governs the contents to be included in consumer credit agreements. It comes in several parts (link here to legislation):

Regulation 3(1) says that the relevant credit agreement must contain certain information and protections as stated in Column 2 of Schedule 1. You will see at paragraph 30, that a hire purchase agreement must include a statement (1) how and when the debtor can terminate the agreement under section 99 of the Act, and (2) the debtor's maximum liability under section 100 of the Act.

Regulation 3(4) then goes on to say that the relevant credit agreement must contain the statement of protections and remedies as set out in Column 1 of Schedule 2 using the language specifically set out in Column 3. Look at Form 9 and you will notice that the statement required to be included resembles the exact statement set out in TERMINATION: YOUR RIGHTS except for the last sentence.

Regulation 7(1) clearly states that the wording in Schedule 2 are to be reproduced without alteration except where you need to replace the reference to creditor or debtor and the sums of money involved.

Obviously you don't need to mention any of this right now but is simply there for background information and understanding. If you start getting into the spat of them relying on clause 5.2 and telling you that's what the contract says then you might want to consider telling them their contract terms are unlawful and in breach of their statutory obligations per above.

[Dunky2k]

Hi R0b

Here is the latest reply from SMF with regards to my recent response advising that i'm not paying for the collection charge etc.
Can you please advise on how I should proceed here?

Dear Mr XXXXXXX,

As you are refusing to rectify any damages that may need repair and the fact that you are requiring expenses to deliver the vehicle therefore unfortunately I cannot proceed with your Voluntary termination request.

If you wish take this further you can contact our complaints team on xxxxxxxxxxxxxxx

[R0b]

It's not clear from that response whether they are now walking back on their position that the agreement is terminated but are refusing to collect the car, or they are saying the termination notice is rejected on the basis that you have refused to pay the fee or return it and pay for any damages and so the agreement (in their view) remains alive.

I don't think you are suggesting that you are refusing to pay for any damage, rather you reserve the right to challenge anything they claim is damage beyond reasonable care but you are also within your rights to refuse paying for the collection fee as you aren't legally required.

The ball is in your court, what do you want to do? You can either go back and agree to pay the damages together with returning the car or pay the fee, or you can stand your ground and push back.

From your perspective, the agreement is terminated and left with a vehicle you have no right to use. You are responsible to ensure the car remains in a reasonable condition and not to allow it to get damaged whilst in your possession. A few thoughts on how you might want to go about this.

- If the car is on your property, you could write back to tell them that they have refused to collect their own car, and as such you are no longer giving authority for it to remain on your land. SMF have 7 days to make arrangements for collection otherwise you will consider them to be a trespasser and charge them £10 per day for the privilege of the vehicle being on your land (equivalent to daily parking charges). If after 30 days they have still not collected the car, then you may want to consider taking further steps such as legal action. I suspect if you did get to this point, they would no doubt make arrangements to collect.

- Let the car sit there for however long you wish, but as above you are responsible for it. Any damage will likely be at your cost unless it is outside your control such as car theft or it was broken into but even then I would expect SMF to say you are responsible. I would caution against this but have seen people hang on to the vehicle for months and then complain nothing is happening so it just sits there. Not a good idea in my opinion.

- You could give them notice under the Section 12 of the Tort (Interference with Goods) Act 1977 which allows people in possession of goods belonging to another, the power to sell and dispose of those goods. All sales proceeds less costs of sale must be held by you and made available for return, you do not get to keep the proceeds. There's a couple of caveats with this route:

- If there is any sum of money owed to you in relation to the goods, you have to give at least 3 months notice. For example, you could write to SMF alleging trespass but at the same time serve notice under this Act bu you would need to allow 3 months before you could sell.

- If you wanted a belts and braces approach, you could make an application to the court under section 13 of the Act for a court order granting the power to sell/dispose of the vehicle and for you to take out your costs and monies owed from the proceeds.

[Dunky2k]

R0b I don't want this thing dragging on forever, so I have sent them this reply in the hope that they complete the process.

Dear Sir / Madam,

I am writing again in response to your latest email below dated 27^th September 2022.

At no point in any previous correspondence have I refused to rectify any damages, I have however stated that I reserve the right to challenge any damage to the vehicle that is deemed to be beyond reasonable care.

I am also within my right to refuse to pay for a collection fee, however in an effort to resolve this matter and get my account closed and the vehicle returned. I am prepared to deliver the car to a named location at my expense, providing that the round trip is less than 100 miles from my current home location. Your online process states that if the delivery location is greater than a 100 mile round trip from my location, that you will collect the vehicle from my home address without charge, at your expense.

Therefore can you please proceed with issuing the letter confirming the termination, detailing where and when the vehicle has to be delivered, or when it will be collected.

[Dunky2k]

R0b

Well thats the first part done, in that they have now issued me with a termination confirmation. They have supplied a delivery address, which is only around a 10 mile round trip, so not bothered about that.

Off now to read what constitutes reasonable condition using the CHAP guidelines they use.

Thanks for all your help and advice to date with this matter, much appreciated.

[R0b]

Good luck. Don't think I've come across the CHAPS guidelines before, it is normally the BVLRA guidelines used.

Just a word of caution, take lots of photos and videos if need be including walk arounds. I can bet you that any damage will be picked up and flagged for potential charges so you should make sure any potential damage is photographed both close up and at a reasonable distance.

Even though you might have photos now, suggest you take final ones when you have dropped off the car but before the keys are handed over. Make sure your photos include the documents and spare keys etc in one photo just in case they lose anything and tried to claim it back.

[Dunky2k]

R0b

Attached is what they sent me to say what the car would be graded against, since I'm no mechanic or panel beater, I'm not exactly sure what's meant by SMART repairs, and what is deemed to be minor or major bodywork required.

Since the car is 1 month shy of being 10 years old and only has 56k miles on the clock, it does have some scratches etc, especially on the alloy wheels (mostly kerbing), I'm hoping that it is fairly graded.

I'm not sure however if they would take into effect the fact I have overpaid the 50% by almost £2300 and the low mileage should hopefully get a fair price at auction into account if deciding that any damages are deemed to be beyond reasonable care.

Its a waiting game now I guess until I next here from them.

[R0b]

Ahh, you confused me when you said CHAP Guidelines as I've never heard of them before but I know the CAP guidelines. They are much more fairer than the BVRLA and take into account the age of the vehicle. So long as you can put it squarely in the average category or higher, you should be fine.

SMART is an acronym for Small to Medium Area Repair Technology. Basically it's a term used to determine whether its possible to use specialist tools to repair minor scratches, paintwork, dents in the bodywork and possible rust patches. Anything that can be done at roadside is what you might consider a SMART repair.

[Dunky2k]

R0b

Okay so the car was finally sold at auction, unsure as to the amount, can I ask for proof of that sale / value?

Today I received the attached letters from SMF.

One was a rectification Report, Nice of them to send me this AFTER the car had been sold, detailing all of the damage, some I may say I can't even say what they are talking about, and some are marks etc that were not on the car when I took my set of photos prior to handing it back. If any of these so called previous repairs were done, then they were done prior to me purchasing the car in the first instance, as other than MOT issues, I have had no work done on the car during the time it was in my possession. The document has small pictures but can be viewed at a higher level on the auction website.

They are claiming that the fee's are what are required to have brought the car back to 'retail sale' condition and are fairly hefty.

The second was a letter stating what my final so called liability is under the agreement, totalling £1000.

Now I need to know where I really stand with this, I believe that the so called 'rust' repairs are probably fair wear and tear for a 10 year old car, and we are talking very small rust stains I'd say, but I'm no mechanic. I also believe that they are saying that the car needed to be in 'retail sale' condition yet other parts of the termination clause says that I must have taken reasonable care of the car.

Consider that I had paid almost £2k over the half way point of the overall agreement, can I argue that the overpayments more than cover the costs of any repairs that were deemed necessary?

I could also possibly argue that what I had paid to date, over £8.5k as well as the auction value on top of that is more than what they would have got if I had taken the option to pay off the agreement early as I would have been entitled to a rebate of interest? (I guess this argument depends on what the car actually sold for).

Either way I need to try and formulate a response that is in my favour here, as I firmly believe that they are chancing there arm here with this invoice / demand for payment.

[Dunky2k]

R0b

Not sure if you have had any time to read over the above, but i've had a stab at trying to write something and would be grateful if you could cast your eye over it and see if its ok, not entirely sure on how i end it mind you. Also unsure if i should expand on the rectification report, as it highlights alleged repairs that must have been done prior to purchasing the car, as i've had no accidents or repairs done. I'm also not sure if i should mention the Consumer Credit (Agreements) Regulations 2010 seeing as they are quoting section 5.2.5 of my agreement.

LETTER START

Dear Sir / Madam,

Re: Condition of vehicle following voluntary termination.

Agreement Number: xxxxxxxxxxxxxxx
Vehicle Registration: xxxxxxxxxxxxxxx
Balance: £1000

I am writing to you with reference to the above matter and your email dated 31/10/2022 concerning the charges raised for damage you alleged state was caused whilst the vehicle was in my possession.

The vehicle was maintained in a reasonable condition throughout the period of the agreement and therefore I do not accept liability for the sum of £1000 that you are claiming to be owed. I would refer you to the Court of Appeal case Brady v St. Margaret’s Trust [1963] 3 W.L.R 1162 which was concerned with the extent of a hirer’s duty to take reasonable care of the vehicle. On that point, Lord Denning stated the following:

"There should be evidence by the hire-purchase company to show the condition of the goods at the time the agreement was made and to show how far the hirer has defaulted under it. As I read this clause, the hirer's duty is to keep the car in the condition in which it might reasonably be expected to be if he had looked after it properly. He need not put it in a better condition than it was when he hired it. He need only keep it in the condition in which a reasonably minded hirer would keep it. Thus he would repair it if there was an accident, and he would do the immediate repairs in the course of running the car, but no more. The hire-purchase company should give evidence of any default on his part in that duty."

Therefore, the onus in on you to prove that the damage to the vehicle was specifically caused by me during the time that I had it. Photographic evidence was taken prior to the vehicle being transferred to you which clearly shows that the vehicle was in a reasonable condition. These images can be supplied for validation on request.

Furthermore, the rectification report issued by G3 does not prove that the damage was sustained during the period of time that it was in my possession, rather it simply lists the damage. There is no evidence to suggest that the damage had occurred whilst in my custody.
The rectification report was only provided once the vehicle had been sold at auction, thus preventing me from arranging my own independent inspection to dispute any damages listed.

You have stated that the proceeds from the sale at auction have been applied to my account, however you haven’t provided any evidence as to what the vehicle sold for, or indeed if it sold for less than expected due to the damage listed on the report.

In reference to your point relating to clause 5.2.5 of my Hire-Purchase Agreement, can I bring to your attention the Consumer Credit (Agreements) Regulations 2010 which governs the contents to be included in consumer credit agreements.

Regulation 3(1) says that the relevant credit agreement must contain certain information and protections as stated in Column 2 of Schedule 1. You will see at paragraph 30, that a hire purchase agreement must include a statement (1) how and when the debtor can terminate the agreement under section 99 of the Act, and (2) the debtor's maximum liability under section 100 of the Act.

Regulation 3(4) then goes on to say that the relevant credit agreement must contain the statement of protections and remedies as set out in Column 1 of Schedule 2 using the language specifically set out in Column 3. Look at Form 9 and you will notice that the statement required to be included resembles the exact statement set out in TERMINATION: YOUR RIGHTS except for the last sentence.

Regulation 7(1) clearly states that the wording in Schedule 2 are to be reproduced without alteration except where you need to replace the reference to creditor or debtor and the sums of money involved.

Based on this, your contract terms are unlawful and in breach of your statutory obligations as per above.

Notwithstanding the above, I have personally paid £8326.92 of the total amount payable, add the proceeds from the sale of the vehicle at auction, and any alleged damage to the vehicle would be covered by these additional payments.

In any event, such sums you are alleging to be owed may only be recovered by a court order only and should you wish to pursue this matter in court, your application will be strongly defended.

Yours faithfully,

LETTER END

[R0b]

See below a revised version, it's a quick type up so there may be grammar and other errors in there so fi you do take any of it, take care to ensure it makes sense. There's also a point in square brackets about the car being 10 years old and multiple owners over time. If this isn't true then delete it or if you do want to keep it in there remove the square brackets.



- - - - - - - - - -


I am writing to you with reference to the above matter and your email dated 31/10/2022 concerning the charges raised for damage you alleged state was caused whilst the vehicle was in my possession.

The vehicle was maintained in a reasonable condition throughout the period of the agreement and therefore I do not accept liability for the sum of £1000 that you are claiming to be owed. I would refer you to the Court of Appeal case Brady v St. Margaret's Trust [1963] 3 W.L.R 1162 which was concerned with the extent of a hirer's duty to take reasonable care of the vehicle. On that point, Lord Denning stated the following:

"There should be evidence by the hire-purchase company to show the condition of the goods at the time the agreement was made and to show how far the hirer has defaulted under it. As I read this clause, the hirer's duty is to keep the car in the condition in which it might reasonably be expected to be if he had looked after it properly. He need not put it in a better condition than it was when he hired it. He need only keep it in the condition in which a reasonably minded hirer would keep it. Thus he would repair it if there was an accident, and he would do the immediate repairs in the course of running the car, but no more. The hire-purchase company should give evidence of any default on his part in that duty."

As above, the burden of proof rests with you to show that the damage you allege was sustained during the time I was in possession of the vehicle. As per the Brady case, that would require you to show the state of the vehicle as at the time I collected it from the dealership and the damage as reported. In the absence of any such evidence, liability is denied. Furthermore, the vehicle is circa 10 years old [with several owners over that period] and there is expected to be some damage and rust for a vehicle of that age. I also note that the inspection report merely lists the damage rather than prove when the damage actually occurred and the report was only sent to me after the vehicle was sold, so there was no opportunity for me to have the vehicle appraised or inspected as to its condition or any ability to challenge the contents.

You also mention that the costs in the inspection report are to bring the vehicle up to 'retail sale' but I don't understand what this term means. I suspect you are suggesting that the costs of repairs are to bring the vehicle back to a standard where there is simply no damage to the vehicle and showroom condition. Under section 100(4) of the Consumer Credit Act 1974 (the Act) which governs my hire-purchase agreement, my liability is limited to bringing the car back to a reasonable condition, and not a showroom standard.

I am also confused by your reference to the proceeds from the sale having been applied to my account and what relevance this has to do with my liability of the car being returned in a reasonable condition. In any event, you have failed to provide evidence as to what the vehicle was expected to fetch and what it had actually sold for or, if it sold for less than expected due to the damage listed on the report. As I am sure you will appreciate, auction sales do not happen as expected and the reason for the low sale value may simply be down to the fact that there was fewer attendance on the day the vehicle was sold and therefore less interest overall. I would appreciate if you could send me your evidence so that I may make further inquiries with independent third parties as to how realistic these expectation were.

Finally, with reference to clause 5.2.5 of the hire-purchase terms you alluded to in your letter, it is my belief that this clause is void for being contrary to my liabilities and responsibilities under the the Act. The clause states that the vehicle must not require any refurbishment and no mechanical or body damage as well as free from any interior damage. Section 173 of the the Act confirms that any contractual clause that seeks to add additional liability to the hirer whether directly or indirectly and contravenes the protections given to the hirer as set out in the Act, shall be void and have no legal effect. Since my liability under section 100(4) is to take reasonable care of the goods - and I take that to mean returning the vehicle in a roadworthy condition - clause 5.2.5 seeks to achieve a much higher standard and is therefore a case of betterment. To add to this, I would remind you that the vehicle is 10 years old [with multiple owners] and so it would be near impossible for the vehicle to have no sustained any damage over that time and nor am I responsible for damaged caused by others. As such, I believe that the clause you are relying on is void and I am not bound by it.

I trust this sets out my position and explains why I am not willing to pay for the sum of money you are alleging is owed. Please also send over the evidence I have requested above in a timely manner, but if I do not hear back from you or you refuse to provide the requested evidence, I will assume that no evidence exists and I reserve the right to show the contents of this letter to the court in the event that any legal proceedings are issued for the purposes of disproving your claim and/or on the issue of costs.

[Dunky2k]

R0b

Just wanted to thank you for your assistance with this matter, finally received a reply from SMF today post the email sent above.
On receipt of the e-mail they sent me a standard customer complaint had been raised letter and that they would reply in due course.

Basically the letter received today stated that the rectification charges supplied by the auction house were for rust, and that rust is something that is outside of my control in a car of this age. Since i had paid well over the agreed 50% VT fee, and with the sale at auction, they are now waiving the rectification charges and updating my account with a status of closed and nothing to pay.

My credit file already showed the account as settled anyway, so its a win for me.

Many thanks again for all the help received and information on this site, which has helped me in successfully VT'ing my agreement.

[R0b]

Glad to hear it is now resolved, that's the main thing. If you ever think of doing this again, I would strongly suggest you avoid BMW or Blackhorse as they are the worst culprits and will damage your credit file. Plenty of BMW cases on here where they have run for years without result and BMW for example continue to report late payments and the only way I see resolution with those creditors would be to start legal proceedings for a final determination.

There's other similar lenders out there but don't seem to be as bad a BMW and BH