VT Excess Mileage - same old same old!

[Solo77]

@R0b
Hi Rob, I contacted you last week with regard to our impending request for Excess Mileage charges. As expected the letter came through last week and we sent a response using some of the information provided by your good self. They have replied very quickly with their take on the situation so it would be great if I could run all the literature past you to see if we are flogging a dead horse and if not how to respond/act accordingly.

I have attached 4 documents which are as follows:

1. Settlement letter - This was sent and signed (perhaps foolishly) before we were aware that we could dispute the excess mileage charge. I have highlighted sections on page 5 which i think maybe pertinent. I took this as being 'yes we acknowledge you will be sending these but that signing this does not say we agree to pay it, just that yes we are aware they will send it.

2. The demand letter for the excess mileage charges.

3. Our response to the demand.

4. Their 'final response' letter

Its taken around 5 days from the initial request letter to their 'final response' letter.

It would be great to hear back from you with regards to the above and to let us know how an earth we should respond /act now!

Kind regards

Solo

[R0b]

Re: VT Excess Mileage - same old same old!

Hello,

Let me get back to you later this evening when I have had time to digest the documents.

[Solo77]

Re: VT Excess Mileage - same old same old!

Fantastic thank you!

[R0b]

Re: VT Excess Mileage - same old same old!

Hi Solo,

This seems to be the typical stance from BMW as with many other lenders so the question is what steps you want to do next. From my knowledge, this will usually go one of two ways, you either pay up or it goes to court whether you bring proceedings or they do (though I am not aware of them bringing a claim and being successful).

A few comments on their response letter to you.

regarding section 99(2) of the CCA, in my view they have cherry picked what the law says. Yes that section says you are liable for anything accrued before termination, but section 100 specifically says that where a debtor terminates under section 99, then he shall be liable for 50% of the total price of the agreement and any sums due in respect of the total price immediately before termination. 'total price' is defined as the total amount payable under the agreement but excludes any damages for breaching the terms or compensation.

So on interpretation, the sums due of the total price immediately prior to termination cannot include excess mileage (but does include outstanding instalments as they were part of the total amount payable) because it is damages for breach of the terms and is specifically excluded under the 'total price'. Therefore s.173 is relevant as they are purporting to make you pay for additional liability.

Regarding the point about being told you could VT if you went over, and if this matter went to court you could also have a defence for estoppel by representation. To rely on the defence, it would be necessary to show that:

(a) a statement was made to you by or on behalf of the lender;
(b) the statement contradicts the representation that the lender wishes to pursue through legal proceedings;
(c) the statement was made with the intention to induce you to enter into the contract; and
(d) you have changed your position in reliance on the statement and you would suffer a detriment if the lender were to pursue its claim.

If you had any witnesses that attended with you at the time that could strengthen your case.

Alternatively you may have a counterclaim for misrepresentation. BMW are clearly fobbing you off to the salesperson but at the end of the day, that person was acting as an intermediary to promote BMW their finance agreement and as such BMW would be liable for the any actions or statements of the salesperson.

Based on previous knowledge, you are in a relatively strong position since it is rare for lenders to take you to court over it, perhaps because it is not commercially viable to do so. Or they may sell the alleged debt to a debt purchaser (Ford do this) who will at some point probably issue a claim. The more immediate issue you for you at hand is our credit rating as lenders are quick to apply a default on your credit report. This is where the standoff takes place, on the one hand it has damaged your credit rating and lenders do this perhaps to force you to pay up and on the other hand, it is arguably a breach of data protection for failing to keep your personal data up to data and accurate. The ICO in their guidance notes says that lenders should not be applying defaults if the alleged debt is solely made up of charges or fees and the customer disputes it.

So, going back to the beginning, what you do next is up to you and how far are you willing to go? This is probably the point where people get stressed or don't want to deal with it anymore or that the threat of going to court is too much and they end up paying up. Although I've not seen a lender being successful, that's not to say they won't bring a claim and there's no guarantee that you will be 100% successful as you can never predict no matter how good your argument is, it's all about what you say on the day and the evidence you have to support our argument.

Finally, there is a leading legal textbook called Chitty on Contracts that is used by judges all time and that confirms exactly what I've said above - that when a debtor terminates an agreement under s.100, then 50% of the total amount is the maximum amount that is to be paid:

Minimum Payment

39-368

Upon termination under s.99, the debtor becomes prima facie liable (unless the agreement provides for a smaller payment, or does not provide for any payment) to pay to the creditor the amount (if any) by which onehalf of the total price exceeds the aggregate of the sums paid and the sums due in respect of the total price immediately before the termination. But if he has paid, or becomes liable to pay, more than one-half of the total price before the termination, he is not entitled to recover, or be relieved from, the excess.
39-369

It is important, however, to note the qualification attached to this “minimum payment” by s.100(3) of the 1974 Act:

“If in any action the court is satisfied that a sum less than the amount [of one-half the total price] would be equal to the loss sustained by the creditor in consequence of the termination of the agreement by the debtor, the court may make an order for the payment of that sum in lieu of the amount [of one-half the total price].”

The one-half minimum payment is thus merely the maximum amount recoverable by the creditor when the debtor exercises his statutory right of termination.

The first thing you should do is check your credit report either through a paid subscription or through Noddle which is free. If you then choose to pay up instead of court, you could offer a really low offer something like £100 in full and final settlement and without any admission of liability. Or if you want to stick it out and wait and see, you could also do that. Claims like this have a limitation period of 6 years, so you ought to retain any documents and correspondence for that amount of time if you can.

Hope that helps.

[Solo77]

Re: VT Excess Mileage - same old same old!

Hi Rob,
Thanks for getting back to me, i'll have a read through this when I get a moment (off to the football!) and i'll get back to you once i've formulated a plan of action!

Kind regards

Solo

[Solo77]

Re: VT Excess Mileage - same old same old!

@R0b

Hi Rob, just to give you an update on our situation. We decided to make a 'Without prejudice' offer for almost half the amount of the invoice. This was rejected and they simply stated we must still pay the full amount. They have also now used the 'reasonable condition' as their right to charge for excess mileage. We haven't yet decided what to do regarding the matter and present we have been given the 'contact the FO within 6 months' line. Today we spoke to BMW finance regarding another issue and they brought up the excess mileage charge, we were also told that we will be repeatedly charged a late fee whist the bill remains unpaid. There has been no mention of this in any of their previous letters but they stated it was in the original documentation. We've requested that they send us a copy of this as we are now concerned that we are going to have an ever increasing bill the longer we do nothing about it.

[R0b]

Re: VT Excess Mileage - same old same old!

Hi Solo,

Thanks for the update, I'm afraid I can't offer much more than what I previously said in that it is entirely up to you as to how you want to go about it. Perhaps they have seen your offer to pay half the alleged debt as a sign of weakness and are simply expecting you to eventually pay up I don't know.

Has the 6 months now expired to contact the FO?

Did you check your credit file to see if any default has been applied?

Regarding the late fee, I cannot see how this can be recovered, though I've not seen the T&Cs but once the agreement is terminated under s.99, they cannot then apply any further contractual charges as per s.100. The excess mileage charges they are applying are based on the contractual clauses for breaching the maximum mileage and so that is not the same as claiming damages for the car being in an unreasonable condition. Lenders can claim compensation if the car is in an unreasonable condition but as with anything, they need to provide evidence to back up their claim - I find it difficult that a lender would be able to rely on a contractual clause which provides for compensation for breach as its damages for the car being returned in an unreasonable condition, when the clause in question is void and unenforceable for the purposes of VT.

It sounds like BMW are sticking to their guns so its a case of who cracks first. Either pay up now or if you want to carry on defending it even if court proceedings are issued I will assist you where I can to provide a defence. Claims brought under the small claims track have limited costs so if you are able to afford the full payment of the alleged debt then even if you lose at court you still have 30 days from the date of judgment to pay the sum and not have a CCJ recorded.