Default Notices: time to remedy

[Amethyst]

Re: Default Notices: time to remedy

So the reporting to the CRA is in fact recording the reality of the situation isnt it and isnt reliant on the default notice under the CCA (which is I think what the original argument was?)

Their misrepresentation to you on the DN and subsequently by phone may have caused (in part) that situation to arise but that is a different argument isn't it.

Whats happening with this case now ? Are they suing you for the £4.5k ?

[Lord_Alcohol]

Re: Default Notices: time to remedy

So the reporting to the CRA is in fact recording the reality of the situation isnt it and isnt reliant on the default notice under the CCA (which is I think what the original argument was?)

Their misrepresentation to you on the DN and subsequently by phone may have caused (in part) that situation to arise but that is a different argument isn't it.

Whats happening with this case now ? Are they suing you for the £4.5k ?

Sorry Amethyst I am still finding that way of thinking to be hard to understand at the mo.

My CRF does indeed show the reality. Missed payments and a default. Egg sent their notice of intention to file a default within (as part of) the defective DN, but of course I was unable to remedy due to the excessive amount demanded and so they carried out their threat and recorded the default.

You are absolutely correct in that recording of the default is not reliant on CCA. However, there is a rider to this; the DN clearly states that the notice of intent to file a default is a part of the steps the lender will take if the breach is not remedied. But the breach could not be remedied. The steps available to the lender were entirely based on non-compliance with s88.

I suppose had the lender issued a notice of intent to file a default independently of the DN (ie, as a separate doc), then perhaps it would be clearer?

They have made demands for the full balance via various DCAs, but I have written to each to say that I believe the cause of action to be misplaced due to the defective DN. I have also offered to pay the arrears now and reset the account, subject to removal of the default, but again they are not interested.

I really need to go through the ICO tech guidelines again.

LA

[Lord_Alcohol]

Re: Default Notices: time to remedy

OK, here is what appears to be the position (but I may be wrong!)...

The ICO states;

The term ‘default’, when recorded on a credit reference file should be used to refer to a situation when “the lender in a standard business relationship with the individual decides the relationship has broken down"

and the indicators of a default including referral to a DCA, legal action, any form of recovery or, most importantly;

The customer has not made satisfactory proposals in response to a demand for repayment

(all this on page 5 of the ICO tech guidelines on default).

So, the default only comes into being for the purposes of the CRAs and the ICO after the DN has expired, if the above has been read correctly.

The demand for repayment is presumably the message within the DN itself, as per pompeyfaith's DN at post #84 (http://www.legalbeagles.info/forums/...0&postcount=84).

At para 33 in the ICO guidelines, the FLA's Lending Code is referred to. The Lending Code, at para 36, states;

Whether or not notice was given by the subscriber and consent was obtained from the customer at the time the account was opened, disclosure of default information can be made. But, in all cases, the customer must be given further notice of the intention to disclose the information at least 28 days before the disclosure is made (for example, when a default notice or formal demand is given). At the same time, customers must be given an explanation about how default information registered against them may affect their ability to obtain credit in the future. This notice will mean that customers have 28 days to try to repay or come to some arrangement with the subscriber before default information is passed to the CRA

Btw, there is a lot of cross-referencing between the ICO doc and the Lending Code (http://www.lendingstandardsboard.org...endingcode.pdf).

To me anyway, it seems reasonable to assume that if the breach is remedied then the default is not filed, otherwise the lender breaches the ICO guidelines and the Lending Code.

However, if the lender has served a defective DN and removed some entitlement to remedy for the debtor, then it seems unreasonable to go ahead and file the default. The reason I currently think this is that, had the DN been compliant, there would be far more likelihood that the debtor would be able to remedy.

Having said that, it seems less unreasonable where the time given in the DN is defective because remedy of the breach within the 28 days required by the ICO can still, apparently, avoid the default being filed. What is puzzling is that the debtor could remedy the breach in, say, 21 days to avoid the default being recorded, but the lender could still terminate the agreement and demand the balance as the remedy was not effected within the stipulated 14 days. To me, this is bizarre.

As for demanding too much, both the ICO tech guidelines and the Lending Code refer to this and state that, where a valid dispute arises due to inaccurate amounts demanded, the default should not be filed.

I guess that, where the default has been filed before the 28 days is up, then the lender is in breach of the ICO guidelines and the Lending Code.

Apologies if this is a bit long but hopefully it helps clarify things, especially after yesterday's spat with PB.

LA

[Lord_Alcohol]

Re: Default Notices: time to remedy

As an addendum to the above, there could be a conflict between CCA s88 and the ICO guidelines.

If a debtor remedies the breach after the prescribed 14 days on the DN but before the 28 days prescribed by the ICO, the lender may not consider that the default is remedied in the given time and so record the default and start recovery action.

I wonder if this is the reason why more reasonable lenders do not terminate the agreement and take their next steps until well after expiry of the DN, as with Brandon.

LA

[Guest]

Re: Default Notices: time to remedy

Hi
Well at least it seems to have sunk in that the Default under section 87 is nothing to do with a notice of default under the Banking code required before a notification is made by a creditor to a CRA.
The situation as explained to me regarding both remedy sums being the same and on the same document but with different settlement times is that the CRA will always go with the longest time. That means that they will not register until 28 days after the default notification however it is given.
In reality the creditor does not usually enforce until at least that period anyway.
I will repeat again the situation about the default being remedied because I think it is important to understand the mechanism.
Section 87 as I originally said says that the default and subsequent action can take place “by reason of any breach of the debtor.
Section 89 says “the breach shall be considered as not having occurred.
This is what section 89 does it means that the default notice has no effect. It does not mean that no payments have been missed or that the relationship between creditor and debtor hae not broken down, entries on the credit file are not relevant to this section.
The CRA doe not recognise the term breach in this context because there may not have even been an agreement to breach, as again I have said before it may just be reporting a failure to keep to a payment arrangement like a direct debit on a utility or something of that nature, and a a common criteria is required so that the prospective lender can evenly evaluate the information.
So a defective notice has no effect on the effectiveness of the CRA notification.
Of course if the amount required to remedy the account is incorrect then the amount to stop the notice will also be, as they will both be the same, but that will be a matter for you to raise with the creditor and the CRA the act will not assist you.
Peter

[Lord_Alcohol]

Re: Default Notices: time to remedy

Hi

I'm pleased that you've changed your mind from yesterday.

Well at least it seems to have sunk in that the Default under section 87 is nothing to do with a notice of default under the Banking code required before a notification is made by a creditor to a CRA.

It is exactly the same thing.

Btw, the Banking Code was superceded by the Lending Code on 1st Nov 2009. You now need to refer to the Lending Code.

If you do, and also refer to the ICO technical guidance, you will see that a s87 default and a 'default' are the same even though not specifically stated.

Also, I think that a notice of default is exactly the same as a default notice.

The situation as explained to me regarding both remedy sums being the same and on the same document but with different settlement times is that the CRA will always go with the longest time. That means that they will not register until 28 days after the default notification however it is given.
In reality the creditor does not usually enforce until at least that period anyway.

This is now clear.

I will repeat again the situation about the default being remedied because I think it is important to understand the mechanism.
Section 87 as I originally said says that the default and subsequent action can take place “by reason of any breach of the debtor.
Section 89 says “the breach shall be considered as not having occurred.
This is what section 89 does it means that the default notice has no effect. It does not mean that no payments have been missed or that the relationship between creditor and debtor hae not broken down, entries on the credit file are not relevant to this section.

At risk of being insulted once more, I will repeat that section 87 states as you say but also that a valid notice that complies with s88 "is necessary" before those steps can be taken.

The Lending Code clearly states that remedy within the time stated will remove the need to record the default and that lenders should not do so. This provides exactly the same outsome as s89 offers and I believe they are inextricably linked by practice (not law).

The CRA doe not recognise the term breach in this context because there may not have even been an agreement to breach, as again I have said before it may just be reporting a failure to keep to a payment arrangement like a direct debit on a utility or something of that nature, and a a common criteria is required so that the prospective lender can evenly evaluate the information.

We discuss defaults, and the ICO defines a default as a total breakdown between lender and borrower. That point occurs after the DN expires.

This has nothing to do with ultility accounts, where there may be no reporting at all.

So a defective notice has no effect on the effectiveness of the CRA notification.
Of course if the amount required to remedy the account is incorrect then the amount to stop the notice will also be, as they will both be the same, but that will be a matter for you to raise with the creditor and the CRA the act will not assist you.
Peter

Para 35 of the Lending Code requires that no default is filed where the debtor disputes the amount notified. A DN that demands too much to remedy and is disputed by the debtor should not, therefore, result in a default being filed.

It's all there, in black and white.

LA

[Guest]

Re: Default Notices: time to remedy

I'm pleased that you've changed your mind from yesterday.



It is exactly the same thing.

Btw, the Banking Code was superceded by the Lending Code on 1st Nov 2009. You now need to refer to the Lending Code.

If you do, and also refer to the ICO technical guidance, you will see that a s87 default and a 'default' are the same even though not specifically stated.

Also, I think that a notice of default is exactly the same as a default notice.



This is now clear.



At risk of being insulted once more, I will repeat that section 87 states as you say but also that a valid notice that complies with s88 "is necessary" before those steps can be taken.

The Lending Code clearly states that remedy within the time stated will remove the need to record the default and that lenders should not do so. This provides exactly the same outsome as s89 offers and I believe they are inextricably linked by practice (not law).



We discuss defaults, and the ICO defines a default as a total breakdown between lender and borrower. That point occurs after the DN expires.

This has nothing to do with ultility accounts, where there may be no reporting at all.



Para 35 of the Lending Code requires that no default is filed where the debtor disputes the amount notified. A DN that demands too much to remedy and is disputed by the debtor should not, therefore, result in a default being filed.

It's all there, in black and white.

LA

Yes its that reading thing again isnt it

Yes a efault should not be filed but it is the cra who decides this on the nature of the complaint not the 87 notice.
as i said you will get no assistance from the act. It is possible to complain to the CRA if you dont get a section 87 notice.

sorry repeating myself to you again .

Peter

[Guest]

Re: Default Notices: time to remedy

Why a default notice cannot be used to render an agreement totally unenforceable.

I thought I would have one last go at this .

Firstly lets define repudiation as it is what the argument is base around.
This is the act of a breaching the core terms of an agreement, if the repudiator does this then he in effect denies the existence of the agreement. When this happens the damaged party can accept this repudiation and then the contract is void, it should be noted that the injured party has to be quick and not give any acknowledgement that the agreement still exists. For a repudiation to be effective it has to be accepted .
This is a concept used in contract law and has many common law references I have yet to see it any consumer credit action.

The argument for this is as I understand it :
IF a creditor issues a a defective default notice and on the back of this terminates the agreement and subsequently, seeks repayment of the loan then according to the argument he has repudiated the agreement due to his unlawful termination. The debtor can then accept this and because he is the injured party, The creditor cannot sue him for the liabilities under the contract. On the contry the debtor can sue for damages.

OK this is why it will not work
Firstly and most importantly. If you present a court with a claim that the default notice you received was defective and they agree, all they will do is ask the creditor to issue a new one. No other argument will be entertained.
The act allows for the possibility of an incorrect notice being issued in the way it is structured the only penalty for the creditor is that he must give the debtor the correct information and the 14 days required by the notice.

Ok Just for the sake of argument lets go into the whys and wherefores.
Section 87 says that the creditor before he can be entitled to enforce (this may not be the exact wording but I cannot be bothered to look it up you can if you like but this is what it means).
Therefore he is not entitled to he cannot terminate ,so the argument for unlawful termination is defeated. This is in my view the way the act functions, incidentally it is also the way the act nullifies the notice if the breach is remedied via section 89 it says the breach did not occur, therefore the creditor is not entitled.

Ok say that everything I said in the previous paragraph is wrong. So the creditor illegally terminates the agreement. The problem with that is that the agreement can be terminated at any time by either party so illegal termination would be impossible.
Accepting this legal termination would just mean that the agreement was bilaterally ended, then the court would rescind it by reassigning the liabilities to the creditor (order the refund of the loan).

In practice i suspect that if the issuance of a new DN was dependant on the none termination of the account then the creditor would probably just not terminate it he doesn’t have to under a contractual position, he just has the option.

After saying all this it is the first reason that will defeat this argument in 100% of cases, as it is doing to at least 10 (yes I am counting) people over on CAG at the moment. Each of them has followed the advice to accept the termination and each have been unceremoniously ruled against.

In closing the issue regarding the separation of the default notice to the notice of default issued by a creditor prior to notifying a credit agency is common knowledge if you want to verify this ring up Experian ask for the customer advice officer and he will tell you I did and he did.
　
Peter

[Amethyst]

Re: Default Notices: time to remedy

Lombard North Central v. Power-Hines [1995] CCLR 24, Halsbury’s Laws vol. 9(1) para. 314 note 3, Goode:
Consumer Credit Law & Practice I 45.19 – service of default notice.
Effect for finance industry; lender can be sure that proceedings are properly issued whether default notice received
or not, thus saving substantial costs because spurious defence is stopped.

(can't find actual judgement but found an abstract on CAG - not sure where it was copied from but thread is Anybody got a copy of this judgment please? )

Abstract: P had obtained judgment by default on June 1, 1992 under which D made five payments by warrants of execution. On February 17, 1994 D applied for judgment to be

set aside on the grounds that no default notice was received under s.87 of the 1974 Act, either because the postman was unreliable or because D's young son had intercepted it. P swore an affidavit of posting. The application was dismissed by the judge and D appealed.

Held, dismissing the appeal, that (1) the wording of the Consumer Credit Act 1974 s.176(2) , provided for service by sending by post. The fact that the default notice did not actually come to the attention of D did not mean that D did not receive it. The service provision of sending by post was designed to apply where, through no fault of the plaintiff, the default notice was not brought to the attention of the defendant (Cooper v Scott Farnell [1969] 1 W.L.R. 120 CA (Civ Div) considered; R. v London County Quarter Sessions Appeals Committee Ex p. Rossi [1956] 1 Q.B. 682 CA followed); (2) the court was entitled to assume that where the letter was not returned it had been delivered. The proviso in the Interpretation Act 1978 s.7 , concerning the time of service, was not relevant since there was no provision for time of service in s.87 of the Consumer Credit Act 1974 (Rossi, Re [1956] 1 Q.B. 682 applied).
Judge: Viljoen, J.

Anyway found a nice article about Amex v Brandon which I thought may be of interest here.
http://www.hammonds.com/FileServer.aspx?oID=23087

Default, Default, Default: High Court Gives
Judgment on Default Notices and Default
Charges under Regulated Consumer Credit
Agreements
INTRODUCTION
His Honour Judge Roderick Denyer QC, sitting as a judge of the High Court, handed down
judgment recently in American Express Services Europe PE Limited v Ian Karl Robert Brandon
[2010], Unreported, 25 May 2010, on two key issues which often arise in consumer credit
litigation: firstly, whether the default notice served under Section 87 of the Consumer Credit Act
1974 (the “CCA 1974”) was invalid; secondly, whether the default charges amounted to penalties.
This extremely helpful judgment, and given its High Court status meaning it is binding on the
County Court, will no doubt comfort lenders facing such allegations.
Background
Mr Brandon entered into a running-account credit agreement (otherwise known as a credit card
agreement) with American Express Services Europe PE Limited (“AMEX”) on 28 March 1998.
By June 2007, the outstanding balance was around £6,500. Mr Brandon failed to make his
payments so on 19 June 2007 AMEX served a default notice under Section 87(1) of the CCA
1974. It required Mr Brandon to make a minimum payment of £275.80 “within 14 calendar days
from the date of this default notice”. Mr Brandon failed to make any further payment so AMEX
wrote to him on 11 July 2007 ending the agreement and demanding the unpaid balance. If it was
not paid within 28 days, AMEX said it would register the default with credit reference agencies.
Mr Brandon’s default also meant that late payment charges of £25 and over limit charges of £25
had been applied to his account.
The Issues
The Court had two main issues to determine on appeal, namely:
1 Whether the default notice was invalid because it failed to state a date for compliance, as
required by Section 88(2) of the CCA 1974, of “not less than 14 days after the date of service
of the default notice”; and
2 Whether the late payment charges of £25 and over limit charges of £25 were penalties
meaning they were irrecoverable unless they were a reasonable pre-estimate of AMEX’s loss.
Review
September 2010
Commercial & Dispute Resolution
“This is an
important
judgment for
lenders facing
two issues
often arising in
consumer credit
litigation: firstly,
whether the
default notice
served under
Section 87 was
invalid; secondly,
whether the
default charges
amounted to
penalties”
Commercial & Dispute Resolution
2
Default Notice
Default notices are often of incredible importance. If the debtor has breached his or her
agreement then, by Section 87(1) of the CCA 1974, a creditor needs to serve a default notice
before it becomes entitled to:
• terminate the agreement;
• demand earlier payment of any sum;
• recover possession of any land or goods;
• treat any right conferred on the debtor by the agreement as terminated, restricted or deferred; or
• enforce any security.
If a creditor just intends to pursue for the arrears, no default notice is needed. By Section 88(2),
any notice after 1 October 2006 must give the debtor at least 14 days after service (7 days
for notices served before 1 October 2006) to remedy his or her breach or before the creditor
proposes to takes further action. Section 176 of the CCA 1974 inserts a presumption that, if sent
by post, a default notice is deemed served on the date it would have been delivered in the normal
course of post. This is the case even if the default notice does not come to the debtor’s attention:
Lombard North Central plc v Power-Hines [1995] CCLR 24.
In Mr Brandon’s case, the default notice was served on 19 June 2007 and demanded he made
payment “within 14 calendar days from the date of this default notice”. As service was deemed
after 19 June 2007, Mr Brandon argued that the time period for compliance was too short. It
therefore followed, so Mr Brandon argued, that the default notice did not give the statutory period
required by Section 88(2) and was therefore invalid. AMEX could not, therefore, rely upon it.
After hearing submissions, HHJ Roderick Denyer QC decided that because AMEX did not take
any steps until 11 July 2007 (when it wrote terminating the agreement) and Mr Brandon was not
prejudiced by a technical breach of Section 88(2), the default notice was valid and the agreement
had been properly terminated.
Default Charges
Before the Deputy District Judge at AMEX’s application for summary judgment, the Court decided
that the late payment charges of £25 and over limit charges of £25 were payable under the terms
and conditions. Mr Brandon argued that they were, in any event, penalties. He relied upon the
House of Lords’ decision in Dunlop Pneumatic Tyre Company Limited v New Garage Motor Co
Limited [1915] AC 79, the Unfair Terms in Consumer Contracts Regulations 1999, the Office of
Fair Trading’s guidance on default charges and the fact that AMEX had recently reduced these
charges.
The Deputy District Judge was not impressed: he said that he did “not accept that [AMEX] suffers
no loss when a borrower fails to make payment on time or goes over the agreed limit” and that
a default “puts pressure on cash flow. If borrowers do not pay it puts pressure on the reserves.
If a sufficient number of borrowers fail to pay that can put the lender in beach of its regulatory
requirements”. He then went on to decide that these charges were a reasonable pre-estimate of
loss and were therefore recoverable from Mr Brandon.
At the hearing of Mr Brandon’s appeal in the High Court, HHJ Roderick Denyer QC decided
that this was a view which the Deputy District Judge was perfectly entitled to reach. It could not,
therefore, be overturned on appeal and HHJ Roderick Denyer QC did not suggest he would have
come to any other conclusion.
Commercial & Dispute Resolution
3
Comment
HHJ Roderick Denyer QC’s decision is an extremely welcome one for any lender. The judge’s
finding that a default notice, whilst technically non-compliant, will still be valid so long as the
debtor suffers no prejudice is of crucial importance. Given its High Court status, it has far
reaching implications and may mean that any technical non-compliance of a notice can be
overlooked so long as there is no prejudice. Similarly, the judge’s refusal to interfere with the
Deputy District Judge’s finding that the default charges were lawful is also very helpful. The
customer plainly agreed to the default charges and the Court’s finding that if a debtor fails to pay
on time then a lender does suffer loss is plainly right.
Going forward, lenders should ensure they are familiar with this decision to maximise their
prospect of recovery. It is understood, however, that this decision has been appealed to the Court
of Appeal and a hearing to decide whether permission to appeal should to be granted is currently
listed for 6 December 2010. Given the difficulties with a second appeal, it will be interesting to
see whether the application for permission to appeal fails at the first hurdle.

[middenmess]

Re: Default Notices: time to remedy

After saying all this it is the first reason that will defeat this argument in 100% of cases, as it is doing to at least 10 (yes I am counting) people over on CAG at the moment. Each of them has followed the advice to accept the termination and each have been unceremoniously ruled against.


Read more at: Default Notices: time to remedy - Page 7 - Legal Beagles Consumer Forum

Can you please post links to the 10 cases mentioned above as they would be nigh on impossible to find on there otherwise?

[Angry Cat]

Re: Default Notices: time to remedy

It would appear that some are confused about the difference between,
the recording/processing of information with the CRA's and;
sections 87/88 of the CCA.

[Lord_Alcohol]

Re: Default Notices: time to remedy

Many thanks Peter and Amethyst. The position is a little clearer now then when I started the thread.

Amethyst, the two judgements relate to a DN that was not received (as claimed by the defendant), not a defective DN, and the other is Brandon, which we are all familiar with now.

As I understand it, the Brandon judgement provides that lenders should not take action during the critical 14 day period and if they do not, even if the time specified in the DN is less than this, then a court will rule in their favour.

This presumably means that courts can interpret s88 and the 1983 Consumer Credit (Enforcement, Default and Termination Notices) Regulations, and the wording of s87, to offer the lender a way around his initial mistake.

Personally, I think this is harsh because how does the debtor fully understand this at the time? He gets a DN with not quite enough time specified, realises he can do nothing in the time given, so just gives up. He may even speak to the lender, who might tell him that the DN is fully compliant (even when it isn't).

I still do not understand why lenders are unable to ensure that the debtor is given full opportunity to remedy, perhaps by sending the DN by special delivery (adding the charge to the debtor's list of charges) and providing the 28 days to remedy as the ICO requires under DP regs.

As for DNs that demand too much, I guess that is not affected by Brandon and that Woodchester would still be relevant. Both the Lending Board and the ICO recognise that a demand for too much in a DN is a ground for a legitimate dispute, but after Brandon it would be helpful to have thoughts on this from others.

Brandon is being appealed isn't it? Does anyone know when?

As for termination following service of a defective DN, I am still in the dark. I agree with middenmess in that we need some more info from the cases that have already been heard.

LA

[dad]

Re: Default Notices: time to remedy

Why a default notice cannot be used to render an agreement totally unenforceable.

I thought I would have one last go at this .

Firstly lets define repudiation as it is what the argument is base around.
This is the act of a breaching the core terms of an agreement, if the repudiator does this then he in effect denies the existence of the agreement. When this happens the damaged party can accept this repudiation and then the contract is void, it should be noted that the injured party has to be quick and not give any acknowledgement that the agreement still exists. For a repudiation to be effective it has to be accepted .
This is a concept used in contract law and has many common law references I have yet to see it any consumer credit action.

The argument for this is as I understand it :
IF a creditor issues a a defective default notice and on the back of this terminates the agreement and subsequently, seeks repayment of the loan then according to the argument he has repudiated the agreement due to his unlawful termination. The debtor can then accept this and because he is the injured party, The creditor cannot sue him for the liabilities under the contract. On the contry the debtor can sue for damages.

OK this is why it will not work
Firstly and most importantly. If you present a court with a claim that the default notice you received was defective and they agree, all they will do is ask the creditor to issue a new one. No other argument will be entertained.
The act allows for the possibility of an incorrect notice being issued in the way it is structured the only penalty for the creditor is that he must give the debtor the correct information and the 14 days required by the notice.

Ok Just for the sake of argument lets go into the whys and wherefores.
Section 87 says that the creditor before he can be entitled to enforce (this may not be the exact wording but I cannot be bothered to look it up you can if you like but this is what it means).
Therefore he is not entitled to he cannot terminate ,so the argument for unlawful termination is defeated. This is in my view the way the act functions, incidentally it is also the way the act nullifies the notice if the breach is remedied via section 89 it says the breach did not occur, therefore the creditor is not entitled.

Ok say that everything I said in the previous paragraph is wrong. So the creditor illegally terminates the agreement. The problem with that is that the agreement can be terminated at any time by either party so illegal termination would be impossible.
Accepting this legal termination would just mean that the agreement was bilaterally ended, then the court would rescind it by reassigning the liabilities to the creditor (order the refund of the loan).

In practice i suspect that if the issuance of a new DN was dependant on the none termination of the account then the creditor would probably just not terminate it he doesn’t have to under a contractual position, he just has the option.

After saying all this it is the first reason that will defeat this argument in 100% of cases, as it is doing to at least 10 (yes I am counting) people over on CAG at the moment. Each of them has followed the advice to accept the termination and each have been unceremoniously ruled against.

In closing the issue regarding the separation of the default notice to the notice of default issued by a creditor prior to notifying a credit agency is common knowledge if you want to verify this ring up Experian ask for the customer advice officer and he will tell you I did and he did.
　
Peter

Peter,

The difficulty I have with your approach is that it is almost impossible to reconcile with the CoA judgment in Woodchester v Swain. You will recall that Woodchester's original claim was for £13,453.07 and that ultimately they were sent away with only the arrears of £634 plus interest.

If the law is as you state then Woodchester just needed to issue a new corrected Default Notice.

In my view what prevented Woodchester from remedying the default notice was that they had terminated the agreement.

You correctly state that s87 says that without a DN a creditor is 'not entitled' to take any of the actions listed in s87(1). There are several cases where the courts have held that where a party is 'not entitled' to terminate the contract and then does so that can be repudiatory. eg:

Federal Commerce & Navigation Co Ltd v Molena Alpha Inc

So my view is that the correct legal effect is:

1. Creditor issues a defective default notice.
Effect:
a. Not entitled to take any of the actions in s87(1)
b. Can at this stage remedy the defect.

2. Takes one of the actions listed in s87(1) AND that action goes to the heart of the contract.
Effect:
a. Contract voidable for repudiatory breach - consumer has the option to affirm or accept repudiation.

3. On acceptance:
Effect:
a. Contract terminates.
b. Further default notice cannot be issued as it has to be 'under a credit agreement'.
c. Consumer relieved of all future obligations and responsible for arrears (if any).

HTH

Dad

[mystery1]

Re: Default Notices: time to remedy

http://www.bailii.org/ew/cases/EWCA/Civ/2010/1168.html

M1

[Lord_Alcohol]

Re: Default Notices: time to remedy

Peter, this is very helpful, thanks. I have some specific questions and if you can bear with me I would be grateful for your comments (and those from others);

OK this is why it will not work
Firstly and most importantly. If you present a court with a claim that the default notice you received was defective and they agree, all they will do is ask the creditor to issue a new one. No other argument will be entertained.

Here is my first problem; how is a court able to order this when the lender has terminated the agreement?

Yes, the lender was not entitled to end the agreement, but the debtor has taken him at his word and accepted that termination as being an end to the contract.

So for a court to order the lender to issue a new DN, it surely requires that the agreement and all T&Cs is resurrected. And if the debtor complies with the DN then the agreement continues as before?

For that to be correct, then the court must tell the lender that his termination notices and the hearing at which all are in attendance is erroneous, which is plainly absurd! Or is it? If the hearing is erroneous then the debtor has been dragged to it against his wishes and so could commence a defence under s140 because there is no doubt in my mind that this could be considered an unfair business practice. Is that a potential defence?

The act allows for the possibility of an incorrect notice being issued in the way it is structured the only penalty for the creditor is that he must give the debtor the correct information and the 14 days required by the notice.

My second problem is that I do not see this in the Act at all. In fact, the Act makes considerable mention of the need for a DN to be properly formatted. S87 states that a DN compliant with s88 "is necessary", and so on. The Woodchester judgement told us that DNs must be "precise".

I may have misunderstood your comment here but would nevertheless ask you to explain (if you feel up to it!) why courts allow such latitude in statute that appears to reject it.

Therefore he is not entitled to he cannot terminate ,so the argument for unlawful termination is defeated. This is in my view the way the act functions, incidentally it is also the way the act nullifies the notice if the breach is remedied via section 89 it says the breach did not occur, therefore the creditor is not entitled.

Yes, I understand this position but it is a bit like saying that we are not entitled to drive over the speed limit but we still do. The lack of entitlement doesn't mean that we don't do it. Similarly, lenders can terminate and sue the debtor; the fact that they are not entitled to doesn't alter the fact that they have.

Is there no defence to this?

Ok say that everything I said in the previous paragraph is wrong. So the creditor illegally terminates the agreement. The problem with that is that the agreement can be terminated at any time by either party so illegal termination would be impossible.
Accepting this legal termination would just mean that the agreement was bilaterally ended, then the court would rescind it by reassigning the liabilities to the creditor (order the refund of the loan).

Yes I see this argument. However, isn't it the case that the lender cannot terminate the agreement on breach without a compliant DN? Also, lenders have to give notice (I think, certainly with my accounts).

Also, why would the court assign liabilities to the creditor? Again, this requires that the court ignored s87(1)(b), or are the liabilities contained within the demand in the defective DN?

In practice i suspect that if the issuance of a new DN was dependant on the none termination of the account then the creditor would probably just not terminate it he doesn’t have to under a contractual position, he just has the option.

Would this require that the court overlook the lender's original mistakes (defective DN, erroneous TN and court proceedings) while offering the debtor an opportunity under s140?

After saying all this it is the first reason that will defeat this argument in 100% of cases, as it is doing to at least 10 (yes I am counting) people over on CAG at the moment. Each of them has followed the advice to accept the termination and each have been unceremoniously ruled against.

I know it's a lot of work Peter but I for one would greatly appreciate any links you can provide to the posts on CAG where the court ruled in this way.

Hope you can reply to this - no worries if not.

LA