Default Notices: time to remedy

[middenmess]

Re: Default Notices: time to remedy

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

M1

So that's all and any defences out of the window then that were based around a faulty default notice?

[Amethyst]

Re: Default Notices: time to remedy

Well its nothing to do with the CCA but interesting (and quite common sensical again)

Once such case recently reached the Court of Appeal, Eminence Property Developments Ltd v Heaney [2010] EWCA Civ 1168. In that case the buyer had contracted to buy 13 properties off plan having paid a 2.5% deposit for each one. Completion had been due on 4 December 2008 but the buyer had failed to complete. As is usual practice the developer served a notice to complete but had miscalculated the appropriate notice period required by the contract. When the buyer still failed to complete the developer then served a notice of rescission, the day before the notice to complete should have expired.
The buyer alleged that this was a repudiatory breach of contract, accepted this breach and treated the contract as at an end. The parties then each claimed and counterclaim for declarations as to their contractual liabilities and at first instance the buyer prevailed. The developer appealed this decision.
The Court of Appeal found in favour of the developer on the basis that it was clear that the developer’s rescission notices did not constitute a repudiatory breach of the contracts. The buyer did not point out the obvious error, but either failed to notice it or else waited to take advantage of it. The Judges concluded that had the developers error been pointed out by the buyer, the rescission notices would have been treated as ineffective and the developer would have waited until the expiry of the notices to complete before deciding whether or not to treat the contracts as being at an end. They thought it was impossible to find an intention by the developer to refuse to perform the contracts, which, in view of the state of the market, had become highly advantageous to the developer and onerous to the buyer.
While this was a gallant attempt on the part of the buyer to escape the consequences of his inability to complete, the Court has elected not to punish a trivial mistake on the part of the developer by allowing the buyer to take advantage and to walk away from its own bad bargain.

[middenmess]

Re: Default Notices: time to remedy

the Court has elected not to punish a trivial mistake on the part of the developer by allowing the buyer to take advantage and to walk away from its own bad bargain.

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

Sensible perhaps but on a million pound contract trivial?


Must put that firm of solicitors on my 'Keep Away From And Don't Instruct' list!

[dad]

Re: Default Notices: time to remedy

Eminence Property Developments Ltd v Heaney [2010] EWCA Civ 1168

This case represents a significant clarification of the law. The judgment now puts the emphasis on the conduct of the 'repudiator'. The key point of the judgment is:

The Judges concluded that had the developers error been pointed out by the buyer, the rescission notices would have been treated as ineffective and the developer would have waited until the expiry of the notices to complete before deciding whether or not to treat the contracts as being at an end. They thought it was impossible to find an intention by the developer to refuse to perform the contracts

The key factual point in this judgment was that as soon as Mr Heaney's solicitor wrote accepting the repudiation the developer's solicitor wrote back saying it was a mistake.

I think this judgment means the end of acceptance by conduct. You will have to be able to demonstrate that you wrote to the repudiator and despite this letter they still continued to act as if the contract was terminated or did not cease to take the action listed under s87(1) which went to the heart of the contract.

HTH

Dad

[Amethyst]

Re: Default Notices: time to remedy

This case represents a significant clarification of the law. The judgment now puts the emphasis on the conduct of the 'repudiator'. The key point of the judgment is:



The key factual point in this judgment was that as soon as Mr Heaney's solicitor wrote accepting the repudiation the developer's solicitor wrote back saying it was a mistake.

I think this judgment means the end of acceptance by conduct. You will have to be able to demonstrate that you wrote to the repudiator and despite this letter they still continued to act as if the contract was terminated or did not cease to take the action listed under s87(1) which went to the heart of the contract.

HTH

Dad

Sooooo.... if you recieve a default notice that is invalid or wrong date wise and they terminate off the back of it and you write to them to accept the termination, they come back and say ahh the DN was incorrect and cancel the termination - you havent got an argument.


If the default notice was wrong and they refused to correct it or accept the correct remedy and terminate regardless and go on to report to CRAs, call in full amount etc .... then you have an argument.

(I'm still not entirely sure what the argument is or where it gets you though has something to do with only paying arrears?)

[middenmess]

Re: Default Notices: time to remedy

Dad #69

I think this judgment means the end of acceptance by conduct. You will have to be able to demonstrate that you wrote to the repudiator and despite this letter they still continued to act as if the contract was terminated or did not cease to take the action listed under s87(1) which went to the heart of the contract.

HTH


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

As Amethyst pointed out to me this contract was not made under the CCA 1974 so the ruling whilst interesting does not apply to those of us whose agreements are regulated by the CCA----have I got that right?

[Amethyst]

Re: Default Notices: time to remedy

It does where you are using common law outside of the CCA as you are doing with the 'repudiation' whatnots.

[The Debt Star]

Re: Default Notices: time to remedy

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

absolutely, could't agree more. the dire consequences of DNs is such that they should be treated with more gravity by creditors. how often do we read on here about consumers claiming not to have received a DN and having their credit destroyed as a consequence?

[Guest]

Re: Default Notices: time to remedy

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

HI
My understanding of the ruling on Swain was that they where sent away with a refund of the amount paid on the faulty DN.
I do not think that the situation involving the contract was resolved was it?
I will have to look at it again.
I was under the impression that the £13000 was the original full term contract price of the hire, and the creditor tried to claim for loss of this.
I didn’t think that a decision was made on this within the copy of the judgement I have..
I presumed perhaps wrongly that since this was a hire agreement that there was no liabilities under the contract once the machine was returned other than a genuine pre estimate of losses, and for that they would have to proven repudiation of contract. I do not think they could although as you say I think that was their original idea.


Peter

[middenmess]

Re: Default Notices: time to remedy

It's unbelievable really that for the sake of spending 70p to record the delivery of an important legal document,the banks would rather spend many hundreds, and in many cases thousands, of pounds in the ensuing aftermath when a debtor disputes or challenges the dates surrounding a Default Notice.

It tells you all you need to know about Banks and goes a long way in explaining how that got themselves into such poor standing with Joe Public.


Total planks!

[The Debt Star]

Re: Default Notices: time to remedy

It's unbelievable really that for the sake of spending 70p to record the delivery of an important legal document,the banks would rather spend many hundreds, and in many cases thousands, of pounds in the ensuing aftermath when a debtor disputes or challenges the dates surrounding a Default Notice.

It tells you all you need to know about Banks and goes a long way in explaining how that got themselves into such poor standing with Joe Public.


Total planks!

Yep. Spot on.

[Guest]

Re: Default Notices: time to remedy

Sooooo.... if you recieve a default notice that is invalid or wrong date wise and they terminate off the back of it and you write to them to accept the termination, they come back and say ahh the DN was incorrect and cancel the termination - you havent got an argument.


If the default notice was wrong and they refused to correct it or accept the correct remedy and terminate regardless and go on to report to CRAs, call in full amount etc .... then you have an argument.

(I'm still not entirely sure what the argument is or where it gets you though has something to do with only paying arrears?)

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);



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

The court can only enforce when he has terminate 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.

The termination does not exist in law so there is nothing for the debtor to accept. The acceptance i think you mean is one of acceptance of repudiation this has not happened because the creditor cannot terminate.

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?

Why section87 does not say entilted by the breach of a live account just that the account has been breached.

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?

This is a circular agrgument if the debtor was not taken to court then how could the court decide who was in the right, the court will not sanction the crediotr for enforceing the agreement, they may find that the enforcement was not compliant but if that is the case then the debtor has just to comply.



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.

The court does not allow any latitude, the act says the notice must be correct to within the confines of section 88 . If it is not, it is not valid it does not say that the agreement is then unenforceable it merely says a valid notice is nesesarry in order to enforce.
No sanction is specified for the erronious Dn section 87 only says that a compliant one is required.


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.

Are you ayng that there is some ellement of blame being attached to the creditor in issuing a faulty Dn, may be difficult to prove for a variety of reasons. Firstly the debtor had 14 days to contact the creditor about the error on the DN he did not , isnt there a feature in common law about this contributory negligence or something i would have to look it up, secondly the crediotr will say he was acting in good faith and within the statue. The correct proceedure to decide if the notice is defective of not is to go to court and how else would he get there, he is mearly asserting the default is correct, the debtor dissagrees the sanction is that the creditor will have to re issue and re file if it is proved to be so that is all.

Is there no defence to this?



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).

No notice is reqired to terminate an open ended agreement under the act. The trmination an take place at any time. Section 87 says a trminationon breach of agreement it ddoes not pohibit a termiantion for any other reason ie by virtue of the crediotrs contractural rights.

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?



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?



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

See above

[Guest]

Re: Default Notices: time to remedy

See above

Sorry cant get the hang of this bloody intersoecing thing.

If the creditor and the debtor both terminate the contract then the court would rescind the agreement . This means that the court would return the situation to the state when the agreement was executed. At that point the liabilities (loan) would be in the creditors bank account.
If this were not the case the debtor would have been unjustly enriched.

I think the next point has been coverd

As for the links just type invalid default into the seach option you will find as many as you need , there are at least three on the invalid default thread.

Otherwise click on some of your fellow believers names and see their past posts, you will find they have advised in most of these failed cases..

Peter

[The Debt Star]

Re: Default Notices: time to remedy

Otherwise click on some of your fellow believers names and see their past posts,

ooooo, your cage being rattled again Pete?

[Amethyst]

Re: Default Notices: time to remedy

Peter, I'm not pretending to understand this as I think its a bit of a slim picky technical argument anyway and have no intention of using it unless absolutely desperate measures are needed in a genuine case, but it interests me and I'd like to understand.

In a particular case this is the scenario;


1) missed a couple payments creating £2k arrears

2) received a DN asking for the entire balance (£6k)

3) tried to pay up the arrears only (£2k) to stop default/reporting to CRAs and continue with the agreement as was (within the time for remedy)

4) contacted creditor to pay and was told by creditor that paying the arrears only (£2k) would not stop the default/reporting, event though it was pointed out that the DN was incorrect in asking for the entire balance.

5) so didnt pay the £2k as it would have had no affect, thus was defaulted and reported to CRAs for the £6k entire balance

What would you recommend in that situation ?