Time Orders

[Amethyst]

Following from Jumpers, and RickyBalboa's, threads yesterday, which are basically want to pays but cant afford to, set up repayments plans but lenders still default and take to court anyway to secure the debt and payments via CCJ and poss charging order, would it be wise for people in that kind of situation - those who try to get lower payments for a period due to a temporary reduction in income - to apply for time orders through the court ?

Debt Factsheets - Time Orders

What are the downsides ?
Is the Credit file affected ?
Why do we not talk about these very much ?

[Angry Cat]

Re: Time Orders

http://www.nationaldebtline.co.uk/en...06_time_orders

[nicknick]

Re: Time Orders

There are certainly precedents from the Court of Appeal and House of Lords regarding this.

There was one case where a time order was given for 15 years and interest suspended. This was upheld at the court of appeal and it was also referred to in the House of Lords in DG Fair Trading v First National Bank.

This is a part of something I did for another site some time ago, the actual issue then was around interest after judgement clauses, the post is here - sorry don't know if it's against the rules to put up links to other sites.

Womble 72/Northern Rock 29k Debt - Court looming **WON*****.

The relevant bit regarding time orders is this:-

In the original First National Bank case in the High Court [1999] EWHC Ch 206 the Judge said the following at [51]:-

...It seems to me that the complaints of borrowers which have been the cause of the bringing of these proceedings by the Director might well be met if the judgment of the Court of Appeal in Southern District Finance Plc v Barnes and in particular the way in which one of the county court Judges dealt with one of the cases under appeal and the Court of Appeal's reactions to his method, were more widely known to the professions and other advisory bodies.

and at [22]:-

The Director's complaint as to the effect of clause 8 of the Bank's form of agreement only arises where the Court has extended the time for repayment of the amount lent by making an instalment order. It is plain from the passages from the judgment of Lord Justice Leggatt in the Barnes case which I have set out above, and in particular from his approval of the order made under one of the judgments being considered, that any county court being called upon to enforce one of the Bank's loan agreements containing clause 8 would have power, if it thought just to do so, to negate any harsh effect of that clause by reducing the rate of interest payable under it, if necessary, to nil.

The order was given in [19]:-

1. In applying these principles to one of the judgments appealed from Lord Justice Leggatt said this at page 71:-"When the Judge re-scheduled the instalments under the agreement he did so over a fresh period of fifteen years. Since nearly three had passed since the agreement was made, this had the effect of extending the total of the agreement to nearly eighteen years. The Judge reduced the rate of interest to nil, since otherwise throughout the extended period of the loan interest would have been payable on the arrears at the exorbitant rate prescribed, and that would have defeated the purpose of giving time. In effect as a sanction for non payment of instalments a suspended possession order was substituted for a penal rate of interest. The Court gave the plaintiff leave to appeal against his order, though the Judge's methods were robust and his reasoning economical, his instincts were sound and his order just. I would dismiss the appeal."
   
   
   
   

This was picked up by Lord Bingham of Cornhill in the House of Lords case [Director General of Fair Trading V First National Bank [2001] UKHL 52] where he said:-

27] In conclusion, I would add a footnote on ss 129 and 136 of the 1974 Act. In the course of argument the House was referred to the decision of the Court of Appeal in Southern and District Finance plc v Barnes [1996] 1 FCR 679 and two related appeals. The effect and interaction of ss 129 and 136 were there considered.

[28] Of s 129 the court said (at 686):

‘When a time order is made, it should normally be made for a stipulated period on account of temporary financial difficulty. If, despite the giving of time, the debtor is unlikely to be able to resume repayment of the total indebtedness by at least the amount of the contractual instalments, no time order should be made. In such circumstances it will be more equitable to allow the regulated agreement to be enforced.’

I would in general agree that time orders extending over very long periods of time are usually better avoided. But I note that the court dismissed an appeal against a judge who had rescheduled payments over a period of 15 years (‘Though the Judge’s methods were robust and his reasoning economical, his instincts were sound and his order just’ ([1996] 1 FCR 679 at 689)), and the broad language of s 129 should be so construed as to permit the county court to make such order as seems to it just in all the circumstances.

[29] Of s 136 the court said (at 686):

‘The court may include in a time order any amendment of the agreement, which it considers just to both parties, and which is a consequence of the term of the order.’

In the case already referred to the judge had ordered that no additional interest should be payable beyond that which had already accrued, and the Court of Appeal upheld his decision. It was right to do so: provided the amendment is a consequence of a term of the time order, the court should be ready to include in a time order any provision amending the agreement which it considers just to both parties.


So, it looks like there is definitely some scope, if you are faced with an enforceable agreement to mention in your defence about time orders and s136. But I think that this is the sort of thing that needs to be drafted by one of the 'proper' legal people that we've got here