Contracts, Termination, Repudiation and Rescission

[SeeThumb]

Re: Contracts, Termination, Repudiation and Rescission

It is not that the termination was unlawful it is just that the crediotr was not entitled to issue it. There is no offence listed in the CCA for issuing a termination when not entitled.

Actually, I believe it is within either party's right to terminate at any time, though they face consequences. I believe the faulty DN does not prevent a creditor from terminating, but should they not have followed proper procedure, it is considered unlawful. The argument is that the faulty document cannot be assumed as termination as it is, for the reasons identified, a faulty document.

Sorry for waking up this tired old thread, but it is of great interest to me, as I have had an agreement terminated, but without any proper notice at all. The OC has not provided me with anything like the documents specified by CCA 1974 and the galling part of it is that I have not, nor at any point before the lender's repudiation, missed a payment. Despite warnings from me following a DN which was not just faulty, but plucked completely from the air, the OC engaged an agency to collect the outstanding balance, and despite repeated requests for the parties to desist in their unlawful actions, I have now received a further notice from the agency to pay. I am yet to receive anything other automatic notices from either in response to my communications.

I do not believe that in my case, where their actions could be considered as negligence, the OC can simply wind back the clock stating that their DN was faulty and they should be able to revert. This would be ridiculous. It would mean that they could defend cases in their favour based on their own incompetence, possibly encouraging sly use of faulty documents.

Surely the truth of this is that a faulty DN issued in a justified action cannot be considered to be implied repudiation, as it is merely a technical fault in an otherwise proper situation. The debtor could accept the faulty DN, if they so wished given that the content was truthful, even though the form was incorrect. In such a case the termination that followed would not in anyway be invalid as both parties were prepared to proceed; That is, it is not the faulty DN that repudiates, but further actions stemming from it, e.g. termination. In such a case, it could be seen that there is a duty on the part of, or at least that it would not be unreasonable to expect, the debtor to query the faulty DN within the timescale of the notice given. Not to do so may appear to be a little opportunistic if you then go on to claim repudiation by the OC. That does appear to be a little lacking in grace, and be as likely a reason for allowing the reissue of a DN as any.

However, if there is a DN, whether faulty, completely proper or simply cuckoo, and the OC terminates outside of CCA 1974 or their own stipulated conditions, then the termination may be considered unlawful, yet acceptable as the creditors repudiation of the agreement by the debtor, providing an opportunity to accept it as such and all the associated rights. I believe that this is the case with my unlawfully terminated agreement, and have informed the OC, but I would like to know what my rights would now be, assuming that what I have put here is correct.

Can anyone point me in the right direction, as some previous links on the site have expired.

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

Hi SeeThumb

This is of interest to me too.

My understanding (currently) is that if your contract contains a termination clause (eg, it is a rolling credit agreement) then no notice is required to terminate before (I think) Feb 2011 because that was when s.98(A) came into effect, requiring the creditor to serve a notice first (this is the EU CCD taking effect).

For example, I have a terminated credit card agreement under which a wholly defective DN was served but, as the contract stipulates termination "for any reason" and the termination was prior to Feb 2011, the termination is effective. I think this was something argued in Brandon by the judge, if I recall correctly, who seemed to say that default and contractual termination are not mutually exclusive. Reading my own contract, this makes sense (to me at least).

If you are arguing that the termination was "unlawful" I have a feeling you won't get far with this. If it was "unlawful" then presumably it should be corrected, as there are no sanctions for the creditor under the Act (unless under s.140), which would mean putting the agreement back to the state it was in prior to the defective termination (assuming there is no contractual termination clause). The OC could then restrict credit or terminate contractually (if allowed).

My own view is that the only way you can get compensation or a reduction in the balance owed is to use s.13 of the DPA if there was adverse data recorded as a consequence of a DN that could not be satisfied due to a significant error, and the notice advising of the registration was contained within the DN or served at the same time. And if the creditor was particularly nasty have a look at the Harrison judgement.

LA

[teaboy2]

Re: Contracts, Termination, Repudiation and Rescission

Well as must know i had an issue with MBNA credit card that was unlawfully terminated of the back of an invalid DN back in 2009. The default was dated the 12th august giving me to the date before the 29th (28th of august) to pay the full outstanding balance not just the arrears. I did not receive the DN till the 18th so it only gave me 10 days out of the statutory 14 days to pay. So it was invalid on a number of points. The account was sold to Varde investment Ireland Limited who appointed Experto Credite to collect, Experto stated it was sold by Mbna to Varde and maintained this all along. I wrote to Mbna asking for confirmation as to whom it was sold to and what. They wrote back stating it was sold on the 17th august 2009 (yes the day before i received the DN). So therefore confirming the sold and therefore terminated the account unlawfully as they sold/terminated it prior to me even getting the default notice let alone getting the 14 days to pay, therefore i got 0 days of my statutory entitlement of 14 to pay. Not only that in the same letter MBNA stated it was Experto credite that they sold the debt too, so for some reason, probably VAT reasons they did not want to acknowlegde they sold to a company in IRELAND, where they would not have to pay VAT on the sale due to sales to other EU companies outside of the UK being exempt from VAT.

Anyway, to cut a long story short, after 2-3 years of verbal back and forth, arguing about unlawful rescission/repudation. Aktiva Kapital bought the debt and i know form threads on this forum that they pursued people from the word go in court aggresively. So i immediately send experto, whom aktiva Kapital, an email to pass on to AK repeating my arguments and challenging them to take me to court, whilst i made it clear i would counter claim for MBNA's unlawful rescission/repudation of contract and was more then capable of taking it to the high court to make it a legal precedent and case law should i win.

Guess what, the default on my credit file disappeared completely along with all mention of the credit card account within weeks of me sending that email. A copy of which i have attached below:

Dear Sir/Madam

I write to you today in response to a letter received from Aktiv Kaptial informing me of the assignment of the account MBL1223 to Aktiv Capital, Zug Branch Limited.

Whilst i do not dispute Varde Investment (Ireland) Limited’s right to sell the account, i do however dispute their right to do so when there is evidently a clear and undeniable dispute between myself, Experto Credite, Varde Investment (Ireland Limited) and the original creditor MBNA. Also as i have written confirmation from MBNA dated 2009 that the account was sold by them to Experto Credite and not Varde Investment (Ireland) Limited as experto credite had stated and continued to maintain throughout all communication. Then as far as i am concerned their is a clear question as to whether Varde were ever the legal owners of the account at all. Which would therefore bring into doubt the legal validity of the assignment to Aktiv Kaptial!

As i am also TEABOY2 on the Legal Beagles consumer forums and formerly on Consumer Action Group, then i am more than aware of who Aktiv Kaptial are, and i am more than aware of their favourite solicitor Bryan Carter (whom i have dealt with very easily in the past). As such i am more than aware of the underhand tactics that both have become well known for and their disregard for the consumer credit act 1974, CPUTTR 2008 and all other relevant legislation/Regulations and guidelines. As such i will make it clear now, that if they even were to think about using such tactics against me, i will come down on them like a tonne of brick, and i promise they will not know what the hell happened.

If they were to bring legal proceedings, then i will defend against such proceedings (oh and Bryan carter better not try his dirty trick of not sending particulars of claims in order to get default judgement, or ill make sure he will not be able to practice law again). Not only will i defend, but i will issue a counter claim for the unlawful rescission of contract by MBNA, therefore making them a joint claiment, i will also counter claim for damages, as the unlawful rescission and unlawful registering of a default on my credit file (which was registered prior to the INVALID default being issued – In breach of ICO guidelines) cause my company that i was in the process of starting up at the time, to suffer a finanical deteriment, resulting in myself not being able to get credit accounts with suppliers, causing myself emotional distress, that could well have been compeltely avoided, if MBNA had as i had requested waiting just 1 more month. If they had then i would have been in a position to repay the whole debt and not just the outstanding amount. But they didn’t, they unlawfully rescinded the contract, they unlawfully registered a default on my credit file prior to even issuing me a defualt notice, which also turned out to be invalid as it failed to give me the required satutory 14 days to remedy. But not only that, it was invalid as 5 days after issuing the default MBNA terminated the contract, by selling to VARDE (OR experto credite as MBNA told me), as such they sold the account in breach of schedule 2 section 6f of the consumer (default, enforcement and termination) regulations 1983, which prevents them from enacted a provision of the contract of the back of an Invalid default, such provision can be a provision to terminate the contract, enforce the debt, or issue a default to a debtors credit file.

Now not only will i defend and counter claim in the event of Aktiv Kaptial taking legal action, i will also push for the case to be heard at the high court, as a matter of public interest, in order to set a legal precedent regarding unlawful rescission. IF successful which i have no doubt that will be, then not many debt collection companies or creditors will be happy with Aktiv, as such debt collection companies and Creditors, will as a result of a successful counter claim on unlawful rescission, be faced with having to compensate many of their customers who’s credit agreements were unlawfully rescinded, not to mention legal fees where consumers take the matter back to court in light of such a new legal precedent being set, in order to overturn any previous court order and sue for compensation.

As for the assignment itself, well i bet Experto failed to inform Aktiv Kaptial of who i actually am, or the fact that this account is basically a lame duck that they are never going to be able to successfully enforce, and which will likely cost them a small fortune if they try to do so. Not to mention the risk i pose to their credit license and or there chosen legal representatives ability to continue to practice law in the UK. I therefore suggest you pass this email along with all my previous email and written communication to Aktiv Kaptial. That way we will both see if they are stupid enough to take the account and myself on.

By the way, As its assigned to their ZUG branch Limited company, it is therefore no Aktiva Kaptial UK Limited as they are completely separate legal entities, and therefore i do not recognise ZUG branch Limited rights on this account, due to it being a foreign company, based outside of the UK courts jurisdiction, as such i do not recognise any rights they assume they have to enforce this account – As such if they wish to enforce this account, i expect them to adhere fully to relevant EU legislation and regulations and any agreements between the UK and Norway, in regards to enforcing a debt alleged to be owed by a citizen residing in a different EU nation to that of the claimant. I won’t tell you what those legislations, regulations and/or required treaties Between nations are as that's for Akitva Kaptial to find out, and yes i do know what they are and i will be watching very closely.

Yours Sincerely and Without Prejudice

The bit highlighted in red, informing them of the consequences to the industry as a whole no doubt helped in persuading them that it would be not only expensive to take me to court (well expensive for them since am certain they would have lost completely) but that it would have been expensive for all involved in the DCA industry, no doubt helped to pursuade them. especially since it would allow people to claim against them regardless of whether they lost in court previously when arguing the DN was invalid etc. It would have cost the industry millions if they took the risk and lost to me in court, and they knew it. Thats why i believe they choose to silently remove the default and not contact me again, not even to tell me the debt is written off or that the Default was removed along with all record of their ever being a credit card account from my file.

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

In response to teaboy2.

Hey have you stolen my identity ???!!!

The description of your dealings with MBNA/EC/AK exactly mirror my own in 2009, down to the defective DN, date of sale and confusion over EC or Varde owning the debt !!!

I shall copy your letter if I ever need to use it. (With your permission).

I never checked my CRA file because it is irretrievably screwed anyway !!!!! So I don't know when (or even if) they slapped a default on there.

PS:I would be interested in knowing more about the issue of Aktiv Zug's entitlement to sue a UK citizen being a Norwegian company (actually I thought Aktiv Zug were a Swiss company https://www.aktivkapital.com/our-com...l-switzerland/ )

[teaboy2]

Re: Contracts, Termination, Repudiation and Rescission

Hi Basa

Your more than welcome to use the letter i used. I think mine and your account must have been sold in the same batch mate. If the dates and everything are exactly the same then it shows they do it by automatic process too.

One thing i know for sure is they sure as hell didn't want to risk taking me to court for me to counter claim for unlawful rescission/repudation in case i won and set a legal precedent in the high court, which i would have pushed for it to have been heard in. Which says to me they know in theory my views unlawful rescission is likely to succeed as i bet they had all their solicitors look at it before they decided to wipe my file clean to the point no history of any credit card account appears to have belonged to me.

If i was wrong, then what were they so worried about, because if i was wrong, then surely they should have been laughing all the way to the court and rubbing their hands with the thought of all the money they would get when award costs!

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

Hi Basa

Your more than welcome to use the letter i used. I think mine and your account must have been sold in the same batch mate. If the dates and everything are exactly the same then it shows they do it by automatic process too.

One thing i know for sure is they sure as hell didn't want to risk taking me to court for me to counter claim for unlawful rescission/repudation in case i won and set a legal precedent in the high court, which i would have pushed for it to have been heard in. Which says to me they know in theory my views unlawful rescission is likely to succeed as i bet they had all their solicitors look at it before they decided to wipe my file clean to the point no history of any credit card account appears to have belonged to me.

If i was wrong, then what were they so worried about, because if i was wrong, then surely they should have been laughing all the way to the court and rubbing their hands with the thought of all the money they would get when award costs!

They haven't sued because they know the enormous bo**ocks they've dropped, with you and me both.

I queried my defective DN with EC and they sent me a new one with same date of issue and remedy but guess what only for the arrears not the full debt!! What a surprise. A clear case of deception if not fraud.

I haven't heard a thing since AK took over and from EC for over a year before that.

[teaboy2]

Re: Contracts, Termination, Repudiation and Rescission

They haven't sued because they know the enormous bo**ocks they've dropped, with you and me both.

I queried my defective DN with EC and they sent me a new one with same date of issue and remedy but guess what only for the arrears not the full debt!! What a surprise. A clear case of deception if not fraud.

I haven't heard a thing since AK took over and from EC for over a year before that.

Well its a shame they did sue as i was itching to have a go at them lol.

Try send the letter to experto and i bet not long after the default on your file along with any history will be gone.

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

Incidentally, as this thread I think demonstrates, the question of termination following a defective DN is a very contentious one. Some argue that the defective DN also renders the termination defective, i.e. as if it never happened and that thus the agreement is still live. In that scenario (it is argued) the OC can then proceed to issue a new (hopefully) valid DN against the still valid agreement.

Quite what the legal position is if the account is sold whilst it is incorrectly defaulted and terminated I have no idea. Some say the new owner now owns a valid credit agreement and can issue its own DN. But it's a lot more complicated than that I suspect!!

[SeeThumb]

Re: Contracts, Termination, Repudiation and Rescission

If you are arguing that the termination was "unlawful" I have a feeling you won't get far with this. If it was "unlawful" then presumably it should be corrected, as there are no sanctions for the creditor under the Act.

Hi and Thanks Me Lud,

I believe that unlawful here isn't a mere error, such as a spelling mistake on a DN which can be put right easily, and one may say rightly so, but a massive failure of the OC to comply with many key parts of CCA 1974, and that the collections notices, which are still coming to me, are very real indeed. In short, they have voluntariliy repudiated the agreement by denying me any part of it, and although there was a faulty DN, it has no bearing on this case as that element is totally insignificant to other aspects of the unfair relationship between myself and the OC.

I believe this is also true of the DN in Harrison, where there are many more pressing issues given weight by the Judge that allowed his judgement. I believe that the DN evidence would have been the last thing the Judge would have considered in making his decision; if the case had hung on it, I believe it would have been lost.

[basa48]

Re: Contracts, Termination, Repudiation and Rescission

I suppose my take or argument on this is that the creditor is not 'entitled' to terminate, but that doesn't mean the same as 'prohibited'.

The creditor can still terminate but cannot take the next step to enforce because he has terminated the very agreement / contract where his rights to enforce are enshrined in law.

[teaboy2]

Re: Contracts, Termination, Repudiation and Rescission

I suppose my take or argument on this is that the creditor is not 'entitled' to terminate, but that doesn't mean the same as 'prohibited'.

The creditor can still terminate but cannot take the next step to enforce because he has terminated the very agreement / contract where his rights to enforce are enshrined in law.

Exactly - once sold, the OC no longer has any rights under the agreement as they have assigned them to a 3rd party after unlawfull termination, so the OC can not simply reissue a DN thats valid without buying back the account and having the debtors permission to reinstate the agreement. People say that the sale to a 3rd party is unlawful, but fail to note that the very terms and conditions of said agreements allow for OC to sell to 3rd parties whether agreement still live (though agreement and account continue as normal if agreement still live and not defaulted - card companies are always buying each other out) or after termination. Though if sold after termination all the 3rd party is entitled to is to collect outstanding balance and enforce, though only if termination was lawful.

Some say as the termination was unlawful then the sale/assignment to another party is invalid - This is not the case. For example if i bought goods from a shop on finance where agreement was between me and the seller and i kept to the payments and paid off in full, only for the seller to fail to pay his supplier for the goods, is the property of the goods still that of the sellers supplier? No, property has passed to me as i have paid for said goods. So although the sale was unlawful on the sellers part due to him not paying the supplier for the goods and therefore not having property of the goods (in legal sense), it doesn't effect my ownership of the property of the goods since i paid for them and my agreement was with the seller not the supplier, meaning supplier cannot claim property of the goods from me, but only from the seller whom the supplier had agreement with.

So even though termination was unlawful, the sale isn't invalid. As once the 3rd party pays the agreed price for it, property of the goods transfer to them and are legally theres along with any rights to it. Only thing is as the termination was unlawful, then the rights they bought can not be enforced as the CCA prevents them from doing so as a result of the OC's unlawful termination prior to 3'rd party buying the account - basically the 3rd party bought a dud, in which case they should pursue the OC for a refund, after all they bought goods, which is what a credit account is at the end of the day.

[Guest]

Re: Contracts, Termination, Repudiation and Rescission

I suppose my take or argument on this is that the creditor is not 'entitled' to terminate, but that doesn't mean the same as 'prohibited'.

The creditor can still terminate but cannot take the next step to enforce because he has terminated the very agreement / contract where his rights to enforce are enshrined in law.

This is my view also, and fits with the facts as i have seen.
I find it hard to understand how a termination can be unlawful, if it is as you say enshrined in legislation and even when it wasn't, the fact is that there was no legislation prohibiting it.

Section 76/ 98 of the act say that notice must be given before.

I think Basas example earlier where the creditor only issued a for the arrears shows the procedure.
Because the original DN was defective they were forced to admit that they terminated under a contractual term and thus only could sue for sums already due under the contract.

D

[teaboy2]

Re: Contracts, Termination, Repudiation and Rescission

I agree, in cases of unlawful rescission/repudation all they would be entitled to would be sums due at the time of termination and not total balance. So if you had a total used balance of £2,000 and were in arrears of say £100, then all they would be entitled to would be £100.

Unlawful termination is unlawful rescission/repudiation of contract. So although the termination is unlawful, it is not prohibited - So the act of termination itself is lawful, even if terminated unlawfully after an invalid default notice was issued (unlawfully as in not entitled to terminate). Which means it still amounts to unlawful rescission/repudation. So eitherway they would still only be entitled to amounts already due. In which event they are likely to write it off anyway, though only after 2-3 years of back and forth communication of various legal arguments.

[Lord_Alcohol]

Re: Contracts, Termination, Repudiation and Rescission

I would just say that s.98 only applies to rolling credit after 2011 (Feb I think), before then there was no requirement to give notice, AFAIK. For that reason it's important to study the agreement itself. My understanding is that a creditor who wanted to terminate as per a contractual provision rather than default would restrict credit, scoop up the contractual interest, and let the agreement finally come to an end when the balance is zero.

In my view there is mileage to be had here - the Brandon judgement refers to the absence of exclusivity between default and contractual termination, so if a termination notice is issued then the agreement has been ended. However, if the DN is defective, then the termination cannot be a default termination (the creditor has no entitlement) it must be a contractual termination. So, if the OC has recorded a default, and the notice of intent to file a default is contained within the defective DN, then it could be argued that the adverse data was wrongly recorded and this might open up a claim under s.13 DPA. In other words, the OC was wrong to record a default because the termination was contractual, not through default.

The judge in Harrison said he saw no reason why a defective DN could not be fixed. There was a case OTR (last year or early this, I think Pumpkinhead's case) where the debtor claimed repudiation following a duff DN and the judge agreed, stating that the agreement was ended and so the debtor had to pay the balance to the OC. The point being that just because an agreement is improperly binned it doesn't seem to remove the liabilities. In fact, there is nothing in the CCA that enables this to happen. I think this should be remembered where repudiation is used as a defence (or claim).

In addition, it might be that a creditor realises his mistake and then demands the intervening contractual interest (it has happened to me!) - at this point, the debtor can simply refer to the contractual termination and also s.140, by simply saying that a claim for contractual interest from a terminated agreement is unfair (to put it mildly).

Sorry to ramble on but hope helps anyway. I just think that a successful defence or claim must stick to the relevant acts (CCA and DPA) so that a district judge isn't coerced to move into difficult territory which may result in an appeal.

Having said that, in reality a creditor might just give up (as Teaboy points out). On the other hand, if a defence was made based on "unlawful rescission" then a judge might simply apply the concept of recission and require both parties to pay to each other what they have taken. This may or may not be a good thing. For "repudiation" I have no idea - does a defective DN amount to repudiation, especially when a termination clause exists in the contract? Personally I doubt it.

LA

[Guest]

Re: Contracts, Termination, Repudiation and Rescission

No section 98 applied since the act was introduced, but only on fixed term agreements section 76 applies to all agreement, both state that 7 days notice had to be given before any action was taken on the account.

The requirements introduced by the EU directive in Feb 12 were related to open ended accounts(credit cared) only, and stated that 28 days must be given before a contractual termination was activated, there were also requirements for a reason to be given for the termination.

Yes i think a creditor who has gotten as far as taking proceedings only to be halted in his tracks by the debtor confronting hem with a faulty DN may well balk at the task of reissuing a new notice and going through the whole thing again.

D