Default Re: Me V Bank - defective DN and unfair relationship defence.

[toomanycalls]

Hi All,

I have a current court claim against me with a Bank Loan (post 2006), after falling behind with payments last year. In Mar they issued a default notice only allowing 14 days and no time for service but also claiming the full amount of the loan not just the arrears. I paid the arrears but after three weeks and then some reduced monthly payments untill they terminated the agreement in July. Since then I have paid nothing.

My intention is to put in a defence that draws the bank to the fact they have issued a defective DN but issue proceedings on the back of it, after me clearing the arrears in question but them refusing to accept reduced payments thus creating an unfair relationship. I need to get the defence done by the middle of next week to allow for me to get it posted but haven't done this before so could do with some help please.

I'm just beginning to draught out the defence and the DN stuff has been covered in detail before so I'm al-right there but could really do with some pointers and opinions with regard to the section 140 unfair relationship stuff.

[toomanycalls]

Re: Me V Bank - defective DN and unfair relationship defence.

Been going through my paperwork trying to put the defence together.

The default notice was dated 4th Mar 2010, action required pay "total balance" by 18th March.

March 4th was a Thursday so even if they used first class post (I don't have the envelope) then date of service would be Monday 8th March. Date to rectify should have been the 22nd March by my reckoning.

March 19th the bank wrote to me to inform me that they had frozen my bank account (my current account was with the same bank). Surely this has got to fall under the unfair relationships if nothing else as they have taken enforcement action before the true date to rectify?

[toomanycalls]

Re: Me V Bank - defective DN and unfair relationship defence.

How much detail to I need to go into with this defence, do I need to quote the CCA section 87, 88, form for default notices 1983, practice direction for time of service as well as detailing the events following the default notice.

Just found another letter saying they would remove the overdraught facility from my joint account sent 6th March, whilst I can appreciate the requirement to reduce the risk of exposue from someone in default, talk about hitting you with everything at once.

[Lord_Alcohol]

Re: Me V Bank - defective DN and unfair relationship defence.

TMC

Couple of questions;

1. Is your loan regulated?

2. Do your terms and conditions provide for the actions the OC has taken?

If the respective answers are "yes" and "no", then it would seem that the bank has made a mistake. There is no entitlement to demand sums not yet due in a default notice served under S87(1) because the whole point of the DN process is to allow the defaulter to remedy "as though the breach had never occurred" (S89).

Had you complied with the DN, the loan would have been repaid in full.

The bank bringing the claim to court seems to me to be bizarre - surely any judge would dismiss this as having no basis in law?

My view (FWIW - not a great deal) re your defence is that it should just respond to the POC, with the meat of your case in the WS.

As for your current account, your T&Cs may allow for this. My Halifax CC did, and they helped themselves to my CA.

I don't know if there is any need for S140 as it seems your defence has to succeed, based on the grossly defective DN. Could it be argued, however, that bringing the claim to court on this basis represents a bias in the OC's favour? Eg, he uses his considerable resources to erroneously bring a former customer to court when he has no entitlement, presumably in an attempt to reach a settlement of some description?

Just a few thoughts...HIH

[toomanycalls]

Re: Me V Bank - defective DN and unfair relationship defence.

1. Is your loan regulated?

Yes the loan is regulated by the CCA1974, taken out in 2008.

2. Do your terms and conditions provide for the actions the OC has taken?

The terms do say

3. Right To Demand Earlier Payment
If any amount payable by you is overdue for more than fourteen days or if any statement or representation made by you in the course of applying to enter this agreement is found to be incorrect then youshall, if we so demand by written notice, immediately pay us the amount required to settle your loan. If you have fallen behind with your payments we may pass information about what you oweus to a credit reference agency. CRA's record this information which may be seen by other companies you may apply to for a loan or credit and this may affrect your ability to get credit

But isn't this contrary to the CCA 1974 in as far as the DN regs need to be complied with?

With regard to the frozen account, it does that they are allowed to do so which I accept but doing so before the DN has truely expired must surely be the beginning of an unfair relationship. They want me to settle the DN but freeze my account to stop me paying them...

[Lord_Alcohol]

Re: Me V Bank - defective DN and unfair relationship defence.

So your bank believes that his T&Cs take precedence over CCA? I think not.

My own view is that CCA will always take precedence, otherwise there is no point in "regulation". Ie, the OC could override the provisions in CCA by making up his own and getting you to agree to them.

The OC may believe you have agreed to allow him to claim all sums on default, but the reality is that this is a regulated agreement and so S87 must apply.

Your bank doesn't have a leg to stand on, unless I am wholly wrong and contractual terms override statute.

[Lord_Alcohol]

Re: Me V Bank - defective DN and unfair relationship defence.

UTTCR 1999 Regulation 5;

(1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.

(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.

(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was.

(5) Schedule 2 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair.

So unless you specifically negotiated this term (payment of all amounts on default), S87 must therefore apply for the OC to avoid falling foul of UTCCR and S140.

[toomanycalls]

Re: Me V Bank - defective DN and unfair relationship defence.

Another thing for the pot.

Having paid the arrears the end of March, I then wrote to the bank with income and expenditure sheets requesting reduced payments as we were in financial difficulty. After initially turning me down and me phoning to urge them to reconsider, they reluctantly agreed to accept my offer for three months with a veiw to review my circumstances then. Towards that three month period I wrote to them again with an increased offer as circumstance were better. This went ignored and the termination notice turned up.

I wrote again with the offer. They replied they would only accept the full monthly payment or proceedings would commence.

Six weeks later in August, a second termination letter arrived followed the next day by second default notice. This time it had the correct arrears but the date to rectify was the original rectify date in March, 5 months prior to the issue of the notice. Now this is not the DN that they stated on the POC but clearly there systems are wrong.
------------------------------- merged -------------------------------

UTTCR 1999 Regulation 5;

So unless you specifically negotiated this term (payment of all amounts on default), S87 must therefore apply for the OC to avoid falling foul of UTCCR and S140.

More ammunition for the unfair relationship...

[diddydicky]

Re: Me V Bank - defective DN and unfair relationship defence.

the ability to offset arrears on one account with another is pretty standard with banks and is nothing to do with DN's ect- they can do it anytime.

the DN argument looks pretty good- save for the fact that you apparently "paid the arrears"- which might have complicated things a bit!

i dont know how you worked out what the arrears were- and if you did so in response to the mis stated amount on the DN- the creditor might argue that although it made a mistake in the amount it claimed in the DN - you were knowledgeable enough to work out that the figure in the DN was an error and that you then worked out that you were required only to pay the arrears in order to remedy the DN and that is what you did.- its a bit devils advocate and i dont know if that argument on their behalf would wash!

[diddydicky]

Re: Me V Bank - defective DN and unfair relationship defence.

as far as the unfair relationship (brandon) goes- i have never beleived that it is right that a separate clause in a CCA regulated agreement could override the requirements of the CCa since- as Lord Alcohol says- it would clearly circumvent the CCA which was not intended

rather, in my opinion - the right to terminate an agreement other than in default circumstances and if mentioned in an agreement IMO means that if the creditor terminates under this clause rather than due to a default- then the balance outstanding is still payable by monthly instalments and not forthwith.

hopefully the brandon ruling will be overturned as it is clearly perverse

- the more so when the creditor starts a default action under s87(1) and then seeks to switch to another clause in the agreement when he sees that he is likely to fail............

and they have the cheek to say that LIP's use "technicalities" to avoid their obligations!!

[pt2537]

Re: Me V Bank - defective DN and unfair relationship defence.

The 1974 Act provides you cannot contract out of the protections of the act

sadly, some lower courts dont follow this, and some creditors do not take any notice of the same provisions

Hopefully the High Court will clear this up shortly

[toomanycalls]

Re: Me V Bank - defective DN and unfair relationship defence.

the DN argument looks pretty good- save for the fact that you apparently "paid the arrears"- which might have complicated things a bit!

i dont know how you worked out what the arrears were- and if you did so in response to the mis stated amount on the DN- the creditor might argue that although it made a mistake in the amount it claimed in the DN - you were knowledgeable enough to work out that the figure in the DN was an error and that you then worked out that you were required only to pay the arrears in order to remedy the DN and that is what you did.- its a bit devils advocate and i dont know if that argument on their behalf would wash!

There was a cover letter with the DN which told me the arrears but also easy to work out in this case as it was two monthly loan payments. The DN itself however didn't state the correct amount.

I paid the arrears on the 29th March over the phone, outside of the DN period stated or even as it should have been. The CCA says that if the default notice was complied with it should be treated as never happened, I appreciate that it was outside of the required period but they accepeted the payment quick enough but certainly didn't treat it as having never occurred as they then did a search on my credit file. Probably looking for any equity in my property.

[toomanycalls]

Re: Me V Bank - defective DN and unfair relationship defence.

Ok people, here is my first draught of a defence, never done one before so all comments good and bad welcome please.

Defence V Bank

1) It is admitted that the defendant signed the credit agreement numbered xxxxx/xxxxxxxxx between the defendant and the bank on 2 May 2008.

2) The Claimant contends that they have a claim to monies under an agreement between the defendant and the original creditor, the defendant seeks clarification of this fact and proof of legal assignment as required by Law of Property Act 1925.


3) It is admitted that the defendant received the notice of default served under the section 87(1) of the Consumer Credit Act 1974 dated 4.3.10.

4) It is noted that the default notice is defective to the requirements of the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561) and Amendment Regulations the Consumer Credit (Enforcement, Default and Termination Notices) (Amendment) Regulations 2004 (SI 2004/3237). To be valid, a Default Notice is required to be accurate in terms of both the scope and nature of breach and include an accurate figure and a prescribed number of days to remedy any such breach.

For a creditor to be entitled to terminate a regulated Credit Agreement where there is a breach, demand repayment in full or take any legal action to recover any monies due under the agreement, a creditor must serve a Default Notice under s87(1) CCA 1974 which states:

S87(1) Service of a notice on the debtor or hirer in accordance with Section 88 (a “default notice”) is necessary before the creditor or owner can become entitled, by any reason of any breach by the debtor or hirer of a regulated agreement,-
(a) to terminate the agreement, or
(b) to demand earlier payment of any sum, or
(c) to recover possession of any goods or land, or
(d) to treat any right conferred on the debtor or hirer by the agreement as terminated, restricted or deferred, or
(e) to enforce any security

5) I note the opening part of section 88(1) CCA 1974, which states:

88 Contents and effect of default notice
(1) The default notice must be in the prescribed form…

The word “must” makes it clear that no variation is acceptable. Therefore it cannot be dispensed with as a de minimis issue. De minimis isLatin for “of minimum importance” or “trifling”. Essentially it refers to something or a difference that is so little, small, miniscule, or tiny that the law does not refer to it and will not consider it.

6) The prescribed format for this document is given by the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983, as amended, in particular schedule 2(2) points 1 to 11 which set out the statutory form that a Default Notice must follow for it to comply with s87(1) CCA 1974.

7) It is noted that the Regulations do not allow any variation in the form of the Default Notice and therefore it is averred that where the Default Notice is not as laid down in the Regulations it is invalid and that termination or further enforcement action cannot take place until such time as a valid notice is served.

8) In the case of Woodchester Lease Management Services Ltd v Swain & Co - [1998] All ER (D) 339 in the Court of Appeal, the court addressed in some detail the issue of the contents of a default notice and should the notice fail to comply with the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561) it would render the default notice invalid. I quote the comments of Kennedy LJ:

“This statute was plainly enacted to protect consumers, most of whom are likely to be individuals. When contracting with a large financial organisation they are at a disadvantage…If the hirer is said to have broken its terms, the hirer needs to know precisely what he or she is said to have done wrong and what he or she needs to do to put matters right. The lender has the ability and the resources to give that in formation with precision. If he does not do so accurately then he cannot take…”the next step” “


9) Failure of a Default Notice to be accurate not only invalidates the Default Notice (Woodchester Lease Management Services Ltd v Swain & Co- (2001] GCCR 2255) but is an unlawful rescission of contract which would not only prevent the court enforcing any alleged debt, but would also give rise to a potential counterclaim for damages where damage occurs to my credit rating (Kpohraror v Woolwich Building Society (1996) 4 All ER 119)


10) As a result, I submit that the Default Notice is inaccurate, clearly the default notice does not allow time for service and the sum required to rectify the breach is the full amount of the outstanding loan, not the arrears as required. Therefore it is invalid and that termination or further enforcement action cannot be taken until such a time as a valid notice is served.

11) The claimant sent me a letter dated 8.7.10 terminating the agreement. This is an unlawful repudiatory breach of contract so as the creditors’ only remedy is now limited by the Consumer Credit Act 1974 section 87(1). All that is left for the creditor to recover is the sum truly in arrear at the date of the default notice.

Harassment

12) The claimant wrote the defendant to advise the removal of the defendant’s overdraught facility with effect 30.3.30 thus removing the possibility to pay the default from this funding source.

13) The claimant froze the defendant’s personal bank account on 19.3.10 which was prior to the date the notice of default should have stated for remedy.

14) The arrears actually due when the default notice was submitted were paid by the defendant on 29.3.2010.

15) In April the defendant wrote to the claimant requesting an agreement to reduce payments due to financial difficulty. This was denied. The defendant then phoned the bank to persuade them to accept the arrangement which was then agreed for three months with a review to happen in that time. The claimant again wrote to the claimant on 30.6.10 delivered by recorded delivery 1.7.10 with an increase in the monthly payment offer. This letter was ignored.

16) The defendant received two letters from the claimant both dated 8.7.10. The first was a “Formal Demand for Payment” for the full amount of the loan outstanding within seven days. The second letter was a “Final Notice” saying that I had failed to comply with the default notice and this failure results in the termination of the credit agreement unless payment is made with fourteen days.

17) It is suggested that the claimant has acted in a way pursuant to the Consumer Credit Act 1974 section 140A (1)(b) Unfair relationships between creditors and debtors
(1)The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following—
(a)any of the terms of the agreement or of any related agreement;
(b)the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;
(c)any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement).
(2)In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor).
(3)For the purposes of this section the court shall (except to the extent that it is not appropriate to do so) treat anything done (or not done) by, or on behalf of, or in relation to, an associate or a former associate of the creditor as if done (or not done) by, or on behalf of, or in relation to, the creditor.
(4)A determination may be made under this section in relation to a relationship notwithstanding that the relationship may have ended.
(5)An order under section 140B shall not be made in connection with a credit agreement which is an exempt agreement by virtue of section 16(6C).


Conclusion

18) In view of the matters pleaded above, I respectfully request that the court gives consideration to whether the Claimant’s statement of case should be struck out since the account referred to in the Particulars of Claim is regulated by the Consumer Credit Act 1974, for a right to pursue action to exist, there are procedures which must be followed under the Consumer Credit Act 1974. A default notice must be issued under s87 (1) conforming to the Consumer Credit (Enforcement, Default and Termination Notices) Regulations 1983 (SI 1983/1561) which sets out the form and content which default notices must include, without such notice being issued the Claimant would not have such right to demand any monies.

19) For the reasons set out in this Defence, the Defendant’s position is that the Claimant’s Claim has no real prospect of success and discloses no reasonable grounds for it to be brought. The Defendant reserves the right to seek costs against the Claimant on the basis that such conduct is unreasonable and/or vexatious in bringing and/or pursuing this claim should the matter proceed to a full assessment.

Statement of Truth
20) I believe the above statement to be true and factual to the best of my knowledge

[Lord_Alcohol]

Re: Me V Bank - defective DN and unfair relationship defence.

It's good TMC but, and this is just my opinion, I would respond specifically to the POC (which presumably claim the balance of the loan) and state that, as you entered into a regulated agreement with the OC where all the provisions of CCA74 apply, you assert that no sums are owed because the claimant ended the agreement when he had no entitlement and the arrears are already dealt with.

It is, I think, up to the claimant to prove that sums are due; as far as you know, under a regulated agreement, no sum other than the arrears are due (and these are already paid).

I would add all the detail in your WS.

If you are asked the usual question "Did you borrow/accept/spend the money?" you can always reply that you did but on the basis of regulation and that you expected the OC to comply with CCA74. As he has apparently waived his rights to the provisions of the Act, you see no reason why further sums should be paid.

I would also change the word "suggested" where you mention S140 to "claimed", making your assertion stronger and requiring the court's time (a "suggestion" might be more readily dismissed).

Just my thoughts - feel free to ignore (I won't be offended!)

LA

[toomanycalls]

Re: Me V Bank - defective DN and unfair relationship defence.

Hi LA

So replace para 1 with this

1) It is admitted that the defendant signed the credit agreement numbered xxxxx/xxxxxxxxx between the defendant and the bank on 2 May 2008 and note specifically that this agreement is regulated by the Consumer Credit Act 1974. I assert that no sums are still due under this agreement as the claimant had no entitlement to end the agreement due to a defective notice of default and that any arrears due at that time have since been paid.

I knew suggested was not the right word but couldn't think what to use. So para 17 will now be as follows

17) It is claimed that the claimant has acted in a way pursuant to the Consumer Credit Act 1974 section 140A (1)(b) Unfair relationships between creditors and debtors
(1)The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following—
(a)any of the terms of the agreement or of any related agreement;
(b)the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;
(c)any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement).
(2)In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor).
(3)For the purposes of this section the court shall (except to the extent that it is not appropriate to do so) treat anything done (or not done) by, or on behalf of, or in relation to, an associate or a former associate of the creditor as if done (or not done) by, or on behalf of, or in relation to, the creditor.
(4)A determination may be made under this section in relation to a relationship notwithstanding that the relationship may have ended.
(5)An order under section 140B shall not be made in connection with a credit agreement which is an exempt agreement by virtue of section 16(6C).

Read more at: Legal Beagles Consumer Forum - Reply to Topic