s.89 - what does it mean?

[teaboy2]

Re: s.89 - what does it mean?

My letter from AK suggests the Zug branch are the debt purchasers. AK UK are acting on behalf of.

Only the debt owner can bring a claim.

I agree with you, but there was one poster on here that used the same argument, and the judge brushed it aside, basically because AK UK is part of the same group of companies (which is totally wrong in my opinion as they are still single legal entities in their own right whether in a group or not regardless of ownership of the companies), even though it had not been legally assigned to AK UK. But then i think the judge on the day was a bad judge as even the DN being defective was overlooked, but unfortunately that's how it goes at county court sometimes. Not sure if the poster appealed as they were pretty drained by it all.

I think i may have also brought up the argument with AK in the letter i sent them when i got the same letter as you basa, so may be they didn't want to test it against myself due to me having a better legal knowledge then the average debtor - But who knows.

[jax50]

Re: s.89 - what does it mean?

Interesting, I , like many others I guess, fit this scenario. A defective DN issued by the OC. However rather than selling to a DCA it was 'passed' to in house debt collection arm of HBOS who hassled me for 2 years before selling it off to a DCA ( well maybe it was the OC who sold it off, I don't know). But here's a scenario...Sainsbury's (the OC) terminate the agreement and pass the account within the HBOS Group for collection. Now when HBOS decide to sell the account outside the HBOS Group, to a third party DCA...what 'rights and duties' are there to sell with the debt to enable the DCA to 'manage' the account fully ? The agreement has been terminated, and aren't the 'rights and duties' an essential part of the agreement ? How can you pass on something that doesn't exist anymore ?

[teaboy2]

Re: s.89 - what does it mean?

They still have rights to reclaim the debt from you for a period of 6 years (5 in scotland) since last payment or acknowledgement of the debt was made, just not to enforce. Thought a court will decide if they are entitled to enforce or not. A debt doesn't cease to exists when agreement terminates.

[miliitant]

Re: s.89 - what does it mean?

the liabilities under that agreement still remain

[jax50]

Re: s.89 - what does it mean?

Back to s.89 then...there was a long debate a while back which seemed to conclude all the OC needed to do was reissue the DN. That seemed to be the 'accepted remedy' then proceedings could continue.So what changed between times..

[basa48]

Re: s.89 - what does it mean?

Back to s.89 then...there was a long debate a while back which seemed to conclude all the OC needed to do was reissue the DN. That seemed to be the 'accepted remedy' then proceedings could continue.So what changed between times..

It changes if the debt is sold to a third party. It remains to be seen if a DCA can issue DNs if it was sold following a defective DN and termination, being that a defective DN effectively prevents the rights holder (OC or DCA) requesting early repayment of any sum (i.e. the full balance as opposed to just the arrears at Default).

[jax50]

Re: s.89 - what does it mean?

It changes if the debt is sold to a third party. It remains to be seen if a DCA can issue DNs if it was sold following a defective DN and termination, being that a defective DN effectively prevents the rights holder (OC or DCA) requesting early repayment of any sum (i.e. the full balance as opposed to just the arrears at Default).

Ok, I see that now. But for the uninitiated (me)...if the account has been terminated, albeit with an outstanding balance (the arrears)..what determines the fact that the arrears are still payable as opposed to the full amount. Sorry for my ignorance...:tinysmile_hmm_t2:

[mystery1]

Re: s.89 - what does it mean?

http://www.bailii.org/ew/cases/EWHC/QB/2012/2402.html

1. I propose to consider Ground 2 first as it directly impacts on the resolution of Ground 1.
2. Section 189 clearly contemplates that an assignee may become a creditor under the 1974 Act. That can be the only reason why assignment is specifically referred to in it. However on the appellant's argument the assignee would never do so since an assignment transfers contractual rights not contractual duties.
3. There are other provisions of the Act which expressly contemplate the assignment of rights under a regulated credit agreement, an obvious example being the recently added section 82A. That section provides that an assignee "must arrange for notice of the assignment to be given to the debtor".
4. The ambiguity of the language in section 189 has been the subject of academic comment.
5. In the Encyclopaedia of Consumer Credit Law edited by Professor Guest it is stated as follows at p2178/2-3:

1. "…The first problem with this definition is that, as a matter of contract law, an assignment transfers rights but does not relieve the assignor of his duties to the other contracting party without his consent. Hence the reference to the assignment of "duties" needs further consideration.
   …
   The rights of a creditor under a credit agreement are frequently assigned to a third party, e.g under a block discounting agreement or securitisation. Does the assignee then become the "creditor" for the purposes of the Act? It is suggested that the answer to this question will vary accordingly to the policy underlying the particular provision of the Act. Where, for example, certain obligations are imposed on the "creditor" towards the debtor, as under ss.77, 78 (duty to give information to the debtor),ss.76,87, 98 (duty to serve enforcement, default and termination notices), s.97 (duty to supply settlement figure), or s.103 (duty to provide termination statement), it is submitted that an equitable assignment, where no notice of the assignment is given to the debtor, would not pass such obligations to the assignee. (And see the OFT's Guidance on sections 77, 78 and 79 of the Consumer Credit Act 1974 (OFT 1272, October 2010), para 2.4, note 5 which states that (in OFT's view, adopting a "purposive" construction) only legal (and not equitable) assignees are "creditors" for the purpose of ss.77, 78 and 79.) As between assignor and assignee the assignment is effective; but vis-à-vis the debtor, the assignment has no effect until the debtor receives notice of the assignment. Moreover, in practical terms, the assignor will continue to collect the payments (albeit as agent of or trustee for the assignee) and will retain the information necessary to comply with those sections. On the other hand, if the assignment is a statutory assignment under s.136 of the Property Act 1925 with notice of the assignment being given to the debtor, there is a strong argument that the assignee would become the "creditor" (whether by virtue of a "slip" in s.189(1) or by necessary intendment). The assignor will cease to have any interest, legal or equitable, in the debt, and only the assignee will be entitled to claim or enforce the debt. The same considerations will also probably apply in the case of an equitable assignment of which notice has been given by the assignee. Although the legal title to the debt still remains in the assignor, the debtor must pay the assignee and the assignee is entitled to enforce payment of and sue for the debt. See the General Note to s.22 where it is submitted than an equitable assignee who has not given notice ( and a, fortiori, the beneficiary under a trust, see below) does not require a licence."

1. The editors therefore suggest that where notice of the assignment has been given the assignee may be a "creditor" for the purposes of the 1974 Act.
2. In Goode: Consumer Credit Law and Practice it is stated as follows at 45A.61:

1. "Although the definition of 'creditor' and 'owner' in the original CCA 1974, s 189(1) did admit some ambiguity, as reworded following the CCA 2006, it now admits of none. As has been seen above, the definition of these terms has deliberately been made wide enough to encompass assignees of regulated agreements.
   Unfortunately the opportunity was not taken to remove the infelicity on which the General Editor of this work has been commenting since the Act was passed. Section 189(1) defines 'creditor' as 'the person providing credit under a consumer credit agreement or the person to whom his rights and duties under the agreement have passed by assignment or operation of law …' and defines 'owner' in similar terms. As Professor Goode has pointed out, the general law of assignment does not permit the passing by assignment of 'duties' under an agreement and it is only to a very limited extent that duties pass by operation of law. The reality is, of course, that the CCA 1974, while nodding respectfully to the common law of assignment, is providing special rules for the assignment of regulated agreements. Under the CCA 1974, the assignment of a regulated agreement puts the assignee willy-nilly into precisely the same position as the original creditor or owner – there are no limitations on the obligations transferred with the agreement – once the assignment is completed by notice being given to the debtor or hirer, the assignee becomes the creditor or owner for all purposes."

1. The editors of that text therefore also consider that an assignee may be a "creditor" once notice has been given and that there is no longer any ambiguity about the matter.
2. Rosenthal in Consumer Credit Law and Practice – A Guide states at 6.7:

"It is submitted that Parliament may have intended to extend the meaning of 'creditor' to include persons to whom the creditor's statutory duties have passed, if only to prevent the assignee evading duties imposed upon the creditor under the Act and in order to facilitate assignments."

1. He too therefore considers that an assignee may be a "creditor", at least where the creditor assignor's statutory duties have passed to the assignee.
2. I essentially accept the analysis in Professor Guest's Encyclopedia.
3. In my judgment the reason for the reference to "duties" in section 189 is that an assignee only becomes the "creditor" where the statutory duties relevant to the enforcement of the creditor's rights have passed to the assignee. This will not be the case where there has been an equitable assignment of which no notice has been given. In such a case the debtor will remain legally liable to the assignor and the assignor will remain responsible for the performance of the statutory duties relating to enforcement, such as duties to provide information and notices.
4. Where, however, there is a legal assignment the debtor's liability will be owed to the assignee and it is the assignee who will have to perform the statutory duties relating to enforcement. This is not because he becomes under a contractual obligation to perform those duties, but rather because he cannot assert his rights under the regulated credit agreement without accepting the statutory obligation to perform duties under the 1974 Act relating to enforcement of those rights.
5. The legal assignee stands in the shoes of the assignor. The enforcement of the assignor's rights under the regulated credit agreement was subject to performance of the statutory duties laid down in the 1974 Act, and the legal assignee's rights are similarly so subject.
6. The position is analogous to the assignment of a contract containing an arbitration clause. It is well established that an assignee of such a contract is bound to arbitrate in accordance with such a clause because it cannot assert its right inconsistently with the terms of the assigned contract. As stated by Hobhouse J in The ****** Nicolev [1990] 2 Lloyd's Rep. 11 at p15:
7. I agree with Professor Guest that this would apply to the statutory duties under ss.77, 78 (duty to give information to the debtor), ss.76, 87, 98 (duty to serve enforcement, default and termination notices), s.97 (duty to supply settlement figure), s.103 (duty to provide termination statement), and the restrictions on enforcement imposed by ss. 90 and 92. I also agree with him that different considerations may well apply to a pre-assignment liability such as that as may be imposed under ss75, 75A.
8. In my judgment the "duties" referred to in section 189 are therefore those statutory duties under the 1974 Act which the assignee has to perform in order to enforce his assigned rights. These duties have "passed by assignment" in the sense that it is by reason of the assignment that the assignee becomes obliged to fulfil them.
9. It is not necessary to add to or change the language of section 189 in order to interpret it in the manner suggested. Even if it was, there would be no difficulty in so doing in order to avoid the obviously absurd consequence of rights under a credit agreement not being effectively assignable. That could be done, as has been suggested, by interpreting "rights and duties" as meaning "rights and/or duties". The section applies to both transfers of rights (by assignment or operation of law) and to transfers of rights and duties (by operation of law) as the case may be.
10. For all these reasons I disagree with the judge's conclusion on Ground 2 and hold that a legal assignee may be a "creditor" as defined in the 1974 Act.

M1

[mystery1]

Re: s.89 - what does it mean?

The question that causes issues here are the same whether the debt has been absolutely signed or not. That question is "what are the consequences of a termination that was attempted but was subsequently found to be not in fact performed in accordance with the rules and/or contract ?"

The answer according to Jones (see above) and sense would not vary depending on who holds creditor status.

M1

[Lord_Alcohol]

Re: s.89 - what does it mean?

Ok, I see that now. But for the uninitiated (me)...if the account has been terminated, albeit with an outstanding balance (the arrears)..what determines the fact that the arrears are still payable as opposed to the full amount. Sorry for my ignorance...:tinysmile_hmm_t2:

I think if an agreement is terminated then the entire balance is payable.

If the route to termination was a duff DN then the agreement is not terminated (unless there is a nicely-worded pre-CCD contractual termination clause), and if the contract stipulates monthly payment on receipt of a monthly statement then further arrears cannot accumulate if the OC hasn't issued statements since termination. Therefore, on re-issue of a corrected DN, only the original arrears can be demanded (IMVHO).

But if the agreement is assigned to an unlicensed firm following a duff DN, then the OC has assigned a live credit agreement to an unlicensed body which is probably a breach of s.189 (the assignee must be able to perform duties and rights under the agreement).

The key to all this might be the contract itself, rather than generalising the act for all contracts.

One last point - s.170. Does this really mean that the OC can never lose his money in a dispute with an individual customer, or does it mean he cannot be sanctioned by the regulator for any breach?

I'd still like to know what should happen if an OC doesn't observe s.89, especially if s.170 is taken out of the equation.

LA

[labman]

Re: s.89 - what does it mean?

If it helps,a friend has a consumer credit specialist solicitor looking at this exact issue at the moment. It will be interesting to see what their response is.

[jax50]

Re: s.89 - what does it mean?

erased

[toomanycalls]

Re: s.89 - what does it mean?

Thanks Miliitant, but what would have happened had you satisfied the fresh DN?

LA

This happened to me, I satisifed the new DN and the claimant was forced to withdraw and I got costs.

[jax50]

Re: s.89 - what does it mean?

This happened to me, I satisifed the new DN and the claimant was forced to withdraw and I got costs.

...and if between times you had been making regular monthly payments to a DCA...? what then

[toomanycalls]

Re: s.89 - what does it mean?

...and if between times you had been making regular monthly payments to a DCA...? what then

I had made a couple of reduced payments to the bank in question and this amount was taken off of the new DN amount needed to remedy.