Service of new default notices

[Lord_Alcohol]

Does anyone know what the requirements are on a creditor that serves a compliant DN a year after service of a non-compliant DN and where the agreement has been terminated for the intervening 12 months?

Eg, s.87 says that the agreement cannot be terminated and unpaid sums demanded unless a compliant notice is served first. If the agreement remains terminated when the compliant DN is served, is the DN (or service of that DN) ineffective in any way?

TIA
LA

[labman]

Re: Service of new default notices

The agreement was not terminated. They and you may have thought it was, but as you can see from the section you have just cited, an agreement cannnot be terminated on the back of a defective DN. I imagine therefore that by serving a valid DN, the agreement reverts to the stage it was at previously. I hasten to add that is not knowledge, it is what common sense is telling me, so do wait for someone who knows for sure comes along.

[basa48]

Re: Service of new default notices

The agreement was not terminated. They and you may have thought it was, but as you can see from the section you have just cited, an agreement cannnot be terminated on the back of a defective DN. I imagine therefore that by serving a valid DN, the agreement reverts to the stage it was at previously. I hasten to add that is not knowledge, it is what common sense is telling me, so do wait for someone who knows for sure comes along.

From my perspective and recalling a saying that 'a man should be bound by what he writes' (or something like that) I would argue that on the service of the first DN (albeit non compliant), both parties believed the agreement was terminated and conducted themselves thereafter in that belief.
So the law says the agreement could not be terminated (after a non compliant DN), what then happened to both parties obligations within the on-going agreement?

Unfortunately I don't think this has been explored in court.

Again from my point of view, the debtor in his belief the agreement was dead may have stopped payments. How can he then be put at a disadvantage because he was not sure of the 'letter of the law' whereas the creditor should be assumed to be familiar with the law.

All this assumes the agreement was 'enforceable' in the first place !!

I think the member PT has knowledge of a case where this was discussed and as I recall the verdict was quite vague.

[labman]

Re: Service of new default notices

This thread makes really interesting reading. The initial post by 'Paul' is pt from here:

[pt2537]

Re: Service of new default notices

But what about if the creditor elects to terminate placing reliance on the contractual term that allows him to terminate for non breach, say s98A CCA

He can terminate for non breach if he decides to do so, i prefer not to tell them they buggered it up too early.

[basa48]

Re: Service of new default notices

This thread makes really interesting reading. The initial post by 'Paul' is pt from here:

Yeh I remember that case, just confirmed some parameters of what constitutes a bad DN and that a creditor cannot enforce on the strength of one. It also confirmed that creditors cannot then revert to non default termination (since it is clear the account is in default and have tried to issue a DN).

It is also clear that the majority of commentators believe a new DN can be issued after a bad one. It is not clear if only the original creditor can re-issue or if a DCA can also issue. There is also the question of unfair relationships and the time between the DNs.

There are many questions, but from my own point of view, it is dodgy ground to fight a creditor solely on the strength of a bad DN. Much the same way as fighting on the strength of a non compliance with s78.

[Lord_Alcohol]

Re: Service of new default notices

But what about if the creditor elects to terminate placing reliance on the contractual term that allows him to terminate for non breach, say s98A CCA

He can terminate for non breach if he decides to do so, i prefer not to tell them they buggered it up too early.

PT, if a contract does contain such a clause and the contract is pre-Feb 2011 (ie, pre S.98A), then presumably a debtor can hold the creditor to his earlier termination and reject the subsequent DN as being invalid (a contravention of s.87(1))?

I was also wondering whether, despite any contractual term allowing termination at the drop of a hat, the agreement would have to be shown to be re-opened before the new DN was served - eg, a letter explaining the invalidity of the earlier termination, a notice suspending credit under a live agreement, removal of a default on a credit file, and so on. In other words, a clear indication that the agreement was not in fact terminated.

[pt2537]

Re: Service of new default notices

PT, if a contract does contain such a clause and the contract is pre-Feb 2011 (ie, pre S.98A), then presumably a debtor can hold the creditor to his earlier termination and reject the subsequent DN as being invalid (a contravention of s.87(1))?

I was also wondering whether, despite any contractual term allowing termination at the drop of a hat, the agreement would have to be shown to be re-opened before the new DN was served - eg, a letter explaining the invalidity of the earlier termination, a notice suspending credit under a live agreement, removal of a default on a credit file, and so on. In other words, a clear indication that the agreement was not in fact terminated.

Amex have successfully argued that where the contract provides a right to end the agreement without reliance on breach of contract, then they can terminate if the Default was defective in any event because the default is a bar on taking steps to terminate unless a compliant default is served.

[Lord_Alcohol]

Re: Service of new default notices

Ta PT, but to be crystal clear - a contractual termination clause can remove any obstacles to termination where a bad DN was served on default?

If so, but a new DN is later served, then presumably it is an abuse of the regs? The creditor has contractually terminated the agreement (possibly without realising - haha!) and now seeks to re-open it with his new DN.

[basa48]

Re: Service of new default notices

Ta PT, but to be crystal clear - a contractual termination clause can remove any obstacles to termination where a bad DN was served on default?

If so, but a new DN is later served, then presumably it is an abuse of the regs? The creditor has contractually terminated the agreement (possibly without realising - haha!) and now seeks to re-open it with his new DN.

Interesting.

We are saying that a creditor can 'put aside' the bad DN and terminate contractually (i.e. a non default termination). Surely then the creditor cannot issue a new DN on a terminated account?

And can the creditor then demand early repayment?

[Lord_Alcohol]

Re: Service of new default notices

Interesting.

We are saying that a creditor can 'put aside' the bad DN and terminate contractually (i.e. a non default termination). Surely then the creditor cannot issue a new DN on a terminated account?

And can the creditor then demand early repayment?

I cannot see anything in the act that stops this - s.87 just says termination "by reason of any breach" but if the DN is cocked up there is nothing to say the creditor cannot invoke a termination clause. I think that requires a pre-Feb 2011 agreement though, as otherwise a s.98A notice is required.

I would imagine that a termination clause in the contract would include a statement like "you must pay up in full if we terminate".

But the flip side to this is that a second DN could be viewed as a breach of the regs - because s.87 says service is required before termination but the agreement is already terminated. With a bit of imagination, that might be sufficient to repay the balance at a reduced rate while avoiding contractual interest, or even looking at s.140 if the creditor has been a total git.

Btw, the judge in the Amex appeal saw nothing wrong in default + contractual termination at the same time - it's just that he disallowed it at the appeal because Amex introduced the argument too late in the day (http://www.bailii.org/ew/cases/EWCA/Civ/2011/1187.html, paras 36 and 37).

[basa48]

Re: Service of new default notices

I would imagine that a termination clause in the contract would include a statement like "you must pay up in full if we terminate".

Not in any of mine !!

They all say "the agreement, interest and charges will continue until you repay all amounts you owe us." or words to that effect.

[Lord_Alcohol]

Re: Service of new default notices

Basa - sounds like there is no contractual termination clause in your ag.

I have one which says "we can end this agreement at any time" (Egg), which is similar to the Amex clause referred to in Brandon, and says that any balance is payabale immediately.

[basa48]

Re: Service of new default notices

Basa - sounds like there is no contractual termination clause in your ag.

I have one which says "we can end this agreement at any time" (Egg), which is similar to the Amex clause referred to in Brandon, and says that any balance is payabale immediately.

That's not what I see in my Egg T&Cs, it says:

15
15.1 We can end this agreement by giving you not less than 30 days notice...................the Agreement will continue until you have repaid all amounts you owe us.

[Lord_Alcohol]

Re: Service of new default notices

Must be different T&C's? Mine is a 2004 version. Clause 15 in mine is all about liability.

But it's a continual source of puzzlement how a creditor can terminate, or say it can terminate, an agreement, but at the same time saying it will continue until all unpaid amounts are repaid. So I guess if you do have a terminated agreement and a clause like yours Basa, then all amounts must have been repaid if it is in fact ended.