Cause of Action Discussion

[jon1965]

Following on from my previous thread
http://www.legalbeagles.info/forums/...ion&highlight=
and the infamous OD COA one .
I have been looking at some terms and conditions that I have (got more but these will do for now) I am trying to determine when the COA would or could be. These are theoretical discussions as all my debts have been defaulted and payments made after that which have now stopped.
03 CapOne CCA.pdf
04CCA.pdf This is Natpest
06 Amex CCA.pdf
06ASDACCA.pdf
Halifax CCA.pdf

You will see there are various reasons given why they can terminate the contract ranging from one missed payment to frequent breaches and some say they will issue statutory notices etc.
Further to that, if a missed payment=breach of contract=COA could it not be that any other breach of the agreement could be a COA , even something as silly as not signing your card when it first arrives , or giving your card and PIN to a trusted person ( I knew all my ex wifes Pin numbers as I did her shopping).

I know some people have already expressed their opinions and while on the whole I agree with most of them, I wanted to open it up for further debate

[Guest]

Re: Cause of Action Discussion



Hope the site team do not mind, I have copied my reply on here from anther thread, as te issue is broader than that being raised elswhere, hopefully the debate will attract some new blood, as it is I think an interesting one..

Just read BMW (again). this case should be read and re-read IMO, not not dismissed as being irrelevant. There is much commentary on there which is applicable to all contracts and links other authorities which are useful if we are to understand the COA issue.

As said it seems that most agree that the COA will be dependent on the contract on CC and in fact on any credit agreement. This is certainty the case in BMW and all the associated case law and authority referred to in it.

I think as also stated before, the only real issue is if this can be deferred by the issuance of the termination notice in a regulated agreement.

It is interesting to see that many T and cs mention statutory notices within their termination clause, for these at least I think it would be safe to assume that a DN and subsequent termination would be a prerequisite for the creditor to be "able to demand full payment".

This as Jon says raises the problem which like it or not exactly parallels that raised in BMW where at 25 the judge says;

25. In my view, the judge was wrong to think that that decision applied to the present case. In
this case, the right to recover the sum set out in clause 12 did not arise unless and until the
hirer gave notice to terminate the contract. That was a right that he could choose to exercise
or not, but unless he elected to do so, the contract continued in existence and instalments of
hire would have fallen due at the stipulated intervals. Under section 5 of the Limitation Act
1980 time in a case of this kind runs from the date when the cause of action accrues. In this
case, the cause of action to recover the amounts claimed under clause 12 did not accrue on
the customer's default alone, but only upon the election of the hirer to terminate the contract.

Similarly the creditor can chose when to send a DN and indeed after that can choose when to send a termination notice.

this was referred to in the quote from squire sanders. http://www.lexology.com/library/deta...7-21b6701a273e

If the Court of Appeal had come to any other conclusion it would have been contrary to the wording of the CCA. This envisages that the balance does not become due (and cannot be demanded as being due) until after the expiry of the notice period. The Court of Appeal’s decision can also be used in appropriate circumstances by lenders wanting to stop the limitation period running. It seems clear that, subject to an argument that the lender has affirmed the agreement by not taking steps to accept a debtor’s repudiation, termination could be delayed until the end of the term of the agreement. This would allow lenders to delay (most obviously where the debtor is in a difficult financial position or cannot be located) issuing proceedings until the last moment, like BMWFS did, and avoid being time-barred.

Of course it may e that when a regulated agreement comes to court a judge will say that the statute is only a procedural bar, and all this should be disregarded, the COA would then rest purely on the contractual right to demand full payment..

Interesting though

[Guest]

Re: Cause of Action Discussion

The requirement for the creditor to demand payment essential for the COA as demonstrated in Reeves Butcher etc.

This means that the contractual relationship between the parties must be extinguished, there are broadly speaking three ways of ending a contract.
One is when it reaches its termination date or expires,
The second is after repuditory breach and acceptance by the wronged party, this happens when one of the parties denies the existence of the contract or breaches a core term to such an extent that a contract no longer could be seen to exist between them.
The last is via a contractual term which says, if a certain event occurs this contract will be terminated. In general credit agreements rely on the last of these.

A proper understanding of the way all this works is needed in my opinion if the reasoning behind the COA and its inception is to be fully understood.
Some years ago I studied this ruling which I found very instructive in the subject.

http://www.bailii.org/ew/cases/EWCA/Civ/2009/75.html

There is an explanation here http://www.inhouselawyer.co.uk/index...mon-law-rights

CONCLUSION


This case confirms that the starting position is that a contractual termination clause, however detailed, will not exclude an innocent party’s common law right to treat a contract as discharged and seek damages, following a sufficiently serious breach. Typically, the circumstances in which termination is permitted under the contract will be regarded as events that the parties have decided correspond with breaches that the common law would recognise as giving rise to similar rights.


OK a long winded reason why a contractual termination clause is needed to end a contract and thus permit the creditor to be able to demand early repayment, not just a missed payment.

[charharp]

Re: Cause of Action Discussion

I'm not going to post up links ect because it's more effort than I care to spend but I'll give my view anyway.

The mistakes you are making in my 'opinion' are...

1. BMW didn't lend any money to Hart, he was renting a car from them. If it was £700 per month, the £700 only becomes due as each payment is missed. He is paying £700 for each month he uses the car, that debt is not created until the month starts. Nothing is owed until a payment is missed and then only that one payment is due. If you spend £5,000 and you pay it off at £200 per month, you owed all of that money as soon as you spent it. The payment doesn't become owed only when it is missed, the payment was owed before the payment date as part of the larger debt.

Hart signed a contract to lease the car for 36 months, he was not lent any money. It was only when the contract was terminated that all future monthly payments were owed. On a credit card you owe the entire balance as soon as it is spent, the contract does not have to be terminated for you to owe the money.

2. COA and action are two different things. It is set in stone that limitations accrues from COA not the action. When you look at the terms and conditions of loans and credit cards they say that if the contract is breached they can demand the full outstanding balance be paid. They also say that the minimum payment or payment must be paid every month, not doing this is a breach. It is at this point that limitations begins, because this is the first instance the creditor can take action. Of course they will have to terminate the contract and issue a DN before they can do this but this is a procedural formality that is entirely under the control of the creditor and does not affect limitations. If it was true that the COA was the issuing of DN by the creditor then the creditor could suspend limitations for as long as it wanted to simply by not issuing a DN. Over on CAG one of the guys posted a case where the judge said that limitations runs from when the creditor first had the opportunity to take action not when it actually decided to other wise limitations was completely under their control and that would be illegal.

Enjoy, think it over. Let it settle in.

[Guest]

Re: Cause of Action Discussion

I am aware that charharp has posted on this thread, however I have him on ignore because of yet he has failed to make any sensible or relevant contribution to any thread he has posted on.
However in the unlikely event that he should raise s a question that anyone else think is relevant or needs examining please mention or quote it and we will discuss.

[Guest]

Re: Cause of Action Discussion

Does anyone have a link to

Reeves V Butcher Coburn V Colledge [1897] 1 QB 702

or

Royal Borough of Kensington and Chelsea v Khan [2002] EWCA Civ 279

or

West Bromwich Building Socierty V Wilkinson.

or

Congregation Union Inc v Harriss and Harriss [1988] 1 ALL ER

Cheers

[Guest]

Re: Cause of Action Discussion

This is relevant and also worth a read see section 7.22

“In cases where the claimant has accepted anticipatory breach as repudiation time runs from the date of acceptance rather than the contractual date for the obligation of the performance in question”


http://books.google.co.uk/books?id=w...%20QBD&f=false

[Guest]

Re: Cause of Action Discussion

Perhaps I should clear up any misunderstanding regarding BMW.
For another member

This was a HP agreement not a lease agreement, In a standard HP agreement the total credit is provided from a finance company to the dealer in this case BMW, they then supply the vehicle, the title to ownership of the car remains with the fiance company until the loan is repaid, it acts a security for the loan.

see here

The appellant is BMW Financial Services (GB) Limited, who are
the successor to the original named company in the hire purchase contract, which was Land
Rover Financial Services. The hirer was Mr Damon Hart, the respondent. Mr Hart has
instructed solicitors but they do not appear and there is no-one appearing for the respondent
today. We were informed that that would be the case in advance.
2. The essential facts of the case are that under a contract signed by both parties on 1 March
1999 Mr Hart took a Land Rover Discovery motor vehicle on hire purchase from the
appellant, for a total sum of just over £35,000 less a deposit paid of £500, with instalments to
be paid as provided in the contract. The balance of the amount payable, including interest
charges and other fees, came to £39,967.25. The contract provided for 36 monthly rentals,
each of £690.40, followed by a final balloon rental payment of just over £15,000.
3. Clause 2(b) of the contract referred to the rental instalments and the final balloon rental,
and ended by stating:
"Punctual payment of all such sums shall be of the essence and a
material condition of this agreement."

The agreement works in exactly the same way otherwise as a standard fixed sum loan agreement, in fact if it were regulated it would be regulated under precisely the same rules as a fixed sum regulated agreement(section 9 I think).

On any credit agreement the only sums due on a mised payment are that missed payment, plus any default sums.
In order to claim early repayment an "acceleration clause" is used to enable the creditor to be able to demand full repayment, this effectively terminates the contract and permits the demand for repayment.

On termination of contract all sums become due and the rebate would be credited against that, as it would against any other loan(using the rebate regulations.)

11, or if the Owner accepts the Customer's repudiation of the
Agreement, the Customer shall pay to the Owner (i) all rentals and
other payments which are due but unpaid; and (ii) as compensation
and/or liquidated damages for breach of the Agreement, the Balance of
Amount Payable shown at item (h) in the Financial Details on page 1,
[sci li cet less] amount of the rentals paid or which have become due
less also a rebate of charges calculated as of the date of receipt of full
payment on the basis referred to in Credit (Rebate on Early Settlement)
Regulations 1983 (or any amendment to or substitution of such

Yes i know the repayments are refereed to as "rentals", but that is just the phrase used for the repayments, and is accurate enough because the car does not belong to the debtor until the last payment and transfer fee if applicable is paid.

None if this is relevant to the point, as usual, but I thought I would clear it up anyway.

If it had have been relevant I am sure that at least one of the many authorities that have commented on this case would have stumbled upon it.

[jon1965]

Re: Cause of Action Discussion

I'm not going to post up links ect because it's more effort than I care to spend but I'll give my view anyway.
The mistakes you are making in my 'opinion' are...
2. COA and action are two different things. It is set in stone that limitations accrues from COA not the action. When you look at the terms and conditions of loans and credit cards they say that if the contract is breached they can demand the full outstanding balance be paid. They also say that the minimum payment or payment must be paid every month, not doing this is a breach. It is at this point that limitations begins, because this is the first instance the creditor can take action. Of course they will have to terminate the contract and issue a DN before they can do this but this is a procedural formality that is entirely under the control of the creditor and does not affect limitations. If it was true that the COA was the issuing of DN by the creditor then the creditor could suspend limitations for as long as it wanted to simply by not issuing a DN. Over on CAG one of the guys posted a case where the judge said that limitations runs from when the creditor first had the opportunity to take action not when it actually decided to other wise limitations was completely under their control and that would be illegal.

Enjoy, think it over. Let it settle in.

Andy, there were two parts , the first you have answered with the detailed explanation oh the HP agreement .
The second part as you can see is about cause and action.
I am sure you can dissect it better than I can but to me the following flaws in the argument stick out. He seems to have misunderstood the terms COA and action. I do not think it is to difficult to grasp that COA and action are two different things in fact I am sure that has been explained before. Action is of course classed as in a court of law.
Even if we were to accept the need for default and termination are not proven he has clearly missed the wording of the various contracts which say for example that several breaches need to take place before they cancel the contract so on that basis the cause would be the last one i.e the straw the broke the camels back.
Another one says subject to any documents the act requires which in that case I take to mean the DN. In that case I would suggest that missing a payment triggers arrears only but it is the default notice that triggers the full amount payable so the point where the DN runs out would be the cause of action.
I also think that the default would have to be issued within a reasonable time and am sure I have read that somewhere but can not remember where

[jon1965]

Re: Cause of Action Discussion

Does anyone have a link to

Reeves V Butcher Coburn V Colledge [1897] 1 QB 702

or

Royal Borough of Kensington and Chelsea v Khan [2002] EWCA Civ 279

or

West Bromwich Building Socierty V Wilkinson.

or

Congregation Union Inc v Harriss and Harriss [1988] 1 ALL ER

Cheers

http://www.publications.parliament.u...630/brom-1.htm

Is that the West Brom one you mean?

[Guest]

Re: Cause of Action Discussion

Andy, there were two parts , the first you have answered with the detailed explanation oh the HP agreement .
The second part as you can see is about cause and action.
I am sure you can dissect it better than I can but to me the following flaws in the argument stick out. He seems to have misunderstood the terms COA and action. I do not think it is to difficult to grasp that COA and action are two different things in fact I am sure that has been explained before. Action is of course classed as in a court of law.
Even if we were to accept the need for default and termination are not proven he has clearly missed the wording of the various contracts which say for example that several breaches need to take place before they cancel the contract so on that basis the cause would be the last one i.e the straw the broke the camels back.
Another one says subject to any documents the act requires which in that case I take to mean the DN. In that case I would suggest that missing a payment triggers arrears only but it is the default notice that triggers the full amount payable so the point where the DN runs out would be the cause of action.
I also think that the default would have to be issued within a reasonable time and am sure I have read that somewhere but can not remember where

I see what you mean , the act refers to the accrual of the COA, this means the relevant date when the coa can be triggered, the term accrued is used widely in the act.

If you were to separate the two words Cause and action and investigate the cause how far back would you go, you could say that the cause was when the loan was made.

In fact if you did you would be correct, in the case of a simple loan under common law that is exactly where the cause of action is. You lend someone a tenner and you have six years to demand it back under common law, unless you contract otherwise.

Section 6(3) of the SOL modifies this and makes the COA on demand.

Reeves vs butcher made it quite clear that the COA runs from when the creditor is able to demand payment, later authority says that this should not be delayed on the whim of the creditor. But he must be able to claim.

The point of contention is, what happens in the case of a regulated agreement where the agreement permits the claim to be made for the full amount(after a couple of missed payments) but the statute does not because of the DN.

One side of the argument would say that the creditor cannot claim because the statute says so in no uncertain terms, arrears only.

The other side of the argument(which in my view is equally valid) is that actually issuing a default notice is a demand towards taking an action, and that the DN itself is nothing more than a procedural bar in respect of the COA, in other words the restriction on enforcement is only applicable and relevant to the CCA.

As you know I believe that the former is true, basically because if the six years had to start before the DN was issued the creditor would not get his six years, it would only be 6 years minus 14 days - whatever period it took to send the notice.

That view is also supported by BMW which is entirely relevant as it is a contract and we are talking about contract law, however having said that it does not mean that consumer credit agreements cannot be distinguished against the judgment, and there may be arguments that we have not thought of yet to come.

[Guest]

Re: Cause of Action Discussion

http://www.publications.parliament.u...630/brom-1.htm

Is that the West Brom one you mean?

Yes thanks, some bedtime reading for me

[Guest]

Re: Cause of Action Discussion

The point about the delay between sending a default notice could be the common law aspect.

As you know under common law an agreement can be ended if one part severely breaches a core term(repudiation of agreement) the procedure is that the wronged party has to accept the repudiation and terminate the agreement. Tnis is the dn/termination process in a regulated agreement.

The point is that the creditor has to accept the repudiation in short order as this is confirming that the agreement has been abandoned. If say the debtor misses a couple of payments and then re starts again, the creditor by accepting the payments is accepting that the agreement still exists, therefore he could only claim for the missed contractual payments.

[charharp]

Re: Cause of Action Discussion

I'll leave you geniuses to chew the fat, not only do you have no insight to offer, you do not have the capabilities to see what is a right or wrong answer.

[jon1965]

Re: Cause of Action Discussion

I'll leave you geniuses to chew the fat, not only do you have no insight to offer, you do not have the capabilities to see what is a right or wrong answer.

Very kind of you Charharp
The problem as I see it is that you are unable to keep track of what you have said or give any insight to your own reasoning

You said COA and Action are different , I do not think anyone has suggested otherwise so why try to dispute something that no one disputes

You have suggested that in BMW , Mr Hart was only renting the car, not true as explained. In days gone by (when Andy and I were young) I could have rented a TV which i would never have owned. Now I take finance on it and own it at the end of the agreement but not until that point. You also need to remember that just because it says BMW above the door of a garage doen't mean that BMW own it. When that garage sells a car on finance, the finance company pay the garage

You then have said cause is from missed payment yet previously you have agreed that it depends on the contract.

It has been suggested to you by several clued up people both here and there that your OD cause is accrues on demand yet you still seem to fight the consensus without any evidence.

As for this thread, Andy has put forward two ideas, he has only ever said he believes in one (lets call it theory 1). Personally I tend to believe in the other (theory 2) i.e no need for termination and I based that on the fact that the default could be delayed. However if we take the common law principle that a DN must be issued in short order (or promptly) it overcomes many of my worries about theory 1.
I will say that I believe that either theory could be the right one however it will need to be decided at some point in a higher court . If theory 1 is correct I think there could be a lot of challenges against it based on delay in issuing DN's

I also suspect that the debt industry are not over keen to have this tested as at the moment they can pretty much claim what they want and fool a lot of people . Remember the people you see on these forums are only a small proportion of people with debt issues