Catalogues…………………..of errors

The issue of catalogues have hit the media again. Only today there was an article on the BBC website here which the issue of catalogues rear their ugly heads.

This article made me think about some of the cases i have dealt with in the past, including my own.

Now from my experience i would say that many catalogues, certainly those accounts opened before 6th April 2007 could well be unenforceable against the borrower. Now let me say that each case turns on its own facts, there is no one size fits all approach here and if anyone reads this and thinks oh my agreement may be unenforceable then my advice is get a professional view on the merits of the case.

Anyway, why do i say that many may be unenforceable? well, Catalogues in most cases provide credit and therefore must comply with the strict requirements of the Consumer Credit Act 1974

Now in my case (time to name and shame) with Littlewoods, i had a flyer come through my letterbox in circa 2002 saying call us for a catalogue or go online to register …. so i rang them up and they sent me my catalogue, i never signed nowt. So i get my catalogue and i start spending, at that time i was oblivious to the Consumer Credit Act by the way.

So anyway, i had a car accident and fell into financial difficulties and rather than be reasonable Littlewoods set their debt dobermans NDR on me so i did a spot of research, well i was a law student at that time, and i found the Consumer Credit Act 1974 and realised that Littlewoods had dropped a huge clanger.

s61(1) Consumer Credit Act 1974 tells us there must be a document, signed by the Debtor containing the prescribed terms if the agreement is to be enforceable. My Littlewoods account had no document bearing my signature period. So i Littlewoods could not ever recover the money from me end of story.

Now i pause for a moment, because there was a change in the law in 2004 which meant that contracts could be concluded on-line by the debtor ticking a box as an electronic signature. The Consumer Credit Electronic Communications Order 2004 states with effect from 1st January 2005 a contract can be concluded electronically for the purposes of the Consumer Credit Act 1974. Now i must also say that just ticking a box doesnt cut the mustard the tick in the box must be on a document containing the prescribed terms if the document is to be enforceable. Of course as of 6th April 2007 the unenforceable provisions of s127(3 to 5) were removed from the CCA 1974 anyway, so for a catalogue opened after that date even if you never signed an agreement, but you open the account over the phone, then the Court could enforce the agreement. However for any account opened BEFORE 6th April 2007 if you didnt sign an agreement like me then you may well have an unenforceable agreement.

The firm i worked for has brought a number of claims for declarations that the accounts are unenforceable, all of which were successful. Next Directory were also guilty of just letting people take goods without getting a signed credit agreement in place and if i recall correctly Next were criticised for opening credit accounts for customers without the customer even knowing. Shocking. It seems to me that the ethos of these companies was push out the catalogues to whoever wants one, which is fine , i have no issue with that side of it, but what they failed to do , certainly in the cases ive dealt with, is to ensure that the paperwork was up to scratch. Now i know people will be thinking “Whoa Debt avoidance” but in circumstances such as mine for example, i was never provided with an agreement so i never got told what the rate of interest would be, what the APR was, if the agreement was cancelable, what charges would be levied if i defaulted etc, all of which are core terms that parliament felt were of utmost importance to a debtor. So i was prejudiced by the creditors failings and therefore i have little or no sympathy with these creditors who cry when people find out their rights and fight back.


Anyway , i really do feel that catalogues are the next big explosion just like PPI was. Its just a matter of time


Santander v Mayhew…

I was sent a copy of Credit Today and was interested in an article concerning the case i was involved with called Santander v Mayhew. There were actually two articles, the first written by Alex Cardno and the second by Optima Legal Solicitors.

Now Alexs article was pretty neutral and dealt with the facts of what happend. The article was not in my opinion judgmental in any way and was very good reading, well apart from one minor error about section 127(3) to (5) Consumer Credit Act 1974 but thats not a problem at all really. The provisions of s127 (3-5) were repealed by the Consumer Credit Act 2006 but for agreements entered into  before 6th April 2007  the provisions of s127(3 to 5) still have effect.

But contrary to the article, s127(3)-(5) do not give the Judge any discretion at all for an agreement executed before 6th April 2007 as if the agreement fails to comply with s61(1)(a) CCA 1974 then the Court has no power to enforce whatsoever as established in Dimond v Lovell, Wilson v First County Trust, London North Securities v Meadows etc.

I would also point out that while the Court has discretion to enforce after 6th April 07  the test that the Court has to apply is set out in s127 which states

127 Enforcement orders in cases of infringement.

(1)In the case of an application for an enforcement order under—
[F1(za)section 55(2) (disclosure of information), or]
[F2(zb)section 61B(3) (duty to supply copy of overdraft agreement), or]
(a)section 65(1) (improperly executed agreements), or
(b)section 105(7)(a) or (b) (improperly executed security instruments), or
(c)section 111(2) (failure to serve copy of notice on surety), or
(d)section 124(1) or (2) (taking of negotiable instrument in contravention of section 123),
the court shall dismiss the application if, but F3. . . only if, it considers it just to do so having regard to—
(i)prejudice caused to any person by the contravention in question, and the degree of culpability for it; and
(ii)the powers conferred on the court by subsection (2) and sections 135 and 136.
(2)If it appears to the court just to do so, it may in an enforcement order reduce or discharge any sum payable by the debtor or hirer, or any surety, so as to compensate him for prejudice suffered as a result of the contravention in question.

So yes the Court has discretion after 6th April 2007 but such issues as those that arose in Mayhew would have called for some response from the Court. An example of the provision of s127 (1)&(2) in operation can be found in Rank Xerox v Hepple where HHJ Hague QC reduced a debt from £5,000 to £500 for a simple breach of the CCA where the creditor failed to draw to the debtors attention the accelerated payment clause for breach, thus the judge held the debtor was unduly prejudiced. Another recent example of this kind of view is found in Harrison v Link Financial Limited which was heard before HHJ Chambers QC in the High Court.

Anyway, it isnt the article Alex wrote that i have issue with, it is well written and very good. It is the article written by Optima Legal that shocks me more than anything. Why? well firstly the article suggests that this case was concerned with debt avoidance. And heres a copy of it from the Credit Today Magazine.

Now then, what i take issue with is the suggestion that this case was about debt avoidance!! it was not, and i can say this because i was involved in the case, in Court when the evidence was given and listened to the submissions made by the superb Paul Brant from Oriel Chambers on Ms Mayhews behalf.

Lets stop and look at the Mayhew case.

Firstly Di Mayhew told Santander the moment she knew she was going to face financial difficulties and i refer to the Judgment directly Paragraphs 6 &  7

  • The Defendant ran into financial difficulties and in July 2009 she failed to make the minimum payment due on the card. She informed the Claimant of her problems in February 2010 and it was agreed that she would make payments of £5.44 a month from March 2010.
  • On 12th October 2010 the Claimant served a default notice with a final demand being sent on 11th November 2010. These proceedings were issued on 20th December 2010.

Now then, Di Mayhew received a Default notice and she ignored it, why? well she received the Default and then a couple of days later she received a letter saying “please ignore the previous correspondence and maintain your payment arrangement” so she did, she just carried on paying. She did not stop paying and tell Santander to get lost, she did not ever intend to avoid paying this debt, what she got was sued by er Santander and put in such a position where she needed to seek legal assistance.

Di Mayhew is a pensioner, she did not go out to avoid paying her debt, infact this lady said to me when we had been given the judgment “do i still need to keep paying because i feel that i should because i borrowed the money”

Is that the sort of thing someone intent on debt avoidance says? Lets also remember Di made a payment right on top of the trial.

Anyway, when Santander sued Di she sought legal advice as she was frightened that her home would be at risk and she couldnt work out why Santander would be suing her as she was paying what they had agreed. Anyway, she found her way to my firm and spoke with Gwyn Jones and discussed her case with him. Gwyn is very skilled in CCA affairs, and asked Di all the key questions. Di answered honestly and she helpfully had retained lots of evidence to support her case although im not sure she understood the significance of these documents as she genuinely did not have a strong grasp of the 1974 Act at the beginning.

Anyway, there were two issues arising out of this case that affected the enforceability of the agreement.

The first issue was the original store card agreement. Ms Mayhew said that she had been visiting Harrods and in the banking hall as she called it there was an area where there were numerous flyers, much like you see in most bank branches, and she saw a store card application for a Harrods card.

She recalled taking the application and took it home with her, she filled it in and posted it off. She took a photocopy of the application as she said that there was not a copy for her to keep.She said there were no separate terms and conditions booklet, and if there was terms available they were in a separate holder and thus if we look at what the 1974 Act requires, the agreement must “contain” the prescribed terms as set out in s61(1)(a) CCA 1974. Now then the High Court helped the banks by setting out how to construe the word contain and i quote from HHJ Waksman QCs judgment in Carey v HSBC Bank Plc (paragraphs 173 & 174)

Agreed Principles

    1. The parties in  Carey  have helpfully agreed the following principles. The fourth one was added by Mr Uff, with their agreement. No other party takes issue with them. The OFT has formulated the matter in a slightly different way but accepts these principles are close to its position.
  •  (1) It is not sufficient for the piece of paper signed by the debtor merely to cross-refer to the Prescribed Terms without a copy of those terms being supplied to the debtor at the point of signature;
  • (2) A document need not be a single piece of paper;
  • (3) Whether several pieces of paper constitute one document is a question of substance not form. In particular a physical connection between several pieces of paper is not necessary in order for them to constitute one document;
  • (4) Additionally, a physical connection (or one or more physical connections) between several pieces of paper does not necessarily constitute them as one document;
  • (5) Accordingly, where the debtor’s signature and the Prescribed Terms appear on separate pieces of paper, the questions of whether those pieces of paper together constitute one document is a question of substance and not form.
  1. As a matter of law, those principles appear to me to be correct, in the context of s61.

So clearly if someone leaves the premises with an application form and is unaware there are a nice shiny booklet of terms and conditions sat in a nice plastic holder, then they are NOT CONTAINED in the agreement clearly. This is not some technicality but a major error on the creditors part for failing to understand the proper construction of the Consumer Credit Act 1974 in my7 opinion.

So Gwyn drew the conclusion that any one knowledgeable in Consumer Credit Litigation would conclude, that the agreement was unenforceable for lacking the prescribed terms. Now just to say the prescribed terms for a credit card for an agreement executed before 6th April 2007 are

“Credit Limit
3. Agreement for running-account credit. A term stating the credit limit or the
manner in which it will be
determined or that there is no credit
Rate of interest
4. Agreement for – A term stating the rate of any interest on the credit to be
provided under the agreement.
5. Consumer credit agreements. A term stating how the debtor is to discharge his
obligations under the agreement to make the
repayments, which may be expressed by reference
to a combination of any of the following – …”
And “the following” deals with the repayment.

So there we are, the agreement failed to contain the prescribed terms and thus was unenforceable. So Di Mayhew had a defence to run in this case.

Gwyn then looked at the issue of the “upgrade” as people refer to it, well it was more than an upgrade in my view. It was an entirely new agreement, the terms varied so wildly from the original store card that there was no way you could call this an upgrade. The store card only worked in Harrods, the credit card was used world wide, the differences were huge. Judge Manners saw this was the case too as can be seen from her Judgment.

Now its worth noting that Di was unaware of the legal implications of the errors made by Santander, so to suggest that she used the CCA 1974 to avoid a debt is wide of the mark. If i was paying my debt and the creditor agreed to accept my payments then sued me, id darn well use whatever legislation to protect me too.

Lets also stop and point a finger at good old Santander now, this was a bank that alleged this n that had happened and Ms Mayhew was just wrong, yet Santander could not provide any evidence before the Court and trust me they were aware this was a live issue from an early stage, now surely they would have had a copy of the terms they say are applicable?? it beggars belief that they couldnt put any evidence before the Court to satisfy the judge on balance of probabilities that there were terms. I mean lets look at what Judge Manners said

  • Evidence for the Claimant was given in the form of the statement of John-Paul Murphy the solicitor with conduct of the case. A hearsay notice was served and although Mr. Murphy was present in court no oral evidence was adduced on behalf of the Claimant. The Defendant herself gave evidence.
  • Four issues fall for determination (i) whether the agreement entered into in April 2000 was valid (ii) whether the upgrade in 2003 was valid (iii) whether the default notice complied with the requirements of the Consumer Credit Act and (iv) whether the Defendant’s request under section 78 of the Consumer Credit Act was complied with and, if it did not, whether that rendered the whole agreement unenforceable.
  • Was the April 2000 agreement valid? Section 61 of the Consumer Credit Act requires that a valid agreement must contain all the prescribed terms (credit limit, interest rate and repayment terms) and be signed by the debtor and the creditor. The Defendant’s case was that she went into Harrods banking hall and picked up a pre-paid foldable application form which she took home, filled in and sent off. She said there were no terms and conditions other than those printed on one side of the form. She had kept a copy of the form for her records. She also said that when she received the store card there were no terms and conditions with it. It was the Claimant’s case that terms and conditions were supplied, that procedures for providing terms and conditions were automated and that it would be unrealistic to expect that the Claimant could call anyone to give evidence as to the application of those procedures in this case. The Claimant was not able to provide a copy of the documents which it said would have accompanied the application form. The Defendant struck me as a methodical person who had kept a copy of the application form for her records and I have no doubt she would have kept, though possibly not read, any terms and conditions sent to her. I believed her evidence that she had not received any terms and conditions, either when she took the application form or when she received the card. I therefore find that the April 2000 agreement is unenforceable.

The bank didnt even reconstruct the agreement, so that says to me that they simply did not know what would have been with the agreement. So the bank that sues this lady cant even get its tackle in order to quote Judge Manners yet Ms Mayhews case is referred to as some kind of debt avoidance case? i think that article needs a real rethink to be honest.

Oh yeah and heres another point, Santanders witness Mr Murphy, a solicitor from Howard Cohen & Co was in Court on the day but wasnt called as a witness. Now that is of course the Claimants right not to call its witness if it so choses but why bring someone then decide not to call them? i must admit i found it somewhat strange that Santander had a solicitor from an outside firm as their witness anyway, i mean what evidence could he have given? he would not have known what happened in 2000 when GE money were the creditor, he could not say what happened with the upgrade nor about the default notice as these were all matters totally outside his knowledge. At best he could regurgitate what he had read, but that certainly wouldnt be sufficient to win the day. In Harrison v Link Financial, MBNA sent their solicitor Mrs Nicola Worden to the Court to give evidence, Mrs Worden had a working knowledge of the practice and procedures because she worked for MBNA and was involved in the processes that she gave evidence on. In the High Court case of Slater v Egg Banking, Egg sent a member of staff who was able to say what happened due to her direct involvement. So why would a bank send a witness from an outside solicitors firm who had no direct involvement in the Mayhew case? the mind boggles.

Id also point out that the leading commentators in Professor Sir Roy Goode QCs publication Goode Consumer Credit Law and Practice appeared to support out own analysis of the matter on the upgrade, infact we took the Judge to the Goode publication along with the OFTs intervention documents. So it wasnt just some Debtor thinking up technical arguments to avoid a debt!!

If i havent made my point here already then i simply need to refer to two very useful judgments which set out clearly the message to these lenders

The first is the Judgment of LJ Sedly in Wilson v Howard Pawn Brokers

The moral for a pawnbroker such as Mr Howard is that if he wants the rewards of his trade he must operate strictly by the book, and that the result of failing to do so may be not merely to unravel agreements, but to reverse the indebtedness that they have purportedly created. 

and secondly from the landmark ruling of Wilson v Secretary of State ( often called Wilson v First County Trust)

Lord Nicholls said:

“72.  Undoubtedly, as illustrated by the facts of the present case, s 127(3) may be drastic, even harsh, in its adverse consequences for a lender.  He loses all his rights under the agreement, including his rights to any security which has been lodged.  Conversely, the borrower acquires what can only be described as a windfall.  He keeps the money and recovers his security.  These consequences apply just as much where the lender was acting in good faith throughout and the error was due to a mistaken reading of the complex statutory requirements as in cases of deliberate non-compliance.  These consequences also apply where, as in the present case, the borrower suffered no prejudice as a result of the non-compliance as they do where the borrower was misled.  Parliament was painting here with a broad brush.

73.  The unattractive feature of this approach is that it will sometimes involve punishing the blameless pour encourager les autres.  On its face considered in the context of one particular case, a sanction having this effect is difficult to justify.  The Moneylenders Act 1927 adopted a similarly severe approach.  Infringement of statutory requirements rendered the loan and any security unenforceable.  So did the Hire-Purchase Act 1965, although to a lesser extent.  This approach was roundly condemned in the Crowther report …

‘It offends every notion of justice or fairness that because of some technical slip which in no way prejudices him, a borrower, having received a substantial sum of money, should be entitled to retain or spend it without any obligation to repay a single penny.’.

74.  Despite this criticism I have no difficulty in accepting that in suitable instances it is open to Parliament, when Parliament considers the public interest so requires, to decide that compliance with certain formalities is an essential prerequisite to enforcement of certain types of agreements.  This course is open to Parliament even though this will sometimes yield a seemingly unreasonable result in a particular case.  Considered overall, this course may well be a proportionate response in practice to a perceived social problem.  Parliament may consider the response should be a uniform solution across the board.  A tailor-made response, fitting the facts of each case as decided in an application to the court, may not be appropriate.  This may be considered an insufficient incentive and insufficient deterrent.  And it may fail to protect consumers adequately.  Persons most in need of protection are perhaps the least likely to participate in court proceedings.  They may well let proceedings go by default.

75.  Nor do I have any difficulty in accepting that moneylending transactions as a class give rise to significant social problems.  Bargaining power lies with the lender, and the social evils flowing from this are notorious.  The activities of some lenders have long given the business of money lending a bad reputation.  Nor, becoming more specific, I do have any difficulty in accepting, in principle, that Parliament may properly make compliance with the formalities required by the 1974 Act regarding ‘prescribed terms’ an essential prerequisite to enforcement.  In principle that course must be open to Parliament.  It must be open to Parliament to decide that, severe though this sanction may be, it is an appropriate way of protecting consumers as a matter of social policy.  In making its decision in the present case Parliament had the benefit of experience gained over many years in the working of the 1927 Act and the hire-purchase legislation, and also the views of the Crowther Committee.  Further, it must be open to Parliament so to decide even though the lender’s inability to enforce an agreement will not assist a borrower who consents to the enforcement of the agreement in ignorance of the true legal position.”

Both the Court of Appeal and House of Lords had no problem accepting that the act of parliament meant that even though the sanction may be harsh, even though it punishes the blameless on occasion that is what parliament had intended and that was its right.

These lenders need to realise that the consumers are fighting back now, and when someone like Di Mayhew who bends over backwards to pay her debt gets sued, you can understand why people are fighting back, maybe if the banks were more reasonable as i pointed out in a recent blog entry, then people would not be fighting them in court ( And WINNING) but they would be more inclined to pay the lenders what they owed. After all you cannot get blood out of a stone, so if someone like Ms Mayhew pays £5 per month because thats all they can afford, i dont see why the lender needs to sue, it makes no sense to me.

I must point out that this article is written to give my take on the case from my involvement in it. I was not the file handler and credit for the work on this case needs to go to Gwyn Jones from Watsons Solicitors.

An amusing incident……..although the debt collector wont think so

Around 13 months ago, i took out a 12 month contract which was paid up front for a web domain.

There was no clause which allowed continuous renewals and of course there was no clause which said i had to tell the company that i didnt want to renew. So, i had my 12 months, and decided i didnt want to renew the website so i never gave it a second thought nor did  i expect to hear anything else about it.

Fast forward to this month i receive a wonderful little missive from a well known Debt Collection Agency (DCA) telling me i owe money and must pay and quoting the details of how i could pay. Now im not the sort of person to just pay when someone tells me to. So i had a think about this and thought “Hell no, im not paying these people” afterall why should i?

A further point to note is not only could these wonderful people not address the letter correctly, they couldnt even spell my name correctly. Now that i find either sheer incompetence or a total lack of care, either way its dam insulting and unprofessional.

So i decided to telephone these people. Their letter said  they were open 9 am to 6pm so i called at 17:30 hrs and got a recorded message saying “our offices are now closed, our opening hours are mon to fri 9am to 6pm!!!!”At this point im starting to think piss up and brewery are quite apt here.So i wrote to them instead telling them of my disgust at their poor and tardy approach to business.

I decided to call them and speak to them again the following day as i had hoped i could resolved the matter amicably. How wrong i was.

I ended up speaking to an Irish lady, now i didnt tell her my legal background at the beginning, i was just the average joe to her, and boy how she would play on that. I was told that i was liable for the debt as i had failed to write to the web company telling them i did not wish to renew my website. She progressed to tell me it was clearly written into the terms of my contract and she knew what my terms were and therefore i was liable for the debt.

I was further told that by my silence i had accepted the offer made.

It was at that point i disclosed my legal background and gave this woman the biggest lecture she had ever received on Contract Law.I explained that her assertion that by my doing nothing i had accepted a new contract was nonsense. I told her in contract you need to first off know the offer that is being made, the terms need to be clear and then if you are accepting an offer it must be by communicated acceptance. So if i didnt know about the offer how the hell could it be accepted.  She then said that she didnt know what the terms of my contract were, wait a minute, a while ago she said that she knew all of the terms now she doesnt? sounds like an attempt to mislead here.

She ended the call darn quickly once she knew who i was and what my legal background was.


Anyway, today i receive a nice email apologising for the inconvenience and closing my account. How nice of them. In my view it is the right conclusion but the way it came about was demonstrably wrong and totally unacceptable.



Debt collection industry faces “perfect storm”

Debt collection industry faces “perfect storm”.

I have just read the ab0ve article on Credit today. Anyone who knows me, will know i have been saying for a long long time that the debt purchase / collection industry is headed for a real problem if it didnt change and do it quickly.

The stories which i hear from clients are of agressive tactics which simply demand unmanageable amounts of money and do not stop to take stock of the debtors circumstances. The old saying you cannot get blood out of a stone springs to mind.

Now in my view, notwithstanding the fact that most regulated consumer credit agreements can be made subject of a time order under s129 of the Consumer Credit Act 1974 (as amended), i do not see why debt collectors employ this inflexible approach. If a debtor doesnt have the money to pay what you ask then it becomes pointless demanding it anyway. What seems more logical is if the debt collector agrees to accept the sum that the debtor can pay. At least he is then recovering something and the debt is being paid and more importantly the debtor is not being harrassed unnecessarily.

In my opinion, it is more the fact that people when they get pushed into a corner come out fighting that is causing the debt industry problems. Many of these people find their way to my firm and then when an assessment of the facts is carried out, often the debt being pursued is found to be irrecoverable for numerous reasons.

What costs the debt purchase industry more,is in the cases i have been the fee earner on, is that they launch legal action without carrying out a full assessment of the case being taken to Court. Often the debt purchaser doesnt even have the credit agreement which under pins their claim and do not even know what clause of the agreement is said to have been breached. Often there is a s78(1) Consumer Credit Act request outstanding which prevents the creditor from getting a Court judgment and yet they still press on with fruitless and ultimately expensive litigation.

The debt industry really does need to stop and take a look at its self. In fact i told one DCA solicitors that the case they had just lost against me , i would have won, it was simply the fact that the Claimant had failed to carry out a proper assessment of the case and put right the errors. That failure cost them close to £30k.

I am quite surprised actually that the DCAs havent approached us to represent them, then again, im not sure i could.

Statutory Demands and Bankruptcy petitions

Ive dealt with a few cases lately where people have ignored statutory demands which have been served on them. It seems the reason for ignoring the demand is this mistaken belief that the debt pursuer would not proceed to a full blown petition.

The Office of Fair Trading (OFT) have placed numerous requirements on Consumer Credit Licence holders to ensure that they do not use statutory demands unless they truly intend to proceed to bankruptcy. So, NEVER ever take for granted that a statutory demand is a threat tool  or a bluff, unless of course you are prepared to be made bankrupt.

If you receive a stat demand, then my advice would be to seek legal advice. Statutory demands can be set aside if there are grounds to do so. If the debt is disputed for example then you may have a case to set the demand aside.

There is a wealth of help out there for people who receive these demands. This website has a helpful fact sheet which i have taken an extract from below


9. Setting aside a statutory demand
Someone has served me with a statutory
demand. What can I do if I disagree
with it?
Courts can set aside statutory demands but
will only do this if there is a genuine dispute
about whether the debt exists. A small
mistake in the statutory demand about the
amount owed will not make it invalid.
Within 18 days of the statutory demand
being served on you, or within 18 days of the
date of the first advertisement (if the demand
was advertised), you may apply to the court
for the statutory demand to be set aside. If
you live abroad, the time limit for applying to
set aside the demand is 22 days.
You must apply to the court where you would
present your own bankruptcy petition, using
Form 6.4 (the application) and Form 6.5 (the
witness statement). You can get these forms
from a legal stationer or The Insolvency
Service website
If the creditor who has filed the bankruptcy
petition is a Government department and the
statutory demand says that the petition will
be presented in the High Court, you should
apply to the High Court.
If the debt is subject to a judgment and the
statutory demand says that the petition will
be presented in the High Court, you should
apply to the High Court.
If the deadline for you to apply to have the
demand set aside has passed, you may
apply for an extension of time to a Judge in
the High Court or to a District Judge.
From the time you file the application to set
aside the statutory demand, the deadline for
you to comply with it stops running.
In Form 6.5 you must say:
• when the statutory demand was served;
• why you believe it should be set aside.
You must file a copy of the statutory demand
with Form 6.4 and Form 6.5.
On receiving your application, the court may:
• dismiss it, without giving notice to the
creditor if it believes there is no good
reason for setting aside the statutory
demand; or
• grant the application to set aside the
statutory demand.
If the court dismisses your application, then
the deadline for you to pay or secure the
debt, which was suspended, will restart. So if
there were 12 days to run when it was
suspended, there will be 12 days to run now.
If the application to set aside the statutory
demand is not dismissed immediately, the
court will fix a time for hearing the
application and give 5 business days’ notice
• you or your solicitor;
• the creditor; and
• whoever is named in the statutory
demand as the person you should contact
about the debt.
The court may grant the application to set
aside the statutory demand if:
• the debtor appears to have a counterclaim,
set-off or cross-demand that is the
same as, or more than, the amount that is
in the statutory demand; or
• the debt is disputed on grounds that the
court thinks are substantial; or
• it appears that the creditor holds some
security, such as a mortgage, that has not
been disclosed or the court is satisfied
that the value of any security is more than
or the same as the amount claimed; or
• the court is satisfied on other grounds that
the statutory demand should be set aside.
The court will only set aside the demand if
injustice to the debtor would occur if the
creditor presented a bankruptcy petition
for the debtor’s non-compliance with the
demand. So if the court believes there
would be no injustice to the debtor, it will
not set aside the demand.
The reason for which a bankruptcy petition
may be presented is that the debtor has not
complied with the terms of a statutory
Technical or factual defects in a statutory
demand will not necessarily mean that the
court will set it aside.
If the court dismisses the application to set
aside the statutory demand, it must make an
order authorising the creditor to present a
petition immediately or at a specified date.
Insolvency law does not specifically cover an
application by a company to set aside a
statutory demand. However, any person has
the right to defend legal proceedings, so a
company can apply to stop the process.
If the company has a valid defence to the
statutory demand, it can apply to the court to
stop the creditor presenting a winding-up
petition. Legal advice should be sought
before making application to the court.
If the company succeeds in its application to
stop the creditor presenting a winding–up
petition, the creditor will have to pay the
costs of the hearing

The forms you will need to set aside the demand can be accessed on this website

There is also a very helpful comment from the High Court in the case of Hammonds (a firm) v Pro Fit USA Ltd where Mr Justice Warren made it very clear that the insolvency service is not to be a tool for debt collectors to use and abuse. He said…


27. So far as disputed debts are concerned, the practice of the court is not to allow the insolvency regime to be used as a method of debt collection where there is a bona fide and substantial dispute as to the debt. Save in exceptional cases, the court will dismiss a petition based on such a debt (usually with an indemnity costs order against the petitioner)…………………………………………………

When talking about disputes, it really does need careful consideration and a properly prepared affidavit. There are firms out there who undertake drafting of these documents for a nominal fee and it would be a good idea really if you are not sure what to do, rather than to risk bankruptcy and the devastation that it causes, to seek proper advice and get the papers prepared professionally. It is also worth noting that if you successfully oppose a stat demand then the costs should be recoverable from the opponent. So in real terms, you recover your bill from the other side and it may not cost you anything if you use a lawyer.


Its ultimately the individuals decision, but ignoring a statutory demand or a bankruptcy petition is in my view NOT AN OPTION


Government Minister Philip Hammond… words fail me

I have just read the guardian article here

So its not the banks fault huh? well maybe he is right,  on Planet Hammond at least.

I have personally dealt with cases which would exceed £1 million pounds of debt, and i can say for certain that those cases were brought about by banks errors. For example, lenders lending £25,000 to a person whos income was less than the monthly repayment. The person was in desperation so yes while they should have had restraint and not borrowed, when the carrot is dangled in their face of course they are going to have a nibble.

Or how about the case where the lender tried to argue in court that the reason there was no signed credit agreement was because the credit card was taken out online? even though they had disclosed a letter confirming that they had forgotten to get the client to sign a credit agreement!!! must have missed that point. Of course the card taken out online was nonsense as the person never had a computer and was in real difficulty with their eyesight and of course when the agreement was supposedly entered into the law did not allow for Consumer Credit Agreements to be executed online.

Or how about the cases of Paul Walton and the Birches reported in the Guardian news paper.Ill find a link shortly and post it up as those stories make interesting reading. and heres the link

And what about the case of Santander v Mayhew which has recently been reported, bank failings lead to the Court finding that the lender could not recover its money.

Also how about the case of Keith Harrison where MBNA and Link were denied by the High Court the right to recover their money.

i could list cases all day where the banks are entirely culpable for their losses so i do question Mr Hammonds comments that the blame should be laid at the feet of the consumer. Maybe the lenders should learn how to lend responsibly first, and comply with the law, then they may well be able to take the moral high ground, til then, well you decide

The Consumer Action Group….

Just been looking at the Consumer Action Group website. I find it somewhat strange that they edit the name of the firm i work for and seem to remove any reference to the firm i work for, in fact any solicitors who do the work we do. Now i understand that this rule is so that the users get help on the forum and dont get rail roaded into going to lawyers, i get it. I also get that they want their users to avoid CMCs.

So heres what i dont get.

On the CAG website, it was plastered with links to Claims management companies offering to reclaim PPI!!! now that is clearly something that people can do themselves. They dont need a lawyer at all in most cases, unless they feel they need one of course. There are numerous free resources on the internet to do that.

There were also links to companies claiming to be able to write off your credit card debts. Now i happen to know a little about those type of things and can list tons of cases which ive won in court, and many many many more that have been won out of court.

It puzzles me that the Consumer Action Group would ban people from mentioning my firm, a firm who undertakes most of its representation under the terms of No Win No Fee agreements (Conditional Fee Agreements) and in most cases recovers the costs from the lender or debt purchaser who had brought the claim against the client yet it allows links to firms who charge excessive amounts of money. Surely if the users of these forums are in debt, the last thing  they need is to be facing links to firms that will charge them for services they could obtain themselves with a little guidance from the forum users. Furthermore, by refusing to allow links to firms like ours who fight for the consumers, it is denying the users of that arena the access to people who can assist them if they feel out of their depth and feel they need professional legal help.

Whats more, when you try to ask questions as to why they will not allow our firms name to appear, you dont get any reply. Oh well, not to worry i guess.

Harrison v Link Financial………..a year on

I was the fee earner responsible for the case which was described as a “landmark ruling” of Harrsion v Link Financail Limited in the High Court (Mold District Registry)

The case attracted widespread publicity and numerous press articles. Keith Harrison did indeed provide the BBC with a frank interview about his case which can be viewed here and contrary to some articles, there were more than just 18 telephone calls complained of in Court. In fact a telephone log of over 700 calls was exhibited in evidence. It was somewhat amusing to see MBNA trying to suggest they were not aware of the call log, as Mr Harrisons witness statement (extending to some 300 paragrpahs) made it very clear the issues and allegations made and interestingly MBNA sent its own solicitor Nicola Worden to give evidence in the case. I understand that Mrs Worden had been presented with Mr Harrisons statement before the hearing !!.

Anyway, little turns on them points, they are just really amusement value. The real issue is the way in which Keith Harrison was treated while he was in debt and the way in which the creditor / debt collector went about collecting or trying to collect the debt.

Being in debt is not a crime, there is no debtors prison, and people who are in debt do not deserve to be treated any differently because of the fact that they are in debt.

I see  and hear horrendous stories of people being pursued in outrageous ways by creditors and debt collectors and if the debt collection industry does not stop and take a long look in the mirror then i predict many more Keith Harrison style cases coming before the Courts.

Some examples of the unfair practices are

  • Calling debtors upto 10 times a day and demanding payments that the debtor simply cannot afford. If the debtor cannot pay whats being asked at 9 am then he sure as hell wont be able to at 10am and 11am etfc.
  • Sending poorly worded letters which mislead the debtor to believe that the creditor can take action when infact it cannot. For example i have seen letters suggesting the debt can be secured against the debtors home without first explaining that a County Court judgment would be needed, then an application for a charging order would be necessary and even then there is no guarantee that the Court will grant it.
  • Asking debtors to borrow money to pay a debt. It is against OFT Guidance to coerce a debtor to make further borrowings.
  • Chasing a debt that isnt even owed. I speak from personal experience here, i was aggressively pursued for a debt that didnt even exist. I had settled my bank account and closed it, so i thought at least. I then start getting letters threatening all manner of nasty things if i didnt pay. It took 6 months and a letter threatening press exposure before the debt collectors were called off!!!! WHY, the debt didnt even exist so how can that be so hard to accept.
  • Failing to comply with a statutory duty- as can be seen from Harrison, MBNA and link made numerous failures and had only managed to comply with s78 Consumer Credit Act on the DAY OF THE TRIAL!!. Link and MBNA are not the only ones though, there are many many others who simply cannot get it right. This is a serious problem that the industry needs to think about carefully.

From my point of view, one thing that i have never been able to work out, is why debt collectors are soo agressive in their approach. If a person only has £2.50 to pay then accept it, why is that so hard, i mean yes of course they want to recover the best amounts for their clients but at what cost? we have seen people driven to suicide by their debts, and from what i have seen in my time with the cases i have managed, i can see why as the way some companies pursue debts is something that i would liken to the Gestapo.

The old saying “you cant get blood out of a stone” springs to mind.

Now to clarify i dont seek to protect those who wont pay, only those who cant pay what is being demanded. I cannot see why the creditors and the debt collectors insist on suing people who are in the cant pay catergory as all litigation does is add costs add expense and add to the debt that the debtor already cannot pay.

It seems to me however that the lessons from Harrison have not been learnt and i really do see more High Court challenges arising out of the manner in which these creditors seek to recover their monies.