And s77-79 Consumer Credit Act 1974 is still causing the credit industry problems.

In May 2011 i took part in an interview with Ian Pollock from the BBC. Ian also interviewed Raymond Cox QC who is a leading expert on banking and finance law.

In that interview, i predicted that the banks were facing a big problem, Ray Cox QC also agreed with this view. Interestingly the Credit Services association Chief Exec Peter Wallwork was quoted as saying “Debt purchasers are not waking up and suddenly finding they have a problem on their hands,” and he apparently denied that lenders had a problem.

If that was correct, then it would be fair to say that i would be out of work by now, as plainly if the banks and creditors were not facing a problem then they wouldn’t lose in court, my firm wouldn’t win, and we would all be out of business. I’m sure that is the lenders wish, but sadly it isn’t whats happening.

On 4th March 2013 a Court heard a case involving a loan agreement. The agreement wasn’t that old, and the bank shouldn’t have had any problem producing a copy of the agreement, if of course their records were good and reliable. However, as was proven in Court before a Circuit Judge, their records fell down badly.

The Defendant made a request under s77(1) Consumer Credit Act 1974 for a copy of the loan agreement, it was a request made so that the Defendant could ascertain the terms of the agreement and to satisfy herself that the bank was entitled to take certain actions and to levy certain charges on to the account.

The first copy produced, was grotesquely illegible, it was ridiculous given that this was a bank who plainly knew what the law said about legibility, to make the point even the banks barrister said in court that no one could say this document was legible!!. It never ceases to amaze me that a bank would send out something which plainly could not be read, i mean what is the sense in doing that? what does it achieve? how does it assist anyone?

The bank then took legal action against the customer, despite failing to provide the documents which it was obliged to provide, and i pause for a moment to also point out that the bank also had a duty to provide documents under the Civil Procedure Rules Pre Action Protocols, so there was a double failing on the banks part.

I actually lost count of how many attempts the bank took at complying with what seemingly is a straight forward piece of legislation. If one reads the BBC interview you would think that the banks had no issues with complying with these s77 – 79 requests.

Everytime the bank sent a copy of the agreement, there were faults, faults so obvious Stevie Wonder on a galloping horse could have seen them clearly. I highlighted that the documents did not comply, yet this was seemingly ignored, in fact on one occasion the bank said, in the hope that a line can be drawn under this particular issue…… and they enclosed the same documents, with the same glaringly obvious errors.

When the case came to Court, the banks barrister ran a rather novel argument that the errors were errors which would have featured in the original signed agreement. The client recalled the document she signed and was adamant that what was produced wasnt it. Also, it seems to have escaped the bank that in running its argument that the errors were present in the original meant that the lawyers who drafted the contract must have been incompetent to write in these errors, further they were incompetent in not proof reading. Then, the printers also were incompetent in printing such a document with such glaring errors, and not proof reading, then, the bank and its agents must also have been incompetent as they sent out a credit agreement riddled with errors. And as the Judge who was alive to all the issues pointed out, no one at the bank had picked up on these errors for nearly 7 years until a customer of the bank pointed them out. Plausible? i think not, and the Judge agreed with that point of view, and dismissed the Claim.

But this isn’t the only case which i have dealt with that has fallen over on s77-79 Consumer Credit Act 1974. I dealt with a claim two weeks prior, where a large debt purchaser could not provide a true copy of the Defendants credit agreement. The judge on that case also dismissed the Claim and found for my client on all points taken.

Then there is the cases which don’t get to trial, many get abandoned when the creditors find they cannot comply with s77 – 79.

I remain of the view that the lenders have a headache facing them, certainly from the documents i see being put forward as “true copies” i am often able to find fault, whether it is a phone number that was not in use, or an address that wasn’t in use, or a rate of interest that wasn’t used until a year later or late payment charges which didn’t apply at the point the agreement was executed,the devil is in the detail.

I wonder if the credit services association would stand by their view some two years on or whether they will finally accept that lenders do have a problem.

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Our order “appealled” to the Judge

An interesting case came up recently which went to reinforce my view that if you are not sure of the arguable points in your case, or how to present them correctly in a Defence, then you should seek legal advice.

The case in question, as so many others do, involved a matter where a clients account had been purchased by a third-party who were seeking to recover the balance outstanding on a credit card account.

The matter ended with the Client being sued, there appeared to be a number of grounds of challenge in this matter, however due to the clients lack of understanding many of the key points were missed out of the Defence, instead there were a number of irrelevant quotes from cases which didn’t assist.

The case did not really get off the ground, as the Claimant applied for summary judgment and unfortunately for the client, they succeeded and judgment was granted. Thus leaving the client with not only the full balance now being payable but also costs, and a CCJ on the credit record.

At this point the client contacted us and we took the case on a CFA basis. We also found a barrister on a CFA also. We considered the judgment and identified a number of weaknesses within the judgment. We prepared the grounds of appeal and filed the appellants notice (Form N161) . We identified a number of points which the Client had not considered or had not argued correctly.

We drafted up a consent order which allowed the appeal by the consent of the parties, of course the appeal court needs to be satisfied that there is a good reason for allowing the appeal without hearing the parties as the Courts do not like to interfere with a judgment unless there are good grounds to do so but as long as there are grounds and neither of the parties isnt a child or under the Court of Protection then it should be straight forward.

There was a fair bit of tooing and froing between the parties, and eventually the parties agreed to the appeal being allowed by consent relying on CPR 52 PD52A Paragraph 6.4. All of the costs were paid by the opponent.

The Judgment should never have been granted, but the client simply was unable to present a convincing argument to the Judge and as a result the client lost. The Client was on a tilted playing field from the start as the barrister the Claimant sent was well versed in Consumer Credit Law but the Client wasnt, it was a case of the Claimant barrister had the Judge eating out of his hand while the Client was simply given short shrift.

The case was put back on an even keel and an amended Defence was prepared raising all of the keys issues which gave the client a chance at trial.

The key point here however is if you do feel out of your depth, you are merely going to cause yourself more problems if you go it alone. It costs nothing to get some advice and see if there are any firms willing to assist you on no win no fee.

At the end of the day, success can never be guaranteed, but with the right help, you can give yourself the best fighting chance available.

Restons Solicitors article on HFO Capital Limited v Wegmuller.

I was trawling the net the other day and i was fortunate (although Restons may disagree here) to find the Restons website.

I must say a nice looking site, however, its a pity about the Wegmuller report, because its wide of the mark. The author clearly has not given sufficient attention to the Judgment of Recorder Campbell.

In the case of HFO Capital Limited v Wegmuller, Mr Recorder Campbell considered the allegation by Mr Wegmuller that the Barclaycard agreement (subsequently  acquired by HFO)  he signed in the mid-1990’s failed to contain the prescribed terms and therefore did not comply with Section 61 of the CCA.  After making reference to “Carey v HSBC Plc” – in particular those passages which dealt with what the Act required the customer to sign – the Recorder noted the court had not been provided either with a copy of the original agreement nor a reconstitution of it.

That is entirely wrong. Before the Court were the following,

1) A copy of the signed application form.

2) Terms and conditions which clearly were provided with the card, in fact they stated that they were accompanying the card!!

3) a reconstitution of the agreement

None of which assist where the underlying agreement is unenforceable, clearly you cannot reconstitute to make a bad agreement good. As they say, you cannot polish a turd, if its a bad agreement, no amount of reconstituting can put it right!!!!

The problems with the case were not as the author of the Restons article suggests, and in fact i made an application to the Court prior to the hearing for an order that the Claimant do provide a reconstitution of the original agreement. The Claimant provided the disclosure, and the reconstituted agreement was entirely supportive of Mr Wegmullers views.

Although Mr Wegmuller actually acknowledged difficulty in recollecting exactly what he signed, the Recorder decided that in the absence of any direct evidence from either Barclaycard or HFO, as to account set up procedures/documentation, Section 61 compliance could not be proved.  Therefore the debt recovery claim brought by HFO was dismissed.

Ok, now its helpful to look at the Wegmuller ruling here.

14. I pause there for a moment. It is worth noting that none of those three terms is actually visible on the copy application form document in the bundle that was signed by the defendant on 25th March 1996.

Clearly Recorder Campbell found the prescribed terms were not on the application Mr Wegmuller signed. That was obvious, contrary to the authors assertion the agreement was before the Court, otherwise how did the recorder make such findings??

Worse was to follow as Mr Wegmuller had instructed a firm of solicitors who are well known for representing customers who wish to challenge their liability under  regulated agreements on the grounds of non CCA compliance.  That firm (and similar) will take comfort from this ruling – not least the award of costs made in their favour.

That Firm, what an amusing comment, it seems to be that they cant even bring themselves to mention our name, still anyone who reads the Wegmuller ruling will know who we are. I would also point out that every one is entitled to be legally represented, if the banks dont like losing money there is a solution, GET IT RIGHT- GET YOUR PAPERS IN ORDER and maybe even invest in lawyers who know about consumer credit law. On the point of costs, well yes, isnt it the case that costs follow the event? if the lender had won he would have wanted his costs surely? or would they be kind and say its ok dont bother paying? for goodness sakes , the mind really boggles. So yes, we won the case, yes we got paid, yes the client didnt have to pay his unenforceable debt and yes we were on a CFA so got an uplift.

Although perhaps a reflection of the quality of evidence before the Court in that particular case, the message is clear – when proceedings are defended, debt purchasers need to ensure that a litigation risk assessment is carried out on every “enforceability” case.  The reality is that for the purposes of both litigation and regulatory compliance they are an “extension” of the original lender.  Implementation of effective arrangements will ensure recoveries  are maximised and defeat/dissuade speculative and time-consuming challenges/defences.

With respect, i find it grossly insulting if the author is suggesting that Mr Wegmullers Defence was speculative. It was anything but. There were identified breaches of s61,62,63,78,86,87 Consumer credit Act. As for HFO Capitals Default notices one merely need read HFO Capital v Michael Burney which is on BAILII and can be found here
We have challenged that certain creditor before, and have at least 20 victories under our belts with them so if our defences are speculative the judges must clearly be missing something. As far as it goes, the failings were no the fault of our clients, they were the fault of the creditors and their stupidity in rushing off to court without making sure they had a case that was winnable. I have a wealth of rulings in the County Court and High Court also that supports the arguments i have used in cases such as Wegmuller, none of which can be called speculative.

On a closing point, i must remind myself of the words of the Vice Chancellor in the case of Wilson v First County Trust Ltd – [2001] 3 All ER 229 where Sir Andrew Morritt VC said

In effect, the creditor–by failing to ensure that he obtained a document signed by the debtor which contained all the prescribed terms–must (in the light of the provisions in ss 65(1) and 127(3) of the 1974 Act) be taken to have made a voluntary disposition, or gift,of the loan moneys to the debtor. The creditor had chosen to part with the moneys in circumstances in which it was never entitled to have them repaid;

It seems pretty clear that if a lender fails to jump through the hoops set down by the legislation then he deserves all the hassle he gets. Lets also not forget that many lenders DID Get it wrong over the last 20 years, and now their errors are coming to light to their detriment sadly.

my dear old dad vs Lloyds TSB

I never thought i would see the day when i had to give advice to my dad about the law relating to financial institutions let alone actually have to represent him but that day came recently.

I was talking to my dad about his loans that he had with Lloyds TSB and he happend to mention a letter that he had recieved from Lloyds which he came accross by accident while looking through his files.

What had happened was that dad was made redundant around February this year, fortunately his loan ended around the beginning of February. This much i was aware of.

However, what i was unaware of, was that Dad had gone into the branch of Lloyds TSB when he took out his loan, and the advisor told him that she strongly recommended that he took out the loan, there were witnesses fortunatley to this. My dad replied that he would only take out the PPI upon condition that it provided him with redundancy cover past his 65th birthday, with it being recorded that if it did not then he did not want it end of story. My dad explained that he was planning on working on until he was 68 or 69 so that his mortgage could be paid, and therefore any PPI needs to provide redundancy cover until he finished work.

He was assured that it did.

Anyway, dad found a letter from lloyds telling him that since he was 65 his ppi was no longer covering him.

To say i was very sad and had a sense of humour failure would be an understatement. So, off we went to Lloyds TSB customer services, dad gave me full authority to deal with the account too, so it was open season on Lloyds.

Not only had they missold dad PPI on this case, but on all his other loans going back years.
So, i got hold of Lloyds, set out clearly that this was an advised sale, despite them trying to say it was, the fact they said ” we strongly recommend you take this”  is clearly an advised sale. They also argued limitation, but sadly they lost that one too, as i argued that the misrepresentation made the relationship unfair and therefore, Patel v Patel [2009] EWHC 3264 (QB) (10 December 2009) clearly says that if the relationship is unfair within s140(a) CCA 1974, then the limitation period is 6 years from the end of the relationship. Sorry Lloyd’s TSB you lost again.
So, after an investigation, Lloyds decided to do the right thing and refunded my Dad all of his PPI with interest.

Very happy with that result.

Jones v Link Financail Limited

I often keep my finger on the pulse of High Court cases involving Link Financial Limited , especially after our victory against them in Harrison.

I came across a case today called Jones v Link. It was a very pleasing case indeed, as it torpedoes these debt purchasers who try to argue that they merely purchased the debt as an assignee and therefore the Consumer Credit Act does not apply to them.

Cabot were prime at doing this, as were Arrow Global, however the High Court has now ruled that the Assignee is the Creditor for litigation, therefore this “were not the creditor” argument is no more (unless there is a further Appeal of course in Jones)

So debt purchase companies, you do have to comply with the Consumer Credit Act, if a debtor makes a statutory request for a copy of the agreement under s78 CCA for example, and the agreement is live and not been terminated, then you cannot say you arent the creditor. And believe me, if you do on a case im involved with, ill slap a copy on Jones on the table quicker than you can say im not the creditor.

The case can be found here http://www.bailii.org/ew/cases/EWHC/QB/2012/2402.html

MBNA told today that the show must go on……..

I attended a Summary Judgment hearing today in a matter that has been rumbling on for a long long time.
It ought to have been listed for trial in the next few weeks but since the Claimant decided to chance their arm at seeking Judgment, the case now faces being allocated into the Multi Track.
Anyhow, the application was heard today and when i heard the Claimants submissions i remember thinking “why the hell have they even applied”. The case is crying out for a trial, the evidence needs testing, and i can say that there are holes in it the size of the channel tunnel in my opinion, and clearly this matter was not suitable for a part 24 app.
The Judge agreed, and was rather critical in his judgment too at one point pointing out that the costs awarded today equalled half of the sum claimed. From my side of the fence there was no way those costs could have been avoided, so its unfortunate but if a party wishes to make a part 24 application they should ensure that the evidence supports the application, unlike today when the Claimant tried to rely on a document which was newly introduced and which was equally as defective as the previous documents ( sorry i cant give away anything more at this stage). Laurel & Hardy anyone?

 

This matter will no doubt be off to trial in the near future and if we succeed on one of the points that are being run it will be very damaging and costly to MBNA by virtue of the card agreement they purchased from Bank of Scotland. I cannot say anything more for now, but will post up the judgment in the case once it has been heard.

 

Watch this space

Santander v Mayhew

Case No: 0XY3859

IN THE CLERKENWELL AND SHOREDITCH COUNTY COURT

Date: 08/03/2012

Before :

DISTRICT JUDGE MANNERS

– – – – – – – – – – – – – – – – – – – – –
Between :

SANTANDER CARDS (UK) LTD Claimant
– and –
DIANA MAYHEW Defendant
– – – – – – – – – – – – – – – – – – – – –
– – – – – – – – – – – – – – – – – – – – –
Karin Tampion (instructed by Howard Cohen) for the Claimant
Paul Brant (instructed by Watsons Solicitors of Llandudno) for the Defendant
Hearing date: 8th March 2012
– – – – – – – – – – – – – – – – – – – – –

JUDGMENT

1. This is a claim for the recovery of a debt accrued on a credit card.

2. The starting point here must be a reminder that this is a case where a major
commercial enterprise is seeking judgment against a consumer. It is true that the
underlying “merits” undoubtedly favour the Claimant but it is also true that it is
and was incumbent on Santander to get its tackle in order.

3. In April 2000 the Defendant went into Harrods and picked up an application
form for a Harrods store card. She filled in the form at home and sent it to GE
Capital Bank on 5th April 2000. Her application was successful and a card was
sent to her. The Defendant began to use the card.

4. The card was “upgraded” to a credit card in September 2003. The Defendant
was “selected” for the upgrade and an unsolicited card was sent to her in the
post. The Defendant voluntarily activated the card and thereafter used it to make
some small purchases and to transfer the outstanding balances from several
other cards.

5. In May 2009 GE Capital Bank became Santander Cards (UK) Limited, the
Claimant.

6. 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.

7. 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.

8. The Claimant brought this claim and it is for it to prove, on a balance of
probabilities that it is entitled to judgment for the sum claimed.

9. 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.

10. 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.

11. 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.

12. Was the 2003 upgrade valid? In September 2003 the Defendant’s card
was “upgraded” to a dual card meaning that it was now a storecard and a
Mastercard. The new card was sent unsolicited to the Defendant who needed to
sign and activate it before she used it. It was open to the Defendant to decline
the new card but she chose to activate it and use it. The new card had an
introductory rate of interest for transferred balances and using it would gather
loyalty points. The Defendant took advantage of both these features. The
Defendant says that the agreement changed from a restricted use debtor-creditorsupplier
agreement to being an unrestricted use debtor-creditor agreement and a
debtor-creditor-supplier agreement which amounts to a modification of the
agreement such that compliance with the requirements set out in regulation 7 of
the Consumer Credit (Agreements) Regulations 1983. Compliance with the
regulation requires a copy of the fresh agreement containing the relevant
prescribed information to be served on the debtor. The Claimant did not allege
that any such document was sent to the debtor. It was the Claimant’s case that
the new card was supplied under a credit token agreement which remained in
force and that there was no modification attracting regulation 7. In my judgment
the Claimant’s analysis is wrong and there was a modification of the agreement
requiring compliance with regulation7. The Claimant did not argue that it had
complied with the regulation.

13. Was the default notice valid? Under section 87 of the Consumer Credit Act
a default notice must be served before any termination or demand for earlier
payment. Section 88 of the Act provides that a default notice must be in the
prescribed form. The Claimant served a default notice by post of 12th October
2012. The Defendant says that the notice was defective because it gave the
wrong figure for the amount due and no OFT fact sheet was included. The
Claimant explains that the difference is the amount by which the Defendant’s
credit limit had been exceeded and that error was detrimental to the Claimant
rather than to the Defendant. It was the Claimant’s case that the OFT fact sheet
would have been included with the default notice and in the event that it was not
there was a clear statement at the end of the notice that the Defendant should
contact the Claimant so that the sheet could be sent. The Defendant denied
that the OFT fact sheet was sent with the default notice, stated that she did not
request the sheet and candidly admitted that she might not have read the whole
letter. No evidence was adduced before me actively saying the fact sheet had
been enclosed. The Claimant invited me to conclude that that the defects in the
default notice were de minimis but I do not agree. The whole point of a default
notice is that the debtor should know exactly what is owed and it is irrelevant
that any defect would be to the detriment of the creditor. I accept the evidence
of the Defendant that no OFT fact sheet was enclosed and words inviting her to
send for the missing sheet are not sufficient to remedy the defect of its absence.
It is unfortunately the case that many debtors in the position of the Defendant
in this case do not read to the end of letters thus the importance of documents
being enclosed.

14. The Defendant’s section 78 request In order to comply with section 78 the
creditor must provide a copy, reconstituted if necessary, of the terms and
conditions originally agreed between the parties and, if different, those in
force at the time of the request within 12 working days, the agreement is
unenforceable until the request has been complied with. On 17th November
2010 the Defendant made a section 78 request to Lewis Debt Recovery, a
chasing letter was sent on 6th January 2011 and a section 78 request was made
to the Claimant on 15th January. The request was replied to on 2nd February. The
Defendant sent an entirely disingenuous reply on 4th February alleging that she
had received information for the wrong account. She claimed that she needed
information for account 5413613010473940 not the information she had been
sent which related to account 6356505552255858. Her evidence was that she
had kept the original agreement and a moment’s checking would have revealed
to her that the 6356 number related to her original account. In my judgment the
Claimant complied with the section 78 request within the stipulated time and
is not prevented from enforcing this debt for non-compliance with a section 78
request.

15. It follows from what I have said above that the claim is dismissed. The claimant
must pay the Defendant’s costs to be subject to detailed assessment if not
agreed

Henrietta Manners
20th March 2012

Above is the Judgment of Judge Manners in Santander v Mayhew. It represents a very important ruling, especially for anyone with a Harrods, Debenhams, Marks & Spencers store card to name but a few. Yes it is only a County Court ruling but it accords with the view of the Office of Fair Trading, and also Goode Consumer Credit Law and Practice.

It is a very helpful judgment.

HFO Capital Limited vs………………..

At the beginning of this year, i faced off against HFO Capital Limited. I say “i” faced off, that isnt true entirely as i was merely the file handler. It was my client Mr Wegmuller who faced HFO.
The Court found in Mr Wegmullers favour, and the judgment is in the public domain already albeit in a limited capacity, however on reflection it is an important ruling and therefore i have decided to post the ruling on my blog.

 

IN THE BIRMINGHAM COUNTY COURT  Case No: 1QC52483

Priory Courts
33 Bull Street
Birmingham
B4 6DS

 
24th January 2012
BEFORE:

MR RECORDER CAMPBELL

BETWEEN:

HFO Capital Limited Claimant
-and-
Mr Roland Wegmuller Defendant

APPEARANCES:

For the Claimant: Miss Margiotta

(instructed by Turnbull Rutherford, London)

For the Defendant: Mr Turner

(instructed by Messrs Watsons Solicitors, Llandudno)
APPROVED JUDGMENT

Transcript provided by:
Posib, Y Gilfach, Ffordd y Pentre, Nercwys, Flintshire, CH7 4EL
Posib, DX26560 MOLD
Tel: 01352 757273
Fax: 01352 757252
No. of folios in transcript – Judgments: 59 / Proceedings: 62
No. of words in transcript – Judgments: 4280 / Proceedings: 4,441

JUDGMENT 24th January 2012

MR RECORDER CAMPBELL:
1. This is a claim brought by the claimant for monies allegedly owed by the defendant under a
credit agreement regulated by the Consumer Credit Act 1974. It is claimed that the credit
agreement was made between Barclaycard and the defendant in about June 2006. It
involved the provision of a credit card by Barclaycard to the defendant.
2. It is claimed that the debt was assigned from Barclaycard to the claimant and in this action
the claimant claims the principal sum of £7,246.06 plus contractual interest.
3. This has been listed before me as a one day Fast Track trial of the entire action. No doubt
it was allocated to the Fast Track because of the amount involved and the time estimate that
had initially been put forward by the parties. However, by the time that the papers were
fully prepared to trial and transferred overnight (last night) from Northampton County
Court to Birmingham County Court, it was clear to both parties, and indeed to me, that the
complexity of this case was such that if I were to try the entirety of the action, it would take
considerably more than one day.
4. Only this morning, I was provided with two lengthy, detailed and very helpful, skeleton
arguments, bundles of authorities running to over two hundred pages, and a bundle of
contractual and other documents running to nearly two hundred pages too. For that reason,
I was invited by the parties to try one preliminary issue today, namely the enforceability of
the credit agreement.
5. That invitation was extended to me on the grounds that if I were to try this preliminary
issue, it may mean the end of the case. Alternatively, it would enable the parties to take
stock and proceed further if so advised. So at the invitation of the parties, and because of
the clear lack of time, earlier today I agreed that I would try the preliminary issue of the
enforcement of the agreement.
6. It is the defendant’s case that this credit agreement is not enforceable on the grounds that
all of the prescribed terms within the meaning of the Consumer Credit Act 1974 were not
contained in the document signed by the defendant.
7. It is common ground that the only document signed by the defendant was a Barclaycard
application form signed with the date of 25th March 1996, to be found at page 41 of the trial
bundle. It is a very poor copy of the document and parts of it have been blacked out for
reasons that no one has been able to explain. Perhaps the other striking feature is that there
is no evidence before me from anyone, either from the claimant or Barclaycard of other
similar documents from the time for me to make a comparison, or any evidence of
Barclaycard’s system back in 1996. Miss Margiotta has rightly submitted to me that I
should not be too critical of the claimant in this regard and I should bear in mind how
difficult it is to obtain such evidence so many years after the event, and I have to say I have
some sympathy with Miss Margiotta in this respect particularly as she points out to me
these matters were only raised by way of criticism from the defendant relatively recently.
However, as against that, I have to deal with this matter on the evidence before me. In the
respects that I have identified that evidence is somewhat inadequate.
8. It is submitted by the defendant that if all of the prescribed terms are not contained in the
document itself, then that is fatal to the enforceability of the agreement, and it would not be
sufficient if, for example prescribed terms were sent a few weeks later with the credit card,
which is what the defendant suggests may have been the way that the terms and conditions
were provided. I therefore have to make a finding of fact on the balance of probability as
to whether the prescribed terms and conditions were contained in that document.
9. I have to make a finding of fact in the context of the relevant law, to which I have been
most helpfully referred by both counsel in this case by their informative skeleton
arguments and also by way of oral submissions. I turn to that law now.
10. I start at section 61 of the Consumer Credit Act 1974 that provides as follows:
“(1) A regulated agreement is not properly executed unless—
(a) a document in the prescribed form itself containing all the prescribed
terms and conforming to regulations under section 60(1) is signed in the
prescribed manner both by the debtor or hirer and by or on behalf of the
creditor or owner,”
And stress is laid there by the defendant on the need for the document itself to contain all
the prescribed terms.
11. I have been pointed to certain guidance on what is meant by the phrase “a document in the
prescribed form itself containing all the prescribed terms”, and I have been referred to the
case of Emma Carey v HSBC Bank [2009] EWHC 3417 and it is the judgment of His
Honour Judge Waksman QC, sitting as a Judge of the High Court in a case of first instance.
I am told by counsel, and I have no reason to suspect that this is wrong, that the principles
set out in that case have been followed in other subsequent cases, including cases of higher
authority. His Honour Judge Waksman QC said this in relation to the agreed principles in
this area (see paragraph 173):
“173. 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;

(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.”
At paragraph 174, His Honour Judge Waksman QC said:
“174. As a matter of law, those principles appear to me to be correct, in the context
of s61.”
12. So, what are the Prescribed Terms that must be contained in the document as so defined in
section 61(1)(a) of the Consumer Credit Act 1974 and in Carey?
13. I now turn to the Consumer Credit (Agreements) Regulations 1983. It is common ground
that these were the Regulations in force in relation to this credit agreement and set out in
Schedule 6 are various Prescribed Terms that must be included and the three relevant ones
here are under Clauses 3, 4 and 5:
“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
limit.
Rate of interest
4. Agreement for – A term stating the rate of any interest on the credit to be
provided under the agreement.
Repayments
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.
14. I pause there for a moment. It is worth noting that none of those three terms is actually
visible on the copy application form document in the bundle that was signed by the
defendant on 25th March 1996.
15. As to the effect of a failure to comply with those statutory obligations, I turn now to section
65(1) of the Consumer Credit Act 1974 that provides:
“An improperly-executed regulated agreement is enforceable against the debtor or
hirer on an order of the court only”.
16. However, it does not rest there because there was important additional statutory material on
this point that was in place in relation to this particular credit agreement (though since
repealed), because by Section 127(3) of the Consumer Credit Act 1974 it was provided
that:
“The court shall not make an enforcement order under section 65(1) if section
61(1)(a) was not complied with unless a document, whether or not in the prescribed
form of complying with the regulations under section 60(1) itself containing all the
prescribed terms of the agreement was signed by the debtor or hirer whether or not
in the prescribed manner.”
17. In other words, the Court is precluded from making an order granting relief from the
infringement of the statutory conditions as to the enforceability if all of the prescribed
terms that I have identified above were not contained in the signed document itself.
18. So moving to the factual issue itself, I start briefly with a matter upon which I have
received some submissions, namely the burden of proof. In submissions the defendant
conceded that there was a prima facia case established by the claimant that there was a
credit agreement in place and therefore the evidential burden of proving the index factual
issue is upon the claimant. I was referred to a first instance case in the County Court of
HFO Services Limited v Kirit Patel. It was decided by His Honour Judge Platt on 20th May
2009. Of course, I accept that this is a first instance decision and is therefore only
persuasive. Nevertheless, I found the judgment of His Honour Judge Platt to be persuasive
in that way and I would wish to take the same approach.
19. His Honour Judge Platt said at paragraph 19:
“Therefore, in my judgment, when the defendant wishes to rely on section 65, several
consequences flow. First, it is not sufficient for him simply to allege that the
agreement is not properly executed. He must specify the particular breach or
breaches of the Regulation on which he relies. The burden of proving that the
agreement has been properly executed then rests with the claimant. It is his
obligation to put before the Court evidence which he considers sufficient to satisfy
the Court on this issue.”
20. Miss Margiotta on behalf of the claimant indicates that she has not had an opportunity to
consider or reflect upon the law in this area, because the above case was only produced by
the Defendant this morning, and she wishes to reserve her position. But she did indicate
also that she accepted that it was for the claimant to show the necessary factual matter on
the balance of probabilities.
21. On this factual issue, I have read and heard evidence on the claimant’s side of the case
from Mr Jonathan Titherley, who is a litigation paralegal for the claimant’s solicitors. I
have read his two statements and heard him give evidence. On the defendant’s side, I have
read the two witness statements of the defendant, Roland Wegmuller. I have also read
numerous documents, the principal ones being the application form signed by the
defendant on 25th March 1996 (to which I have already referred). Another document of
relevance is a current a blank standard form of Barclaycard’s terms and conditions put in
the bundle by the claimant, to be found at pages 43 and 44, and it is worth noting that on
that standard blank form, the relevant prescribed terms are included. Of course, the issue
for me is whether those terms and conditions were contained in the actual document that
was signed.
22. I have already observed that it is disappointing and makes it difficult for the Court without
further evidence from Barclaycard, and Mr Titherley says, and I entirely accept Mr
Titherley’s evidence, that his client asked for this information but for whatever reason, it
was not forthcoming, and therefore there are no similar documents of the time to compare
with this one. So although I accept Mr Titherley’s evidence generally, he was unable to
give any direct evidence on whether the application form actually contained the prescribed
forms, whether on the front, back or anywhere else.
23. Mr Wegmuller gave evidence on the matter. In his witness statement, he set out the
general circumstances in which he came to sign this agreement. He said that about six
months after he had come to the United Kingdom from Spain, he saw an advertisement in a
magazine and he recalled completing the document and posting it back to Barclaycard. He
said he recalled that the application was in the form of a glossy style fold-out pamphlet. In
his witness statement he said he recalled there was no other documentation with the
application form; certainly, there was no separate booklet of terms like those the claimant
has produced in the course of these proceedings.
24. Mr Wegmuller was honest enough to concede that he had certain difficulties with his
recollection of exactly what was on the form. This is perhaps not surprising given that he
was referring back to his recollection of some sixteen years ago, and it is true to say that
there were some slight fluctuations in his evidence that were quite properly referred to by
Miss Margiotta in her submissions. Nevertheless, his evidence taken as a whole, and that is
how I have to view it, was really to the effect that whilst he could not categorically say that
there were no further textual items on the document, either on the front or on the back, he
did not believe that there were significant additions to the document, and he did not believe
that there were the prescribed terms on the document for example on the back or in the
blacked-out spaces of it.
25. The impression that I formed of Mr Wegmuller was that he was a man who was doing his
best to give a truthful and accurate recollection of what he saw, and as I say, he conceded
that it would be difficult to be absolutely precise on that. But in general terms, I was
satisfied that he was a credible witness.
26. Miss Margiotta on behalf of the claimant has made a number of submissions to support her
proposition that on the balance of probabilities it is likely that the prescribed terms were on
the form. If I may summarise her submissions in particular those I regard as her strongest
ones.
27. Firstly, she submits that Barclaycard are and were a reputable large-scale organisation who
had in 1996 a legal department and a compliance department and therefore, in effect, it is
inherently unlikely that they would make the mistake of sending out an application form in
a magazine without the prescribed terms stipulated in the Regulations to which I have
referred, particularly as the Regulations has been in force for a number of years at that
time.
28. That is a perfectly proper point for Miss Margiotta to make. However, it seems to me that
it would be wrong for me to place too great a reliance upon that, particularly as one knows
that there have been numerous more recent examples where financial institutions of similar
size have on occasions made errors in terms of compliance with their financial services
obligations.
29. Secondly, and this is also a good and proper point to be made on behalf of the claimant, if
one actually looks at the form that was signed by Mr Wegmuller, difficult though it is to
make out, one part that is plain if one looks carefully, and Mr Wegmuller agreed this, is
that he did sign a caption stating that:
“This is a Credit Agreement regulated by the Consumer Credit Act 1974. Sign only
if you wish to be bound by the terms of the agreement.”
30. Miss Margiotta submits that this sentence having been signed by the defendant (and it is
not suggested by the defendant that he had difficulties with the English language, although
he is of course of Swiss nationality originally), the likelihood is that there would have been
“some” terms and conditions somewhere on that document otherwise he would not have
signed this. However, the mere fact that there may not have been such terms and
conditions on the face of the document may not necessarily have been a critical factor in
the decision whether or not to sign this application form. The evidence that he gave was
that what was at the forefront of his mind was obtaining a credit card, rather than the detail
of the terms and conditions, which of course is something of a two-edged sword.
31. In my judgment, those were the strongest submissions. However, I do not accept that
those factors are conclusive.
32. I am satisfied on the balance of probabilities that the application form signed by the
defendant did not contain the three prescribed terms to which I have referred, and I come to
that conclusion principally for these reasons.
33. Firstly, I look at the document itself; the application form. That is the best evidence that
the claimant has been able to provide in terms of the documentation. Quite simply, there is
no reference whatsoever to any of those three prescribed terms that are required. It is
submitted that I should infer that it is more probable than not that they would have been
there, either in the blacked-out areas or on the back. I am afraid there is quite simply
insufficient evidence to enable me to draw that inference. And I repeat that matters may
have been very different if further and better evidence had been produced, either from the
claimant or Barclaycard, as to what the position was back in 1996. We do not have that
evidence and I have to deal with the evidence that is before me.
34. The second real reason why I find in favour of the defendant on this issue is that in general
terms I accept his evidence as I have set out, and having heard him give evidence today I
found him to be a credible witness.
35. Mr Turner on behalf of the defendant made various other submissions associated with the
standard terms and conditions on the blank documention. I did not find those submissions
of such force as his others and they did not play a major part in my conclusion.
36. I am satisfied on the balance of probabilities that the requisite prescribed terms and
conditions were not contained in, on or together with the document that was signed by the
defendant, and therefore I conclude that this is a credit agreement that cannot be enforced.
37. Before I leave this matter, just for the avoidance of doubt and clarity, given that Miss
Margiotta has indicated, in a slightly equivocal submission, that she wishes to reserve
herself on the burden of proof, I hereby indicate that it would have made no difference to
my ultimate conclusion upon whom the burden of proof lay because the result would have
been the same in either event.
End of judgment

The Judgment speaks for itself, i need not say anything more about the case .

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