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.

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Consumer Credit Litigation

I was emailed a link to a website belonging to a firm of solicitors whom i am acquainted with via a number of successful litigations.

Their website can be found here http://turnbullrutherford.com/services-consumer-credit.asp

I note that they suggest a litigation review is necessary and they are entirely correct. Many creditors and their lawyers are quick to issue claims, but slow to check they have the evidence necessary to discharge the burden placed upon them by the litigation.

I have taken a quote direct from the website, as it is very Apt indeed.

Some common themes arising in defences to claims for monies owed under consumer credit agreements are whether:

  • A creditor has complied with its duties under section 78 of the Act to provide a copy
    of the credit agreement;
  • A compliant default notice has been served on the debtor under section 87 of the
    Act enabling the entire sum to be repayable immediately and permitting termination
    of the agreement;
  • The credit agreement was executed in compliance with the Act and contained
    all the prescribed terms at the time of the debtor signing the agreement;
  • There was mis-selling of PPI policies or whether the debtor can establish a
    claim under the newly introduced unfair relationship provisions.

And here’s why its very apt!!!!!

HFO Capital limited v Denis Robinson- The Claimant represented by Turnbull Rutherford Solicitors failed before Deputy District Judge Bradly to satisfy the Court that section 78(1) Consumer Credit Act 1974 had been complied with
HFO Capital Limited v Michael Burney- The Claimant represented by Turnbull Rutherford Solicitors failed to satisfy the District Judge that the Default notice was compliant with s87(1) Consumer Credit Act 1974. The Court ruling is on BAILII and can be found here http://www.bailii.org/ew/cases/Misc/2011/23.html

HFO Capital Limited v Roland Wegmuller- The Claimant represented by Turnbull Rutherford Solicitors failed to satisfy the Recorder Campbell at Birmingham County Court that the agreement contained the prescribed terms required by s61(1)(a) Consumer Credit Act 1974. I was the fee earner for this case too. The Judgment is here http://www.bailii.org/ew/cases/Misc/2012/19.html

So, yes, the above cases show that without a proper and adequate litigation review, it will be very costly if it goes wrong for the creditors, and quite rightly, if you bring a claim rife with errors, you deserve to be punished in costs when the Defendant exercises his or her right to a Defence and wins.

Hire purchase agreements and s90-92 Consumer Credit Act 1974

Over the past few months i have dealt with a number of hire purchase cases whereby the creditor has taken possession of protected goods upon a debtor breaching the terms of the agreement regulated by the Consumer Credit Act 1974.

Protected goods are goods that more than one third of the repayments due under the agreement have been paid. Where the debtor has paid more than the one third of the total repayments before repossession the creditor would need an order of the Court to be entitled to repossess the goods. It is worth visiting the relevant sections of the Consumer Credit Act

90 Retaking of protected hire-purchase etc. goods.

(1)At any time when—
(a)the debtor is in breach of a regulated hire-purchase or a regulated conditional sale agreement relating to goods, and
(b)the debtor has paid to the creditor one-third or more of the total price of the goods, and
(c)the property in the goods remains in the creditor,
the creditor is not entitled to recover possession of the goods from the debtor except on an order of the court.
(2)Where under a hire-purchase or conditional sale agreement the creditor is required to carry out any installation and the agreement specifies, as part of the total price, the amount to be paid in respect of the installation (the “installation charge ”) the reference in subsection (1)(b) to one-third of the total price shall be construed as a reference to the aggregate of the installation charge and one-third of the remainder of the total price.
(3)In a case where—
(a)subsection (1)(a) is satisfied, but not subsection (1)(b), and
(b)subsection (1)(b) was satisfied on a previous occasion in relation to an earlier agreement, being a regulated hire-purchase or regulated conditional sale agreement, between the same parties, and relating to any of the goods comprised in the later agreement (whether or not other goods were also included),
subsection (1) shall apply to the later agreement with the omission of paragraph (b).
(4)If the later agreement is a modifying agreement, subsection (3) shall apply with the substitution, for the second reference to the later agreement, of a reference to the modifying agreement.
(5)Subsection (1) shall not apply, or shall cease to apply, to an agreement if the debtor has terminated, or terminates, the agreement.
(6)Where subsection (1) applies to an agreement at the death of the debtor, it shall continue to apply (in relation to the possessor of the goods) until the grant of probate or administration, or (in Scotland) confirmation (on which the personal representative would fall to be treated as the debtor).
(7)Goods falling within this section are in this Act referred to as “protected goods ”.

91 Consequences of breach of s. 90.

If goods are recovered by the creditor in contravention of section 90—

(a)the regulated agreement, if not previous terminated, shall terminate, and
(b)the debtor shall be released from all liability under the agreement, and shall be entitled to recover from the creditor all sums paid by the debtor under the agreement.

92 Recovery of possession of goods or land.

(1)Except under an order of the court, the creditor or owner shall not be entitled to enter any premises to take possession of goods subject to a regulated hire-purchase agreement, regulated conditional sale agreement or regulated consumer hire agreement.
(2)At any time when the debtor is in breach of a regulated conditional sale agreement relating to land, the creditor is entitled to recover possession of the land from the debtor, or any person claiming under him, on an order of the court only.
(3)An entry in contravention of subsection (1) or (2) is actionable as a breach of statutory duty.

The above is pretty clear yes? so why do creditors get themselves caught out? well the difficulty Mr Creditor seems to have is, in the cases ive dealt with, they have tried to argue that the debtor returned the keys, thus consented to the repossession and therefore the one third rule et al is irrelevant.

However, while a debtor can indeed consent to enforcement under the act, when it comes to repossession of protected goods the consent must be “informed consent” and in the cases which i have dealt with, the consent was clearly not informed consent.

The Court of Appeal case of Chartered Trust v Pritcher makes it very clear that recovery of protected goods must be by informed consent. So what does this mean? In Pritcher, the debtor had not been made fully aware of his statutory rights before the vehicle was repossessed. Such as the right to keep the goods after more than one third of the repayments had been made and seek a time order from the Court. This right was not explained to Mr Pritcher and therefore his consent was not informed consent. While the Pritcher case was relevant to the Hire Purchase Act, the editors of Goode agreed that the case would apply to the provisions of s90  Consumer Credit Act .

Given the amount of defective Default notices that we see, there is no doubt that some lenders will face a real difficulty if they repo protected goods after one third of the repayments have been made without securing informed consent of the debtor. It is my view that a materially bad default which does not provide the debtor with statutory information required by the Consumer Credit Act could invalidate any consent that the debtor may have given, if he did so not fully aware of his rights.
I have already dealt with such a case where the client was entitled to a refund of all monies paid under the agreement because informed consent was not achieved.

MBNA told show must go on……..but gave up anyway

A follow up to my post last month on here.

MBNA were defeated on an application for summary judgment by my client who was represented by arguably one of the leading barristers in consumer law – Paul Brant of Oriel Chambers.

Well after the hearing, MBNA filed notice of discontinuance. The sceptic in me says they didnt want the issue about interest to come out at trial as it would be horrendously damaging but of course that is just my thoughts.

Anyway, im going to point out the interest issue here, so such is life 🙂

The client had a Bank of Scotland Credit card which was opened in 1994.

The terms of the original card provided that interest was simple interest. The terms did not provide an unfettered right to introduce new terms when the creditor felt like it.

The terms only provided a very narrow right to vary interest rates, but not the manner which interest was charged.

However, MBNA took over the card in around 2006, like they did with millions of others from the Bank of Scotland. So, MBNA without further thought it seems slapped new terms on the table and bound our client to them………or atleast they thought they did.

We disagreed. We pleaded that the Claimant was not entitled to compound interest and MBNA in their reply admitted that we were right bout the original terms of agreement, but it seemed MBNA were arguing they could vary the terms relying on their right to vary the RATE of interest.

We referred to Goode the leading authority on CCA work.

Paragraph 35.1 Goode Consumer Credit: Law and Practice refers when it is stated “Many variation clauses are drawn in very general terms, but the creditor should not assume that that these confer on him an unlimited power to alter the contract terms. A variation clause will, like the rest of the contract, be construed contra preferendem, and in the absence of clear language the court is unlikely to treat the clause as empowering the creditor to modify the contract in some fundamental manner outside the reasonable contemplation of the parties.’

Our view is that it is entirely correct, that the Creditor could not twist a clause to suit itself. Furthermore, the issue on compound interest has been to the Court of Appeal already in the matter of Armstrong v American Express. And in that case Amex had to reduce the balance from a compounded rate to a simple rate as their terms did not allow for compounded interest.

In our clients case, MBNA had been charging compounded interest over 6 years, so arguably there was a huge refund due our client which would of extinguished the debt in any event, that is certainly my own opinion.

Anyway, we will never know who was right and who was wrong…………