Dissecting the Manchester Test Case....

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Where to start PriorityOne.

The first feeling I had after reading the judgement was that the Judge had ridden a coach and horses through the Act and overturned some of the foundations laid down by several Law Lords in earlier appeals.

I have read quite a few cases relating to the consumer Credit Act 1974 mainly the ones that have gone to appeal and almost without exception the Law Lords point out how difficult the Act is to interpret in parts. Now it may be that the Wilson cases are not the best examples to use in this

thread since it involves a pawn.

 

Another observation is that it is a pity that the claimants were pretty naive and seemed to have very little knowledge of the Consumer Credit Act to challenge some of the Judge's observations. And having the OFT involved-apparently on our side-may not have been to our advantage.

Had there been some Caggers there for example to point out to the Judge more pertinent reasons why the Act should not be weakened the final reasoning may have been different.

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At least the Judge was able to insist that under S.78 the address had to be included despite opposition from the banks that this was unnecessary.

Judge Waksman did make the point that the debtor would obviously know their address, but missed the point that by including the address did help to confirm that a DCA in particular was pursuing the right person or not. Something that was not raised by the claimants in this case because they were just chancing their arms rather than having been hassled by any number of DCAs and often wrongly as quite a few have been on this site.

 

Another surprising omission [well perhaps not that surprising given the quality of the people opposing the banks] was they scarcely mentioned that PPI was a factor in asking for the executed agreement. Justice Waksman did mention McGinn v Grangewood so at least he had read it, but failed to pick up how contentious the "Amount of Credit" can be on

agreements when PPI is included. That alone can render an agreement totally unenforceable and why the original agreement does need to be produced when the banks are the Claimants.

 

The Judge also seems to think that just because the agreement was drafted by lawyers that it follows they were lawfully drafted and thus fishing expeditions were not going to produce much. This is not the case,

especially when the amenments came into force in 2006 and companies were still issuing contracts that were drawn up to comply with the 1974 Act. Do we honestly think that any bank is going to admit now what they did then? They will provide details of what a reconstituted agreement would be like

AFTER they had redrafted the 2006 agreements to be compliant. This may also be a reason why they do not want to produce some originals because they know they are permanently unenforceable. Far better to produce nothing and while it may be unenforceable, it is not permanent and it appears they can still pursue us for the debt [as long as is not enforcing- WTF? ] and inform the CRAs.

 

Noone, not even the Judge seems to have picked up on the situation where the T&Cs had been sent in response to an S.78 request, purportedly the originals, yet it was obvious from the charges involved that the T&Cs were from a much later time. Was this a genuine mistake or some kind of attempt to hoodwink the debtor?

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Interesting [or worrying] that the OFT are more certain that creditors should take care about "enforcement" when they lack the executed agreement, than the Court.

Perhaps it is time to have a debate on what the CCA meant by enforecement.

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C'mon Paul-don't keep us in suspense let us know what the lawyers are unhappy about.

[ Loads of respect for your continuing battle against RBS. Looks like it may be

coming to a successful conclusion soon. When you first started out with it, I was still at school and now i am getting a pension.]

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It is sometimes difficult to judge the timing of pronouncements by the OFT and therefore their significance in regard to the latest two cases. But I wonder if they are concerned that in Mcguffin v RBS the judge took the matters of what enforcement means so far from what the OFT [ and us] thought, that they felt they had to remind the financial institutions of the dangers they run should they not follow the OFT gudance. [i am thinking that the Court appears to give creditors a green light to issue default Notices and threaten legal action ].

 

It seems awfully easy to hoodwink these Judges. In the McGuffick case the Judge agrees with the bank submission -"Were it otherwise, as Mr Handyside pointed out, one would be left with the conundrum that the creditor could not apply to the court for an enforcement order under section 127(1), because to do so would amount to enforcement, not permitted by section 65(1)."

 

What conundrum?

65 Consequences of improper execution

(1) An improperly -executed regulated agreement is enforceable against the debtor or hirer on an order of the court only.

If there exists an improperly executed agreement the only way it can be resolved is in Court and there is no mention in 65 [1] that enforcement is or is not permitted!

In fact it is only when the creditor fails to comply with 77 to 79 and after the stipulated time when a default occurs that the creditor is not allowed to enforce. So there is no conundrum.

Sadly Judge Flaux falls for it and so does Judge Waksman

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In an earlier post I remarked at the poor quality of knowledge about the CCA

by the claimants. Here is another example of their ignorance in McGuffick v RBS-

79.

In contrast, the bank invited the court (as set out in the list of issues) to conclude not only that reporting to the CRAs did not amount to enforcement, but that a number of other activities did not constitute enforcement: (i) reporting to CRAs without also telling them that the agreement is currently unenforceable; (ii) disseminating or threatening to disseminate the claimant’s personal data in respect of the agreement to any third party; (iii) demanding payment from the claimant; (iv) issuing a default notice to the claimant; (v) threatening legal action and (vi) instructing a third party to demand payment or otherwise to seek to procure payment.

80.

So far as activities (iii) to (vi) are concerned, it was accepted on behalf of the claimant that these did not amount to enforcement or actions to enforce the agreement. That concession seems to me to be correct: at most these activities are steps preparatory to subsequent enforcement. Furthermore, in a recent decision, Rankine v American Express Services Europe Ltd [2009] CCLR 3, HHJ Simon Brown QC (sitting as a Deputy High Court Judge) concluded that the bringing of proceedings is only a step taken with a view to enforcement and not actually enforcement. It seems to me that that conclusion must be correct.

 

 

While I accept that a Default Notice is a necessary precursor to legal action, how in God's earth can the document itself not be described as

enforcement? The alleged debtor is confronted with a legal demand to pay

outstanding arrears within 14 days of receipt or face certain consequencies.

In addition, much of the wording is capitalised and some of it emboldened

for extra effect.

 

And what were the OFT doing there? They are supposed to oversee the Consumer Credit Act. They should have intervened there and then to put their view to the Judge.

[lookinforinfo]

Another scenario:

You're being taken to court by a DCA who hasn't got the OA...All they can produce is a copy of what they say you would have signed..."

 

However, clever little old you has kept the original copy but has never revealed their ace card...AC

 

It might depend on what you were contesting. If you were claiming unenforceability only through the lack of the OA, you would have surely shot yourself in the foot by producing your copy.

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Diddydicky, I note your contract is pre April2007. If it was signed shortly after March 2006 when the amended act came in, bear in mind that lots of offices continued using the 1974 type forms to use them up. This would render them unenforceable and is one reason why finance companies don't always produce agreements even when they have them.

 

But if they go for a reconstruct, you might throw in a suggestion that they might not have got their Acts together.

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Can anyone confirm that the document supplied is the document they are committed to rely on in Court?

Is this just the statement or does it include the Credit Agreement?

 

The statement refers to the financial statement that they send you in response to your CCA request.

The bit about being binding appears to be a bit of a joke since

if it is incorrect, the Court can simply ignore/reject it as stated in todays OFT guidance-they say it doesn't have to be accurate at all. I can't help feeling that that was not the intention of the drafter.

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Anybody fancies having a look at the OFT Guidelines in 5 SANCTIONS FOR NON-COMPLIANCE

 

5.2 says one thing but then 5.4 and 5.5 contradict

 

i.e. it is no problem to issue proceedings and it is not classed as enforcement but to threaten court action when knows cannot win is oppressive

 

 

It is not actually contradictory.

5.2 is laying out what Judge Waxman [ok maybe it was Judge Flaux] said in Court, while 5.4 and 5.5 are the OFT's thoughts on the matter.

 

What will be totally inequitable is if those decisions by the Judge go unchallenged and unchanged. They are completely at odds with the Act and the intentions of the drafter and Parliament.

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Yes I agree that it is "the OFTs thoughts on the matter" but the OFT is not the Court and does not make the law. In fact the OFT is there to abide by the law and the Act. And for example one of the rules I know is that

 

CPR Practice direction 16 para 7.3

 

7.3

 

Where a claim is based upon a written agreement:

 

(1) a copy of the contract or documents constituting the agreement should be attached to or served with the particulars of claim and the original(s) should be available at the hearing, and

 

 

 

 

And as far as I understand in the English language, "the original" does not mean a reconstituted copy made out of whatever somebody wants to allege if it is a true copy or not.

 

 

Going back to todays announcement by the OFT what they are saying there is regardless of what the recent judgements may be, they take the view that a company could put its Consumer Credit Licence in jeopardy by threatening legal action when in default of s.77-79.

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Don't shoot the messenger Nick.

All I did was distinguish between what the Court said and the OFT.

It would need to be something pretty fantastic for the OFT to remove the Consumer Licence from any major institution where so many people's jobs are at stake.

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No offence taken-I've been heckled by professionals.

 

I have read the Bill of Rights and know it hasn't been repealed.

 

Trouble is that in Court especially the HIgh Courts, Judges can interpret the Law almost any way they want-even introducing Common Law decisions into

the Consumer Credit Act. Perhaps Parliament will wake up and act if the OFT fall short after their fact finding survey of today. I don't hold out much hope though-our rights have been eroded so much since Blair became PM and Brown

is just as much a control freak as his predecessor.

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Here is 172 from the 1974 act. I think it clearly states that it refers to statements made by creditor or owner. The 2006 ammendments do refer to anual statements of accounts, but that is a recent addition and not included within the meaning of 172.

 

172.-(1) A statement by a creditor or owner is binding on statements by

him if given under- creditor or

owner to be

section 77(1), binding.

section 78(1),

section 79(1),

section 97(1),

section 107(1)©,

section 108(1)©, or

section 109(1)©.

(2) Where a trader-

(a) gives a customer a notice in compliance with section

103(1)(b), or

(b) gives a customer a notice under section 103(1) asserting

that the customer is not indebted to him under an

agreement,

the notice is binding on the trader.

(3) Where in proceedings before any court-

(a) it is sought to reply on a statement or notice given as

mentioned in subsection (1) or (2), and

(b) the statement or notice is shown to be incorrect,

the court may direct such relief (if any) to be given to, the

creditor or owner from the operation of subsection (1) or (2) as

appears to the court to be just.

 

I am obliged to you for showing the full transcript. My point was that it is pretty pointless saying it is binding, if the Court can then alter it. So how is the statement binding?

 

Here are the OFT's thoughts on it-taken from their recent request

survey-

3.4 By section 172(1) of the Act, a statement provided under sections

77(1), 78(1), 79(1) is binding on the creditor or owner. By virtue of section 113(1), a surety will also be able to rely on the binding nature of the statement as between the creditor or owner and the debtor or hirer.

However, if in court proceedings it is sought to rely on the statement and the statement is shown to be incorrect, the court may direct such relief (if any) is given to the creditor or owner from the operation of section 172(1) as appears to be just.

 

and here again

 

3.6 The OFT considers that, so long as the creditor or owner provides a statement representing the state of the account as held by it, there will be compliance and the agreement will remain enforceable even if the account turns out to be inaccurate as judged against the terms of the

agreement. The purpose of the obligation is to allow the debtor to understand what the creditor is stating is owed, a statement which the debtor can challenge, rather than requiring that the creditor or owner must provide a correct statement of the debt in fact due under the contract if the duty under these sections is to be satisfied. This is supported by the fact that the sections only require that the statement is made according to the information to which it is practicable for the

creditor or owner to refer. Further, section 172(1) provides that a

statement given under section 77 to 79 is binding on the creditor or owner. This provision would appear to be unnecessary if the duty under these sections required a statement correctly stating the amount contractually due, as opposed to a statement of what the creditor or

owner considers is due. Section 172(3) provides that where in court proceedings it is sought to rely upon a statement so given and the statement is shown to be incorrect, the court may direct such relief (if any) to be given to the creditor from the operation of section 172(1) as appears to the court to be just. If the agreement is unenforceable unless the statement was correct, this provision would also appear to be unnecessary.

 

I can accept that where a debt has been assigned that any payments made thereafter would perhaps be beyond the knowledge of the OC. However that should not prevent the OC from getting their own figures correct and confirming that the

totals are correct up until the account was passed on.

 

On the one hand, the Act is saying that a signed statement as a result of a s77-79 is binding. We then have the OFT saying that weeell the statement doesn't really have to be that accurate and the debtor can always challenge it and anyway the court can alter it too. So that's ok.

 

I suppose I am upset because I do have a statement that is wrong in my favour. However were it not possible to alter a

binding statement in Court, creditors could automatically understate the debt and thus increase the debtors liability.

[lookinforinfo]

That's how I read it also Shadow.

It is the OFT's take on it that surprises me. They appear to be saying that because the Court can amend the creditor's error, there is no need for the creditor to give an accurate statement.

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Remember, it is open season on LIP's.

 

As some Judges may have a downer on LIPs,[ though I haven't found that myself] it might be advantageous when filling out one's defence to declare that as a LIP you will be aiming to lay out your best possible defence exactly as you would have expected a barrister to do for you. Hopefully then that should get that objection out of the way.

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We mustn't forget that recent cases including Mcgufick were decided in the high court which does not set precedent and are subject to challenge....I assume this will be the case?PW

 

I don't think that is quite right Paul. I think the Mcguffick and Carey cases have set a precedent in the High Court. Other Judges in the High Courts will tend to go along with the decisions of the two previous judges if only to prevent confusion in future cases.

Judges in the High Court cannot now overrule Judge Waxmans

decisions [that can only be done by higher courts] but paradoxically they are not obliged to follow his decision. So by

explaining in which way their case is distinct from the Carey one,

a Judge could circumvent the earlier decision without appearing to overrule it.

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Sorry Angrycat, I was referring to High court judgements in general rather than Carey v HSBC in particular.

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The Mercantile Court is a division of the High Court.

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If that is the case, then you know much more than I do............

 

PS How many variations of McGuffick do you do?

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I was in court today for an application hearing and after giving the claimant a rinsing for failing to provide the documentation I've been asking for, for about 6 months the judge had a quick look at the agreement.

 

He turned to me and mentioned that although he wasn't up to speed on the case he reminded me that the recent Waksman case would have a bearing on any argument I raised as to the validity of the agreement.

 

Same thing happened to me and I just pointed out that the Waksman case inolved a situation where the debtor was taking the creditor to Court whereas here it was the other way round and the onus was therefore much more on the creditor to prove there was an agreement.

 

Think the Judge was a bit surprised when I came back like that so I confirmed that I had read the whole transcript.

[lookinforinfo]

It poses the question about the OFT as overseers of the Consumer Credit Act-

are THEY fit and proper? Quis custodiet ipsos custodes?

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Seriously fed up, Cartel do make a valid point though. It will make it extremely difficult for c/card companies in particular to amend their rates [or vary their T&Cs] if they cannot produce the original agreement. The flipside I suppose is that they cannot alter them down either.

 

Which raises a question to the experts.

If a financial institution wishes to alter its terms but does not have the original agreements of many of its clients, can it legally send out the amended T&Cs to those who it can include a copy of their agreement?

[lookinforinfo]

Probably better to point out what Justice Waksman said in relation to variations of the T&Cs.

 

Carey v HSBC

Final Summary

S 234 [4] If an agreement has been varied by the creditor under a unilateral power of variation, the creditor must still provide a copy of the original agreement, as well as the varied terms.

 

As you have never received a copy of your original agreement along with each variation of the contract, you are therefore only governed by their original T&Cs. In order to comply with your S 78 request it would obviously have to include a copy of their regulations when the agreement was signed. If they have increased their charges or interest rates in the meantime you should ask to be reimbursed the difference.

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What is the penalty for a creditor who does not send the original agreement along with the revised T&Cs?