Lender cannot produce Default Notice

[pt2537]

In respect of time orders

 

They are useful, but notoriously difficult to obtain

 

This is what one of the leading texts for practitioners says

 

One of the most important powers given to the court is to make a time order under CCA

1974, s. 129. By s. 129(2), a time order provides for one or both of the following, as the court

considers just:

(a) the payment by the debtor or hirer or any surety of any sum owed under a regulated

agreement or a security by such instalments, payable at such times, as the court, having

regard to the means of the debtor or hirer and any surety, considers reasonable; and/or

(b) the remedy by the debtor or hirer of any breach of a regulated agreement (other than the

non-payment of money) within such period as the court may specify.

By CCA 1974, s. 130(2), in the case of a hire-purchase or conditional sale agreement only,

a time order may deal with sums which, although not payable by the debtor at the time

the order is made, would if the agreement continued in force, become payable under it

subsequently. A time order is not restricted to giving the debtor or hirer time to discharge his

or her obligations under the agreement, but may also alter those obligations, including future

obligations. The power to alter the terms of the agreement is similar to CCA 1974, s. 136, see

95.64

 

The debtor or hirer can apply for a time order in the following situations:

(a) following service of a default notice under CCA 1974, s. 87, a calling-in notice under

s. 76 or a termination notice under s. 98;

(b) following issue of proceedings by the creditor to enforce a regulated agreement, security,

or to recover possession; and

© following an application by the creditor for an enforcement order.

An application for a time order is made using Form N440 (see PD 7B, para. 3.1(2)).

In Southern and District Finance plc v Barnes (1995) 27 HLR 691 the following principles were laid

down: (1) When a time order is applied for, or a possession order is sought in respect of

land to which a regulated agreement applies, the court must first consider whether it is just to

make a time order. That will involve consideration of all the circumstances of the case and of

the position of the creditor as well as of the debtor. (2) When a time order is made, it should

normally be made for a stipulated period on account of temporary financial difficulty. If,

despite the giving of time, the debtor is unlikely to be able to resume payment of the total

indebtedness by at least the amount of the contractual instalments, no time order should be

made. In such circumstances it would be more equitable to allow the regulated agreement to

be enforced. (3) When a time order is made relating to non-payment of money: (a) the ‘sum

owed’ means every sum which is due and owing under the agreement, but where possession

proceedings have been brought by the creditor that will normally comprise the total

indebtedness; and (b) the court must consider what instalments would be reasonable both as

to amount and timing, having regard to the debtor’s means. (4) The court may include in a

time order any amendment of the agreement, which it considers just to both parties, and

which is a consequence of the order. If the rate of interest is amended, it is relevant that

smaller instalments will result both in a liability to pay interest on accumulated arrears and,

on the other hand, in an extended period of repayment. But to some extent the high rate of

interest usually payable under regulated agreements already takes account of the risk that

difficulties in repayment may occur. The practice of amending agreements (including

amendment so that no further interest is payable) was approved by the House of Lords in

Director General of Fair Trading v First National Bank plc [2001] UKHL 52, [2002] 1 AC 481. (5) If atime order is made when the sum owed is the whole outstanding balance due under the loan,

there will inevitably be consequences for the term of the loan or for the rate of interest or

both. (6) If justice requires the making of a time order, the court may suspend any possession

order that it also makes, so long as the terms of the time order are complied with.

 

[Guest]

Caro can i direct you to

 

KEith Harrison vs Link Financial Limited

 

Lloyds TSB bank Plc vs Simpson

 

Then please tell me the default notice argument is pointless. The first case is a High Court judgment so is binding upon the lower courts

 

It is also not, contrary to suggestions, easy to put right such a failing as a bad notice, it is more complicated than that.

 

HI

 

I know Harrison keeps being quoted regarding default notices but to be honest i cannot see the relevance. The judgement reflected the lack of an agrement and the abuse of the debtor by the creditor as far i can see. i know the judge commented on DNs but this was really just reiteating common knowledge as per the legislation, that agrements cannot be enforced on a bad DN but they can be remedied by a good one.

I have not read any other analysis of this judgement that gives the comments any more weight than this, in fact most dont even mention that section of the juidgment at all.

I would be interested in seeing the other judgement you mention though do you have a link is it available|?

 

Peter

Edited April 25, 2011 by caro
Removing edited text from quoted post

[caro]

 

Caro can i direct you to

 

KEith Harrison vs Link Financial Limited

 

Lloyds TSB bank Plc vs Simpson

 

Then please tell me the default notice argument is pointless. The first case is a High Court judgment so is binding upon the lower courts

 

It is also not, contrary to suggestions, easy to put right such a failing as a bad notice, it is more complicated than that.

 

I have seen Harrison v Link but not yet seen successful cases using that particular judgment. I am fully aware that High Court judgments are binding on the lower courts. No doubt in due we may see the difference this makes, but it's rather soon to know.

 

I'm afraid I'm not familiar with Lloyds TSB Bank v Simpson case. If you could direct me to the report on that case I will take a look. I have noticed you mention a case against LTSB but was under the impression that wasn't public yet so I'm assuming it can't be that one.

 

EDIT

 

For anyone interested in time orders sequenci's blog provides good information on them and how to apply. http://www.consumeractiongroup.co.uk/forum/entry.php?186-Time-orders-A-Guide-For-The-Rest-Of-Us

Edited April 25, 2011 by caro
Adding info

[Guest]

HI

Whilst the creditor would have the burden of proof against them, the problem with civil cases is that all judgements are made on the balance of probabilities. This means that the credit only has to prove that it was probable that the notice was sent.

It may be that as in Harrison you can convince the court that because you meticulously kept all your correspondence it would be unlikely (improbable) that you would have not kept the DN.

Unfortunately I have sent to many cases where the judge has just said,” no default notice so what another can be issued “and carried on.

To me when the judge in the Harrison case said;

“75.The notice of enforcement was a statutory pre-condition of enforcement. It was a bad notice and enforcement cannot be attempted in dependence upon it. However, bad notices can often be remedied by the service of good notices and I see no reason why that should not be so in respect of credit agreements.”

He confirmed that DNs can be remedied. Many times the first sentence of the above is quoted and the second bit is conveniently forgotten, I would not depend on the other side not knowing the full quotation. Really as said this small paragraph is the only mention of the DN issue, the judgment spanned over 15 pages In total, it was not an issue in my opinion merely an observation and if anything dismissed the importance of the DN. Personally I would not rely on it to support your case.

Having said all that I have seen cases where an ineffective notice has been used to put off proceedings. A lot can happen in the period where a creditor has to prepare a new notice, it can give you time to negotiate a payment or reach a compromise if successful.

In short I would say that if you are thinking that the default notice is going to somehow make the agreement unenforceable then you are mistaken, as said earlier the best you can hope for is a stay of execution. Regarding Time orders, I hear what PT says, but I would not totally discount the idea it depends on your circumstances, have a look at sequence’s excellent blog and there is a lot of information on line also. The CCA 2006 has amended a few of the details about the application process since the information included in this thread but the Seq,s blog will fill you in.

Regard

Peter

[alsodada]

Many thanks to Gaston Grimsdyke, postggj, pt2537, peterbard and caro. I greatly appreciate your input and comments. Bless.

[pt2537]

a bad notice cannot allow for enforcement, that is established

 

Litigation is about tactics. If you can manoeuvre your opponent into a position where he does not have the upper hand, where it is commercially non-viable to continue the claim, where he faces costs etc, then you will be able to bring him to the table in most cases and use this to negotiate.

 

A bad notice assists, why? well if the Claimant seeks to issue a new notice he has to amend his pleaded case!! costs follow the event so the Defendant is then entitled to the costs of amending his defence plus his LIP research costs etc. This can run to a couple of £k

 

So the Claimant may well be able to be manoeuvred into a position where he faces the OFT guidance on responsible lending, the prospects of costs etc and decides to accept a reduced offer of payment on a tomlin order

 

it has its advantages

 

However when you get to trial and the Claimant has not made good a bad notice, lest not forget some banks are arrogant and think their sh!t dont stink etc, so we have a trial then they ought to lose. This is the pattern it seems from the cases ive seen discussed with other fee earners

 

You can never have a one size fits all reply, this is the difficulty and i think that there are circumstances where you can defeat a claim with a bad notice and make it financially non viable for the claimant.