old CCJ mortgage shortfall now + CO - sb'ed? - dca adding yrs of backdated interest - is this legal?

[BradB]

On a calculation of interest that Lawsmiths have supplied that is what they have added,

6 years interest and that takes the total to 30k.

 

To me this does not seem correct as they have only owned the debt for 4 years and the OC has not added any interest past the judgement date.

 

Surely they can only charge interest for the period they have owned the debt and again can they claim for a period that they had the debt but had not substituted themselves as the claimant?

 

I have searched the web re National Home Loans Paragaon to see if they were regulated under CCA 1974

and found the following where it was raised about there interest rates and it does appear that they were covered by this act.

 

House of Commons Hansarrd Debates for 24 May 2002

 

24 May 2002 : Column 506

The second issue that I want to raise is the need to speed up the Government's consideration of reform of the Consumer Credit Act 1974.

In our general election manifesto, we rightly gave a commitment to tackle the activities of loan sharks.

 

We noted that the Act provided that a court, at a debtor's request, could consider whether a credit agreement was extortionate

and, if so, change its terms so that they were fair and reasonable.

Unfortunately, a series of cases has highlighted the fact that the law is deficient.

 

In the autumn,

consultation documents were published, which proposed the redefinition of the term "extortionate credit" in the 1974 Act;

the reduction of some of the qualifying barriers before cases could be considered by the courts;

and the introduction of a requirement for responsible lending.

 

The consultation period has closed and I understand that consideration is still under way at the Department of Trade and Industry and the Treasury.

I hope that my hon. Friend will pass on my concern that consideration of the issue should be accelerated.

 

My specific interest arose from the case of one of my constituents who took out a mortgage in the 1980s with National Home Loans Ltd.

—now part of Paragon Finance plc.

 

National Home Loans has had a somewhat turbulent career.

In the 1980s, it was one of the new type of mortgage lenders known as centralised lenders.

Such companies did not operate like traditional building societies or banks which take deposits to raise funds for their mortgage lending;

instead, they raised funds on the wholesale markets and lent money at a higher rate.

 

Many of those companies were especially exposed to the property recession of the late 1980s and early 1990s,

and that may explain some of the more recent actions of Paragon Finance in respect of the National Home Loans book.

 

The annual reports of Paragon Finance have alluded to the problem facing my constituent and several others.

The reports show that charging rates are much higher than those in the market,

and that reflects the overall profile of the company's home loan portfolio.

 

After a recent court case,

an article highlighted the fact that National Home Loans borrowers typically paid double the market interest rate.

Back in October, two sets of borrowers challenged the company's interest rate policy.

 

They did so because Paragon was seeking possession orders on their homes after they had fallen into arrears.

They tried to argue in the High Court and the Court of Appeal that the high interest rates applied by National Home Loans or Paragon

were extortionate under the terms of the Consumer Credit Act 1974 and unfair under the Unfair Contract Terms Act 1977.

 

Sadly, in those cases

—the cases of Nash and Staunton v. Paragon Finance

—the borrowers were unsuccessful in persuading the court to endorse their case.

The Court of Appeal decided that a lender's discretion as regards the way that it sets its interest rates,

although not completely unfettered, should only be restricted according to the terms of the 1974 Act in a very limited way;

and that crucial, very narrow, definition of the constraints on the lender's discretion meant that the two borrowers' arguments were struck down.

 

I have raised this issue in the House before, and the concerns that I voiced then were picked up by a law firm,

which recently highlighted to me a case of a client who is due very shortly to be evicted from their home by Paragon's solicitors.

 

The firm, in its preparation and its attempts to persuade the courts and Paragon Finance not to take such action,

called in expert evidence to examine how the rates that National Home Loans was charging compared with those charged by more than 100 more conventional mortgage lenders.

 

It concluded that although National Home Loans' rates had initially been very competitive, now they were traditionally 4 or 5 per cent.

higher than those charged by other lenders and, in some cases, were utterly out of line with the market.

 

I hope that hon.

Friends in the Department of Trade and Industry and the Treasury will accelerate the review of the Consumer Credit Act 1974 so that this bunch of loan sharks

—I can think of no other term to describe the way Paragon Finance has operated

—can be brought to book and vulnerable people who took out loans in the 1980s can have proper protection,

which I am sure those who initiated the 1974 Act expected it to offer.

 

It would be great if I could find a technical problem with the interest that has been charged

and get the debt back to £19k (which in all honesty is a lot easier to clear than 30k)

and teach these bully boys a lesson.

 

I have until the end of May to try and find a way of doing it.

 

All advice gratefully received.

Edited April 28, 2011 by BradB
Insert extra text

[BradB]

It's important to bear in mind that the rules surropunding interest-post judgment are complicated, and that much of the information posted above is specifically fordebts that are Consumer Credit Act regulated, this shortfall debt is unlikely to be regulated.

 

Both the cases of Duer v Frazer [2001] 1 All ER 249 and Patel v Singh [2002] EWCA 1938 state that enforcing a CCJ within six years is sufficient, anything longer than that shouldn't be. The problem lies with the type of action being taken; in Yorkshire Bank Finance v Mulhall [2008] EWCA Civ 55 it has held that there is NO time limit for a CO to be applied for.

 

You should certainly raise the argument of interest. In accordance with s24(2) Limitation Act 1980 only the last 6 years worth of interest can be claimed for.

 

Thanks for this.

If section s24(2) applies

then does s24(1) apply

(An action shall not be brought upon any judgment after the expiration of six years from the date on which the judgment became enforceable)?

 

If you read this literally then no action can be taken after six years!

Can anyone explain what section 2 actually means?

My charging order was allowed 16 years after the original ccj.

Thanks

[BradB]

I have spent the last couple of hours reading the following

 

http://www.bailii.org/ew/cases/EWHC/Comm/2008/801.html

and think I now understand (as quoted in item 3) that interest is only chargeable for 6 years.

 

Please correct me if I am wrong.

This case also throws some light on the 6 year rule for action and that a charging order is not classed as an action.

I do think that I may have an argument in as much as they have not tried to enforce this judgement since the attachment of earning hearing in 1995 but I will pursue this later on.

 

My initial question is still the same,

can the DCA add on 6 years interest when they have only owned the debt for 4 years and only substituted themselves with the courts in Dec 10.

 

I would think that legally they can only charge interest from Dec 10 but would welcome a view on this.

Many thanks

[paulwlton]

I can't see how they can claim interest retrospectively. You need to make a SDAR and specifically request the amounts which transfered.

[BradB]

Hi

Tried the SAR route with them before and not very forthcoming! Do not have 40 days available now but in the correspondance I have the first letter I received off them stated £15722.02 as the debt balance (2008). So in effect they have managed to double this debt in 3 years!

[nicklea]

The problem lies with the type of action being taken; in Yorkshire Bank Finance v Mulhall [2008] EWCA Civ 55 it has held that there is NO time limit for a CO to be applied for.

 

Just a tiny point but the citation is incorrect. It should be [2008] EWCA Civ 1156. The citation you give above is for a different case NatWest v Ashe where the bank didn't take any action at all for more than 12 years and was statute barred.

[BradB]

If section 24 1 of the Limitation Act 1980 states

- An action shall not be brought upon any judgment after the expiration of six years from the date on which the judgment became enforceable

- and section 38 1 (Interpretation) states

- In this Act, unless the context otherwise requires— “action” includes any proceeding in a court of law, including an ecclesiastical court - is a charging order not proceedings in a court of law?

[nicklea]

Hi, CCJ was granted 30th November 1994 and Co was granted 14th March 2011. I did question this at the hearing but it was still granted. Will the N244 just cover what I have asked (for interest to be stopped) or can I raise the whole issue again?

Thanks for your advice.

 

I've just gone back and seen this post you made earlier.

 

Can I as, did you have legal representation at that hearing?

 

You are correct in what you say, the CO should never have been made and, I would suggest, taht you do have grounds to get it set aside.

 

What sequenci says here about COs is not actually correct:-

 

The problem lies with the type of action being taken; in Yorkshire Bank Finance v Mulhall it has held that there is NO time limit for a CO to be applied for.

 

The above is wrong, what that case was actually about is that once there is a charging order, there is no time limit for requesting an order that the property be sold. Those are two different things altogether.

 

In that case, the bank got the CO within the time limit but didn't seek to get possession until much later.

 

However, your case is different in that they didn't apply for the CO in time. Also, depending on how your mortgage is worded it may be that they have in fact lost all security on the house altogether due to the case of National Westminster Bank Plc v Ashe [2008] EWCA Civ 55

 

I really would suggest that you might wish to speak to a solicitor that knows quite a bit about this area and is aware of these authorities.

[BradB]

Hi Nicklea, thanks for your response.

No I did not have legally representation at the Charging Order hearing,

I'm afraid I don't have the kind of money they wanted spare.

 

Since the hearing I have had an off the record chat with my father's solicitor and their best advice (and they are very good solicitors)

was to try and pay the order off, but at £30k this is not possible.

 

The price they were quoting to represent and re-open was between £1,500 - £2000 plus disbursements

- a bit out of my league I'm afraid so this is why I am trying to get as much information as possible before the end of May.

 

What is really annoying me is this is not a debt that I have incurred and refused to pay, not a loan, credit card, hp agreement or anything along those lines.

I had the misfortune of losing my home in the last recession and not have to stump up 30k to an unknown company in Luxembourg!!

 

Sorry for getting on my soapbox but it is really frustrating.

 

I have read the links you posted and plenty more but am still unable to find a judgement where the 6 year rule for applying a charging order has been upheld.

 

Have found some re interest and again wonder why my DCA have added on 6 years interest when they haven't even owned the debt for 6 years!

[nicklea]

ok, I've just got back in. I'll try and put a few things together for you tomorrow evening.

[BradB]

Thanks, any help is really appreciated.

[sequenci]

 

What sequenci says here about COs is not actually correct:-

 

 

Hey Nick, thanks for raising this. In that case my training is likely to be wrong, as I was referring to the training notes as I typed that. It looks like I need to raise this with them. I think you are likely to know who the training was with too. I may PM you for further help.

[BradB]

Hi, can I just ask again, does the N244 just cover what I have included on it (being interest that has been charged) or can I raise other issues at the hearing.

Thanks in advance.

[Dial Square]

I had a similar problem with Paragon in 2007.

I paid off my CCJ balance in full and received letters chasing for an extra £10,000 in contractual interest.

 

With the help of the CAB I sent an official complaint stating the following points:

 

--I believe that there are doubts about whether a creditor with an existing judgment is permitted to commence fresh proceedings for recovery of interest charged after judgment.

I understand that where a creditor wishes to claim contractual interest after judgment,

there are 2 methods available:(

1) Request an interlocutory judgment at the outset and include a specific claim for post-judgment interest to be assessed at a later date or

 

(2) Where the interest rate is fixed throughout the term of the loan, obtain a final judgment at the outset for the full amount owed under the agreement

 

.My information suggests that neither method was requested.

Section 35 of the County Courts Act 1984 states that 'It shall not be lawful for any plaintiff to divide any cause of action for the purpose of bringing two

or more actions in one or more of the county courts'.

 

As a result, a creditor who fails to obtain the correct form of judgment at the outset is precluded from taking further or separate proceedings

to recover that which s/he omitted to claim in the original action.

 

I would also argue that a second action could constitute an abuse of process,

due to the combined effect of CPR rules 7.3, 1.3 and 1.4 (2) (i).

 

Such an action falls to be struck out on application under CPR.3.4 (2) (b).

 

There was also an issue with lack of tranparancy regarding my case

where I would never have paid the debt off as they were charging more interest per month than I was actually paying.

 

The final response from them was that although they can charge this interest,

as a gesture of goodwill they have closed my account and no further funds will be due

 

.I'm not sure if this would help in your case but it might be worth looking into.

[BradB]

Hi dial square and thanks for this. This is exactly what I don't want to happen. Glad they didn't pursue it with you and I will note what you have said.

[BradB]

I have the original particulars of the claim and on the final page under the heading

 

AND THE PLAINTIFF CLAIMS:

 

1 £**,***.**

 

2 Interest pursuant to Section 35A of the Supreme Court Act 1981 from completion date of 7th January 1992 to the date of issue of this Writ at at the rate of 15% to April 1993 and thereafter at the rate of 8% to the date of issue in the total sum of £****.** and continuing at the daily rate of £3.24 from issue until judgement or sooner.

 

A photocopy of the judgement states a figure of £19k and does not mention any further interest.

 

Can anyone advise whether further interest should have been added please.

 

Thanks

[Dial Square]

No problem BradB.

They made my life hell for months

so any input I can give to help anyone else pleases me no end.

 

I got the impression that they don't want to take these cases of the extra added interest back to court (if they are legally entitled to)

as there's a chance they will lose which will set a precedent.

 

I told them in my official complaint that that due to their lack of transparency and lack of a legal basis to pursue the extra balance,

I considered my contract to have been settled.

 

The fact that they gave up at the first complaint lead me to believe that they don't want this going anywhere near the FOS either.

[Dial Square]

To add to my comments above, my case was an unsecured loan with Universal Credit which was taken over by Paragon but I still believe their behaviour to be unnaceptable and they know it. Hopefully you can use this information to challenge the CO.

[BradB]

Does anybody have any opinion on this? Thanks in advance.

[sequenci]

 

 

The above is wrong, what that case was actually about is that once there is a charging order, there is no time limit for requesting an order that the property be sold. Those are two different things altogether.

 

 

Hi Nick, sorry to raise this again, I'm just looking to seek further clarification after reading the Mulhall judgment. The parts highlighted confuse me a little:

 

23.

 

Lowsley v Forbes was taken to the House of Lords, where it was decided that on the making of a charging order, section 24(2) does limit the arrears of interest to be secured by the order to the last 6 years' interest, because the section is not cast in terms of limiting the recovery of interest by bringing an action: see [1999] AC 329. It was also held, however, that section 24(1), which is expressed in such terms, does not preclude the enforcement of a judgment debt by making a charging order although more than 6 years had passed (in that case, almost 12 years) since the date of the judgment. Lord Lloyd of Berwick, with whom all the other members of the House of Lords agreed, said on that point, at [1999] AC 342D, that:

 

""Action" in section 24(1) means a fresh action, and does not include proceedings by way of execution."

 

24.

 

Accordingly it did not apply to the making of a charging order or of what would now be a third party debt order. On the other hand he said that the more general wording of section 24(2), "no arrears of interest in respect of any judgment debt shall be recovered …" did not only apply to recovery of interest by a fresh action, but "limits recovery by way of execution on all judgments to a period of six years, including the judgment in this case": [1999] AC 343B. Thus, if a charging order is made more than 6 years after the date of the relevant judgment, it will secure arrears of interest on the judgment debt, but only for the period of 6 years up to the date of the charging order. It will also secure continuing interest, until the principal is paid, but that is a different matter.

 

25. Thus, the House of Lords held that no provision of the 1980 Act applies to the enforcement of a judgment debt by making a charging order, which may, accordingly, be made at any time while the judgment debt is outstanding, but it will not carry more than six years' arrears of interest to the date of the order. It was held in Ezekiel v Orakpo that the enforcement of a charging order was not affected by section 24(1), and that if the charging order were enforced all arrears of interest could be recovered, not merely 6 years' arrears, despite section 20(5) and section 24(2). The distinction in the present case is that more than 12 years have passed since the entry of the judgment and the making of the charging order. That makes no difference as regards section 24(1) or section 20(5), both of which have 6 year limits, but on Mr Stacey's submissions it brings section 20(1) into play. However, he rightly accepts that the language of section 20(1) is precisely comparable with that of section 20(5), so that, if the Court of Appeal's decision that full arrears of interest are recoverable notwithstanding section 20(5) is right, then the same must follow as regards the irrelevance of section 20(1) after 12 years have passed.

 

I would be greatful for your take on it as it seems to imply that once judgment is entered a charging order can be applied for at anytime - unless I'm missing something.

[BradB]

Thanks for this sequenci, I am reading through it and trying to understand it.

 

Can I just ask the following

 

Action in section 24(1) is defined in section 38 as any proceeding in a court of law, including an ecclesiastical court; surely a charging order would fall into this category? And if they use section 24(2) to limit the amount of interest then shouldn't I be aloud to use section 1 as a defence?

Thanks

[sequenci]

From what I understand, an application for a charging order is not regarded as 'action', it's regarded as 'execution' of the original judgment. To be honest, I find it all REALLY complicated and a real struggle to understand!

[BradB]

Thanks sequenci,

this now raises another question from me, sorry!

 

If a charging order is regarded as an execution then does RSC Order 46 Rule 2 come into play

( (1)A writ of execution to enforce a judgment or order may not issue without the permission of the court in the following cases, that is to say –

 

(a)where 6 years or more have elapsed since the date of the judgment or order

 

If it does then what form does the permission from the court come in,

is it verbal or does it have to be granted in writing?

 

Sorry about all the questions but I really do need to sort this out.

Thanks

[BradB]

Can anybody help with the question above, even if it's not the answer I want!

Thanks

[sequenci]

RSC Order 46 Rule 2 is High Court specific, and I think to do with the use of bailiffs, rather than any other form of action?