I have found quite a few cases being litigated lately where the underlying debt arises out of an overdraft. The general approach that seems to be adopted when defending these claims seems to overlook section 140A Consumer Credit Act 1974.
I dealt with a case recently where Hoist Portfolio Holding 2 limited had purchased a debt that was made up of overdraft / bounced direct debit charges. The charges had created a cycle of debt, yet the advice given on one of the other forums that i dont get on was that a s79 CCA 1974 request should be made and there was some waffle about the fact there was no signed agreement meant that the debt was unenforceable…….. now back in the real world the advice given was utter nonsense.
So the client consulted me and after considering the facts of the case it was clear that there was an unfair relationship, the way the creditor had added the charges were clearly unfair, most were added when the debtor was waiting for funds to come in and despite requests the creditor refused to defer payment of the charges thus creating an ever increasing cycle.
So a Defence was drafted, and the Claim proceeded to trial. The Claimant seemed to bizarrely think that they couldn’t be touched by these charges. However s140B Consumer Credit Act is clear that the Court can make an order directing an assignee to repay monies even though the monies werent paid to them.
In addition, s140B(9) CCA 1974 also prescribes that where there is an allegation of unfairness, it is the opponent who carries the burden of proving the relationship is not unfair.
So, the matter came to trial, not only did the Claimant lose the Claim, they were ordered to repay all of the bank charges added to the account.
Section 140A is often overlooked, undervalued and it is a powerful provision. I used s140A back in 2010 when i took the Harrison v Link Financial case to the High Court when all the advice was to challenge the creditor under the Protection from Harassment Act 1997 i decided to use the CCA and the result speaks for itself. The provision of s140A covers a broad spectrum and im surprised that it isnt used more often to reclaim charges and to Defend proceedings.
Very little to say in this blog really, Hoist brought a claim, had no documents, couldnt provide any documents, a Defence was drafted on a fixed fee funding agreement, Claimant reviewed the Defence and decided that it lost its appetite for the litigation.
The Debt in question related to a bank account, we challenged them on the basis that the bank charges gave rise to an unfair relationship under s140A CCA 1974.
Hoist dont seem to have much of an appetite to fight cases where we are instructed. They never seem able to show the assignment (wonder why) and they never seem to want to test us in Court. Shame.
Two good results this week for the Consumer Team at Howlett Clarke, firstly 1st Credit were silly enough to go head to head with me and Tom Brennan, and as a result, lost in spectacular form, and also they faced my colleague Chris Chapman in another matter. The result was the same although they saw sense and discontinued that case before the inevitable happened.
In the case i dealt with, it involved a Halifax credit card account, which had been allegedly assigned to 1st Credit. There was no Default notice apart from a template, which in itself was plainly unhelpful to the Claim as it dated apparently three years before the default actually occured (Whoops) and also the dates on the notice meant that it at best only allowed 13 days assuming it was delivered on the day it was dated for the debtor to remedy the breach. Thus their best evidence sunk their case before it even touched the water.
They also provided illegible documents under s78(1) Consumer Credit Act 1974, but we didnt need to go that far, the Court was happy to dismiss the claim purely on the Default notice.
It is of course interesting to note that the Claimant tried to argue that there had been some kind of “contractual termination” ala Brandon v Amex, however what was quite telling of that argument was the fact that it was not
- Mentioned in the Claimants evidence
- Subject to any correspondence between the parties
Accordingly the Judge refused to allow the volte face by the Claimant and refused to allow them to depart from their pleadings.
The only down side of this case was the Court did not allow costs as it was a small claim and the Court did not feel that the Claimants conduct was so unreasonable to trigger CPR 27.14(2)(g)
However, we were able to make the case affordable, and are now looking at progressing fixed fees for small claims cases to make litigation and representation accessible to those even with small claims cases.