I recently blogged about the issue of poor pleadings. Today i can give a working example.
I was instructed on a case where Lowell had issued proceedings for a debt. The pleadings were awful, they simply said “and the agreement was terminated”
Well we knew the Claim was based on breach of contract as it said so, and we know the agreement was alleged to have been terminated because it was pleaded, but how was the question that needed answering.
Nowhere within the pleading did it mention a Default notice or a s98A notice, no where did it say that the debtor failed to remedy the breach and the agreement was terminated, no where did it give the date of termination etc.
The editors of Goode are very clear that default notices must be pleaded along with the date of the notice and the date of termination. The Court of Appeal in PRA v Doyle also emphasised the importance of a Default notice not just for pleadings but because it is part of the cause of action and therefore cannot be overlooked.
The Claim was poor, so rather than file a Defence and run the case to trial we instead lodged a summary judgment application. This application has been successful in bringing the case to an end.
Also, when the application was lodged Lowells tried to adduce evidence to support their case, sadly they didnt read through it before lodging it with us, because the evidence said that a default notice was served in 2010, so even if they were right, limitation expired in 2016 and their claim came about in 2019, whoops.
I will be using this approach from here on with any case where a default notice is required but not served or more crucially not pleaded.
Im sorry to bang on about this point, but i am seeing hundreds of claims for breach of contract relating to a regulated consumer credit agreement, which make no mention of service of, or expiry of a Default notice, no mention of when the notice expired, no mention of when the agreement was terminated or the right to demand the full balance arose.
we know the editors of Goode Consumer Credit Law and Practice made it clear that a default notice must be pleaded. We know the Court of Appeal in Doyle made it clear the default notice is part of the cause of action. So why would you defend a claim to trial if there is no mention of a default notice?
The Court of Appeal said no notice then its a unarguable strike out!!. If the Default notice isnt mentioned in the pleadings then you cannot ask for a copy under CPR 31.14, if you ask under CPR 18 the chances are the lender wont have its house in order and wont be able to answer your questions, and at the end of the day why should you have to mess about correcting the errors of the claimant? Isnt it after all their job to plead their case?
I consider that a poorly pleaded claim shouldnt be allowed to fester any longer than needed, in my view the Court is right, a strike out is quite correct. Im hoping to be able to report a judgment on this shortly.
I was asked the question by a lawyer at another firm recently as they were unsure whether the creditor had to issue a default notice or not. There is no one size fits all answer to this question, it is often very fact specific and depends on the circumstances, however there are some times when a creditor will not need a default notice under s87 (1) Consumer Credit Act.
So, what are these circumstances, well they are often missed by consumers but i thought it would be worth listing one or two.
- A creditor does not need a Default notice if he is seeking to recover the outstanding balance due under a fixed sum fixed term loan when the loan agreement has come to an end due to the term expiring.
- The creditor does not need a default notice if he is seeking arrears only, arrears are due and payable in normal circumstances so a default notice is not needed.
- When the creditor wishes to terminate the agreement for non breach situations, such as the creditor is exiting the market place and wishes to terminate the credit agreement for a credit card, in those circumstances he may need a s98A Notice but not a default.
Consumers also miss the fact that while a Default notice is needed for any of the situations in s87(1) Consumer Credit Act 1974, they breach itself doesn’t always mean a failure to pay a specific sum, a creditor under a Hire purchase agreement for example will need to serve a Default notice if the debtor fails to insure the vehicle fully comprehensive, as this would be considered a breach too.
It is also very important not to overlook the guidance of the Court of Appeal in PRA Group v Doyle, the outcome of Doyle was disappointing obviously, but the case made it clear that a default notice is far more important than debt purchasers have thought. From now on, fail to plead a default notice if your claim relates to breach, and you’re failing to plead part of what the Court said was the cause of action and thus the Claim is left open to being struck out.
The best advice i can give to anyone with an issue surrounding their case and default notices is get some advice, these pesky little notices can be the difference between winning and losing, and are often overlooked. If in doubt, shout!!!