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.
Many people seem to have the view that if their claim is allocated to the Small Claims Track (SCT) that they will be safe from costs being ordered against them if they lose. Im sorry to say that this couldn’t be further from the truth. I’ve heard clients say “its ok its a SCT case so i don’t need a lawyer as im not at risk of costs, am i?” the answer they get often surprises them!!.
Firstly, while the CPR part 27 does limit the costs that a Court can order, CPR rule 27.14(2)(g) allows the Court to make an order as to costs for circumstances where a party is deemed to have been unreasonable in their conduct. So if the Court finds against you and finds you have acted unreasonably, then the Court can aware costs of the litigation too.
Secondly, a case which is often forgotten is Shaw v Nine Regions which was a High Court Ruling which set down that if the contract contains a clause which entitles the Claimant to their costs incurred in recovering the debt, then that clause is in effect an indemnity costs term which ousts the SCT protection.
Many creditor have clauses which set out that they can recover their costs incurred in recovery of the debt including costs of litigation, creditors such as MBNA have these clauses in their contracts. If the contract has such a clause, then you could find yourself on a tilted playing field with the SCT.
I’ve seen cases where the debt of £3,000 has been followed by costs of over £20,000 in the SCT due to terms such as the ones referred to above. These cases were litigant in person cases, but none the less the cost orders were real, the consequences were real. If the opponent has a solicitor instructed, and has a clause in the contract which allows for costs, then for every hour that they are tied up dealing with your arguments about why this credit agreement is an application, or because you say that the creditor has to produce the original credit agreement to comply with s78(1) Consumer Credit Act 1974, just think they may be charging your case at rates up to £160 per hour plus VAT which you may end up being ordered to pay if you lose.
So before you think you’re safe in the SCT take a long look at the contract and make sure there’s no indemnity clauses, they are easily overlooked but can come back to haunt you.