Return Of Goods / Consumer Credit

Question 1

What is key legislation?

Amended by?

Answer 1

Consumer Credit Act 1974

CCA 2006
Financial Services and Markets Act 2000

Question 2

What agreements are covered?

What did CCA 2006 do?

Answer 2

Consumer credit agreement or consumer hire agreement other than an exempt agreement

Removed the monetary limit on the amount of credit.
Previously 15k then increased to 25k in 1998

Now an agreement post 6th April 2008 is prima facie a regulated consumer credit agreement

Question 3

What is a consumer credit agreement

Answer 3

Agreement between individual (debtor) and any other person (creditor) by which the creditor provides the debtor with credit of any amount

Question 4

What is a consumer hire agreement?

Answer 4

Agreement by an individual (hirer) for the bail meant of goods to the hirer
- Not a hire-purchase agreement and must be capable of subsisting for more than 3 months

Question 5

What is the difference between conditional sale and hire-purchase agreement?

Answer 5

Under a conditional sale agreement the title to the goods remains with the seller until the purchase price is paid in fully by instalments, then the title passes automatically

Under a hire-purchase agreement some other condition must be fulfilled before title passes such as the payment of a final option fee.

Question 6

What agreements are exempt?

Under what statute?

Answer 6

Financial Services and Markets Act 2000, art 60C:

• mortgage contract
• MORE than 25k loan wholly/predominately for the purpose of the borrower’s business
• Less than 25k loaned wholly for the borrower’s business
• agreement made in connect with a business loan for goods/services between/within country outside UK

Question 7

What provision requires service of default notice:

What provision sets out what the content must be?
What should be included?

Answer 7

S.87 CCA 1974

S.88 CCA 1974

• nature of breach
• capable fo remedy
• Action needed to remedy and date must be taken by

Question 8

What does s.14 (1) CCA 2206 provide

Answer 8

Debtor has 14 days to comply with the default notice

Question 9

Brandon v American Express Services Europe LTD

Answer 9

Default notice should detail correct arrears figure and debtor should have 14 days to remedy the breach

Question 10

If debtor fails to remedy the breach within the prescribed time …

What does this trigger?

Answer 10

The Creditor is entitled to terminate the agreement

Failure to remedy the breach trigger the debt to become due and owing — giving the Creditor a cause of action

Question 11

Why is creditor entitled to ROG order?

Answer 11

Because debtor is a mere bailed of the goods and only lawfully in possession of the goods with the creditors’ consent which would have ended/be retracted upon the termination fo the agreement

Question 12

When do goods become protected?

What is the impact of this?

Answer 12

If Debtor has paid one-third or more of the total price of the goods

Total price = whole amount payable by the Debtor under the agreement including deposit all instalments and any option-to-purchase fee

Creditor must obtain court order before taking possession

Question 13

What is goods are not protected?

Answer 13

Creditor can seize the goods but still needs a court order (Unser s.92 CCA 1974) if it will need to enter the Debtor’s property to effect seizure

Question 14

Court’s powers under CCA 1974:

Answer 14

• ROG
• Suspended ROG
• Time order
• Directions for trial (if defended and appropriate)

Question 15

Suspended ROG:
The condition Under a SROG is for a monthly payment towards the ______ .

Why?

What must judge be satisfied of?

Answer 15

Whole debt (not CMI + separate towards arrears)

Because upon termination whole debt becomes due and owing, no MI under terminated agreement

Must be satisfied that the goods are in the possession or control of the Debtor

Question 16

Submissions if C seeking judgment for the arrears and Judge wants to adjourn whole money claim (till car sold)

Answer 16

Creditor entitled to arrears until date of termination because Debtor has had use of the goods for this period
The arrears have crystallised into a fixed figure at termination; this amount will not be affected
by the actual proceeds of any future sale of the goods. The Debtor will not be prejudiced by
judgment for this figure at this date.

Question 17

Statutory provision for time orders?

Answer 17

S.129 CCA 1974

Question 18

Under s.129 CCA 1974 what does court have the power to do?

Answer 18

Order payment by debtor of any sum owed under a regulated agreement by instalments, at such rate as the court (having regard to the means of the Debtor) considers reasonable

Question 19

When is the power exercisable by the judge?

Answer 19

Where it appears just to do so

Question 20

Time order can reschedule _____ and the amount of _______

Answer 20

1. The rate of repayment

2. Interest

Question 21

Generally court’s power does not extend to future payments due, what are the exceptions?

Answer 21

1. Accelerated payment clause stipulating all payment became due upon termination
2. Mortgage been granted as security for a loan and possession proceedings started
3. Hire-purchase and conditional sale power covers all payment would have been due had agreement not been terminated

Question 22

Key case re. Time Orders?

Answer 22

Souther and District Fianance Plc v Barnes

Question 23

What should court consider when granting a time order?

Points from Barnes

Answer 23

1. Where or not it is just to make it
   - Involves considering all the circumstances include D and C position
2. What instalments would be reasonable both in amount and their timing (considering D means)
3. Time order should normally only be made for specific period of time to address temporary financial difficulty

Other points from Barnes:

• Court can vary contractual interest rate
• If justice requires, Court should suspend any ROG order for so long as the terms of the time order are complied with

Question 24

Held from First National Bank v Syed

Answer 24

• court can only exercise power if it appears just to do so — which included considering creditor’s position:

If in the circumstances long history fo default and merely sporadic payments from D and in absence of any realistic rather than speculative prospect of improvement in the D’s finances ….

Not Just to make C accept (the minimal) instalments that D can afford

Question 25

What may Director of Fair Trading v First national Bank be relied on for?

How to oppose this?

Answer 25

Common to be relied upon to suggest no need for temporary financial difficulty for time order

Relates to post-judgment interest,
Comments orbiter
Nothing to suggest wider discretion re. ROG

Question 26

What does S.129A CCA 1974 state?

Answer 26

Prescribes that Debtor should give notice fo the application for a time order to Creditor and period of at least 14 days must have elapsed after the day on which he gave notice to the Creditor

Notice should detail details of proposals D is seeking

Question 27

Two defences in ROG matters

Answer 27

1. Something wrong with goods themselves (failed to comply with term of contract - express or implied via statute)
2. the agreement was improperly executed or the creditor has failed to fulfil legislative obligations

Question 28

Something wrong with goods:

1. Creditor jointly and severally liable with the _____
2. Creditor likely ____ by the supplies for any losses suffered, so will seek to ___ _____ as a ___ to the _____
3. If no defence previously filed court is unlikely to be …. So ….
4. To mitigate seek …

Answer 28

1. Supplier
2. Indemnified, add the supplier party proceedings
3. Able to deal with issues at first hearing, so directions for trial most probable outcome
4. Seek ROG still made, Debtor not owner of goods and Creditor entitled to return. MC can be adjourned.

Question 29

Which statute provisions govern requirements relating to form and content of agreement, signing of agreement and and sending copies of the unexecuted and then executed agreement to the Debtor

Answer 29

S. 60 -63 CCA 1974

Question 30

Unless the agreement is in the prescribed form, contains the prescribed terms and complies with the relevant Consumer Credit Regulations, the agreement may be found to be

Answer 30

“improperly-executed”.

Question 31

Implication of an improperly executed agreement is that …

Per section …

Answer 31

1. Agreement is enforceable against the debtor on by order of the court only
2. S.65 CCA 1974

Question 32

McGuffick v The Royal Bank of Scotland:

the Court was required to consider whether the unenforceability of an agreement extinguished the Creditor’s rights

‘Enforcement’ did not included the ____

Found that breaches in relation to s.77 & 78 were …

Answer 32

Issue of proceedings

Found that breaches in relation to s.77 & 78 were redeemable, whilst prevented a judgment being entered until the provisions were complied with, they do not prevent a claim being issued and upon compliance judgment being entered

Question 33

Wilson v First Country Trust Limited concluded that:

… the effect of unenforceability under section 65 is that the rights of the Creditor and corresponding liability or obligations of the Debtor do exist ___________________

Answer 33

exist but are unenforceable,

Question 34

Court will not be ______________ who seeks to rely on the minutiae of the CCA 1974 in order to prevent enforcement of regulated credit agreements.

Answer 34

supportive of a Debtor

Question 35

What documents should be in ROG bundle?

Answer 35

1. The agreement
2. Witness evidence (W/S or PofC)
3. Default notice
4. Termination notice
5. Statement of account

Question 36

What should you argue for if the Debtor attempts to defend the action by disputing the figures or the terms of the agreement?

Answer 36

Debtor remains only a bailed of the goods pursuant to the terms of the agreement

ROG should still be sought, MC adjourned as judge will likely adjourn and allocate to a track

Question 37

If time order made:
the Debtor retains the goods, and are treated as __________ of the goods under the terms of the agreement, notwithstanding that the agreement has been formally terminated

Answer 37

a “statutory bailee”

Question 38

Payment under a suspended ROG order is a monthly payment towards ________

Because upon termination the __________ become ___ and ____

Answer 38

The whole debt

Whole debt becomes due and owing

Question 39

If time order made, desirable for it to be made in conjunction with a _______ because ……

Answer 39

Suspended ROG order

Gives creditor leverage to ensure that terms of time order are complied with as if debtor defaults the suspended order automatically becomes enforceable

Question 40

Power to suspend section _______

Answer 40

135(1) CCA 1974

Question 41

What must a SRO specify

Answer 41

Date of first payment

Question 42

If Creditor seeking judgment on the arrears but judge wants to adjourn whole money claim

What would be submissions?

Answer 42

o Creditor is entitled to the arrears until date of termination because Debtor has had use of the goods for this period;
o Arrears have crystallised into a fixed figure following termination – amount will not be impacted by proceeds of any future sale of the goods. Debtor will not be prejudiced by judgement for arrears at earlier date

IF not … MC AG W/ LR

Question 43

If Creditor is seeking outright MJ and judge wants to subject to strike out provision

What are submissions to oppose

Answer 43

Can often be delays not only in recovering the vehicle but also in selling it.

Strike out provision not appropriate as there is a risk of money claim being struck out before possession and sale have completed

Then further court action would be required, causing additional costs and court time. In accordance with OO NOT to include strike out provision

Question 44

What does s. 92 enable creditor to do?

Answer 44

Enter the Debtor’s premises to recover their goods

without the need to apply to the Court for further leave to take enforcement action.

Question 45

Submissions if judge opposed making of s.92 order due to there being no evidence that Creditor being obstructive?

Answer 45

• Termination notice sent to the Debtor outlines that the Creditor’s permission for the Debtor to be in possession of the vehicle is withdrawn and that the Debtor should return the vehicle  Debtor has not done so
  Goods are a depreciating asset and expedient recovery of goods will assist in realising a better sale price for the vehicle – be to both parties benefit

Only have to come back to the court in the event that difficulties arise — In accordance with OO (save time and expense) to order now

Claimant will only exercise permission if they need to

Question 46

Submissions if judge wanted to attach strike out provision to s.92 order

Answer 46

Can be delays in recovering the vehicle

Not putting any time limit on will avoids the situation of having to apply for another court order for s.92 permission (saves court time, general expense – in accordance with OO)

Therefor avoiding extra delay which may result in the value of the goods depreciating asset, which would disadvantage both parties

Question 47

If Debtor seeks suspended order that creditor doesn’t consent to, what are submissions/considerations?

Answer 47

The Debtor’s ability to adhere to the proposed order;

how long the Creditor should have to wait for sums due under the agreement that was
entered into in good faith;

the previous contractual rate of payment;

that a time order ought only to be made due to the Debtor’s temporary financial difficulty and
should be for a specified period only;

whether a review of the matter would be helpful and/or necessary.

Question 48

COSTS:

If creditor seeking summary assessed costs and judge states only entitled to fixed costs - what are submissions?

Answer 48

1. Refer to CPR 44.6(2) = ‘party may recover fixed costs’ = Creditor only bound by fixed costs if they choose to limit themselves to this
2. Refer to clause in agreement and make submissions in line with CPR 44.5
3. If there is contractual entitlement but court refuses to assess — argued that denial will result in further proceedings being issues to recover and this would be waste of court time and resources (anti-OO)

Question 49

What are the three parts of fixed costs:

Answer 49

1. Issue fee (fee on CF)
2. Fixed commencement costs
3. Fixed judgment costs