Unenforceability of Credit Card Debts- New Judgment

The_Eye_Of_Sauron

Just a quick heads-up. Reportedly, the Court of Appeal in the case of Phoenix v Kotecha (26 Jan) held in favour of the borrower when the finance company could not produce a photocopy or recreate via other means the original finance agreement with the correct interest rates in.

Under s.78 Consumer Credit Act, finance company must set out the actual, original terms and conditions of the agreement at the time it was made. It didn't in this case. Bearing in mind that a lot of companies who now hold these debts were never the original finance company, but have bought the debts, it may well be worth debtors checking out the interest rate terms if being sued. Likely that there will be other cases where the finance company can't properly produce a correct copy of the agreement- it has already been decided that they can recreate an agreement, even if they can't produce an exact photocopy of the original, but there will doubtless be errors in some cases.

No more information. It may well be that this case turns on its own facts, but as and when the law report is published it may be worth a read.

fermi

That's not one of pt2537's, is it? Just read 'elsewhere' that he's got some interesting results due?

fermi

fermi wrote: »

That's not one of pt2537's, is it? Just read 'elsewhere' that he's got some interesting results due?

Looks like it.....

http://www.legalbeagles.info/forums/showpost.php?p=194094&postcount=78

fermi

So.......................

Here.

PHOENIX RECOVERIES (UK) LTD SARL v DEVENDRA KOTECHA (2011)

CA (Civ Div) (Thorpe LJ, Lloyd LJ, Patten LJ) 26/1/2011

CONSUMER LAW
CONSUMER CREDIT : CREDIT CARDS : CREDITORS' POWERS AND DUTIES : REGULATED AGREEMENTS : CREDITOR'S COMPLIANCE WITH DEBTOR'S REQUEST FOR COPY OF REGULATED CREDIT AGREEMENT : ENTITLEMENT TO ENFORCE DEBT : CONSUMER CREDIT ACT 1974 : s.78(1) CONSUMER CREDIT ACT 1974 : s.78(6) CONSUMER CREDIT ACT 1974

A creditor had failed to satisfy a debtor's request under the Consumer Credit Act 1974 s.78(1) for a copy of a credit card agreement as it had not, on the evidence, included the original, actual terms and conditions in respect of interest rates then in force. The creditor was, accordingly, not entitled to proceed to enforce the debt under s.78(6).

The appellant (K) appealed against a decision of the judge allowing a claim by the respondent company (P) for amounts due under a credit card agreement. That agreement, which was regulated by the Consumer Credit Act 1974, had been entered into by K and a bank (B) in 1998. K was then issued with a credit card which he used extensively. B subsequently merged with another bank (H) and H took over B's credit card business. In 2007, K made a request under s.78(1) of the Act for a copy of the credit card agreement. H supplied an incomplete version and following K's further request it sent a copy of what it contended were the terms and conditions incorporated into the agreement. K disputed whether that version of the terms and conditions was correct. H later sent a default notice and issued proceedings against K, alleging that he was in breach of the agreement. H then assigned the claim to P, who was substituted as a party. K, then acting in person, defended the action on the ground that, because the s.78(1) request was not complied with, P could not enforce the agreement pursuant to s.78(6) of the Act. The judge found, on the balance of probabilities, that the appropriate records had been supplied by P. She therefore held that P had satisfied the s.78(1) request and that it was not precluded from enforcing the debt. K contended that there was no credible evidence that the documents set out as evidence by P were the same as those which had been used in the agreement between him and B. He submitted, inter alia, that a scanned copy of B's leaflet inviting him to apply for the credit card clearly set out an annual percentage rate (APR) of 9.9 per cent for balance transfers, reverting to 16.9 per cent after six months, and 18.7 per cent APR for cash withdrawals, whereas by contrast the terms and conditions given in evidence by P sent out in terms rates of 20.9 per cent APR for balance transfers and 22.8 per cent for cash withdrawals. It was accepted that that point had not been before the judge, although it was discernible from the papers.

HELD: Interest rates were a term of central importance in credit card agreements. There was a strong case that the interest charges which would have been specified in the terms and conditions when B and K made the agreement in 1998 were those in the leaflet and not those which appeared in P's evidence. Under s.78(1), a creditor was required to set out the actual, original terms and conditions of the agreement at the time it was made. In those circumstances, P had not proved that that obligation was satisfied, and it was therefore not entitled to progress to enforce the debt against K under s.78(6).

Appeal allowed
Counsel:
For the appellant: Kelly Pennifer
For the respondent: Guy Sims

Solicitors:
For the appellant: Watsons (Llandudno)
For the respondent: Weightmans LLP (Liverpool)

winner12

Hi Fermi
Have the flood gates opened then!!

fermi

winner12 wrote: »

Hi Fermi
Have the flood gates opened then!!

No. But it's certainly one in the eye for some creditors/DCAs who thought they could supply any old uncorroborated rubbish under a CCA request and get away with claiming that they had complied.

winner12

Yes
Thats nice to know not everyone wants to go down this route but most people are forced into it by unreasonable creditors and their DCA gools who like to think they can harass us into paying whatever they demand its been good reading followed it on another site too
Thanks

simon_the_poet

HI

Ys but unfortuately this would only be a temprary unenforceability under section 78.
The orriginal enforcement order(under section127) was not overturned, so all the creditor has to do is present a true copy of the agrement presented at the orriginal hearing.

Simon