The Trumpian alternative world of the NI Chancery court Judges v Consumer Credit Act 1974
THE TRUMPIAN ALTERNATIVE WORLD OF THE NI CHANCERY COURT
JUDGES V CONSUMER CREDIT ACT 1974
Introduction?
IN September 1968 the then British Labour Government set up a committee under the chairmanship of the late Lord Crowther to review the existing law and practice governing the provision of consumer credit and to make recommendations. Its report, Consumer Credit, was made to a Conservative Government and published in March 1971.’ It was not until September 1973 that specific reforms of the law were proposed by the Government and these were advanced in the Department of Trade and Industry’s White Paper, Reform of the Law on Consumer Credit.2 A Bill was introduced in the House of Commons on November 1,1973, and it was in its Committee stage when the general election of February 28, 11974, returned a Labour Government. The new Government promptly revived the Bill, slightly modified to take into account the deliberations of Standing Committee D on the first Bill as well as Labour’s preferences on a few relatively minor issues. This second Bill was introduced in the House of Lords on March 28, 1974, ultimately received the Royal Assent on July 31, 1974, and became the Consumer Credit Act 1974.4 It would be difficult to overstate the significance of the Act in the field of consumer protection. When fully operatives it repealed seven Acts entirely and parts of many others; 232 sections and 22 Schedules were discarded. It will be regulated all forms of provision of consumer credit and the licensing of consumer credit providers and those carrying on ancillary credit businesses. Professor Goode described the Act as “ probably the most advanced and certainly the most comprehensive code ever to be enacted in any country in the sphere of consumer credit.”?
An important part of the legislation was the introduction of sanctions for breaches of the rules. It is these sanctions which the Court appears to have ignored.
This paper has been written to highlight a grievous injustice reflected in the judgments of Chancery Court judges who appeared to be oblivious to these sanctions and are ignoring the legislation to the detriment of consumers.
The facts of the case have not been published and it is not clear how the learner judges arrived at their conclusions. Consequently, I have had to rely solely upon the history of the case as narrated to me by the litigant in person.
?The litigation is based upon the provision of a series of loans which were all less than ￡25,000.? The loans were made by the Presbyterian Mutual Society (PMS)? which was an unlicensed trader. the litigant in person (l)? alleged unfair relationship under section 140a of the consumer Credit Act which was introduced into legislation through the 2006 Enterprise Act
There was no time bar arising out of the statute of limitations because the credit agreements had not been repaid.? time only began to run when one of two events occurred -? the loans had been repaid? or litigation was taking place.
?On appeal from the Master’s Court, the Lord Justice dismissed the application without a hearing saying that there was no case.
The Consumer Credit Act Legislative framework
S8. Consumer credit agreements
58 Opportunity for withdrawal from prospective land mortgag
Form and content of agreements
(a) the rights and duties conferred or imposed on him by the agreement,
(b) the amount and rate of the total charge for credit (in the case of a consumer credit agreement),
(c) the protection and remedies available to him under this Act, and
?(d) any other matters which, in the opinion of the Secretary of State, it is desirable for him to know? ? about in connection with the agreement.
(2)Regulations under subsection (1) may in particular—
61 Signing of agreement
(1) A regulated agreement is not properly executed unless—
(a)a document in the prescribed form itself containing all the prescribed terms and conforming to regulations under section 60(1) is signed in the prescribed manner both by the debtor or hirer and by or on behalf of the creditor or owner, and
(b)the document embodies all the terms of the agreement, other than implied terms, and
(c)the document is, when presented or sent to the debtor or hirer for signature, in such a state that all its terms are readily legible.
(2)In addition, where the agreement is one to which section 58(1) applies, it is not properly executed unless—
(a)the requirements of section 58(1) were complied with, and
(b)the unexecuted agreement was sent, for his signature, to the debtor or hirer by post not less than seven days after a copy of it was given to him under section 58(1), and
(c)during the consideration period, the creditor or owner refrained from approaching the debtor or hirer (whether in person, by telephone or letter, or in any other way) except in response to a specific request made by the debtor or hirer after the beginning of the consideration period, and
(d)no notice of withdrawal by the debtor or hirer was received by the creditor or owner before the sending of the unexecuted agreement.
(3)In subsection (2)(c), " the consideration period" means the period beginning with the giving of the copy under section 58(1) and ending—
(a)at the expiry of seven days after the day on which the unexecuted agreement is sent, for his signature, to the debtor or hirer, or
(b)on its return by the debtor or hirer after signature by him,whichever first occurs.
(4)Where the debtor or hirer is a partnership or an unincorporated body of persons, subsection (1)(a) shall apply with the substitution for " by the debtor or hirer " of " by or on behalf of the debtor or hirer ".
62 Duty to supply copy of unexecuted agreement
(1)If the unexecuted agreement is presented personally to the debtor or hirer for his signature, but on the occasion when he signs it the document does not become an executed agreement, a copy of it, and of any other document referred to in it, must be there and then delivered to him.
(2)If the unexecuted agreement is sent to the debtor or hirer for his signature, a copy of it, and of any other document referred to in it, must be sent to him at the same time.
(3)A regulated agreement is not properly executed if the requirements of this section are not observed.
148 Agreement for services of unlicensed trader
(1)An agreement for the services of a person carrying on an ancillary credit business (the " trader "), if made when the trader was unlicensed, is enforceable against the other party (the " customer ") only where the Director has made an order under subsection (2) which applies to the agreement.
(2)The trader or his successor in title may apply to the Director for an order that agreements within subsection (1) are to be treated as if made when the trader was licensed.
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(3)Unless the Director determines to make an order under subsection (2) in accordance with the application, he shall, before determining the application, by notice—
(a)inform the trader, giving his reasons, that, as the case may be, he is minded to refuse the application, or to grant it in terms different from those applied for, describing them, and
(b)invite the trader to submit to the Director representations in support of his application in accordance with section 34.
(4)In determining whether or not to make an order under subsection (2) in respect of any period the Director shall consider, in addition to any other relevant factors.—
(a)how far, if at all, customers under agreements made by the trader during that period were prejudiced by the trader's conduct,
(b)whether or not the Director would have been likely to grant a licence covering that period on an application by the trader, and
(c)the degree of culpability for the failure to obtain a licence.
(5)If the Director thinks fit, he may in an order under subsection (2)—
(a)limit the order to specified agreements, or agreements of a specified description or made at a specified time;
(b)make the order conditional on the doing of specified acts by the trader.
127 Enforcement orders in cases of infringement
(1)In the case of an application for an enforcement order under—
(a)section 65(1) (improperly executed agreements), or
(b)section 105(7)(a) or (b) (improperly executed security instruments), or
(c)section 111(2) (failure to serve copy of notice on surety), or
(d)section 124(1) or (2) (taking of negotiable instrument in contravention of section 123),the court shall dismiss the application if, but (subject to subsections (3) and (4)) only if, it considers it just to do so having regard to—
(i)prejudice caused to any person by the contravention in question, and the degree of culpability for it; and
(ii)the powers conferred on the court by subsection (2) and sections 135 and 136.
(2)If it appears to the court just to do so, it may in an enforcement order reduce or discharge any sum payable by the debtor or hirer, or any surety, so as to compensate him for prejudice suffered as a result of the contravention in question.
(3)The court shall not make an enforcement order under section 65(1) if section 61(1)(a) (signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1)) itself containing all the prescribed terms of the agreement was signed by the debtor or hirer (whether or not in the prescribed manner).
(4)The court shall not make an enforcement order under section 65(1) in the case of a cancellable agreement if—
(a)a provision of section 62 or 63 was not complied with, and the creditor or owner did not give a copy of the executed agreement, and of any other document referred to in it, to the debtor or hirer before the commencement of the proceedings in which the order is sought, or
(b)section 64(1) was not complied with.
(5)Where an enforcement order is made in a case to which subsection (3) applies, the order may direct that the regulated agreement is to have effect as if it did not include a term omitted from the document signed by the debtor or hirer.
L alleges breaches of?
The case law
A summary of Dimond v Lovell (in respect of enforceability only)
The hire agreement which Mrs Dimond signed was a regulated hire agreement, which was not exempt
under section 189 (1) of the Consumer Credit Act 1974 - so it had to comply with the various requirements of the Consumer Credit Act 1974. In summary the agreement did not comply with section 60 (1) of the Consumer Credit Act, in that “all the prescribed terms” were not included (the amount of credit was excluded in the agreement”). Under s65 (1) of the Consumer Credit Act 1974, a non-compliant agreement shall be enforceable only “on an order of the court”. However, the breach in Dimond v Lovell was of such a type that the court did not have that power to enforce the agreement. This is because section 127 (3) of the Act (since repealed) states that the court shall not make an enforcement order in this type of a situation. So, Lord Hoffman,described the hire agreement as “irredeemably unenforceable”. The hire charges were not recoverable.
Dimond v Lovell was restricted to “irredeemably unenforceable” agreements only The hire agreement in Dimond v Lovell could not be enforced by way of any court order (pursuant to section 127 (3) of the Act, repealed by the Consumer Credit Act 2006). Dimond v Lovell was dealing with an “irredeemably unenforceable” agreement. Indeed, when one looks at the decision of Dimond v Lovell carefully, it is arguable that it only ever applied to “irredeemably unenforceable” agreements and not redeemably unenforceable agreements. Lord Hoffman stated, “The hiring agreement in this case did not and is therefore irredeemably unenforceable”.?
Extra judicial comment
“We have concluded our investigation and have decided that it [PMS] was conducting regulated activities without the necessary authorisation or exemption. However, on the basis of the information currently available to us, and applying the criteria in the Code for Crown Prosecutors, we have decided that it would not be right for us to take a case against any of those involved in running the PMS. However, we remain in touch with the administrator and, if further information comes to light relating to the issues we have investigated, we will look into it.”
6. Enforcement of agreements by unlicensed trader etc.
Omitted from 26 July 2013
?1 In section 40 of the 1974 Act (enforcement of regulated agreements made by unlicensed trader
"(1)A regulated agreement is not enforceable against the debtor or hirer by a person acting in the course of a consumer credit business or a consumer hire business (as the case may be) if that person is not licensed to carry on a consumer credit business or a consumer hire business (as the case may be) of a description which covers the enforcement of the agreement.”
(1A) Unless the OFT has made an order under subsection (2) which applies to the agreement, a regulated agreement is not enforceable against the debtor or hirer if -
In a similar case recently heard by a Chancery Master I am given to understand he vented his spleen at the litigant’s legal team using words such as “immoral”,”without foundation” etc.
THE QUESTIONS WHICH NEED TO BE ANSWERED
How have these two judges ruled in defiance of the regulations either under this provision or under the irredeemability provision?
Are decisions being decided on moral grounds instead of the legislation?
How can a Court ignore consumer protection legislation?
How can a court rule that the litigant has no case when the lender committed a criminal offence in making these loans?
Managing Director at GDP Partnership Limited and Clearpath Finance lImited
1 年are you appealing Ben ?