Well just had a claim form through the post. Property repossessed and sold in January 1995, claim submitted in April 2002. Original shortfall of 35,000 now 56,000 with interest. I have read all the info on this very helpful site, and have sent back defence form using 6 year CML code as my opening stance and also requesting full disclosure from lender. What I would like to know is when and how should I consider attempting settlement?

-- steve (cantsay@co.com), May 13, 2003

Answers

Steve,

You say that you have used the CML Code as a defence? Here is some info I have been given from a solicitor:

"The CML agreement should apply if the lender is a CML member and the lender didn't begin recovery action for the shortfall within the first six years following the sale of a property in possession. (subject to their exclusions) although this is no basis for defending the claim (although it could be added to any other defence that is made). However, I think that the point should be made to the creditor and to the CML at the same time, with a view to taking it to the Financial Ombudsman Service which can award compensation.

The defendant should file the acknowledgment of service (N9) indicating an intention to defend. This will then give him/her up to 28 days from the service of the claim to file a defence (N9B) or an admission with an offer (N9A)(if negotiations fail).

He/She should have received some form of 'notice before action', although if she/he didn't, it isn't a defence to the claim but only effects the costs that he/she could be held liable for. There are also issues of the premature issue of proceedings contrary to CPR 1 (overriding objective) and the Pre-action Protocol Practice Direction, although, as above, this will very rarely lead to the dismissal of a claim, rather a costs penalty on the claimant.

Other than complaining about the breach of the CML agreement, I think that the defendant needs to negotiate a settlement. It would certainly make sense to see what the defendant could borrow so he/she knows within what limits he/she can negotiate within, although he/she may find that the lender is not prepared to negotiate at this late stage.

It is particularly difficult where a claim has already been issued. The creditor must of course be able to prove the debt (full statement of a/c) and distinguish between interest and principal, but they can usually do this. Disclosure will of course get a full statement of account and the creditor could be ordered to make the interest/principal distinction.

Regarding disclosure, this is usually ordered as part of the case management directions. Where disclosure is ordered the court will set the time scale(s) that it considers appropriate, although I admit that I haven't specificially checked the CPR.

I think that he/she should immediately contact the creditor or solicitor and try to get their agreement to the action being stayed for the time being so that a full and final can be negotiated."

Steve, don't forget if you go down the settlement route to mark the letters "Without prejudice" and state that it is an offer made on an ex gratia basis, and it includes any possible tird party such as an insurance company. A few questions, when did the lender advise you of the sale price? Was your property undersold?

Hope this is of use.

Mark.

-- M Amos (idgroms@hotmail.com), May 13, 2003.

Thanks for the info, I have filed the N9B form already and also stated mis-selling of the MIG for counterclaim. Together with unreasonable time to sell property on, therefore pro-tracting interest accrual and underselling so got a few bits to lob at em.

I have found some great info about 12 for principal & 6 years with which to sue for interest. This implies the principal can only be claimed in this case, so there claim is invalid at the moment. Not that this will affect any eventual outcome of course :-)

Im loathe to negotiate settlement and would rather wait until court hearing, one interesting point being that they havent requested a court hearing yet. On the application it says without hearing, I presume this is another way for them to try for me to admit liability of the debt and provide I&E to the court rather than them. If that is their intention I have stuffed that for them by not admitting liability and filing defence.

At the end of the day I am in a pretty good position, I am self employed with only 7 weeks of guaranteed work left, I have no assets (I rent) and I would willingly go bankrupt if necessary just to give em the bird! lets seee........

good luck to anyone else in my position.

Steve

-- Steve (cantsay@co.com), May 13, 2003.

Steve,

As I understand it where more than 6 years have passed since sale the lender's lawyers say any counterclaim is time barred and the claim is struck out. However, you could try (if applicable) the following:

The defendant asserts that this counter claim is within time as the claimant, under s32(1)(b)Limitation Act 1980, deliberately concealed from the defendant the price obtained for the property by not contacting him for more than six years after the property was sold.

Also:

1. A borrower dose not 'buy' a MIG - s/he just pays for the lender to buy a MIG

2. As nothing is bought, there is no claim for misselling, but there could be a claim for misrepresentation regarding the terms of the mortgage,i.e. of the effect of a MIG (but this is very difficult to prove).

3. It doesn't matter that there is nothing in documentation stating that a borrower will be liable for a MIG payout - liability comes under subrogation under the old 1865 Act, although it has been described as both an equitable principle and a common law one!!

4. The issue of subrogation in insurance cases is nothing new or unique - it is well estabished.

If the lender is being difficult about supplying MIG docs you could include in the defence:

In additionand in the alternative, the defendant countercalims for the sum of £xxxx, being the premium for the insurance policy sold to him by the claimant's employee. There is no evidence that such a policy was purchased and the defendant puts the claimant on proof that the policy was in fact purchased.

Any MIG mis-representation/underselling counterclaim needs to be backed up by evidence, that I think is the tricky part.

You mention the interest and principal aspect presumably you are talking about the fact that the lender cannot recover arrears of interest after the expiration of six years from the date on which the interest became due, as per Bartlett & West of July last year?

You can always apply for leave to amend a defence, and this should be granted if refusal would involve a miscarriage of justice.

If you're interested I have a specimen defence from a solicitor.

-- M Amos (idgroms@hotmail.com), May 13, 2003.

Hi, thanks for the info Mark. I am compiling what my defence at the moment and tomorrow will commence discovery.

With regards to the 6 year rule on interest, I presume it means the lender cannot claim any interest prior to 1997 if we are now in 2003? If this is true it completely screws up their claim figures and would need quite a lot of reworking on their part. That alone maybe enough to get em nervous!

cheers

-- Steve (cantsay@co.com), May 14, 2003.

That's the way I read it, so does the solicitor, see his statement below:

"Is the lender claiming statutory interest? If so, liability for any such interest that relates to more than 6 years ago should be denied - as it is statutory interest, it comes under LA s9, a sum recoverable under a statute, and is limited to the last 6 years."

Some possible useful wording:

The Claimant has failed to distinguish between the interest and principal elements of the debt, as required by the Court of Appeal in Bristol and West plc v Bartlett. The Defendant therefore puts the Claimant to strict proof of the amount claimed, including proof of the mortgage account from the inception of the mortgage, and proof of a full completion statement relating to the sale of the property and a breakdown of the interest and principal elements of the debt.

I think you'll certainly give them more of a headache, but it shouldn't pose too much of a problem for them.

Cheers, Mark.

-- M Amos (idgroms@hotmail.com), May 14, 2003.

Quick Update:

Letter just sent off to lenders solicitors asking for strict proof of claim including copy of mortgage deed, mortgage T's & C's, copies of two independent valuations prior to sale, copy of MIG, completion statement from sale, mortgage account breakdown showing principal and interest calculations.

Also dispute debt and point out errors in calculations for interest using 6 year interest clause.

Also highlight their non-compliance with CML ruling as a bit of icing.

Sent recorded

wait and see now......will update when response received.

good luck all

-- Steve (cantsay@co.com), May 15, 2003.

Good Luck Steve, but don't be surprised if the lender gives you a hard time supplying these documents. You can complain to the Information Commissioner, but even in spite of this some lenders will not co-operate until forced to by the courts.

Mark.

-- M Amos (idgroms@hotmail.com), May 15, 2003.