Debt Buyer Court Defence Explained
How did we get to Court?
A debt buyer buys debts for pennies in the £. The figure of 12% of the face value of an alleged "debt" is not unusual. The debt buyer then writes to a "debtor" saying that they have purchased or been "Assigned" the debt. They will send a "Notice of Assignment" and claim this is all they have to do to establish themselves as the new owner of the "debt" as per Section 136 (1) of the Law of Property Act 1925..
Clearly the tricky debt buyer would like you to believe they only have to comply with that one little Section of the Law of Property Act 1925 to make the purchase LEGAL, but this is simply not the case. Any Corporation has to comply with ALL statute regulation.
What COMMON LAW says!
The OVERIDING PRINCIPLE in Common Law, which is superior to Statute Law, is that a debt buyer cannot sue for a contract that they were not a party to!
When the Rules Changed to give Debt Buyers and EXEMPTION to Doctrine of Privity
In 1999 the Contract (Rights of Third Parties) Act was passed giving debt buyers an EXEMPTION to Doctrine of Privity IF they are expressly identified in the Original Contract by name (or by being a member of a Class or answering a particular description). Often contracts do not even have a clause about the BENEFIT of the Contract being sold.
Prior to court action the debt can be disputed using the 3 Letter Process which asks for PROOF that the debt buyer owns the debt. This proof ultimately is the DEED OF ASSIGNMENT, also known as the SALE AGREEMENT between the Original Creditor and the Debt Buyer.
The Debt Buyer rarely wants to provide the DEED OF ASSIGNMENT, claiming it is a "commercially sensitive" document containing personal information relating to other people. That is because it is simply a list of names and numbers purchased in BULK by the debt purchase company. If it was just to protect sensitive information, the Supreme Court has ruled that the Debtor has a right to see the Deed of Assignment with the sensitive information blocked out:
See (Van Lynn Developments v Pelias Construction Co Ltd 1968.[3] All ER 824) Where Lord Denning M.R. said "the debtor is entitled to view the sale agreement to ensure that the assignee can give him good discharge under the contract";
And; [Webster v Ridgeway (2009) ] - A case that demonstrates that a debtor is entitled to see a redacted version where sensitive information is contained in the document(s);
Also; [Jones v Link Financial Ltd (2013) ] 1 WLR 693 Where at Section 9, the judge found that three conditions for the validity of such an assignment must be satisfied, 'namely': that the assignment was absolute and not by way of charge; that it was in writing under the hand of the assignor, and that express notice in writing had been given to the debtor.
The Zombie Debt buyer has to show THREE ELEMENTS of a LEGAL ASSIGNMENT to satisfy the Court (if you point this out) that the Assignment is a LEGAL Assignment and not just "EQUITABLE":
a. that the assignment is absolute and not by way of a charge; (they cannot assign future "debts", but this is common practice!);
b. that it is in writing under the hand of the assignor (the 'Deed of Assignment'); (it must be correctly formatted with TWO signatures, not just one;
c. and that express notice in writing has been given to the debtor; The easiest element, but is must be sent by registered post, not just standard mail.
Often the actual sale agreement will be a separate document, creating an interesting problem for the Debt Buyer. If they show you what they have, you will look at the documents and conclude it is not a valid Deed of Assignment as required by the Law of Property Act 1925. The debt buyer has an EQUITABLE ASSIGNMENT NOT A LEGAL ASSIGNMENT.
The Debt Buyer needs to include the Original Creditor as a party to any Court action!
So we have a stalemate that often ends up with the Debt Buyer issuing a County Court Claim and us having to argue the case in court.
The judge can either:
Order the Claimant to provide the Deed of Assignment to the Defendant (the correct course of action) which the Claimant will not do. This usually results in the Claimant giving up and discontinuing their claim.
View the Deed of Assignment himself and say he is perfectly happy with it and it is not an issue! This often happens and puts the judge is an strange position. He is saying he viewed a document that does not meet the criteria for a Deed, so we can question him on the elements of the Deed. If he incorrectly confirms elements that cannot possibly exist, we create a good case for any appeal of an incorrect judgment. Often judges will claim that you cannot appeal their decision. This is simply incorrect.
A Judge will never like being put on the spot and challenged on his word, so it is important to get the Key Points that we are challenging into our written defence. The judge will not want to put himself in the firing line of key defence points:
The Key Points
The points to challenge challenge the Debt Buyer on in the Defence bundle are:
Section 1(3) Law of Property (Miscellaneous Provisions) Act 1989, - A Deed must be witnessed if signed by one person.
Section 44 of the Companies Act 2006, - A Deed requires the signature of two directors or one director and a secretary.
The Regulatory Reform (Execution of Deeds and Documents) Order 2005 (S.I. 2005/1906), arts. 1(1),3 , (Deed/two signatures)
Section 136 of the Law of Property Act 1925. There needs to be a sale agreement in writing under the hand of the assignor.
Section 196 of the Law of Property Act 1925. Notice should be served by registered letter.
A Deed Must be Witnessed if signed by one person
(3)An instrument is validly executed as a deed by an individual if, and only if—
(a)it is signed—
(i)by him in the presence of a witness who attests the signature; or
(ii)at his direction and in his presence and the presence of two witnesses who each attest the signature; and
(b)it is delivered as a deed F2...
A Company needs two signatories (Director & Secretary or Witness)
44Execution of documents
(1)Under the law of England and Wales or Northern Ireland a document is executed by a company—
(a)by the affixing of its common seal, or
(b)by signature in accordance with the following provisions.
(2)A document is validly executed by a company if it is signed on behalf of the company—
(a)by two authorised signatories, or
(b)by a director of the company in the presence of a witness who attests the signature.
(3)The following are “authorised signatories” for the purposes of subsection (2)—
(a)every director of the company, and
(b)in the case of a private company with a secretary or a public company, the secretary (or any joint secretary) of the company.
(4)A document signed in accordance with subsection (2) and expressed, in whatever words, to be executed by the company has the same effect as if executed under the common seal of the company.
(5)In favour of a purchaser a document is deemed to have been duly executed by a company if it purports to be signed in accordance with subsection (2).
A “purchaser” means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property.
(6)Where a document is to be signed by a person on behalf of more than one company, it is not duly signed by that person for the purposes of this section unless he signs it separately in each capacity.
(7)References in this section to a document being (or purporting to be) signed by a director or secretary are to be read, in a case where that office is held by a firm, as references to its being (or purporting to be) signed by an individual authorised by the firm to sign on its behalf.
(8)This section applies to a document that is (or purports to be) executed by a company in the name of or on behalf of another person whether or not that person is also a company.
A company needs two signatures and a seal (if not relying on s44 above)
Execution by corporations
3. For section 74(1) of the 1925 Act substitute—
“(1) In favour of a purchaser an instrument shall be deemed to have been duly executed by a corporation aggregate if a seal purporting to be the corporation’s seal purports to be affixed to the instrument in the presence of and attested by—
(a)two members of the board of directors, council or other governing body of the corporation, or
(b)one such member and the clerk, secretary or other permanent officer of the corporation or his deputy.”
There must be a written sale agreement (Deed of Assignment)
136 Legal assignments of things in action.
(1)Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice—
(a)the legal right to such debt or thing in action;
(b)all legal and other remedies for the same; and
(c)the power to give a good discharge for the same without the concurrence of the assignor:
Provided that, if the debtor, trustee or other person liable in respect of such debt or thing in action has notice—
(a)that the assignment is disputed by the assignor or any person claiming under him; or
(b)of any other opposing or conflicting claims to such debt or thing in action;he may, if he thinks fit, either call upon the persons making claim thereto to interplead concerning the same, or pay the debt or other thing in action into court under the provisions of the M1Trustee Act, 1925.
Notice should be served by registered letter
196Regulations respecting notices.
(1)Any notice required or authorised to be served or given by this Act shall be in writing.
(2)Any notice required or authorised by this Act to be served on a lessee or mortgagor shall be sufficient, although only addressed to the lessee or mortgagor by that designation, without his name, or generally to the persons interested, without any name, and notwithstanding that any person to be affected by the notice is absent, under disability, unborn, or unascertained.
(3)Any notice required or authorised by this Act to be served shall be sufficiently served if it is left at the last-known place of abode or business in the United Kingdom of the lessee, lessor, mortgagee, mortgagor, or other person to be served, or, in case of a notice required or authorised to be served on a lessee or mortgagor, is affixed or left for him on the land or any house or building comprised in the lease or mortgage, or, in case of a mining lease, is left for the lessee at the office or counting-house of the mine.
(4)Any notice required or authorised by this Act to be served shall also be sufficiently served, if it is sent by post in a registered letter addressed to the lessee, lessor, mortgagee, mortgagor, or other person to be served, by name, at the aforesaid place of abode or business, office, or counting-house, and if that letter is not returned [F1by the postal operator (within the meaning of [F2Part 3 of the Postal Services Act 2011]) concerned] undelivered; and that service shall be deemed to be made at the time at which the registered letter would in the ordinary course be delivered.
(5)The provisions of this section shall extend to notices required to be served by any instrument affecting property executed or coming into operation after the commencement of this Act unless a contrary intention appears.
(6)This section does not apply to notices served in proceedings in the court.
Sample Defence/response to Particulars of Claim:
1) It is disputed that the Defendant entered into an agreement with Jacamo (the 'Alleged Assignor') which was regulated under the Consumer Credit Act 1974 under account reference P0236785 on 20/05/2018 ('the Alleged Agreement'). The Claimant is put to strict proof to provide a copy of the Contract upon which they rely as per the Consumer Credit Act 1974.
2) It is disputed that, in breach of the Alleged Agreement, the Defendant failed to maintain the required payments and the Alleged Agreement was terminate. The claimant should provide a full breakdown of the amount they are claiming. The Claimant should provide proof that the Agreement was terminated and on what date. The Claimant should provide all Statements, invoices, default notice and termination notice in relation to the Alleged Agreement. The Claimant is also put to strict proof to show that a compliant Default Notice was served in relation to the alleged agreement pursuant to CCA s. 87 & 88 (1).
3) It is disputed that the benefit of the Alleged Agreement has been legally assigned to the Claimant on 17/12/2019 due to the constraints of:
⦁ Section 1(3) Law of Property (Miscellaneous Provisions) Act 1989,
⦁ Section 44 of the Companies Act 2006,
⦁ The Regulatory Reform (Execution of Deeds and Documents) Order 2005 (S.I. 2005/1906), arts. 1(1),3 ,
⦁ Section 136 of the Law of Property Act 1925.
⦁ Section 196 of the Law of Property Act 1925.
The Claimant is put to strict proof to provide the Deed of Assignment required for absolute assignment of the Alleged Agreement. The Defendant is entitled to view the Deed of Assignment that the Claimant is relying on in this matter. The Defendant is willing to accept redacted copies of any documents that may contain sensitive commercial data or personal details of other clients providing that evidence relating to the Defendant is apparent.
The Defendant requests that the Claimant provide a copy of the Deed of Assignment under CPR18 and CPR31.14 as being crucial to establish if the Claimant has any Legal standing to bring a claim the benefit of the Alleged Agreement.
⦁ See (Van Lynn Developments v Pelias Construction Co Ltd 1968.[3] All ER 824) Where Lord Denning MR said 'the debtor is entitled to view the sale agreement to ensure that the assignee can give him good discharge under the contract'
⦁ And; [Webster v Ridgeway (2009) ] - Where a debtor is entitled to see a redacted version.
⦁ Also; [Jones v Link Financial Ltd (2013) ] 1 WLR 693 Where at Section 9, the judge found that three conditions for the validity of such an assignment must be satisfied, 'namely': that the assignment was absolute and not by way of charge; that it was in writing under the hand of the assignor, and that express notice in writing had been given to the debtor.
The Claimant is put to strict PROOF to show that all three elements of Legal Assignment are satisfied:
⦁ a. that the assignment is absolute and not by way of a charge;
⦁ b. that it is in writing under the hand of the assignor (the 'Deed of Assignment');
⦁ c. and that express notice in writing has been given to the debtor.
4) It is disputed that written notice was given to the Defendant. The Claimant should provide proof that any Notice of Assignment was served on the Defendant in compliance with Section 136 and Section 196 of the Law of Property Act 1925. Copies of any Notices of assignment should be provided.
5) It is disputed that repeated requests for payment have been made:
⦁ a) the sum of £504.94 is disputed. The should provide a detailed breakdown of exactly how this sum has been calculated with supporting evidence. e.g. How much of this sum is V.A.T. added to the purchased debt by the Claimant?
⦁ b) Interest pursuant to Section 69 of the County Courts Act 1984 is disputed. The daily rate of £0.111 is disputed. The sum of £40.40 is disputed. The Defendant denies any indebtedness to the Claimant but particularly denies that they are due statutory interest on the alleged amount, as such the Defendant requests disclosure of the amount the Claimant claims to have paid for this alleged debt.
⦁ c) Costs are disputed and the court is invited to award costs against the Claimant.
The Defendant has requested an properly formatted signed bill/invoice as per the Bill of Exchange Act 1882. It is the Defendant’s understanding that; the Defendant would be in direct contravention of the Bills of Exchange Act 1882, the Fraud Act 2006 and various other offences under HM Revenue and Customs regulations with regard to Value Added Tax if the Defendant were to settle this matter without first receiving such an invoice. The Claimant is put to strict proof to proof to provide a copy of any bill or invoice they claim to have sent in this matter.
It is contended that the Claimant is in breach of Rule 16.4(a) of the Civil Procedure Rules 1998 in that the Particulars of Claim do not set out a clear and concise statement of facts upon which they rely.
In particular, the Particulars of Claim does not identify:
⦁ (a) the nature of the Alleged Agreement with the Alleged Assignor;
⦁ (b) on which date(s) the Defendant had allegedly failed to maintain the required payments;
⦁ (c) the exact date when the Alleged Assignor terminated the Alleged Agreement and gave notice of the same;
⦁ (d) the date the Claimant claims to have given Notice of Assignment to the Defendant and if the method of service was compliant with Section 196 of the Law of Property Act 1925;
⦁ (e) whether the Claimant is relying on an Equitable Assignment or a Legal Assignment.
The Defendant avers that the Claimant is also in breach of Pre-Action Protocol by not issuing a Letter of Claim prior to proceedings. That the Pre-action Conduct protocol has ben complied with should be stated in the claim form or particulars of claim. See Practice Direction-Pre-Action Conduct para.9.7. There is no claim by the defendant on the Claim Form that they have complied with Pre-Action Protocol.
The defendant invites the court to dismiss this claim as it is in breach of pre court protocols in relation to the particulars of claim under practice direction 16, set out by the ministry of justice and also civil procedure rules under 16.4 and to allow such defendants costs as are permissible under civil procedure rule 27.14.
I would also like to take this opportunity to remind the Claimant that under Civil Procedure Rule Part 39 PD 39a (3.3) any documents upon which the claimant intends to rely the ORIGINALS should be brought to any subsequent hearing for examination.
STATEMENT OF TRUTH
I believe the facts in this statement are true.
[defendants name]
Executing Deeds
Individual
For an individual to execute a Deed validly, they must sign the Deed in the presence of a witness, who must 'attest' the signature. The individual's name must be clearly stated.. The witness' details must be clearly recorded and this must include their signature, name and address. The witness must be independent – another party to the Deed cannot be the witness, and good practice is for the witness to be over 18 and not to be related to the individual signatory.
Company
In accordance with the Companies Act 2006, companies can execute deeds:-
· Under their common seal (if they have one), by affixing the seal to the document in the presence of the company secretary and a director, or two directors, who will need to sign the Deed. The signatures do not need to be witnessed; or
· By two company directors or one director and the company secretary, who need to sign the Deed. The signatures do not need to be witnessed; or
· By one director in the presence of a witness – in which case the director signs in their capacity as director, but otherwise as described for individual signatories above.
In each case, where a Deed is being executed by a company, the execution clause will read "Executed as a Deed by [Company name] acting by…"
The ONLY other way for a Corporation to execute a Deed is by using it's SEAL:
There are only TWO Methods of Execution for Corporations
There are two statutory presumptions of due execution in favour of third parties dealing with a corporation:
Section 74(1), Law of Property Act 1925 (1925 Act). This provides, in favour of a purchaser, that a deed is deemed to be executed by a "corporation aggregate" (for example, a registered company, local authority or building society) if the common seal is affixed to the deed in the presence of, and attested by, the corporation's clerk, secretary or other permanent officer or their deputy and a member of the board of directors, council or other governing body of the corporation.
The purpose of section 74 of the 1925 Act was to make it unnecessary for a purchaser to require proof of a corporation's formal compliance with the provisions of its memorandum and articles or its charter.
Section 36A(6), Companies Act 1985 (1985 Act). This provides, in favour of a purchaser, that a document is deemed to have been duly executed by a company or a limited liability partnership (LLP) if it purports to be signed by a director and the secretary of the company or by two directors of the company or two members of the LLP.
The apparent intention of section 36A(6) of the 1985 Act was to extend the protection under section 74(1) of the 1925 Act to the situation where a company (or LLP) signs under section 36A(4) of the 1985 Act. However, significant inconsistencies remained:
You have solved the problem for the debt buyer then!
They can simply follow the law.
