Couple lose £40,000 write-off fight
Updated on 12 November 2009
A loophole in loan agreements which would have allowed a couple to write off their £40,000 debt has been closed by judges at the Court of Appeal.
Michael Walker and his wife, Suzanne, fell into arrears after they remortgaged their home and faced repossession until a county court judge ruled in April this year that their credit agreement was unenforceable.
But on Thursday, instead of the Walkers enjoying a "windfall", they face losing their home in Sandringham Close, Winsford, Cheshire, and legal costs from the loan company of £100,000.
The appeal judges said the ruling at Cheshire County Court had led to a "spate of consumer credit litigation" and the lenders, Southern Pacific Personal Loans, had been faced with more claims of irrecoverable loans from other borrowers.
Lord Justice Mummery, giving the ruling of the three appeal judges, said consumer credit law was complicated and county court Judge Halbert had got it wrong when he found the debt unenforceable.
The appeal judge said the question of whether the loan agreement was enforceable or not "will affect other cases in the current spate of consumer credit litigation and potentially many other credit agreements".
The appeal judge said the case turned on whether the loan agreement correctly stated the amount of credit to comply with consumer credit legislation.
Although the amount of credit was £17,500, a "broker administration fee" of £875 was added to the total and this led to the challenge because if the amount of credit is incorrectly stated, the agreement is unenforceable.
When the Walkers appealed during earlier repossession proceedings, Judge Halbert held the loan was unenforceable and ordered the discharge of the charge against the property.
Lord Justice Mummery said he did not agree that consumer laws prohibited interest on any charge for credit, including the broker fee. He said there was nothing in the legislation to prohibit the inclusion in a loan agreement of the total amount financed or to make its inclusion a reason for rendering the agreement unenforceable.
These news feeds are provided by an independent third party and Channel 4 is not responsible or liable to you for the same.
