In a positive ruling for lessors, a court has ruled
lease contracts are still enforceable even if true copies cannot be
found. Jo Owens
reports.
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Challenging the enforceability of
regulated lease agreements has become big business. Most challenges
start by a lessee requesting a ‘true copy’ of the executed lease
agreement under section 79 of the Consumer Credit Act 1974 (the
CCA).
If the lessor cannot produce a “true copy”,
the lease will be unenforceable until it can produce one.
His Honour Judge Waksman QC heard test cases
in Manchester County Court in November 2009 to consider what is
meant by a “true copy” within the CCA.
It does not have to be a copy of the original
signed executed lease, he ruled. His judgment clarified the law in
this area and confirmed that a “true copy” of a lease:
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By GlobalData• Does not have to be a photocopy or copy of
the original lease. Rather, it can be a reconstituted version of
the lease if the copy is “honest and accurate”.
• Does not need to be a signed copy of the
lease.
• Must contain the name and address of the
lessee as it was at the time the lease was made.
• Does not need be in the form set out in the
Consumer Credit Agreements (Regulations) 1983 (the Regulations) at
the date the lease was made.
• If varied by the lessor under a unilateral
power to vary the terms of the lease, must comprise a “true copy”
of the original lease as well as the varied terms.
The case decided that failing to provide a
true copy of the lease, or to comply with the rules regarding the
form and content of a lease, will not, without more, give rise to
an unfair relationship.
This means lessees cannot seek to “write off”
monies they owe and/or reclaim monies already paid under regulated
lease agreements if there has only been a breach of section 79 of
the CCA.
It also decided that the prescribed terms
required by the Regulations can be contained in an executed lease
even if they are not on the same page as the signature page.
The decision means that if lessors under
regulated leases cannot find the original lease agreement, lessors
can reconstitute a version of the lease for the purpose of section
79 of the CCA.
However, they must ensure that all the
relevant terms are in that reconstituted copy lease, and that the
lessor explain to the consumer that the copy provided is a
reconstituted one, not the original or a copy of the original.
Lessors must include:
• Heading in the relevant form;
• Name and address of debtor and creditor;
and
• Any applicable cancellation clause.
The above information can be provided on a
separate sheet from the full statement of terms and conditions
which also forms part of the reconstituted agreement.
The precise form of the reconstituted lease
has not been set out but its format must not be misleading to the
lessee.
Significant step
The judgment is a major victory for
the leasing industry and wider finance sector. It should have a
detrimental affect on claims management companies who, for months,
have been promising their customers that they can write off their
customer’s debts for a fee.
This will not be the case merely because a
true copy as they see it of the lease has not or cannot be
provided.
The fact that a lender may have lost the
agreement should not put the lessor in a detrimental position
against a lessee who has had the benefit of finance and the use of
the leased equipment for months or even years.
The statutory “true copy” regime provides its
own statutory sanction in the event of breach.
In the words of His Honour Judge Waksman QC:
“What the [lessee] is seeking to do… is to achieve a more
dramatic remedy against the [lessor] for… breach… than the statute
provided… In my view, this is a hopeless proposition.”
The author is an associate at the
law firm HBJ Gateley Wareing LLP
