County court judgments for debts soar!

The recent article in the Guardian highlights a worrying trend developing in the UK. It seems that nearly 300,000 judgments were entered against consumers in the first quarter of 2017 which the Guardian highlights is a considerable increase. However there is also a more worrying trend developing from our experience and that default judgments being entered against consumers without their knowledge.

We have been instructed on a number of recent cases where the consumer was entirely unaware that a judgment had even been entered, and in some cases unaware that their debt with the original creditor had even been sold. One case highlights the considerable difficulties which consumers face in those circumstances.

We recently dealt with a matter involving a client who had, as a result of fraudsters, been saddled with a county court judgement for an overdraft debt. The debt was accrued with Santander, a high street bank.

The issues in that case could have happened to any one of us. The consumer lost their driving licence, reported the driving licence lost to the DVLA and a new driving licence was provided. The consumer moved house around a year later and was totally oblivious to the events which were unfolding in this matter.

Unbeknown to the consumer, the fraudsters had opened a bank account in their name and had used a bank account to commit acts of fraud. Santander had picked up on these fraudulent transactions and closed the account however the debt which had accrued was sold to a third party debt purchaser. The third party debt purchaser issued court proceedings against the consumer however the proceedings were served on the consumer’s old address. They had no knowledge of these proceedings until around 2 years later when the consumer went into a local bank and was refused credit as a result of an adverse entry on their credit file.

The consumer checked their credit file and to their horror noted a county court judgment had been entered on their old address. The consumer contacted the solicitors who were representing the debt purchaser but they were unwilling to accept the consumer’s version of events. As a result, the consumer applied to the court to set aside the county court judgment and argued that the account had accrued as a result of fraud, totally without their knowledge and, as a consequence, they should not have been liable for the debt.

The consumer succeeded in getting the judgment set aside, however, the opposing solicitors still refused to accept the consumer’s position. The consumer contacted QualitySolicitors Howlett Clarke and instructed Paul Tilley to assist. An urgent review of all of the paperwork was carried out and the original creditor was contacted by Paul on the consumer’s behalf. The original creditor confirmed that the account had been highlighted on their systems as being opened fraudulently and that the account had been used for fraud. In addition, evidence was obtained to show that the consumer could not have opened this account as the consumer was not even in the locality of the bank during the period in question. The consumer had travelled to be with family members and clear evidence was provided including train receipts and a witness statement from a family member confirming that the consumer had stayed with them during that period. Unfortunately the opponents still did not accept the consumer’s position. It was only when the original creditor providing confirmation that the account had been opened fraudulently in writing that they accepted that the consumer had no liability for the debt that the claimant discontinued proceedings.

Unfortunately the proceedings which had been brought incurred considerable costs on the consumer’s part, costs which could have been avoided had the creditor carried out his due diligence and checked the consumer’s correct address on her credit file before issuing this claim. Had the creditor written to the consumer at the correct address and issued proceedings on the correct address, there is no doubt that the consumer would have been able to defend these proceedings and would not have incurred the costs of doing so.

The claimant tried to argue that this case was a small claims matter and therefore the consumer could not recover their costs. The court disagreed and ordered the claimant to pay the costs on the basis that their conduct had been unreasonable.

This is just one of a number of cases which we have dealt with recently and which go to highlight that the figures put forward by the Guardian showing some 300,000 judgments being entered against consumers in the first quarter really does not tell the full story. There is no doubt that those figures will contain a number of other cases like the ones which we have dealt with where the consumer has simply no knowledge that a judgment has even been entered against them.