Section 75 Help please

Discussion in 'Legal' started by HQ786, Feb 9, 2018.

  1. HQ786

    HQ786 UKBF Newcomer Free Member

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    Hi everyone,

    I am currently in an unfortunate position. I hired a building company and paid a 50% deposit for the works before any work had taken place. The company were accredited by the Federation of Master Builders and were found through Nothing seemed suspicious as they even took us to a client’s home to show us the quality of the work. I checked all the company details and even paid for a credit report on the director of the company.

    After handing over 17k (50% of the contract) the company went into liquidation, 2 weeks later before any works could start. We then managed to find out if any other people were in the same position as us and to our surprise there were 50 plus other couples who had been scammed by this company. Each and every one of us paid the 50% deposit for the works, and not one person’s work had started. No materials bought and no design work completed.

    We later found out that the show home that had been used to take potential customers around and to gain FMB accreditation was the director’s friend’s house and her neighbour had actually done the work. Above all we have uncovered a lot more about the director and the people who had been working for him and the company is now being investigated.

    I have posted to this forum as I need some advice on Section 75. Many of us had paid part of the deposit on credit card. My contract was split into two contracts one for the kitchen (under 30k) and one contract for the extension (under 30k). I paid two separate deposits on Credit card for both contracts and two separate bank transfers for the remainder of the contracts totalling 17k. The problem I am having is that the bank have rejected the claims as the contract states a total price of £34k which doesn’t meet section 75 criteria, however there is a breakdown of the two contracts clearly listed on the document. I have explained to the bank that we had two contracts (clearly shown on the document as contract 1 and 2) and we paid separate payments for each however they have rejected the claim based on the fact there is a total price above stating £34k.

    We don’t agree with the rejection as we could have signed for the extension only and not the kitchen and this would still show 34k on the contract even though the total cost would only actually be £24k. Not only this a few other victims of the scam who have the same/similar contracts as us have had their claims accepted by their banks who have stated that there is a basis for a claim.

    We are now currently going through the Financial ombudsman, however we are unsure if they will side with us as we are hearing from others that the financial ombudsman cannot find a law that looks at two contracts on one bit of paper. Is there anyone who can provide some advice to us on what explanation we could use if the FOS side with the banks and reject us again? We have cited that other banks have accepted and this seems to be standard industry practice but the FOS has said they will only look at our claim on an individual basis….
    Posted: Feb 9, 2018 By: HQ786 Member since: Oct 6, 2017
  2. KAC

    KAC UKBF Enthusiast Free Member

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    Can't help with our query but really sorry to read of your problem. You did everything right but still got scammed :mad: What more could you have done? o_O
    Posted: Feb 9, 2018 By: KAC Member since: May 7, 2017
  3. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

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    Most ordinary members of the public would not think to ask for evidence that the deposits are being paid into a separate client account held on trust for them and even when they do most Companies have not set up the facility to do so.
    Posted: Feb 9, 2018 By: Lisa Thomas Member since: Apr 20, 2015

    JEREMY HAWKE UKBF Legend Full Member

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    There is a very slim chance that the directors could have been trading while insolvent and continued taking money from the public when they knew what was about to happen .Potentially this could make them personally liable

    Hopefully somebody on here would be able to give an expert view on this soon but they would need to gain an understanding of this particular situation
    Posted: Feb 9, 2018 By: JEREMY HAWKE Member since: Mar 4, 2008
  5. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    2,570 310
    The Liquidators will investigate this and can bring any necessary claims against the Directors personally. I think the non protection of customer deposits would fall under the misfeasance banner rather than wrongful trading, although WT may well also apply.

    Sorry HQ but I cannot answer your specific S75 query - hopefully someone else will be long shortly to comment.

    In the meantime ensure you put your complaint and claim in writing to the Liquidator.
    Posted: Feb 9, 2018 By: Lisa Thomas Member since: Apr 20, 2015
  6. smallclaimsassistance

    smallclaimsassistance UKBF Enthusiast Full Member - Verified Business

    820 215
    There are a couple of avenues you could try.

    The first is S75a. This states:

    (1)If the debtor under a linked credit agreement has a claim against the supplier in respect of a breach of contract the debtor may pursue that claim against the creditor where any of the conditions in subsection (2) are met.

    (2)The conditions in subsection (1) are—

    (a)that the supplier cannot be traced,

    (b)that the debtor has contacted the supplier but the supplier has not responded,

    (c)that the supplier is insolvent, or

    (d)that the debtor has taken reasonable steps to pursue his claim against the supplier but has not obtained satisfaction for his claim.”

    S75(a)6 states that “This section does not apply where— (a)the cash value of the goods or service is £30,000 or less”.

    The only issue I can see with this clause is establishing that your credit card transaction amounted to a “linked credit agreement” under the act. I haven’t done much digging but I am unable to find a definition of that term, as it applies to the act. I’m sure there must be one, but I don’t have time to hunt for it at the moment. I suspect a credit card doesn’t count, and I think this is designed for finance taken out to fund contracts. It’s certainly worth arguing however, because in purely factual terms, the credit agreement was linked.

    Your only other option would be sticking with S75, as on your facts, it appears that the bank may have interpreted S75 incorrectly, according to the strict wording of the act.

    S75 states: (3)Subsection (1) does not apply to a claim

    (a) under a non-commercial agreement, F1. . .

    (b) so far as the claim relates to any single item to which the supplier has attached a cash price not exceeding [F2£100] or more than [F3£30,000]”

    On your facts, it doesn’t relate to a single item. It relates to two items, or two contracts.

    You need to refer the FO to the above wording, but more importantly, you must demonstrate to them that the two jobs were standalone contracts which happened to be conducted with the same supplier.

    Based upon what you have said above:

    “the contract states a total price of £34k”, and “We don’t agree with the rejection as we could have signed for the extension only and not the kitchen and this would still show 34k on the contract”, it appears that you only have one document evidencing two jobs, in one contract, for a total price of 4k above the limit. If that’s the case, the FO are unlikely to agree with you.

    Best of luck and let us know how it goes.

    Posted: Feb 9, 2018 By: smallclaimsassistance Member since: Jan 7, 2015
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  7. HQ786

    HQ786 UKBF Newcomer Free Member

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    Thanks everyone, the case has been investigated by the Ombudsman investigator who has agreed that there are two contracts however this decision is not legally binding and if the bank disagree then we will have to go to the financial ombudsman for a decision.

    Staying positive and hoping that we get our money back.
    Posted: Feb 20, 2018 By: HQ786 Member since: Oct 6, 2017
  8. HQ786

    HQ786 UKBF Newcomer Free Member

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    We are trying to overturn the current appointed liquidator who has actually had private meetings with the director of the company and has only notified us after the meeting via a letter through the post. He has not produced any findings and is asking for £25k for a creditors meeting to be held in London for the day.

    We believe the Liquidator and the director have some sort of relationship as both companies were registered at the same address. Not only this the appointed liquidator has been very difficult and not honest regarding the money that has been transferred over from the company – we have recordings of him stating different amounts.
    Posted: Feb 20, 2018 By: HQ786 Member since: Oct 6, 2017