Debt and Limitation Act

I have a client who was placed in bed and breakfast accommodation in 2002 to 2004 and she built up a debt of ineligible charges and a shortfall between HB and rent due, as she worked part time. The total claimed by the local authority was £1,900.00 which we have managed to get reduced as HB was wrongly assessed we also argued that any remaining sum would be statue barred.

However the authority has produced a documents signed by the client in 2007 stating she agreed to repay the amount owed at £2.60 per week. The client states at the time she did not want to sign it but was told, as the letter states, that if she did not she could lose her accommodation. On the signature the client has clearly stated DURESS.

Does anyone feel that despite the signature from the client that her comment of DURESS will mean that it is arguable that it does not count as acknowledgment because obviously if it does then we would be within six years and client would need to repay the money?

Further to make the issue more complicated the client came to us ad the authority had issued proceedings in the County Court for the claimed money but in light of it being reduced by the HB, as noted above, they have stated that if the client now agrees to make repayment in instalments that they will withdraw their case and waive the costs to date. So is that a fair offer or, as the client feels, a way to put her off the limitation point?

Thank you for any advice or pointers in advance.

Hopefully Ariadne will have a comment on the legal implications.  My view - perhaps too simplistic - is:

1.  I assume the client owes the money (I say this because you made successful efforts to get the amount reduced).

2.  When she signed the form it was within the 6 years & she was therefore simply acknowledging the fact that she owed the money.

3.  Even if she did not make any payments after signing the form it is arguable it is still valid as less than 6 years ago.

On the other hand, the fact that LA asked client to sign the form makes me wonder whether there was some doubt in their mind about whether the money was truly owed.  What made them take this step?  Was there/is there any written evidence from the time the alleged debts occurred which would go to show that she had entered into a contract under which she was liable to pay?  If there was (& still is) a genuine dispute as to her liability for the alleged debt then it could perhaps be argued that she was disputing liability and only signed the form because of the threat.  In that case, LA would presumably have to produce evidence to the Court to persuade the judge that, on the balance of probabilities, client did in fact owe the money.

roecab - 08 December 2011 12:11 PM

she built up a debt of ineligible charges and a shortfall between HB and rent due, as she worked part time. The total claimed by the local authority was £1,900.00

Is this two debts? (or was the LA the landlord?)

The shortfall between HB and rent due is, presumably, a loss to the landlord whether HB was paid direct or to the claimant.
The ineligible charges are presumably a HB overpayment.

Is that right?

roecab - 08 December 2011 12:11 PM

I have a client who was placed in bed and breakfast accommodation in 2002 to 2004

Thank you for any advice or pointers in advance.

Maybe your client was placed under the provisions of the Housing Act 1996/Part vii (Homelessness) Homelessness ACt 2002?

If so there might be a different angle to this, as the LA has specific obligations under this Act to provide suitable temp accommodation not to keep your client in B and B.

Just a thought.

Gareth Morgan - 08 December 2011 07:05 PM

roecab - 08 December 2011 12:11 PM

she built up a debt of ineligible charges and a shortfall between HB and rent due, as she worked part time. The total claimed by the local authority was £1,900.00

Is this two debts? (or was the LA the landlord?)

The shortfall between HB and rent due is, presumably, a loss to the landlord whether HB was paid direct or to the claimant.
The ineligible charges are presumably a HB overpayment.

Is that right?

I’d suggest the ineligible charges would be e.g. meals, heating & lighting, so not a HB overpayment, but a sum that would have been due to the landlord from the client, however much other HB was being paid.

Thanks for the replies. As I understand it the remaining balance is what the client owes to the local authority as they pay the bed and breakfast up front so she owes it to them. I assume that they do this to avoid clients getting debts with the provider who would refuse to take further clients?

We have now got all housing benefit due for the period as they used the wrong income details and essentially this ‘balance’ that remains would be the clients liability for that period. I feel that she probably does owe it but not being a debt adviser, and not wanting to miss advise my client, I want to check this point.

So to be clear it is not an overpayment of housing benefit it is the clients liability for ineligible charges, which as noted above was for food etc as well as a small shortfall as clients income was in excess of her applicable amount.

Thanks again.

roecab - 12 December 2011 10:37 AM

Thanks for the replies. As I understand it the remaining balance is what the client owes to the local authority as they pay the bed and breakfast up front so she owes it to them. I assume that they do this to avoid clients getting debts with the provider who would refuse to take further clients?

Thanks again.

It looks like to me that your clients was placed in B and B pursuant to a homeless application. The LA is then trying to recover its costs. (apologise if not the case)

In 2003 the govt passed legislation preventing LAs placing families in Bed and Breakfast for excessive periods of time. The max period of time for a family was six weeks. The legislation was enacted but periods prior to April 2004 did not count. You might want to check the dates. If I am right your client has spent an incredible 2 years plus in B and B pending the provision of reasonable temporary accommodation. They have then be asked to sign to take on the LA costs of providing emergency accommodation (for 2 years)on pain of being evicted from that temp accommodation. One can only imagine the fear that would create in your client.

I hope I am wrong.

Martin,

You are correct. In this case she is a single girl who was at the time housed as under 18 as she was ‘having problems’ with her mother although it turns out she was also under the care of the CMHT.

It seems totally unjust to me but that does not mean, of course, that they cannot are not entitled to take the matter to Court.

What bothers me and makes me think that there is more to this is the Council’s offer to withdraw the action and costs if she now agrees to repay i.e. is client getting a good deal or walking into a trap?

If this B&B was used to prevent homelessness under the 1996 Housing Act duties then the HB liability would (or should) have been paid under the “non-HRA rent rebate” Housing Benefit regulations. This covers the total bill including heating and light. The only cost it does cover is the Breakfast, if there was one. Suggest asking the LA if this was done, if not then you can argue that the LA created some of the debt by applying for the wrong Benefit.

It should also be noted that your client was under 18 at the time and therefore still a child. She should have been accommodated under the Childrens Act not under homelessness legislation. Under the Childrens Act there cannot be any liability for debts.

When placed into the B& B as a Homeless person did your client get a s193 decision letter and is the present accommodation still being provised under the same s193 decision, in short is she still in Homeless temporary accommodation ?

On the limitation question: in general, making a payment will count as acknowledging a debt and so re-sets the 6 year clock. Therefore it may not just be the written acknowledgement in 2007 that you have to nullify, but each payment made thereafter, eg she may have taken legal advice at some subsequent point and kept paying anyway? A lawful threat of legal action doesn’t seem like undue duress on the face of it. However, on what grounds was her tenure really threatened in 2007? Was she still in the same property as before, and on the same basis?? They can’t just add a debt from a previous property to a new rent account. To quote adnet: This will be the case even where the long-term accommodation is provided at the same address as the interim accommodation.

Another possibility was that not taking steps to clear some previous “housing-related debt” was a breach of a term in her new tenancy?

I also think the threat to evict was unlawful. Having accepted a 193 duty to accommodate pursuant to the Housing Act 19996 part vii/Homelessness Act 2002, the LA   can only discahrge its duty pursuant to that section 193. The LA cannot evict the tenant for previous arrears accrued at a different property under this section. This appears to simply have been an attempt to bully the applicant, into accepting the debt.

The applicant was under 18 a child at the tinme the debt arose, she should have been offered at the very least an interview in the prescence of an “appropriate adult”  to discuss these debts.

THe LA is not legally bounfd to chase this debt, they have no obligation to do this. They are legally bound for the debt with the B and B. They merely can make reasonable arrangements, to recover these charges from the client, if they beleive she has means to pay. In this case they have not take into account that she was a vulnerable child, without support.

Please note if the LA had arranged suitable temporary accommodation (not left her in a band b for two years)as they are legally bound to do, these charges would not have arisen.

The law relating to minors’ contracts is archaic and complex, and in case of doubt a solicitor specialising in contract law should be consulted. basically young people can enter into contracts for “necessaries” which would include accommodation. I wrote a poem about it once:
WARNING TO SUPPLIERS OF GOODS AND SERVICES

Note: this poem was written in 1983.

Never make a contract with a minor -
I don’t mean one of Arthur Scargill’s lads;
Never make a contract with a minor,
For minors are a load of rotten cads.
For if you make a contract with a minor,
He’ll have to need that thing from you for sure,
Or if you make a contract with a minor,
It’s just an easy way to end up poor.

You may serve him up fish fingers in a diner
Provided that he needs that kind of food;
You may take him on a trip to Carolina,
If educational is how it’s viewed;
You may offer him a job aboard a liner,
Provided the conditions are quite fair;
You may sell him the Frankfurter Allgemeiner,
If German politics are his affair;
You may meet his needs for glasses and for china
To suit the status of the darling lad:
But if he fancies something that is finer,
You’d better make your contract with his Dad.

So never make a contract with a minor,
And never lend him money anyway;
For if you make a contract with a minor
The law may say he doesn’t have to pay.
Never make a contract with a minor:
Engrave it on your heart in runes of gold;
Then if you make a contract with a minor’
You cannot say that you were never told.

If I could work out how to use emocitions I would send you a clapping one…..