The outcome of a recent case will be regarded with relief by anyone who is having trouble with their bank – an increasing problem as the credit crunch continues.
The case involved a man who had negotiated with his bank to have a secured overdraft, which was repayable over 20 years. The overdraft agreement provided that should the agreed borrowing limit be exceeded, the bank had the right to demand repayment of the whole of the overdraft. Failure to meet the demand would trigger the bank’s right to take possession of the property against which the advance was secured. The man failed to keep within the agreed overdraft limit and was contacted by the bank. His bank manager held discussions with him and the man claimed he obtained the bank’s agreement to a three-month moratorium, during which it would not seek a possession order if he brought the account back within the overdraft limit. There was to be a further review at the end of the period. The bank denied that this had been agreed.
The bank sought a possession order, which was granted. The man appealed. The Court of Appeal found that the bank had given an undertaking to the man not to issue proceedings for possession for three months if the terms agreed were adhered to. It had not agreed that it would never apply for a possession order, just to postpone the application. The bank could not change its mind. Accordingly, the original possession order was set aside.
This case illustrates that a bank cannot agree to take one course of action and then take another. If you find yourself in a similar position, it is very important to obtain the strongest evidence you can of what has been agreed by the bank. Taking professional advice so that variations to agreements are properly recorded is a good safeguard. We can advise you if you are having difficulty with your bank or with collecting your debts.