Time Orders

Time Orders

This part looks at the court's power to make a time order
under section 129 of the Consumer Credit Act 1974
Information Sheet
Section 129 Consumer Credit Act 1974
 
129 Time orders

(1) Subject to subsection (3) below, if it appears to the court just to do so—

   (a) on an application for an enforcement order; or
   
   (b) on an application made by a debtor or hirer under this paragraph after service on him of—

       (i) a default notice, or

       (ii) a notice under section 76(1) or 98(1); or

   (ba) on an application made by a debtor or hirer under this paragraph after he has been given a notice under section 86B or 86C; or

   (c) in an action brought by a creditor or owner to enforce a regulated agreement or any security, or recover possession of any goods or land to which a regulated agreement relates,

the court may make an order under this section (a “time order”).

(2) A time order shall provide for one or both of the following, as the court considers just—

   (a) the payment by the debtor or hirer or any surety of any sum owed under a regulated agreement or a security by such instalments, payable at such times, as the court, having regard to the means of the debtor or hirer and any surety, considers reasonable;

   (b) the remedying by the debtor or hirer of any breach of a regulated agreement (other than non-payment of money) within such period as the court may specify.

How important is this?

The Consumer Credit Act 1974 contains a number of provisions concerning the enforcement of regulated agreements, including those secured by a land mortgage, and section 126 of the Act provides that a land mortgage securing a regulated agreement is enforceable on an order of the court only. This engages the provisions for judicial control in Part IX of the Act, including section 129 which enables the court to make a time order. The fact that a consumer credit regulated agreement engages different statutory provisions is reflected in the questions asked in paragraph 4 of Form N120 Particulars of Claim for possession of mortgaged residential property (which asks whether the agreement for the loan secured by the mortgage [or at least one of them] is a regulated credit agreement, and if so requires the date that notice of default was given to the defendants).

Significantly, with effect from 30 March 2014, s 126 was amended to extend judicial control to regulated mortgage contracts. the impact of this and the relationship between these provisions and section 36 Administration of Justice Act 1970 in the context of residential mortgage possession claims, is not widely appreciated (for further guidance, see FCA Handbook, Perimeter Guidance Manual (PERG), section 4.17; Megarry & Wade, Law of Real Property, 9th Edition, para 24-030; Emmet & Farrand on Title, Volume 2, para 25.239). 

However, section 38A Administration of Justice Act 1970 disapplies Part IV of that Act (which contains section 36) to a mortgage securing an agreement which is a regulated agreement under the Consumer Credit Act 1974 and the likelihood is that regulated mortgage contracts, which now account for the bulk of high street residential mortgages, will be governed by the separate statutory regime for judicial control in Part IX of the Consumer Credit Act 1974.    

What does section 129 do?

Section 129 enables the court, if it appears just to do so in any of four different situations (including on an application for an enforcement order or in an action to recover possession of land) make a time order, which may provide for one or both of the following, as the court considers just:

(a) the payment by the debtor (or any surety) of any sum owed under the regulated agreement or security by such instalments, payable at such times, as the court, having regard to the means of the debtor (and any surety) considers reasonable; or

(b) the remedying by the debtor of any breach of a regulated agreement (other than non-payment of money) within such period as the court may specify. 

When making a time order under s 129, the court may also, if it considers it just to do so, impose conditions or suspend the operation of any term of the order or include such provision as it considers just for amending any agreement in consequence of a term of the order.

How does it apply?

In Southern & District Finance Plc v Barnes (1995) 27 HLR 691 the Court of Appeal identified the following principles of judicial control:

(1) When a time order is applied for, or a possession order sought of land to which a regulated agreement applies, the court must first consider whether it is just to make a time order. That will involve consideration of all the circumstances of the case, and of the position of the creditor as well as the debtor.

(2) When a time order is made, it should normally be made for a stipulated period on account of temporary financial difficulty. If, despite the giving of time, the debtor is unlikely to be able to resume repayment of the total indebtedness by at least the amount of the contractual instalments, no time order should be made. In such circumstances it will be more equitable to allow the regulated agreement to be enforced.

(3) When a time order is made relating to the non-payment of money:

   (a) The ‘sum owed’ means every sum which is due under the agreement, but where possession proceedings have been brought by the creditor that will normally comprise the total indebtedness; and

   (b) the court must consider what instalments would be reasonable both as to amount and timing, having regard to the debtor’s means.

(4) The court may include in a time order any amendment of the agreement, which it considers just to both parties, and which is a consequence of the term of the order. If the rate of interest is amended, it is relevant that smaller instalments will result both in a liability to pay interest on accumulated arrears and, on the other hand, in an extended period of repayment. But to some extent the high rate of interest usually payable under regulated agreements already takes account of the risk that difficulties in repayment may occur.

(5) If a time order is made when the sum owed is the whole of the outstanding balance due under the loan, there will inevitably be consequences for the term of the loan or for the rate of interest, or both.

(6) If justice requires the making of a time order, the court should suspend any possession order that it also makes, so long as the terms of the order are complied with.   

Practice points

Although these provisions are often referred to as giving rise to a power to ‘reschedule’ the debt , and may extend to adjusting the amount owed, the term of the loan, and the rate of interest, the court will need to strike a balance between the interests of the creditor and debtor, and will normally only make an order for a stipulated period to address temporary arrears . 

Any application by defendant for a time order under s 129 may be made (a) in his defence, or (b) by application notice in the proceedings (CPR PD 55A, para 7.1). If the debtor is a claimant, making a claim for a time order, he must use the Consumer Credit Act procedure (see CPR Practice Direction 7B).

It will be noted that the court has a separate statutory jurisdiction under s 140A etc Consumer Credit Act 1974 to (amongst other things) reduce or discharge any sum(s) payable or to alter the terms of the agreement, if it determines that the relationship between the creditor and the debtor arising out of the agreement is unfair to the debtor, although this power does not extend to regulated mortgage contracts. A debtor making a claim for an order under s 140A etc must also use the Consumer Credit Act procedure.

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