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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3755
Experience:  Solicitors 2 years plus PQE
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In 2008 my husband started a new business as a property

Customer Question

In 2008 my husband started a new business as a property developer and borrowed £140k from a person he knew through the industry. The credit crunch and the Bank brought the site to a halt as the funding was halted and the bank moved in. Martin and myself signed a promissory note for £140k in early June £2011; the money was to be repaid within a year. This person had a charge against my mothers house and when it was sold the profit of £109k was paid to this person early in July 2011. He wrote a cheque to Mom for the £9k so that he had a nest egg. The balance on the promissory note was now £40k. Unbeknown to me, my husband then borrowed £70k from the same person, this time the 2 cheques were not made out to the company and were paid into an account I knew nothing about. I know the reason for not paying into the company account; the bank would have taken all of the funds. During this time I have kept in touch with this person letting them know the outcome of complaints I have made to the bank and to the Financial Ombudsman all of which have been denied. At last the banks are admitting that they "bled" micro companies dry in order to recoup money they had lost during the credit crunch. We have a case with a Barrister now and hopefully the outcome will be in our favour and we can all regain monies lost. This person has just issued a "Demand for payment" of £140k to be paid within 14 days or legal proceedings will commence. Can the £70k that my husband borrowed be revisited on the original promissory note> When this person agreed to loan the money there was no contract, written or verbal regarding repayment. The 6 year statute bar on this money expires on the 17th of this month. It was always my understanding that if compensation was awarded through our court case the £70k would be repaid at that time. I also believed that this person was of the same opinion. We have to agree to a charge against our property and then he will call the "dogs off". The last 9 years have been a nightmare and it has cost us dearly, not only money, but the end of a 36 year marriage. My husband is a broken man and he hasn't worked for the last 5 years.
Submitted: 4 months ago.
Category: Law
Expert:  Alex J. replied 4 months ago.

Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Was the promissory note an "all monies" note or did it only reference the £140k. Is this individual trying to pursue you for the additional borrowings that your husband drew down under the terms of the promissory note? Kind regards AJ

Customer: replied 4 months ago.
Hello,
The Promissory note was for the £140k at the very being of the build in 2008. The bank wanted the company to put in £240k but we couldn't raise that amount. The money was paid into the Solicitors account and then used to buy the land, one house that was to be knocked down and used as a start up fund for the development. The note was written because the lender had a charge against my Mothers house to ensure that he got his money back. House prices fell and my Mothers house sold for only £112k not the £140k it was originally valued at. When Moms house was sold, the lender was repaid £100k leaving £40k on the promissory note.
Customer: replied 4 months ago.
I think I missed a number out
Customer: replied 4 months ago.
Hello are you still there? I thought you were asking me to call you.
Customer: replied 4 months ago.
Can you email me a time for us to continue. I do need to respond to the Solicitors letter by 19th July.
Customer: replied 4 months ago.
Hello, not sure what to do now. How do I find out if you are still there? I work from 7.30 until 4.00 and I don't get home until after 5. Would you be able to contact me after five. This is quite important to me.
Expert:  Alex J. replied 4 months ago.
Thank you. So assuming you did not pay the £100k as a full and final settlement to this individual he can only claim the balance on the promissory note - £40k. He cannot keep adding to the balance of promissory note and increasing your indebtedness without your consent. Did he have any right to charge you interest for the debt? Kind regards AJ
Expert:  Alex J. replied 4 months ago.
I will be online after 5 as well. Kind regards AJ
Customer: replied 4 months ago.
he could have charged interest on the debt, but by waiting until the 11th hour, 2 days before the end of the 6 year statute bar he said it meant he didn't charge the interest he could have. The problem here is after repaying £100k he then lent my husband £70k. This was a "loan" made out in a cheque or 2 of them for £35K. The cheques were in Martins name; this amount has been added onto the original promissory note. Surely this is a separate matter? I'm not disputing that there is money to be repaid, I am disputing the amount on the original note. The £70k was borrowed, with no written or verbal contract and no Solicitor was involved; the 6 year statute bar has also run out. I am willing to negotiate and resolve this issue but I need to know what I am thinking is correct and therefor I can confidently go forward and put my case to his Solicitor; I cant afford to engage a Solicitor for us. If I am wrong then I will have to sell the house and settle the debt. Through all of this financial crisis my husband left the marital home and has had a breakdown. He hasn't been able to work for almost 4 years. He was a Principal Building Inspector and highly respected. If I could just resolve some of our financial problems I'm sure it will help him. We have been married for 37 years. Regards Elaine
Expert:  Alex J. replied 4 months ago.

Thank you. The bot***** *****ne your assets are not liable for the additional £70k - the Statute of Frauds states that you can only accept liability for another persons debt if you do so in writing. The promissory note is only for a fixed so he cannot unilaterally add to the promissory note a capital without your consent. Does he have a charge on your property? Kind regards AJ

Customer: replied 4 months ago.
There is no charge as yet, but if we agree to do it, he will stop the demand for payment.
Customer: replied 4 months ago.
I am just going to get something to eat and I will be back at my screen at 6.15 to carry on. I don't have a lap top so I have to keep on coming back to see if you are there.
Thank you Elaine
Customer: replied 4 months ago.
is it correct that the 6 year statute bar means that the £70k is now dissolved anyway? This man also first said he wanted to invest in the company and then he said it was a loan because things started to look bad due to the credit crunch, but then again he loaned Martin a further £70k to complete the build !
Expert:  Alex J. replied 4 months ago.

Hi, Thank you. You should not agree to a charge over your share of the property for the £70k - unless you accept liability for that in writing you are not liable. The debt only becomes statute barred (this would be the balance of the original promissory note) if six years go by without a demand. When did he last make a demand for the original balance - not the further monies advanced to your husband?

Customer: replied 4 months ago.
The original note was signed on the 30th June 2011. The sale of Moms house was completed on the 1st July 2011 and all of the proceeds went to him on the day. It might have been bacs transfer I don't think he waited for a cheque. He didn't ask again for any payment until the 27th of June 2017, letter of demand for the full payment within 14 days. This payment isn't statute barred, he thought he could demand all of the money in one hit. I think he told his Solicitor about the £70k loaned after the repayment.
The £70k was borrowed between 2nd July and the 12th July 2011 and no payment has been asked for or made.
Customer: replied 4 months ago.
Sorry I DON'T think he told his solicitor about the £70k. The house is still in both our names so I know that he will come after the house for his £70k. We hopefully have compensation due and I was going to repay the money then. I thought that we had an understanding, but he got in just in time.
Customer: replied 4 months ago.
I just want to put the brakes on until the outcome of our case against the bank. Mom has lost her home and we have invested and lost £138k plus 3 years of working on site with no payment what so ever. We are not refusing to pay.
Expert:  Alex J. replied 4 months ago.

Hi, Thank you. To be clear he will be able to enforce the existing £70k against your husbands share of the property. If you want to put the brakes on you could offer him a charge over the property (with your consent) and in return ask for a forbearance agreement, this would be forbearance against being sued or having any enforcement proceedings being take. When will you expect to receive any compensation?

Customer: replied 4 months ago.
Is the £70k 6 year Statute barred ? If its not can you explain to me why its not please? Its not that we are not going to pay him, its just that he has been so sneaky in the way he has treated me especially. All he needed to do was talk to me as we have done over the past 6 years. I had forgotten about the promissory note and I thought he was "with me" on the fact that payment would come from any compensation. He invested in the company along with my Mom and us. Now he wants to change it because we have all lost our money. It has taken 5 years to get this far with our claim against the bank, it could be over in a month it could take another year and he knows that. We are all stuck in limbo.
Expert:  Alex J. replied 4 months ago.

Hi, Thank you. For a debt to become statute barred, you need to go 6 years without there being any demand for payment - every time a demand for payment is made this period will reset. Sorry if I have misunderstood this point but to confirm the £70k is your husbands debt only?

Customer: replied 4 months ago.
Thank you for your advice, it will help in negotiating what happens next. The best outcome will be, compensation that gives everyone their money back. If there is no compensation then I will have to leave the house to Chris's family in my Will. I work for the solicitors Mills & Reeve, but I didn't want to involve anyone at work. The Family Solicitor is handling my divorce and Martin will sign a document to say the Mom and myself can live in the house until the death of both of us, I will just have to add Chris to the list. He will be paid, we could not "steal" that amount of money off anyone. Sorry for the disjointed conversations. You have been very helpful. How do action payment?
Expert:  Alex J. replied 3 months ago.

Hi, Thank you. ***** can assist any further please do not hesitate to contact. In the mean time I would be most grateful if you would rate my answers on this thread? Kind regards AJ

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Customer: replied 3 months ago.
Hello, I wrote to the Solicitor stating that we wanted to appeal against the Demand for Payment. I detailed the time line and events of the last 6 years, my husband then delivered it by hand on 19th July; this was the dead line for replying to her letter.
What happens next? Might we receive a letter in the post informing us that we have to go to court and they will pursue the repayment of £45k approx. Do they have to reply to our appeal or even let us know what they intend to do next?
Thank you Elaine
Expert:  Alex J. replied 3 months ago.

Thank you. To clarify two points, did the solicitor issue the demand? Did they give a deadline by which they would issue a court claim?

Customer: replied 3 months ago.
Sorry I haven't got the letter in front of me. Martin has it. I will get it tomorrow and then get back to you.Thank you
Elaine
Customer: replied 3 months ago.
Alex, sorry it has taken so long to get back to you. I am confused about the "Demand". Is this a document I should have received a copy of or is the letter from the Solicitor the Demand? The letter said I should reply within 21 days and if I didn't the matter would proceed without further contact. I haven't heard a word since the 19th July when Martin hand delivered our appeal against the amount owed. Its gone very quiet. I have been looking on the internet regarding "what I should do next" and the information suggests there is paper work I should submit to the court regarding the appeal. I haven't got any documents detailing the court I should appeal to. What do I do next? Thank you Elaine
Customer: replied 3 months ago.
Just remembered, I did a search at The Registry of Judgements, Orders and Fines and it came up as "none". Would the demand be listed there if the Solicitor had gone to Court?
Thank you
Elaine
Expert:  Alex J. replied 3 months ago.

Hi, Thank you. This sounds like they sent you a statutory demand, this is not a court claim but is a way of putting pressure on people to pay. In theory they could petition for bankruptcy if you did not pay within 21 days. I would write to them and ask them to withdraw the demand as soon as possible, are you any closer to knowing when any compensation will be paid in the mean time?

Customer: replied 3 months ago.
Hi, I received a letter from their Solicitor today, but I'm still too shocked about the situation to open it. I don't know if its good news or bad. I have sent it to Martin and he can open it and let me know tomorrow. With the 6 year statute bar on £70k and the £10k the most he can now claim is £35k on the original promissory note; will this mean that the original demand for payment and the threat of court action is now void as it was based on incorrect information? Plus the date has passed for the 6 year statute bar on the remaining £35k. The Solicitor has obtained some sort of order as they are willing to hold off for 4 months. I have contacted the person dealing with our claim against the bank, but he had to cut the call short. I am hoping
for news tomorrow. If there is compensation from our claim ***** ***** will be listed as a creditor of DMR Homes Ltd as will my Mom, Martin and myself. Chris has known this for 5 years.
Customer: replied 3 months ago.
Hello Alex, are you still available to help me or do I need to start again with another solicitor.
Thank you
Elaine
Expert:  Alex J. replied 3 months ago.

Thank you. I am happy to still assist. My apologies for the delay in responding. Are they waiting for 4 months to see the outcome of your settlement?

Customer: replied 3 months ago.
In the letter she said that if we let them put a charge against the house they will not proceed. The reason I don't want to put a charge against the house is because I want to move, preferably after the outcome of the court case. I don't really want to have to move Mom more than once. If there is compensation I could buy a smaller home for us both. If we let them put the charge on the property, all proceeds from the sale will go directly to Chris. Martin doesn't want anything from the sale so I know how much I might have. The last time we "spoke" you asked if Martin had any other debt; we have a joint credit card debt of about £29k. We used the cards to carry on with the build when the bank stopped funding us. I have an arrangement and I am paying £120 a month for the last 4 years. We are hoping to settle this asap.
Customer: replied 3 months ago.
Sorry about our disjointed conversation, I don't have a lap top and I can only get to my PC after 2.00 pm. Hope this isn't inconvenient for you.
Expert:  Alex J. replied 3 months ago.

Hi, Thank you. The charge wont stop you from being able to sell the house, but obviously they would have to consent to the removal of the charge. Are they asking you

Expert:  Alex J. replied 3 months ago.

to consent and accept the part of the debt that is statute barred? Kind regards AJ

Customer: replied 3 months ago.
Hi Alex, they haven't even acknowledged the statute bar. Would it be easier if I send the letters from their Solicitor and my response? I can add them tomorrow afternoon.
Elaine
Expert:  Alex J. replied 3 months ago.

Thank you. If it is ok that would be helpful, can you post them into this link? Kind regards AJ

Customer: replied 3 months ago.
Here is the correspondence to date. I haven't sent the last letter just in case I have misunderstood the information you have given me. There should be 4 separate documents attached. I'm not sure if they will all go in one email.
Thank you Elaine
Customer: replied 3 months ago.
Just checking to make sure that the 4 attachments were delivered.Elaine
Expert:  Alex J. replied 3 months ago.

Thank you. I have received these. I am travelling today so will review them tonight. Kind regards AJ

Customer: replied 3 months ago.
Thank you for letting me know.
Regards
Elaine
Customer: replied 3 months ago.
Hello Alex, I have received a letter today asking us to respond the their letter of the 31st July "Mr Walker will say ......." by the 21st August. Is it possible for you to have an answer regarding our documents by the 18th August. The only reason I am against the charge on our property is because I don't believe that Mr Walker will remove the charge when I sell. There is possibly £110k to £140K equity. I will have to settle the credit card debt and then find a smaller property to buy. I am 60 and I wouldn't get a mortgage now and I don't really want one. The Solicitor at work who is helping me decide about a divorce said a document can be drawn up whereby Mom and I live in the house until both our deaths and then Martin would get the property. Mr Walker wants his daughter to inherit our property as repayment of the £120k that we are disputing. Last on the list would be Mr Walkers daughter. I think this is a fairer way to deal with the situation. I am absolutely mortified to have been forced into a position whereby I seem to be "stealing" this money. The best solution would be compensation from the bank, whenever that might be. Thank you
Expert:  Alex J. replied 3 months ago.

Thank you. My apologies for the delay. Can clarify one thing - the last letter refers to their version of events being that the loan was paid to both of you - did you ever actually accept this debt in writing? Would a way forward be offering a charge for a fixed sum - that is automatically released if the funds from the bank compensation come through? Kind regards AJ

Customer: replied 3 months ago.
There was never anything in writing at all regarding this money. After the event I did know about it but I never saw the account that Martin paid the money into.
With the 6 year statute bar and the type of promissory note we signed, doesn't this mean that the only amount he can actually claim is £35k. I am only asking this as I feel he blind sided me, by not letting me know what was about to happen. Even the Bank had the courtesy to phone me and say "there is a letter in post demanding payment £660k concerning DMR Homes Limited. The bank is aware that you are unable to pay this amount and therefore please send a letter confirming this along with a list of your income and outgoings". Mr |Walkers letter was a complete shock; he didn't have to put us in this position. I wanted to send the letter to let him know that he can't scare me into doing what he wants and actually,legally he can't either.