How has the Mond ruling changed PPI claims after a Trust Deed?
February 26, 2019
If you are a Scottish resident in financial difficulty, you may have entered into a Trust Deed in order to restructure debt repayments to creditors. A Trust Deed is a fixed voluntary agreement made between the debtor and creditor, with the help of a trustee. Debt is broken down into smaller, affordable instalments, typically lasting up to four years. A Trust Deed can be used for debts in excess of £5,000, but if the scale of the debts is significantly larger, you may have to consider a Debt Arrangement Scheme.
Prior to the Mond ruling, the manner in which PPI compensation was distributed amongst parties differed. If an individual discharged from a Trust Deed received payment from a successful PPI claim after the final distribution had been made, the funds would be allocated to the creditor. This would occur even if the Trust Deed had been discharged.
The recent Mond ruling now protects debtors as they will be able to retain PPI payment and assets after a Trust Deed has been discharged.
Dooneen Vs Mond
The Supreme Court recently issued a judgment in the appeal case of Dooneen Ltd (t/a McGinness Associates) and another v Mond. The debtor in the case was Dooneen Ltd and the appellant was Mr Mond who disputed entitlement of PPI compensation after final distribution.
The dispute in question was whether the debtor was entitled to the PPI compensation after the Trust Deed had been discharged and final distribution was made. The appellant argued that the final distribution had not been made as the assets of the debtor were not exhausted, nor was the creditor paid in full. As a result, the appellant argued that the PPI compensation should be distributed to the creditor.
As the existence of the PPI claim was not apparent at the time of final distribution, nor was the compensation deliberately concealed, Lord Reed and four other justices ruled in favour of Dooneen Ltd. As a result, the debtor was able to retain the PPI payment.
The judge also said that proper clarity should always be exercised when a final distribution is made by the creditor to avoid consequences as such and to eliminate ambiguity around the status of the Trust Deed, including the discharge date of the Trust Deed.
The full Supreme Court judgment can be found here.
This Supreme Court judgment clarifies uncertainties deriving from previous cases. It establishes that the creditor is not entitled to assets which are discovered after the final distribution has been made in relation to the Trust Deed, or after a Trust Deed has been discharged.
If you have any questions on how a Trust Deed works, please get in touch with the Scotland Debt team. We have been helping Scottish residents with debt problems since 1989, including sequestration and insolvency. Our debt experts can guide you through the process and help determine the best options. Please contact one our team members to arrange a free same-day consultation at any of our four offices in Scotland, or a location of your choice.
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