CI: mutuality is dead - long live unjust enrichment

**steven4064** · 16th July 2007 15:59

As others have already stated, the mutuality argument for claiming CI is currently dead (Halliday v HBOS plc 2007).

Compound interest icon

is only a compensatory remedy in equity (ie not in common law or statute) and, for that, a breach of a relationship of trust (fiduciary relationship) has to be established:

"Equitable compensation is loss-based. This must be contrasted from what might be termed ‘restitutionary’ remedies. The prime example of a restitutionary remedy is the account of profits. Thus where a fiduciary makes an unauthorised profit, equity can compel him to account for that profit. The account of profit does not require any loss to have been sustained by the person to whom the fiduciary duty is owed. Compensation on the other hand is a remedy which compensates for the loss sustained." (Association of Coroprate Trustees)

Any comments?

(THis thread came about as the result of a discusion on the CI Precedent - lost thread - http://www.consumeractiongroup.co.uk...t-1005772.html)

Similar Threads:

**elsinore** · 16th July 2007 18:13

Subscribing

Els

**mfpa** · 16th July 2007 18:26

I read somewhere (I think a Wikipedia article that I have not been able to find since) that the money deposited in a bank became the bankers to use as he saw fit.The bankers responsibility in law (not clear to me what country's law) was to return to the depositor on demand (or with the agreed notice period) an equivalent sum to the money deposited - with interest icon

if so agreed.

**steven4064** · 16th July 2007 18:35

mfpa

There has been a similar discussion to this on another thread where case law relative to the banks position of trust was put forward - I'll find it and post it later - particularly related to the payment of cheques and, by implication, the payment of SOs and DDs.

The purpose of this present thread is to explore the concepts of unjust enrichment and account of profits in realtion to remedies in equity, CI in particular.

**TANZARELLI** · 16th July 2007 23:29

How about this for starters:

a) House of Lords: Westminster Bank Ltd v Hilton (1926) 43 TLR 124, 126

“As against the money of the customer's in the banker's hands the relationship between banker and customer is that of principal and agent: It is well established that the normal relation between a banker and his customer is that of debtor and creditor, but it is equally well established that quoad the drawing and payment of the customer's cheques as against money of the customer's in the banker's hands the relation is that of principal and agent. The cheque is an order of the principal's addressed to the agent to pay out of the principal's money in the agent's hands the amount of the cheque to the payee thereof."

b) Court of appeal: Barclays Bank plc. v. Quincecare Ltd., [1992] 4 All E.R. 363

:”…..the relationship between a bank and its customer ……was that of principal and agent and as an agent the bank owed a fiduciary duty to the customer and prima facie was also bound to exercise reasonable care and skill in carrying out the instructions of its principal, the customer”.

**steven4064** · 17th July 2007 00:00

Thanks Tanz, that's svaed me havingto find where I put them

**TANZARELLI** · 17th July 2007 00:46

No probs lol

**beetlejuice** · 17th July 2007 15:27

Subscribing, I'm already lost!

Beetlejuice.

**Capitulator** · 17th July 2007 17:15

Just subscribing !

Does any of this apply to credit card companies ? I had assumed there would be a difference as they couldn't really be described as fiduciaries !

**steven4064** · 17th July 2007 18:25

Originally Posted by Capitulator

Just subscribing !

Does any of this apply to credit card companies ? I had assumed there would be a difference as they couldn't really be described as fiduciaries !

Absolutely right - I don'[t think there is any way that CC companies can be fiduciaries. However, they actually charge you CI so you can claim it back - that is claim back what they actually charged you in interest icon

on the unlawful charges.

**mfpa** · 17th July 2007 20:26

Originally Posted by steven4064

Absolutely right - I don't think there is any way that CC companies can be fiduciaries.

Probably being a bit thick here but is a bank dealing with a direct debit icon

mandate acting as a fiduciary? It seems to me a credit card company dealing with a continuous payment mandate is doing exactly the same.

Originally Posted by steven4064

However, they actually charge you CI so you can claim it back - that is claim back what they actually charged you in interest icon

on the unlawful charges.

So, if you can claim for a bank account the charges plus the interest actually charged on those charges plus s69 statutary 8%, why can you not claim the 8% in the case of a credit card?

**steven4064** · 17th July 2007 20:31

One of the problems is that 'CI' is not alwasy used to mean the same thing.

What is clear (at least to me) us that you can claim any interest the bank charged you on their charges -so for a current accout that would be the proportion of any overdraft icon

interest attributable to the unlawful charges. For a credit card it is compound interest at their normal APR (this could be called 'CI')

Then there is s69 interest. For current accounts, you can add it to every charge and every interest payment you made on the charges from the date that 'payment' was made. ('payment' is in quotes because what I said applies even if the account was overdrawn and you didn't 'pay' anything - this is another story)

For a credit card, you only claim it if for some reason your 'CI' calculation stops short in time - in our case because the card account was closed - we claimed CI up until that point and s69 thereafter. If the card account is still open, claim the CI up to the point of judgement because that is what they have charged and continue to charge you.

The argument over CI on current accounts is whether there is any route to claim compound/contractual (eg unauthorised borrowing rate) interest instead of just the overdraft interest we were actually charged. The idea that we should get CI becasue the unlawful bank charges are effectively the bank taking out an unathorised loan from us has been knocked on the head. So has the idea that we should get CI because the bank has been using the money they took unlawfully from us to make money for themselves.

There is another possible route which we are exploring at the moment that the banks have abused there position of trust and therefore we can claim CI as compensation. THis argument is unproven and we are still thinking round it - see the link in the post above.

(copied from the "Conractual Interest Precedent - Lost" thread)

**mfpa** · 17th July 2007 20:56

Originally Posted by steven4064

One of the problems is that 'CI' is not alwasy used to mean the same thing.

Contractural interest or compound interest, for a start.

Originally Posted by steven4064

What is clear (at least to me) us that you can claim any interest the bank charged you on their charges -so for a current accout that would be the proportion of any overdraft icon

interest attributable to the unlawful charges.

Sounds pure hell to calculate as the account would sometimes be over its overdraft limit, sometimes within and sometimes in credit - possibly earning (nominal) interest. The bank are not paying that nominal interest to you so that is effectively something they are charging you, too.

Originally Posted by steven4064

Then there is s69 interest. For current accounts, you can add it to every charge and every interest payment you made on the charges from the date that 'payment' was made.

Fair enough.

Originally Posted by steven4064

For a credit card, you only claim it if for some reason your 'CI' calculation stops short in time - if the card account is still open, claim the CI up to the point of judgement because that is what they have charged and continue to charge you.

This seems inconsistent: why can you claim s69 on top of the interest they charge you for a bank account but not for a credit card?

**photoman** · 17th July 2007 21:18

Steven,

Hi there, just subbing icon

.

PM

**TANZARELLI** · 17th July 2007 21:20

Originally Posted by steven4064

Absolutely right - I don'[t think there is any way that CC companies can be fiduciaries. However, they actually charge you CI so you can claim it back - that is claim back what they actually charged you in interest icon

on the unlawful charges.

There has been discussion about some CC's having a fiduciary responsibility. For example I had an account with Barclays icon

and was recomended a Barclaycard by my bank, as Barclaycard is a trading name for Barclays Bank then there could be some small arguement that th fid duty applied also.

**overflow** · 17th July 2007 22:15

Hi

Just subscribing, but Ive found this definition of "Equity" if its of any interest icon

to anyone. (Probably not but here goes)

EQUITY.- A system of Law designed to furnish remedies for wrongs which were not legally recognized under the common law of England or for which no adequate remedy was provided by the common law.
2) Another word for stock (or similar securities representing an ownership interest)
3) The amount by which an entity's assets exceed its liabilities.

An accounting term used to describe the net investment of owners or stockholders in a business. Under the accounting equation, equity also represents the result of assets less liabilities.

Dont know if anyone can find this relevant

**cala99** · 18th July 2007 12:09

Dear ***********
I reiterate the points outlined in my email below and confirm that your proposed claim for interest icon

at a rate of 29.69% is entirely without merit. I set out below the Bank's position. Quite simply:

there is no express term in the banking contract between the parties that entitles the Claimant to charge the Defendant interest at 29.69% per annum (or at any rate) on sums which might otherwise be due to the Claimant from the Defendant; and
nor is there any basis upon which to imply or otherwise "impose" such a term into the contract between the parties. It is trite law that a term will not be implied into the contract simply because it is "reasonable" or "fair" to do so but only because it is necessary to give business efficacy to the contract. In the present case, it is plainly not necessary for such a term to be implied. See also the recent decision of Underhill J in Halliday v HBOS PLC [2007] All ER (D) 66 (Jun) (QBD) to similar effect.

I reiterate my request for a schedule detailing interest at 8% and confirm that should you choose to pursue your claim for contractual interest at a rate of 29.69%, we reserve the right to apply to the Court for an Order striking out this part of the Claimant's claim and we shall refer to this correspondence on the issue of our costs.

Kind regards

Hi - That's the letter i received today! so basically saying its a no go on fair & reasonable /mutuality and reciprocity! I was hoping they wouldn't realize! In any case -any ideas on what I should respond? I mean in terms of CI - is there another argument I should put forward now? Plus I just received a court date today for november...should i mention?

thanks for any possible help!!!

**overflow** · 18th July 2007 12:50

Hi Cala 99,

read your post and this is the reason a lot of people are not trying to claim CI at the moment.

I dont think anyone has yet come up with a good solution to this yet.
I myselfwas gong for CI on a claim with Haliprats but in light of the Precedent Lost case decided not to even try, cause I know I dont have enough evidence to argue the point to a successful claim.

Sorry if this is just what you DIDNT want to hear and if anyone thinks Im talking through my hat please feel free to correct me.

Regards

**steven4064** · 18th July 2007 13:24

Hi chaps

Sorry to be a pain but this thread is supposed to be to discuss the issues related to unjust enricment and account of profits.

Would youmind keeping other CI-related stuff to http://www.consumeractiongroup.co.uk...dent-lost.html
so we don't get confused.

Thanks

**overflow** · 18th July 2007 13:30

soooorrrrrwwwweeee:o

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