Thread: The Phantom v Northern Rock ***WON*** 12 years charges plus interest@8% - £8293.54

Just got back from banking the cheque - at my Local branch of Northern Rock, no less.

Full story to follow as I'm a bit busy for the next few hours. But one thing to mention is that NR absolutely, point-blank refused to consider any claim for contractual interest. They seemed well willing to fight it out in Court and the few hundred quid difference wasn't worth the hassle to me given that most of the settlement was interest anyway.

P.

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Ok, this is is quick run through of my story, sorry don't have a scanner so I can't reproduce the full letters from the bank.

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Sent SAR on 11th Aug 2006 requesting details of all charges.


Letter recieved on 5th sept with list of charges dating back 6 years and saying that Northern Rock is only required to retain the information for 6 years.


Wrote the following letter to them on the 8th Sept:




08/09/2006




Re: Your letter of 5th Sept 2006 - Ref BC/XXXXXXXX




Dear Beverley,


I thank you for your letter of the 5th September and note the contents therein.


You mention that Northern Rock is legally obliged to keep a record of all transactions for 6 years. This does not fully comply with your obligations to provide information under the provisions of the Data Protection Act. The bank is required to tell me whether it actually holds this information, not merely whether it is required to do so or not.


I would be most greatful if you could confirm to me whether you do actually hold this information or not and, if so, provide me with a list of the relevent charges as per my previous request.




Yours sincerely




The Phantom


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Received a letter 16th September containing the balance of the charges.




Sent the following prelim letter

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11/11/2006






Re: Unlawful penalty charges debited to my account, XXXXXXXX, 1995 - 2006




Dear Sir/Madam,


It has come to my attention recently that penalty charges made by you to my account, number xxxxxxxx, are unlawful.


You will be aware, no doubt, that in April this year the Office of Fair Trading published a report regarding such charges. It concluded that they were unlawful under Common Law, in Statute (Unfair Contract Terms Act 1977 Sec.4) and under recent consumer regulations (Unfair Terms in Consumer Contracts Regulations 1999 Sec.8). In addition, the OFT concluded that such charges did not accurately reflect the actual liquidated losses they purport to compensate for, nor has any bank shown that they are a genuine pre-estimate of same.


The charges which this letter relates to are those charges which were debited from my account between 22nd March 1995 and 16th January 2006, as detailed in your previous letters to me and on the attached schedule.


I consider that you have deceived me into paying these charges through presenting them as fair, reasonable and lawful and that your concealment of their true nature has prevented me from reclaiming them until now. I therefore respectfully request that you pay them back with immediate effect. As these charges were debited from my account without my informed consent and, in my opinion, unjustly enrich the bank, I am applying interest to them at the rate mentioned in my contract with the bank, compounded annually. This is your current overdraft rate of 11.8% applied to each charge from the date it was made to 16th September 2006, the date on which I received your final letter detailing such charges. The total owed is £8,477.99


A schedule of the relevant unlawful charges along with the interest accrued on each one is attached to this letter. I will also expect you to reimburse me for any overdraft interest charged at the time that the unlawful charges were made. That is, the interest that has been incurred solely to the unlawful charges themselves and as such would not have been incurred had the unlawful charges not been applied.


It is shocking to me that an organisation such as yours, and to which I entrust my finances, should act in such a deceitful manner with my money. Not only have you consistently deceived me for years regarding the true nature of these charges, you have even attempted to deceive me into believing that you hold no records relating to me prior to June 2000. This, I can only conclude, was an attempt to prevent me from reclaiming the aforementioned charges. Whilst on this matter; I note that the second list of charges you have provided me with dates back to March 1995. My most recent statement relating to this account is number 189. At one statement per month this would mean that this account has actually been open for circa fifteen and a half years, approximately four years before the earliest charge you have provided me with details of. May I strongly urge you to check all of your records relating to my account and to make absolutely sure that I have been provided with details of every charge that has ever been applied to this account as I am entitled to be under the terms of the Data Protection Act. Should, during the course of things, I discover that you are still concealing charges from me I will consider it to be a very serious breech of trust on your part and I will be making representations to the OFT, FSA, the Data Protection Registrar and the Banking Ombudsman regarding it.


In addition to being refunded these charges I will require you to remove any and all detrimental information which you may have recorded on my credit history as a direct consequence of the said charges. A mere correction or amendment will not be acceptable. Should I discover that any detrimental information due to these charges has in any way caused me financial harm then I will be pursuing separate claims to compensate me for such damage. In addition I require you to cancel any charges currently pending on my account.
I would be grateful if you could contact me within 14 days to agree a payment date so that we can bring this matter to a speedy conclusion without having to resort to legal remedies.
If you do not respond, or you do not respond positively, within this time period, I will send you a letter before action giving you a further 14 days in which to reflect. I believe that these targets are more than sufficient for a large company such as yours with dedicated staff and departments.
After that, there will be no further communication from me and I shall issue a claim at the expiry of the second deadline. Should this be necessary you will incur Court costs in addition to the sum already owed.
As a goodwill gesture in anticipation of your early settlement I have not included any costs relating to the substantial amount of time, effort and expense I have incurred in calculating this claim and researching this area of law. Should it be necessary to pursue this matter to Court I will have no choice but to request that the Court awards to me such further costs as it deems reasonable to compensate me for time that otherwise could have been used more productively.



Yours,


The Phantom


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Received long reply refusing refund on 22nd Nov. Reasons being that “Northern Rock refutes that charges are unlawful”, charges levied are “services” provided by the bank, charges are a “core term of the contract”. Also, the Terms and Conditions envisage that your account may be in one of three states, “in credit; in an authorised overdraft position; or, in an unauthorised overdraft position. They are saying that because they have pre-empted the state your account may be in then you are not in breach of contract. They also made mention that the OFT report made was on credit card charges, not bank account charges.


I responded on the 23rd with the following;


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Re: Your letter of 22nd November 2006




Dear Lynn,


I thank you for your letter of the 22nd November and note the contents therein. I am sure will be unsurprised to learn that I do not accept your position.


I do not agree that charges levied by you for refusing to pay direct debits, returning cheques and exceeding authorised overdraft limits constitute charges for a service. Nor do I consider that your suggestion that because you may have envisaged me exceeding my overdraft, or failing to keep sufficient funds to pay direct debits, etc this somehow means that I am not in breach by doing so.


I would bring your attention Sec.6 of your Terms and Conditions, entitled “Operating your Account”. Sub-section (a) of that section clearly states “You must keep your account in credit or within any agreed overdraft limit”. This term is clear and leaves no room for ambiguity. If I fail to adhere to it then I am in breach and any charge you may levy as a result of such breach must accurately reflect the actual loss caused by my breach, or be a genuine pre-estimate of same. It really is a simple as that and it amazes me that a lay person such as myself need point this out to a large financial institution that, presumably, has access to the best legal advice available.


Further, I would ask that you note Sec.4(a)(iii) Cheque, which clearly states that cheques may be issued up to the cleared balance or agreed overdraft limit. Should a customer inadvertently issue a cheque in excess of such agreed limit then he would be in breach and any charge made for such breach must reflect the actual costs incurred by you or be a genuine pre-estimate of same.


In reference to paragraph six of your letter asking me to provide details of the common law and statutory principles on which I rely. I really do find it incredible that a bank that can afford excellent legal advice has to ask this, especially as you allude to knowing the answer to this anyway only two paragraphs previously when you refer to how a Court determines what constitutes a penalty.


In Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79, Dunedin LJ, in stating his view of the law on penalties, distilled from previous cases (most notably, Clydebank Engineering and Shipbuilding Co. v. Don Jose Ramos Yzquierdo y Castaneda in the House of Lords and Public Works Commissioner v. Hills before the Privy Council) the following rules to be applied when deciding whether a charge made for breach of contract constitutes a penalty. The parts of his statement which i think applies to my case are set out below.


“It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach.”


In the absence of you providing evidence as to the exact cost (or a genuine pre-estimate) that you are put to in the event of a breach of contract as described above then I can only reasonably conclude that the charge you make is indeed “extravagant and unconscionable” in nature. I find it unbelievable that it costs you £30 to return a cheque (especially as you do not even physically receive cheques for less than £5,000 back from the bank they were presented for payment at.) and £28 every time a customer exceeds his overdraft limit. Indeed, this latter charge is not even a true cost to you in any way as it is something you chose to do and is entirely avoidable by not allowing the customer to go overdrawn (and hence be in breach) in the first place.


Sec.4 of the Unfair Contract Terms Act 1977 places a prohibition upon a party to a contract requiring a party who is acting as a consumer from being required to indemnify the other against his negligence, unless it can be shown to be reasonable between the parties. The levying of a charge by you, purportedly to cover your costs for my breach, is clearly such an indemnity. If you wish to rely on the reasonableness test contained in that section you are welcome to try but I believe it would be highly unlikely indeed that any reasonable Court would consider that I, a consumer, am better placed to carry an ordinary business risk than a large financial institution such as Northern Rock. Especially as these charges are levied by all banks so I have no opportunity to change my account to a bank that does not apply them.


I would like to move on to the very important point mentioned in my previous letter that you have not adequately addressed in your response. That being, my request that you check your records as to whether this account incurred charges prior to March 1995. As you are no doubt aware I made a properly submitted Subject Access Request on 11/08/2006 to request details of charges applied to the account. This was not properly complied with as you provided me with an incomplete schedule of charges which only dated back some 6 years or so. Upon a further letter from me you provided me with details of charges dating back to 1995. I have since pointed out that my statement numbers indicate that, in fact, this account was opened at a date well before 1995 and have asked you to look in to this matter in my letter of the 11th November.


You have not provided a satisfactory response in relation to this request. I asked you for written confirmation of all charges applied to this account since it was opened. As you are probably aware you are required in law to provide me with all the information I have requested, or to confirm to me in writing that you do not hold it. Please confirm to me, in writing, the actual date on which this account was opened and whether or not you actually hold charge information (or any information) relating to it prior to March 1995. If you do hold such information I require you to provide it to me as per my original request.


Failure to comply with a Subject Access Request is serious matter. I would respectfully bring to your attention an order made in the Barrow in Furness county court on 21st November 2006 in relation to a banks failure to comply with a Subject Access Request. In making the order district judge Forrester commented that had the claimant been able to supply the name of the data controller at the bank then he would have included a threat of imprisonment for non-compliance.


I do hope this letter has clarified the legal position in relation to charges for you and I am sure you will now realise that the charges applied to my account do indeed constitute unlawful and unenforcible penalties.


My position on this matter is clear, however, I am willing to reconsider upon receipt of a full breakdown of your costs associated with each of the charges levied to my account. Failing that I would like you to consider this letter to be my letter before action in this matter and would advise you that I shall begin legal proceedings to recover this money 14 days from your receipt of it.


Yours


The Phantom


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Received further reply on 7th Dec basically reiterating what they had previously said, not penalties, no breach, etc, etc.


I Wrote back on the 8th with the following;


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Re: Your letter of 7th December 2006




Dear Lynne,


I am in receipt of your letter of yesterday and would like to make the following observations regarding it.


To begin I would like to once again address the very important point of my original subject access request which has still not been properly complied with. You state in your letter that you are only required to store my records for a reasonable time. This is true, of course, however, the Data Protection Act places a requirement on a data controller to provide the requested information if he still has it or to advise that he no longer has it. You are correct that you are not required to provide information that requires a disproportionate effort to obtain but, if this is the case in relation to my information then you are required to inform me of the fact. I find it very difficult to believe that information, even quite old information, relating to a still active account has been destroyed or would involve such a disproportionate effort to locate.


To reiterate my request. Please provide me with any information you hold in relation to charges applied to my account that pre-dates 22nd March 1995, including the date on which this account was opened. If you no longer hold this information then please tell me, in writing, when, and by what method, it was destroyed. If this information does indeed require a disproportionate effort for you to locate then please inform me as to why this is.


I find it utterly astonishing that you are still claiming that the charges that are in contention are not levied for my breach of contract despite the contents of my previous letter. I do not intend to discuss this at length again, other than to say that I cannot believe that anyone could contend that a charge made for exceeding an overdraft limit is anything other than a charge that is triggered due to a breach of contract! As previously pointed out, Sec.6 of your terms and conditions state; “You must keep your account in credit or within any agreed overdraft limit”. Therefore, an account holders failure to keep his account within the limits prescribed by Sec.6 must be in breach of contract. The fact that the terms and conditions envisage several states that my account may be in is totally beside the point. Just because you accept the possibility that something might happen does not mean that its status changes because of it and to say that it does is stupidity almost beyond belief.


You state that the charges are for “services” rather than for the account holders breach of contract. Presumably then, the charges you make include a VAT element? I have had accounts with many banks, including business accounts, and I cannot recall ever seeing a VAT element to charges included on my bank statements. If I had I would have claimed it back.


A charge made for not paying an automated direct debit cannot possibly be a “service” as you are not actually doing anything so are not providing me with a service of any description. Telling another bank that they can't have a payment is not providing a service, in fact, it is a specific refusal to provide a requested service. It would be akin to me being charged a fee at a pub because the beer I had requested had run out.


If you are adamant that refusing to do something really constitutes providing a “service” then next time I am in one of your branches and I am offered a loan, mortgage, credit card, etc, I will forward to you a bill of £30 upon my refusal of your offer for the service I have provided.


I am fully aware of the statutory limits relating to time barring of debts under the provisions of the limitation Act 1980. However, you will be aware, no doubt, that Sec.32 of that Act provides relief from the strict 6 year rule in the case of the debt having been accrued through fraud or mistake. In such cases the Act provides that the 6 year limitation time runs from the time that the fraud or mistake was discovered, or should have been discovered through the exercise of due diligence.


As I have mentioned previously, I consented to the charges in the belief that they were fair, representative of your costs and that there were lawfully debited by you. I consider that I was deceived into this belief by the bank (or at the very least that I mistakenly consented to them) and will seek to pursue this position at Court.


I really cannot see any further benefit in repeatedly arguing the same points time and again as we are going no where. Obviously we cannot agree on this matter so the only sensible option to resolve the issue is for a Court to give a ruling.


As you will appreciate, this matter has been ongoing for almost 4 months now (due, in part, to your attempts to dishonestly conceal charges from me). I must inform you that this will be my final letter on the subject unless you provide me with a better legal argument than the one you already have.


This letter has been posted first class on the date shown above. Should I not hear from you by 15th December 2006 I will file a claim form at the Court that afternoon. I will also file a form asking the court to require you to properly comply with my subject access request. Both of these actions will incur further costs to you (and subsequent costs should further charges come to light) and I will also ask the Court to compensate me for the substantial amount of time and expense I have had to devote to this matter.


Yours,




The Phantom.


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Got a letter dated the 12th saying that as I was dissatisfied with the previous response the matter was being referred back to their legal department.


Another letter on the 25th Jan going over the same old rubbish and trying to frighten me into not proceeding by quoting bit of the CPR at me and saying that my LBA was manifestly lacking in sufficient detail and didn't constitute a proper LBA. They concluded by saying that Northern Rock looks forward to receiving a substantive response to their previous letters and basically egging me on to file a claim form.


However, I'd filed my claim at Court the day before they wrote that letter as their time had run out.


The Particulars of Claim on the form were thus;
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1. The Claimant has an account ("the Account"), number xxxxxxxx with the Defendant which was opened on or before March 1995.


2. During the period in which the Account has been operating the Defendant debited numerous charges (the charges) to the Account, those charges being in respect of the defendants refusal to pay direct debit requests, standing order requests and cheque payments from the account due to the defendants failure to maintain a sufficient credit balance in the account to satisfy such requests and also in respect of the defendants failure to operate the account within agreed credit limit.


3 The defendant maintains that the charges were made for account services provided to the claimant - those services being the refusal by the defendant to requests from third parties to pay direct debit requests, standing order requests and cheque payments from the account.


4. The claimant contends that the defendants refusal or inability to make a payment from the account could not properly be regarded as a service provided by the defendant and that such services are not mentioned in the contract concluded between them.


5. The claimant contends that a refusal by the defendant to perform a service requested by a third party on behalf of the claimant, or the defendants inability to perform a requested service, can not, of its self, be regarded as a service provided to the claimant or the third party.


6. The claimant contends that the charges were, in fact, levied by the defendant due to the claimants breach of contract in failing to maintain a sufficient balance in the account to ensure that payment requests are met and failure to keep the balance within the agreed credit facility.


7. The Claimant contends that the charges therefore constitute penalties levied for the claimants breach of contract and, as such, are unlawful at common law and are consequently unenforcible. The claimaint contends that:


a) The charges debited to the Account are punitive in nature; are not a genuine pre-estimate of cost incurred by the Defendant due to the claimants breach of contract; exceed any alleged actual loss to the Defendant in respect of any breaches of contract on the part of the Claimant; are not intended to represent or relate to any alleged actual loss, but instead unduly enrich the Defendant which exercises the contractual term in respect of such charges with a view to profit.


b) The contractual provision that permits the Defendant to levy such charges is unenforcible by virtue of the Unfair Contract Terms in Consumer Contracts Regulations (1999), the Unfair Contract Terms Act 1977 and the common law.


8. Accordingly the Claimant claims:


a) the return of the amounts debited in respect of charges in the sum of £3,849


b) interest applied to the amount at the rate mentioned in the contract concluded between the Claimant and the defendant; this being the rate for borrowing of 11.8%, applied to each charge from the date it was debited from the account until 21st September 2006 and compounded annually; in the alternative, should the court feel that this rate is not applicable, the claimant claims interest at the Court rate of 8% under Sec.69 of the County Courts Act, compounded annually.


c) reasonable costs (detailed on the attached schedule of charges) to compensate the claimant for correspondence with the defendant, postage expenses and the defendants time expended in preparing the claim.


d) court costs.


9. A list of the charges applied to the account is attached to these particulars of claim.
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I also included £200 in costs on my schedule of charges to compensate for the time and hassle doing the claim.


Bank filed defence on 16th Feb. Basically, it was along the lines of what they had already said but with a very important change. The bank sought to justify the charges as being charges for services with a cunning little trick. They claimed that the service they provided wasn't one of wctually refusing the payment requests, etc, but rather was for the “consideration of provision of the service to honour payment or not”


I did a response to their defence, as follows;


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Claimants response to defence

1. The claimant refutes the defendants assertion in paragraph 5 of the defence that the charges applied to the claimants account were for services rendered by the defendant – those services allegedly being the consideration of whether or not to honour a particular item presented for payment where payment of the item would result in the claimant becoming overdrawn or exceeding his credit facility. The claimant believes this because;

1. Clause 6(a) of the Terms and Conditions applying to the account is not a clause which defines a service that the defendant is providing, or offering to provide, to the claimant. The clause states that the account holder must keep his account within credit or within any agreed overdraft facility. The clause also provides that charges would be applied in the event of a breach of that term. The wording of the clause by the defendant to include a statement to the effect that the defendant may allow the account to become overdrawn, and the defendants subsequent allowing of it to become so overdrawn, does not obviate the fact that such overdrawing or exceeding of the credit limit by the account holder results in the account holder being in breach of that contractual term, not withstanding the fact that the defendant is aware of, and has consented to, the breach. This being the case, any charge made by the defendant that is purportedly given rise to by clause 6(a) is, the claimant believes, a charge levied due to the account holders breach of the contractual term and is consequently unlawful and unenforcible.
2. The claimant is in possession of a letter from the defendant dated 26th May 2004 which relates to a cheque issued by the claimant, number 000440, that the defendant was unable to pay due to insufficient funds available in the claimants account when the cheque was presented for payment. The letter states that the defendant was “unable to honour” the cheque, rather than being unwilling to do so after having considered whether it would do so or not. The letter also states that the defendant would charge the claimant £30 “In order to cover the additional costs involved in returning your cheque” and refers to this charge as being it's “standard administration fee”. The claimant contends, that the recovery of it's costs cannot rightly be regarded as constituting a service provided by the defendant to the claimant in that such costs recovery provides a benefit to the defendant alone and, indeed, is entirely detrimental to the claimant. The claimant believes that at no time did the defendant believe that it was providing a service to the claimant when applying such fees and that it is clear from the letter sent to the claimant that the defendant intended the claimant to believe that the defendant was applying the charge as a form of compensation to it's self for the costs it claims to have been put to due to the defendants breach of clause 6(a) of the terms and conditions. The claimant has lodged a Subject Access Request pursuant to the provisions of the Data Protection Act with the defendant to require the defendant to provide the claimant with copies of all letters sent to the claimant in relation to charges made to the account. The claimant believes that all such letters will show that the defendant intended the claimant to believe (and that the defendant it's self believed) that the charges made were to cover it's costs and not as a charge for services purportedly provided to the claimant.
3. At no time during the operation of the account did the claimant believe, or have any reason to believe, that the charges in question were levied in respect of services provided by the defendant, nor does he consider that the defendant has ever acted in such a way that should, or could, have led him to believe so. The first time at which the claimant had any knowledge of the defendants claim that such charges were fees for services related to the consideration by the defendant as to whether or not to honour payments from the account was on his receipt of the defence entered by the defendant in respect of this claim.
4. The defendant has made no attempt to accurately describe the precise nature of the service allegedly provided to the claimant which purportedly gives rise to the charges in question, except for stating in it's defence that they are made in respect of the defendants consideration of whether to not to honour a payment request. The defendant has not informed the claimant as to how the decisions as to whether to honour or decline a payment are made, at what staff level they are made and by whom. Nor has the claimant been informed of any appeals procedure applying to the service or when the defendant will be liable to the claimant in respect of his failure to provide the service to a reasonable standard. This being the case, the claimant believes that he is not, in fact, being provided with the service claimed by the defendant and, if he is in fact being provided with such a service then it is inappropriate that he should be charged for a such service, the precise details of which are not known to him and of which he had no actual knowledge of the existence of until being served with the defence to this claim.
   

2. In relation to paragraph 8 of the defence. The claimant contends that the fact that the terms and conditions applying to the account may envisage certain positions which the account may from time to time fall into is irrelevant as to the determination of whether a breach of contract has actually occurred or not. The claimant, as a lay person, can see how ludicrous this view is as if it is the case that a breach of contract ceases to exist, or cannot exist, simply by virtue of the particular breach being envisaged by the words of the contract then it appears that no breach would ever be able to be sued on as it's occurrence has already been envisaged by the parties, thereby rendering any written contract worthless.


3. In relation to paragraph 12(i) of the defence. The claimant relies on clauses 4(a), 4(d)(ii) and clause 6(a) of the terms and conditions.

• (i) Clause 4(a) states, “Sufficient cleared funds must be available in your account at least one working day prior to the deduction of funds”. The methods of funds withdrawal to which this applies are set out in clause 4(c) and include, “issuing a personal cheque” and by “Standing order or Direct Debit”. The claimants failure to maintain sufficient cleared funds in the account at the prescribed time to meet cheque, direct debit and standing order payment instructions issued by him is a clear breach of this term.
  (ii) Clause 4(iii) states, “If you are provided with a cheque book facility you may issue cheques up to your balance or agreed overdraft limit.”. If an account holder should inadvertently issue a cheque the value of which exceeds his balance or overdraft limit he is in breach of this clause.

4. In relation to Sec12(ii) of the defence. The claimant relies on the established common law principle that charges made to a contractual party by way of a penalty for his breach of contract are unlawful and are consequently unenforcible.


(i). In Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79, Dunedin LJ, in stating his view of the law on penalties, distilled from previous cases (most notably, Clydebank Engineering and Shipbuilding Co. v. Don Jose Ramos Yzquierdo y Castaneda in the House of Lords and Public Works Commissioner v. Hills before the Privy Council) rules to be applied when deciding whether a charge made for breach of contract constitutes a penalty. The parts of his statement which the claimant thinks apply to in this case are; “It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach.”.


(ii). The charges levied by the defendant are only applied after the account holder has failed to satisfy a payment or to keep his account within any agreed credit limit. If the Court accepts the claimants view that the charges concerned do not represent a payment to the defendant for a service then the claimant asserts that they must logically be made in respect of his breach of contract. That being the case the claimant also asserts that the charges concerned are indeed extravagant and unconscionable in amount as they clearly exceed any possible loss that could have been incurred by the defendant.


(iii) The claimant contends that it does not cost the defendant £30, or anything remotely close to £30, to refuse to pay a direct debit request which is an automated procedure that involves no human intervention. The defendants computer system simply refuses the request and the matter is ended. Similarly, the claimant contends that it does not cost the defendant £30 to refuse payment of a cheque as this is also an automated procedure in almost all cases. The claimant has previously been told by the defendant that the actual cheque which is presented for payment is not physically returned to the defendant it's self unless it is made out for a value exceeding £5,000.


(iv) Lord Dunedin went on to say that “There is a presumption (but no more) that it is penalty when "a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage...”


(v) The defendant applies a charge of £30 upon the occurrence of several events which must obviously have greatly differing effects on him. If the account holder exceeds his agreed credit facility by £1 he will incur a charge of £30 from the defendant. If the account holder exceeds his credit facility by £50 he will still be charged £30 by the defendant even though the defendants alleged loss in the form of the depriving him of his money by the account holder is clearly far greater in the latter instance. Similarly, if the defendant is unable to honour a cheque made out in an amount which is less than £5,000 then any loss incurred (if any at all) will clearly be less than the loss incurred in refusing a cheque made out in an amount greater than £5,000 as it is only the latter cheque that he will physically have to handle.


(vi) Sec.4(1) of the Unfair Contract Terms Act 1977.

• (i) Sec.4(1) of the Unfair Contract Terms Act 1977 provides that where a party to a contract is acting as a consumer (as the claimant is in this case) then he cannot be required by any contractual term to indemnify another party in respect of negligence. The letters sent by the defendant to the claimant state clearly that he is being required to indemnify the defendant in respect of negligence by being required to compensate the defendant as to his alleged costs arising from the claimants negligence. This is clearly contrary to Sec.4.
  (ii) The defendant may seek to rely on the wording of Sec.4 allowing such indemnities where the contract terms meet the requirements of reasonableness. The claimant will argue that it is not reasonable for the defendant to be allowed to rely on this for the following reasons;
  The defendant is a large national bank which has complete control over the contents of it's contracts. The claimant is a private individual who had no opportunity to negotiate any of the terms of the contract entered into with the defendant. Moreover, as a private individual of far more modest means than the defendant and the other large national and international banks operating in the UK, the claimant was, and is, unable to choose a bank which does not impose these types of charges at similar levels to the defendant. It is not feasible for the defendant to do without a bank account, the effect of which is that the claimant has no choice but to accept the fees of whatever bank he chooses.

5. The claimant does not accept the defendants assertion in paragraph 10 of the defence that the clause purporting to give rise to the charges at issue are “core terms”, or that they go directly to the adequacy of the bargain which would exclude them from the provisions of the Unfair Terms in Consumer Contract Regulations 1999. If the Court agrees with the claimant that the charges do not in fact describe a service which is being provided to the claimant then they can not be core terms. Further the claimant notes that in Director General of Fair Trading v First National Bank (2001) the House of Lords held that a clause that only came into effect after a customer had defaulted (and was therefore in breach of contract), as the defendants clause 6 does, could not be a core term.6. Clause 5(1) of UTCCR 1999 states that a contractual term that has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties rights and obligations arising under the contract to the detriment of the consumer. It is the claimants belief that if the Court accepts the defendants position that the charges are made in respect of services provided to the claimant then a significant imbalance between the parties to the detriment of the claimant arises. The defendant, in deciding whether or not to honour a payment, can chose to exercise the decision with a view to profit for it's self. If several payments are presented to the account on the same day then the defendant in making his decision is free to chose to refuse one of them on the grounds that it would result in the claimant becoming overdrawn. This would incur a refusal fee £30 and an unauthorised overdraft fee of £28. In this situation the account holder could become severely overdrawn which will result in further payment refusals and therefore incur still further refusal charges of £30 each for every other charge the defendant refuses due to insufficient funds even though they may be much smaller requests that would have been paid had they been considered first, thereby avoiding the additional refusal fees. 7. The claimant believes that should the Court find that the charges in question are penalties at Law then he should be entitled to recover interest on the charges at the rate of 11.8%, applied to each charge from the date it was debited from the account until the 21st September 2006. He believes this for the following reasons;

1. (i) The claimant has been unlawfully denied the use of his money for a considerable time, the earliest charges date back to early 1995.

(ii) The claimant believes that terms of fairness and balance are implied into the agreement he had with the defendant. The defendant applies the rate of 11.8% to the claimants account on overdrawn balances. The claimant believes that the defendants unlawful taking of the claimants money is unfair. The claimant believes that it is reasonable that when the defendant removes money from the claimant to which it is not entitled it is, in effect, going into an overdrawn situation with the claimant in the same way as the claimant goes overdrawn to the defendant and that applying a different and lower rate of interest to the defendants unauthorised use of the claimants money to that which the defendant applies to the claimants use of the defendants money represents a significant imbalance between the parties and is unfair.

1. (iii) The defendant has been afforded the use of the claimants money for a considerable time. The defendant is a financial services business and the claimant thinks it reasonable that the defendant has been using the claimants money for it's own purposes as general funds to operate it's business through lending to it's customers and investing in other ventures. The claimant considers it reasonable that the defendant had the opportunity to earn, and did in fact earn, at least 11.8% on the funds taken from the claimants account. Indeed, it can be said quite confidently that the defendant had the opportunity to earn up to 28.9% as this is the rate it applies to overdrafts which are incurred without it's authorisation.

(iv) The claimant believes that because of the reasons explained in (iii) above, applying the defendants rate of 8% to the charges would result in the defendant being in the position of being unduly enriched through it's own unlawful actions due to it having the opportunity to lend the claimants money to other account holders at a rate of at least 11.8%. The claimant believes that such enrichment is unconscionable and provides no disincentive to the defendant, or to other financial institutions, not to do the same in the future. 8. In response to paragraph 15 of the defence. The claimant has on two separate occasions (at his initial request for refund of the charges and upon filing the claim at Court) furnished the defendant with a schedule containing concise particulars of his losses. Those losses being the charges the defendant debited from the claimants account and interest associated with the charges. The claimant therefore requires the defendant to demonstrate to him why he considers this particularisation of his losses to be inadequate.


9. The claimant is in receipt of the defendants Allocation Questionnaire filed 6th March 2007. With reference to the track allocation requested by the defendant and the defendants intention to seek an order to strike out the claim in that document the claimant responds as follows. The claimant does not agree with the defendant that the charges accrued between 1995 and early 2001 are statute barred. The claimant seeks to rely on Sec.32 of the Limitation Act 1980. The claimant believes that the defendants actions amount to fraud under Sec.32(1)(a) in that the defendant committed a deliberate breach of his duty to the claimant. The claimant believes this because;

1. (i) If the Court finds that the charges constitute penalties in law then the defendant has breached his duty to act fairly and lawfully towards the claimant.

1. (ii) If the Court finds that the charges were indeed made for services provided by the defendant, then the claimant believes that the defendant has breached it's duty to him by falsely stating in the letters mentioned in paragraph 1(ii) of this response that the charges were to cover costs.
   

10. The claimant claims relief from the limitation period under Sec.32(1)(b) of the Act. The letters mentioned in Sec.1(ii) of this response state that the charges are made to cover the defendants costs yet the defendant now claims they are for services provided to the claimant. The true nature of the charges are clearly facts relevant to the claimants right of action as the claimant is entitled to know precisely why he is being charged.11. The claimant claims relief from the limitation period under Sec.32.(1)(c) of the Act. The claimant believed that the defendant had a contractual right to make the charges. If the Court finds that the charges do indeed constitute penalties at law then the claimant was clearly mistaken as to their true nature and would have had the opportunity to question their application. If the Court finds that the charges are charges made for a service provided then the claimant was similarly mistaken in agreeing to them as he was told in writing by the defendant that they were to cover the defendants costs.


12.Taking the whole of Sec.32 into account the claimant suggests that the limitation period for this particular claim should run from either 12th August 2006 when the claimant was first made aware of the potential unlawfulness of this particular type of charge or, early April 2006 the date of publication of the report by the Office of Fair Trading into such charges as this was the earliest date at which the claimant could with reasonable diligence have discovered the fraud, concealment or mistake.


13. For the reasons previously stated the claimant will seek to challenge any application to strike out all or part of the claim.


14. The claimant believes that this claim is a straightforward one and relates only to the well established law on contractual penalties that can be disposed of in 1 hour or less. That being the case he respectfully requests that the Court allocate the case to the Small Claims track notwithstanding that the amount of the claim is substantially greater than the usual £5,000 threshold for allocation to that track.


15. Should the claim be allocated to the Fast Track and the Court decides that the charges concerned are indeed intended to compensate the defendant for losses incurred by the claimant then the claimant intends to make an application to require the defendant to produce independently audited evidence of the actual costs incurred by him due to each of the defendants breaches.




I believe that the facts stated in this response are true.










Signed................... ......................... ..................The Phantom (Claimant)


6th March 2007


To Be Continued!

Nice one Phantom.

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