Sorry for starting a new thread, but panic and stress are starting to take over now.
My court bundle needs to be in by this Friday, so I just wanted to check if I have got everything correct.
I don’t have a copy of FD’s T&C’s (my account was opened in 1996) and I was wondering if a copy of HSBC’s would suffice – seeing as FD is “owned” by HSBC??
So far in my court bundle, I have the following documents :-
1) Statement of evidence
2) Letters from claimant (less the “without prejudice” ones)
3) Letters from defendant (less the “without prejudice” ones)
4) Bank statements
5) Schedule of charges
6) Relevant case law to penalty charges
7) Early day motion
8) Dunlop v new garage
9) UTCCR’s 1999
10) UTCA 1977
11) SOGA 1982
12) OFT’s summary on credit card default charges
Most of it seems pretty straightforward at the moment, although I am worried about the T&C’s not being available for my account.
Below is my Statement of Evidence.
1. The Claimant has the account XXXXXXXX ("the Account") with the Defendant which was opened in 1996.
2. During the period in which the Account has been operating the Defendant debited numerous charges to the Account in respect of purported breaches of contract on the part of the Claimant and also charged interest on the charges once applied.
3. A list of the charges applied is attached to these particulars of claim.
4. The Claimant submits that the charges levied to his bank account, as set out in the attached schedule, are, notwithstanding the contention of the Defendant, penalty charges arising from and relating directly to breaches of contract on the part of the Claimant. As a contractual penalty, the charges are unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999, the Unfair Contracts (Terms) Act 1977, and the common law.
5. It is admitted that the Defendant’s charges were levied in accordance with the terms and conditions of the account in question. However, it is submitted that the Defendant’s charges are not related to or intended to represent any actual loss arising from a breach of contract, but instead unduly enrich the Defendant which, by virtue of the legislation cited in paragraph 4 above, exercises the contractual term in respect of such charges with a view to profit.
6. The Defendant avers that the charges levied are legitimate fixed price contractual services, unrelated to breaches of contract, which are therefore not required to be a pre-estimate of loss incurred on the part of the defendant. The Claimant further submits that this contention is merely an attempt to ‘cloak’, or disguise, their penalties in order to circumvent the common law and statutory prohibition of default penalty charges with view to a profit.
7. The Claimant believes the definition of a 'service' to be a provision of knowledge, skill or other transferable facility that benefits the consumer, and one that the consumer agrees is at a reasonable market rate commensurable with the service provided. The Claimant believes it to be inconceivable that the charges levied to his account by the defendant could be any form of ‘service’, rather than a penalty.
8. I understand the definition of 'breach of contract' to be the failure of a party, without legal excuse, to perform a contractually agreed obligation pursuant to any or all of the terms agreed within that contract. I have an overdraft facility with the defendant. This overdraft facility has a contractually agreed limit, which is an express term of the bank account contract between myself and the Defendant. When I exceeded the agreed overdraft limit, therefore breaching an express term of the contract between myself and the Defendant, I was consequentially penalised for each such breach by way of a charge of £10 - £129.
9. In the case of Dunlop Pneumatic Tyre Co v New Garage & Motor Co  AC 79, Lord Dunedin stated that a clause is a penalty if it provides for;
"The essence of a penalty is a payment of money stipulated as in-terrorem of the offending part;”
I.e. if it is designed to scare or coerce or is used as a threat. It is submitted that the charges applied are not representative of any 'service' provided by the Defendant, but instead are punitive, and held "in-terrorem".
10. The Claimant further submits that the Defendant’s contention that the charges are now a legitimate service charge represents a contradiction to materials published by the bank previously.
11. Additionally, the Claimant believes there to be a high possibility that the terms and conditions of his account contract explicitly describe the charges as to be levied in instances of breaching those terms. This is true of the contracts of other customers of the defendant that the claimant is aware.
12. The Claimant refers to the statement from the Office of Fair Trading (April 2006), who conducted a thorough investigation into default charges levied by the British financial industry. While the report primarily focused on Credit card issuers, the OFT stated that the principle of their findings would also apply to Bank account charges. They ruled that default charges at the current level were unfair within their interpretation of the Unfair Terms in Consumer Contracts Regulations 1999. With regard to the ‘cloaking’ or disguising of penalties, the OFT said this;
“4.21 The analysis in this statement is in terms of explicit, transparent default fees. Attempts to restructure accounts in order to present events of default spuriously as additional services for which a charge may be made should be viewed as disguised penalties and equally open to challenge where grounds of unfairness exist. (For example, a charge for ‘agreeing’ or ‘allowing’ a customer to exceed a credit limit is no different from a customers default in exceeding a credit limit.) The UTCCR’s are concerned with the intentions and effects of terms, not just their mechanism”.
13. As submitted above, the Claimant believes the charges levied to his account to be disproportionate contractual penalties, arising from clear and demonstrable breaches of express terms of the account contract between itself and the Defendant. The Claimant vehemently refutes the Defence’s contention that they are legitimate contractual service charges.
14. However, and without prejudice to the above, in the event the charges were accepted by this honourable court as being a fee for a contractual service, the claimant submits that they are unreasonable under section 15 of the Supply of Goods and Services Act 1982.
15. Further, under the UTCCR:
"5. - (1) A contractual term which 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.
(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.
(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.
(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was."
Schedule 2 also includes such clauses (to define examples of unfair clauses) as:
"(i) irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract;
(j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;
(m) giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract."
The Defendant is a multi-national corporation. The term regarding charges was inserted unilaterally in contract. The contract was pre and mass-produced and I had no opportunity to negotiate the clause, or indeed any of the contract.
The cost of First Direct's charges have increased on more than one occasion during the period in which my account has been held, at no time was I given the opportunity to negotiate, or even notified of these increases. This means the bank has unilaterally altered the terms of my account contract to my detriment, and to their advantage.
16. Following on from the above, the Claimant does not accept The Defendant’s contention that the charges are enforceable as a service charge. It is not disputed that the Defendant is entitled to recover its damages following my breaches of contract, and it is entitled to include a liquidated damages clause. I accept without reservation the bank’s right to recover its actual losses or a genuine pre-estimate thereof. A penalty however, is unenforceable.
17. The Claimant cites the case of Robinson v Harman  1 Exch 850 which states that a contractual party cannot profit from a breach and that the charge for a loss suffered from a breach of contract should be the amount necessary to put both parties in the same position before the breach occurred.
18. Lord Dunedin in the case of Dunlop Pneumatic Tyre Co v New Garage & Motor Co  AC 79 set down a number of principles in definition of a penalty clause and how such clause may be ascertained from a liquidated damages clause. One of these principles being -
"The sum is a penalty if it is greater than the greatest loss which could have been suffered from the breach"
19. The Claimant will further rely on numerous recorded authorities dating throughout the 20th Century up to the most recent case of Murray v Leisureplay  EWCA Civ 963, all of which have upheld and reinforced the principles set down by Lord Dunedin defining contractual penalty clauses and the unenforceability thereof.
20. Further, under the Unfair Terms in Consumer Contracts Regulations 1999, schedule 2 (1) includes to define an example of an unfair clause as -
"(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;"
21. In a recent study undertaken in Australia, (Nicole Rich, “Unfair fees: a report into penalty fees charged by Australian Banks”) it was estimated that the cost to an Australian Bank of a customers direct debit refusal was estimated to be in the region of 54 cents. By reviewing the charges against the above figure, the study estimated that banks could be charging between 64 to 92 times what it costs them to process a direct debit refusal. The study’s key findings stated that in its opinion the Australian Bank’s cheque and direct debit refusal fees were likely to be penalties at law.
22. The Defendant, or indeed any of the UK banks, has never published any information to support how their charges are calculated, or what their actual costs associated with such breaches are, or what revenue they derive from such charges.
23. For their recent BBC2 documentary “The Money Programme”, the BBC appointed a commission of former senior banking industry figures and business academics to attempt to ascertain the actual costs to the UK banks of processing a customer’s breach of contract. They concluded that the absolute maximum conceivable cost that could be incurred by a direct debit refusal or overdraft excess is £2.50, and of a returned cheque £4.50. They did state however, that the actual cost is likely to be much less than this. The commission also estimated that the UK banks collectively derive as much as £4.5billion in profit a year from their charging regimes.
24. It is submitted that the Defendant’s charges are applied by an automated and computer driven process. This process consists of a computer system ‘bouncing’ the direct debit, and sending out a computer generated letter. It is therefore impossible to envisage how the Defendant can incur costs of £37.50 by carrying out this completely automated process.
25. On 22nd May 2006, the House of Commons passed an early day motion which welcomed the OFT's statement that default charges should be proportionate to the actual loss incurred. The house described such default charges as "exorbitant" and "excessive".
26. As set out previously, it is submitted that The Defendant’s charges can not be considered to be a service charge. In arguing that they are, they also effectively admit that their charges make profits. The Defendant seemingly contends that their charges are not subject to any assessment of fairness whatsoever. This implies they can set these fees at whatever level they like without limit or regulation. Similarly, as set out above, the charges cannot be considered to be liquidated damages. They, by The Defendant's own admission, are not a pre-estimate of loss incurred as a result of the breach of contract. The charges are punitive, held “in-terrorem", and unduly and extravagantly enrich the Defendant. As such, they are a contractual penalties and unenforceable at law.
I, the Claimant, believe all facts stated to be true.
Is there anyone that can advise if everything seems okay with all of the above??
Is there anything else I should add to my bundle?
Sorry for posting all over the place, but the clock is ticking now and I want to get this right. It’s my last chance before my court date!!