Zoot - thank you so much, you are a complete star! Just one qusetion - do you ever sleep? X

Any comments/thoughts/suggestions before I post this to the Court tomorrow, would be welcome Case No 6QZ68236 IN THE BRENTFORD COUNTY COURT BETWEEN: XXXX XXXXXX Claimant -and- ABBEY NATIONAL PLC Defendant WITNESS STATEMENT OF XXXX XXXXXX OPPOSING APPLICATION TO SET ASIDE JUDGEMENT IN DEFAULT I, XXXX XXXXXX, state: I am litigant in person in this action and make this witness statement in opposition of the defendant’s application pursuant to CPR 13.3 to set aside judgement in default, which was obtained by the claimant against the defendant on or about 19/10/2006. I refer to a bundle of documents exhibited to this witness statement marked “MAO 1”. The application is opposed: 3.1 on the basis that the witness statement of XXX XXXX XXXXXXXXY dated 25th October 2006 offers the defendant has no real prospect of successfully defending the claim and clearly demonstrates that the case has not even been give any real consideration as it is riddled with factual errors and therefore the defendant cannot possibly have any confidence that it can successfully defend the claim. 3.2 as the defendant has been given every opportunity to present evidence to the claimant as to the lawfulness of the ‘product related charge’, but thus far has produced only ‘evidence’ that does not even stand the test of common sense, but also contradicts earlier attempts to prove the lawful nature of the ‘product related charge’. 3.3 as the claimant believes that the defendant has a history applying to set aside judgements in default, only to settle claims before the matter goes to trial and that this application is merely an attempt to intimidate the claimant and delay settlement. Claimant’s position 4. The claimant considers that the defendant has no real prospect of successfully defending the claim: Terms and Conditions 5. The terms and conditions of the mortgage are not in dispute, except to the degree that the Defendant is now trying to rely on terms that did not exist in the contract. What is in dispute is the lawfulness of certain terms in the contract that provided for the repayment of ‘the Cashback’. 6. The Defendant asserts that there was a term in the contract, which made the Claimant liable for a charge, in the event the Defendant chose to redeem the mortgage early. There is no such term in the contract that provides for the Defendant to redeem the mortgage. 7. The defendant further asserts that the above was a core term of the Mortgage referred to in Mortgage documentation as a product related charge (“PRC”). There is no reference to a product related charge in either the “Offer Conditions” or the Defendants “Mortgage Conditions”. I refer to exhibit “MAO 1” pages x to x, the “Offer Conditions” or the Defendants “Mortgage Conditions” 8. The Claimant does not dispute that he accepted both, the “Offer Conditions” or the Defendants “Mortgage Conditions” at the time of taking out the mortgage. However, at that time, I believed and it was generally accepted that the Defendant, as a large financial institution, was conducting itself in a lawful manner and was complying with the law. Had I not have believed this then I would not have agreed to the terms. Unfair Contract Terms Act 1988 (“UCTA”) 9. The Defendant contends that what it refers to as the PRC, although no such term exists in either the “Offer Conditions” or the Defendants “Mortgage Conditions”, does not indemnify the Defendant against any liability it incurred. However in its submission under Common Law the Defendant contends that the PRC is a charge is to compensate the Defendant over time and on average, for the cost of early redemption. Quite simply the charge cannot on the one hand be a price and on the other hand compensation. 10. The Claimant submits that a breach of S.4 of the Unfair Contract Terms Act 1988 is applicable because it provides that a business can only require a consumer to indemnify their loss where it is reasonable to do so. The term in the contract that provided for the payment of the charge should be regarded as unreasonable as it effectively deprived the Claimant of the right to exercise early repayment of the mortgage without payment of disproportionate penalty costs to the Defendant. The term also totally disregarded the fact that a premium interest rate had been paid during the course of the mortgage. 11. I refer to a letter dated 23 February 2001 from the Defendant at exhibit “MAO 1” page x that clearly admits that it is expecting the Claimant to indemnify the Defendant against risk: “In order to offset the full risk of offering such an attractive product we would rely on continued custom for the full 5-year period. The tie in period is set accordingly so that we can confidently take account of the total interest we might expect to earn, over the full 5-year period, when calculating the risk involved in offering the product.” In addition, I refer to the defendant’s Part 18 Response of 11th December 2006 at exhibit “MAO 1” page x that clearly admits that it is expecting the Claimant to indemnify the Defendant against risk: “The interest rate premium on SVR compensates Abbey for the increased cash back costs and the additional risk cost associated with this type of mortgage.” 13. Additionally, attention is also drawn to the following statement, by the Office of Fair Trading: ‘ A term in a mortgage agreement which requires the Borrower to pay more for breaching the contract terms than actual costs and losses caused to the Lender by the breach (or a genuine pre-estimate of that) is likely to be regarded as an unfair penalty and to be unenforceable both at common law and (in a Consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations. A redemption charge may be regarded as a penalty even if it is expressed as the price for exercising a right rather than a consequence of breaking the agreement’’ Unfair Terms in Consumer Contract Regulations 1994 and 1999 (“UTCC”) 14. The Defendant seeks to argue that the UTCC does not apply to the PRC (which as has already been pointed out is not, a term in the contract), but presents no evidence as to why this is the case. 15. The Claimant’s account falls within the ambit of the Unfair Terms in Consumer Contracts Regulations 1999 as the Claimant is a consumer. 16. The charge constitutes an unfair penalty under Schedule 2 of the Unfair Terms in Consumer Contracts Regulations 1999, which provide an indicative and non-exhaustive list of terms, which may be regarded as unfair. Under paragraph 1(e) of schedule 2 this specifically includes terms, which have the object of requiring any Consumer who fails to his obligations to pay a disproportionately high sum in compensation. 17. The Defendant contends that the circumstances under which the Claimant entered into the Mortgage do not render the charge unfair should it be subject to an assessment under the UTCC. The Claimant does not dispute that he was aware of the terms of the contract or that they were set out with sufficient clarity as to be clearly understandable, these are facts and are not in dispute. However as stated earlier at that time I accepted the contract, I believed and it was generally accepted that the Defendant, as a large financial institution, was conducting itself in a lawful manner and was complying with the law. Had I not have believed this then I would not have agreed to the terms. 18. The Claimant, as an individual was at the outset already at a substantial disadvantage as the Defendant is a large financial institution with ready access to legal advice, extensive marketing and financial expertise. At the outset, the Claimant thus relied on the integrity and expertise of the Defendant and their introducing broker. That the Defendant concealed the true nature of the charge both in the contract and subsequent correspondence has prevented the Claimant from asserting his rights until now. The Defendants repeated representations that the charge was fair and reasonable were and are deceptive and expressly deceived the Claimant into agreeing to pay them. 19. In addition under 5 (1) of the Regulations 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. Common Law 20. The Defendant contends that the Claimants early repayment was not a breach of contract. The Claimant has a letter dated 21 February 2000 from the Defendant at exhibit “MAO 1” page x that clearly admits that the early redemption was a breach of contract rather than the exercise of a right: “The product you opted for has allowed you to have the full benefit at completion of your mortgage and was only agreed on the basis of your signed acceptance to the products terms and conditions, one of which was that it would be fully repayable, if you withdrew form the contract early. For this reason we are not able to reduce or waive the product related charge due at redemption.” 21.The claimant denies that there was not a breach of contract as I was in breach of a major term of the contract. The particular term in the mortgage, which was breached, was an express term relating to the period of fourteen years for which the mortgage was to run. This term of the contract was clearly stated in the written mortgage offer signed by the claimant. The terms of which were incorporated by reference into the mortgage deed, which was not only signed, but also witnessed. There is clearly no room for doubt that such a clause existed in the contract. Similarly, there is no question that the claimant in fact redeemed the mortgage before the expiry of the fourteen-year term. This date is clearly well before the contractually agreed date and thus represents a clear breach of the contract. 22. To further the contention that a breach of contract did in fact occur, it is submitted by the claimant that during the period of the thirty years the claimant was clearly under a contractual obligation to pay monthly instalments to the defendants and clearly has not made such payments since the redemption of the mortgage. 23. The Claimant accepts the contention that redemption of the mortgage was expressly provided for in the mortgage offer. However, the condition that provided that a charge was payable on early redemption of the mortgage represents a charge that is payable in anticipation of the event of a breach of contract. This term merely anticipates a breach and does not represent the exercising of a right under the contract. 24. In the event that the court were to find the said term as exercising a right and without prejudice to the above paragraph it is submitted that the fact that such a term exists does not prevent a court finding of breach of contract following the House of Lords decision in Bridge v. Campbell Discount Co Ltd [1962] AC 600. This case was decided upon the finding of a breach of contract, the finding of a breach of contract as oppose to the exercising of an option was based on the fact that to amount to an exercising of an option there had to be intention to exercise the option demonstrated by the hirer. When I terminated my mortgage early it was purely to be free from the burden of the contractual obligation. I was not aware that I was exercising an option to terminate but merely knew that if I did end early I would have to pay a penalty. If I am unaware that I am exercising a right how can it be said that I intended to exercise such a right. I was forced into redeeming the mortgage before the end of the contractual term as I had moved to Jersey in order to take employment. In Jersey, I was not able to own property due to the Housing Laws of the Bailiwick and had to pay a very high rental. Because I was unable to rent out the property in the United Kingdom, there was a very serious danger of my defaulting on repayments under the mortgage, as I simply could not afford to pay both rent in Jersey and the mortgage. In addition I as also in breach of another term in the contract, by leaving the property unoccupied for more 30 days. Two of their Lordships (Lord Denning and Lord Devlin) went further in their findings, holding that even had the hirer exercised the option, they would still be prepared to strike down clause 9 as a penalty and thus were of the opinion that Associated Distributors, Ltd. v. Hall was wrongly decided. This, as a minority decision, however, I recognise as not being binding. However, it is the claimant’s submission that term relating to the Early Repayment charge is merely a penalty clause disguised as an option to exercise a right. It is respectfully requested that the court should look to the substance of the clause rather than the form. It is thus my assertion that the clause is simply a pretence at conferring a right to exercise an option when in essence it is simply a term setting out the consequences of a breach of contract and as such in the absence of a genuine pre-estimate it amounts to a penalty. 25. The Defendant contends that the charge cannot be considered a penalty as it is a charge designed to cover the cost to the Defendant of funding the product on early redemption and is calculated to compensate the Defendant over time and on average, for the cost of early redemption and is a genuine pre-estimate of loss suffered. The Defendant has provided a response in the form of a spreadsheet, to the claimant’s request under Part 18 at exhibit “MAO 1” page x, which purports to demonstrate how the defendant’s pre-estimate of loss was calculated. This is little more than a simplistic mathematical exercise showing how much money was to be paid by the claimant to the defendant over a five-year period with the net result being that the ‘Product Related Charge’ was always outstanding. Given that the charge was the same amount on day one of the mortgage as it was on day 1,856 despite the fact that 0.75% per annum was being paid on the principal sum of the mortgage in recognition of the payment of the ‘cashback’ amount, means that on a test of simple common sense, that the charge cannot be a genuine pre-estimate of loss suffered. 26. There is a presumption that a charge is a penalty when “a single lump sum is 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” (Lord Watson in Lord Elphinstone v. Monkland Iron and Coal Co., 11 App.Cas. 232). So the fact that the charge was a single fee irrespective of the actual loss to the Defendant is indicative of finding of a penalty. Conclusion 27. The Claimant request the Court not to set aside the default judgement on the grounds that: 27.1 the defendant has not properly considered the case and is seeking set aside by using a generic defence; 27.2 the defendant has neither a substantial or meritorious defence to the claim and it is respectfully submitted that it has little prospect of success; 28. I believe that the facts stated in this witness statement are true.

Herewith the text of Abbey's Response to my Part 18 Request: Claim No 6QZ68236 IN THE BRENTFORD COUNTY COURT BETWEEN: XXXXX - Claimant - and - ABBEY NATIONAL PLC - Defendant RESPONSE TO THE CLAIMANT’S REQUEST UNDER PART 18 FOR FURTHER INFORMATION CLAIMANT’S REQUEST In respect of the witness statement of xxxxxxxxxx, under section 18, please provide details of the calculation of the charge and the cost to the Defendant of funding the product on early redemption, in particular please explain how the 0.75% over the Defendant’s standard variable rate paid by the Claimant during the term of the mortgage was brought into account for the purpose of the calculation. DEFENDANT’S RESPONSE 1. Attached to this response are a set of calculations relating to the Claimant’s particular account is exhibited this response at page 1 together with evidence of competitors’ products / ERCs at pages 2 to 3 of the exhibit. Abbey’s position on ERCs 2. Abbey (like other home lenders) offers a range of different mortgage products in order to meet the requirements of different customers. The product range has included: 2.1 Standard Variable Rate (“SVW”) mortgage. This is the basic mortgage product which is a fee free, free to go mortgage which requires the customer to pay interest at Abbey’s SVR throughout the term of the mortgage. This is a mortgage, which lets the customer more or less do what he likes, for example make over-payments to save on interest and terminate by repaying in full at any time without paying an ERC. 2.2 Cash back mortgage. The customer pays SVR for a set period, in return a cash back is offered at the start of the mortgage. Should the customer leave before the end of the set period they are required to pay back the cash back. 2.3 Enhanced cash back mortgage. The customer pays a premium on SVR for a set period, in return an enhanced cash back is offered at the start of the mortgage. The interest rate premium on SVR compensates Abbey for the increased cash back cost and the additional credit risk cost associated with this type of mortgage. Should the customer leave before the end of the set period they are require to pay back the enhanced cash back. Explanation of SVR 3. Abbey borrows on the money markets for the purpose of funding and offering mortgage products to its customers. Abbey actually borrows these funds at a rate that is generally greater than the Bank of England base rate (and which fluctuates from time to time). 4. Abbey works within a fiercely competitive market, and accordingly takes great care to set the SVR at a level that ensures Abbey remains competitive and obtains an appropriate market share. However, the SVR naturally has to take into account the cost of Abbey’s own borrowing, the set up costs of a standard mortgage product, as well as the necessary overheads and other costs of the business. 5. Accordingly Abbey’s SVR is always above the Bank of England base rate, and is currently 7.09% compared to the Bank of England base rate of 5.00%. This is competitive in the market; for example, both Alliance & Leicester and Northern Rock have a SVR of 7.09%, whilst the SVR for Woolwich is set at 7.25%. Impact of taking a non SVR mortgage, and the payment of an Early Redemption Charge 6. It can be seen that if a customer takes out an enhanced cash back mortgage as explained above, then Abbey receives higher amounts of interest for the initial period, than it would if a SVR mortgage had been entered into. This premium above SVR covers the cost to Abbey of offering the enhanced cash back together with any additional credit risk associated with this type of mortgage. 7. There is always the risk for Abbey that a customer may choose to repay the mortgage early, possibly by re-mortgaging, and if the customer does so after the interest rate has reverted to the SVR, then Abbey simply accepts that the cost of the cash back was an acquistion cost associated with the mortgage. In practice, most customers who keep their loan until the interest rate has reverted to the SVR, pay interest at the SVR for a period (which may vary widely), which means that on average, Abbey receives a reasonable return for the discounted interest rate. 8. However, if a customer chooses to repay the mortgage during the initial period, then Abbey (along with all other home lenders) charges an ERC which is designed to cover the loss to Abbey as a result of the customer choosing to take out a cash back mortgage, rather than a standard mortgage product. 9. Indeed, the ERC is calculated by Abbey to be precisely the sum which makes up the difference between (1) the amount of interest actually paid by the customer between the date when the loan was made and the date of repayment, and (2) the amount of interest actually paid by the customer between the date when the loan was made and the date of repayment net of the cash back. Dated 11 December 2006 The Defendant believes that the facts stated in this defence are true. I am duly authorised by the Defendant to sign this statement. Full name xxxxxxxxxxxxxxx of DLA PIPER UK LLP signed.................position or office held SOLICITOR Defendant’s solicitors 16 October 2006 D1V1 Not quite sure how to get the spreadsheet they sent to link in, but basically what it shows is the amount of interest they expected to get monthly and cummulative less what I paid less the 'cashback' = ERC. That is a genuine pre-estimate!!!!!!! If I had one of my trainees present this to me an a justification for a charge I would sack them! I reckon a call to DLA Piper pointing out that they are going to look pretty stupid in court if the present this, might be good next move. Any Thoughts?

Well, well, I have now recieved from DLA Piper a response to my Part 18 request - when I've finished laughing and worked out how I can actually post want they sent - I will update. Very nice spreadsheet that conveniently shows that whenever the mortgage is redeemed the cost to Abbey is the same - very clever. Ooops! I forgot to mention that I'm a qualified accountant! Feel sorry for the poor chap at DLA Piper - he's going to look a complete arse in court! And a qucick quote from the covering witness statement "The premium above SVR covers the cost to Abbey of offering the enhanced cash back together with any additional credit risk associated with this type of mortgage."

Receieved the following from DLA Piper today: Claim No 6QZ68236 Further to your recent request for further information, our client is unable to provide the information you require by 5 December 2006 due to the complex and bespoke nature of the information you have requested. Our client requires a further 5 working days in order to collate the information and expects to be able to provide a full response to you by close of business on Tuesday 12 December. Please note that the information is being collated by our client on the assumption that the early redemption charge of £7,438 as described in your claim form concerns the 'cashback' element of your mortgage accounts, calculated pursuant to the mortgage cionditions. Please let us know as soon as possible if this assumption is incorrect. I wait with bated breath!!!!!!!!!!!!!!!

Alan It hasn't been allocated as yet, but as it is £11k with interest and costs (£7k ERC) it is cerrtain to be ouside small claims. Shabbey have already used this on me, so what's good for the goose is good for the gander - like to see them argue that it doesn't apply! Regards Mark

How does this grab you ? Claim No 6QZ68236 IN THE BRENTFORD COUNTY COURT BETWEEN: MARK OLIVER Claimant - and - ABBEY NATIONAL PLC Defendant REQUEST UNDER PART 18 FOR FURTHER INFORMATION Request In respect of the witness statement of Ian Paul Battersby, under section 18. , please provide details of the calculation of the charge and the cost to the Defendant of funding the product on early redemption, in particular please explain how the 0.75% over the defendants standard variable rate paid by the Claimant during the term of the mortgage was brought into account for the purpose of the calculation. Please provide a full response to this request by 4th December 2006

I've thought about this over night. I think what I am going to do is hit them first with a request under Part 18 for further information, specifically how the charge was calculated. Suspect we won't get an answer and I can then add that to my witness statement opposing their application to set aside

Sound advice - I will get it done this week. You're lucky with the Christmas Card list - my wife took control of the finances and blew a six figure sum (before she left me on my own to bring up three kids) which is why I'm in the mess I am in and so desparately need to win this one.

I think I might just time it to arrive around Christmas Eve, or is that just being plain evil?

Alan Thanks for that - doesn't the legal system just give you a warm glow! I think I will have some fun and go for it - if nothing else it will show them that they are just going to look complte twits in front of the judge - the defendant reedeemed the mortgage - I wish. Do you know if I just draft up my agruments and send them to the court with a covering note? Regards Mark

Does anyone know what the procdure is for a Defendant's Application Hearing - do I submit my response to the Court and Defendant in advance or just turn up on the day a 'let them have it'? I've trawlled through CPR and can't seem to find the answer

Ok this is still work in progress, but having digested their submission this is the eginings of my response. Does anyone know what the procdure is for a Defendant's Application Hearing - do i submit my response to the Court and Defendant in advance or just turn up on the day a 'let them have it'? The bit I am most unsure about is the Breach of Contract bit under common law - any help here would be most welcomme. Particular thanks to Zoot and Saraounia for all the stuff I've taken from their brilliant threads. So without further delay - herewith: The arguments put forward by the Defendant as to why judgement should be set aside are generalistic and show that they have clearly not considered the case in any detail. They demonstrate a ‘scatter gun’ approach, with the intent of throwing as much mud as possible in the hope that something will stick. In particular they incorrectly refer to a Product Related Charge (“PRC”) to which there is no reference to in either the “Offer Conditions” or the Defendants “Mortgage Conditions”. They also refer to a discount period and again there was no such thing in the contract. For the sake of clarity, on completion of the mortgage the Defendant paid to the Claimant a sum equivalent to 7% of the value of the mortgage (known in the Defendants Terms & Conditions as ‘cashback’)in return for which the Claimant was to pay 0.75% above the Defendant’s Standard Variable Rate for a period of five years. For reasons outside of the Claimants control, the mortgage had to be redeemed after 1,400 days rather than the 1,857 required under the contract. The Defendant debited the account of the Claimant with the sum of £7,438 which was the full sum of the ‘Cashback’ despite the fact that the claimant had been paying a premium of 0.75% above the Defendants Standard Variable Rate on the entirety of the mortgage advance. The ‘cashback’ offered with my mortgage product represented a legitimate considered commercial decision by the Defendant to attract my custom. Such practices are commonplace in the world of business and few companies would have the audacity to pass such commercial risk on to their customers. Terms and Conditions The terms and conditions of the mortgage are not in dispute, except to the degree that the Defendant is now trying to rely on terms that did not exist in the contract. What is in dispute is the lawfulness of certain terms in the contract that provided for the repayment of ‘the Cashback’. The Defendant asserts that there was a term in the contract, which made the Claimant liable for a charge, in the event the Defendant chose to redeem the mortgage early. There is no such term in the contract that provides for the Defendant to redeem the mortgage. The defendant further asserts that the above was a core term of the Mortgage referred to in Mortgage documentation as a product related charge (“PRC”). There is no reference to a product related charge in either the “Offer Conditions” or the Defendants “Mortgage Conditions”. The Claimant does not dispute that he accepted both, the “Offer Conditions” or the Defendants “Mortgage Conditions” at the time of taking out the mortgage. However, at that time, I believed and it was generally accepted that the Defendant, as a large financial institution, was conducting itself in a lawful manner and was complying with the law. Had I not have believed this then I would not have agreed to the terms. Unfair Contract Terms Act 1988 (“UCTA”) The Defendant contends that what it refers to as the PRC, although no such term exists in either the “Offer Conditions” or the Defendants “Mortgage Conditions”, does not indemnify the Defendant against any liability it incurred. However in its submission under Common Law the Defendant contends that the PRC is a charge is to compensate the Defendant over time and on average, for the cost of early redemption. Quite simply the charge cannot on the one hand be a price and on the other hand compensation. The Claimant submits that a breach of S.4 of the Unfair Contract Terms Act 1988 is applicable because it provides that a business can only require a consumer to indemnify their loss where it is reasonable to do so. The term in the contract that provided for the payment of the charge should be regarded as unreasonable as it effectively deprived the Claimant of the right to exercise early repayment of the mortgage without payment of disproportionate penalty costs to the Defendant. The term also totally disregarded the fact that a premium interest rate had been paid during the course of the mortgage. In addition the Claimant has a letter dated 23 February 2001 from the Defendant that clearly admits that it is expecting the Claimant to indemnify the Defendant against risk: “In order to offset the full risk of offering such an attractive product we would rely on continued custom for the full 5-year period. The tie in period is set accordingly so that we can confidently take account of the total interest we might expect to earn, over the full 5-year period, when calculating the risk involved in offering the product.” Additionally, attention is also drawn to the following statement, by the Office of Fair Trading: ‘ A term in a mortgage agreement which requires the Borrower to pay more for breaching the contract terms than actual costs and losses caused to the Lender by the breach (or a genuine pre-estimate of that) is likely to be regarded as an unfair penalty and to be unenforceable both at common law and (in a Consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations. A redemption charge may be regarded as a penalty even if it is expressed as the price for exercising a right rather than a consequence of breaking the agreement’’ Unfair Terms in Consumer Contract Regulations 1994 and 1999 (“UTCC”) The Defendant seeks to argue that the UTCC does not apply to the PRC (which as has already been pointed out is not, a term in the contract), but presents no evidence as to why this is the case. The Claimant’s account falls within the ambit of the Unfair Terms in Consumer Contracts Regulations 1999 as the Claimant is a consumer. The charge constitutes an unfair penalty under Schedule 2 of the Unfair Terms in Consumer Contracts Regulations 1999, which provide an indicative and non-exhaustive list of terms, which may be regarded as unfair. Under paragraph 1(e) of schedule 2 this specifically includes terms, which have the object of requiring any Consumer who fails to his obligations to pay a disproportionately high sum in compensation. The Defendant contends that the circumstances under which the Claimant entered into the Mortgage do not render the charge unfair should it be subject to an assessment under the UTCC. The Claimant does not dispute that he was aware of the terms of the contract or that they were set out with sufficient clarity as to be clearly understandable, these are facts and are not in dispute. However as stated earlier at that time I accepted the contract, I believed and it was generally accepted that the Defendant, as a large financial institution, was conducting itself in a lawful manner and was complying with the law. Had I not have believed this then I would not have agreed to the terms. The Claimant, as an individual was at the outset already at a substantial disadvantage as the Defendant is a large financial institution with ready access to legal advice, extensive marketing and financial expertise. At the outset, the Claimant thus relied on the integrity and expertise of the Defendant and their introducing broker. That the Defendant concealed the true nature of the charge both in the contract and subsequent correspondence has prevented the Claimant from asserting his rights until now. The Defendants repeated representations that the charge was fair and reasonable were and are deceptive and expressly deceived the Claimant into agreeing to pay them. In addition under 5 (1) of the Regulations 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. Common Law The Defendant contends that the Claimants early repayment was not a breach of contract The Claimant has a letter dated 21 February 2000 from the Defendant that clearly admits that the early redemption was a breach of contract rather than the exercise of a right: “The product you opted for has allowed you to have the full benefit at completion of your mortgage and was only agreed on the basis of your signed acceptance to the products terms and conditions, one of which was that it would be fully repayable, if you withdrew form the contract early. For this reason we are not able to reduce or waive the product related charge due at redemption.” The Claimant accepts the contention that redemption of the mortgage was expressly provided for in the mortgage offer. However, the condition that provided that a charge was payable on early redemption of the mortgage represents a charge that is payable in anticipation of the event of a breach of contract. This term merely anticipates a breach and does not represent the exercising of a right under the contract. The Defendant contends that the charge cannot be considered a penalty as it is a charge designed to cover the cost to the Defendant of funding the product on early redemption and is calculated to compensate the Defendant over time and on average, for the cost of early redemption and is a genuine pre-estimate of loss suffered. Given that the charge was the same amount on day one of the mortgage as it was on day 1,856 despite the fact that 0.75% per annum was being paid on the principal sum of the mortgage in recognition of the payment of the ‘cashback’ amount, means that on a test of simple common sense, that the charge cannot be a genuine pre-estimate of loss suffered. There is a presumption that a charge is a penalty when “a single lump sum is 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” (Lord Watson in Lord Elphinstone v. Monkland Iron and Coal Co., 11 App.Cas. 232). So the fact that the charge was a single fee irrespective of the actual loss to the Defendant is indicative of finding of a penalty.

Ok get ready for a long post! Have received from Brenford County Court a notice of Defendant's Application Hearing on 12th January 2007 - basically Abbey are trying to have my judgement by default set aside: This is still being handled by DLA Piper "The defendant considers that it has a real prospect of sucessfully defending the claim and/or that there is good reason that the defendant should be allowed to defend the claim" Usual guff about Terms and Conditions then follows. Then what they intend to argue: Unfair Contract Terms Act 1988 (UCTA): "The Product Related Charge (PRC) is the price the Defendant charges when the Claimant exercised his right to redeeem the Mortgage as such it is not an indemnity because it does not indemnify the Defendant against any liability it incurs to another person. Accordingly, the defendant has a reasonably good prospect of successully defending a claim with regard to UCTA. Unfair Terms in Consumer Contract Regulations 1994 and 1999 (UTCC): 1 The Defendant contends that the UTCC do not apply to the PRC 2 In the event that UTCC do apply the Defendent contends that it has reasonably good prospect of sucessfully defending the claim: a. The UTCC stipulate that certain contractual terms may carry a presumption of unfairness and could be subject to an assessment as to the unfairness because of their nature. b. The UTCC state that an assessment of fairness of any term shall not apply to terms relating to the price of tge product. The PRC the Claimant was required to pay was directly referable to the actual price of the product offered and as suc the Defendant maintains that the UTCC does not apply and the tems are not subject to an assessement, nor does a presumption of unfairness arise. c. In the event that the UTCC did apply and even if the PRC was subject to an assessment the PRC would not be deemed unfair. The whole of the circumsatnces whereby the Claimant agreed to take out the Mortgage would be taken into consideration. The Defendant contends that the following circumstances in which the Claimant entered into the Mortgage do not render the PRC unfair should the PRC be subject to an assessement under the UTCC: A. The Claimant was aware of the terms of the PRC prior to entering into the mortgage. B. The terms of the product were set out with sufficient clarity as to be clearly understandable and with sufficient certainty so as to enable you to be aware at the outset of the amount you would pay on early redemption. C. The Calimant would have been free to select other products which carry a lower PRC or alternatively, to select a basic mortgage at standard variable rate which does not carry a PRC. Position Under Common Law The Defendant contends that the common law of penalties only applies to sums of money that are expressed by a contract to be payable by a party in the event that the aprty breaches the contract and , since the Conditions did not expressly or impliedly oblige the Claimant to retain the mortgage until the end of the discount period, the Claimant's early repayment was not a breach of contract. Accordingly the PRC cannot be deemed to be a penalty and/or uneforceable. In addition, the PRC cannot be considered a penalty, as it is a charge designed to cover the cost to the Defendant of funding the product on early redemption. It is therefore calculated to compensate the Defendant over time and on average, for the cost of early redemption. Accordingly it is a genuine pre-estimate of loss suffered by the Defendant as a result of the Claimant's decision to redemm the Morgage early, and, as such, cannot be deemed to be a penalty and/or be unenforceable. The Defendant considers that it would be unjust for the judgement to stand in circumsatnces where the case law has not been considered ion detail by the court in this case. First thing to say is this is another "off the shelf defence" and they have not even looked into the details of the case - I got a £7k cashback for whcih I was to pay 0.75% above their Standard Variable rate for 5 years - no discount! I will look at it in detail over the weekend and add further notes, but first reading does tend to suggest several contradictions.

Phoned MCOL Customer Services earlier - Abbey have had judgement set aside and the case transferred to Brentford - pretty much as expected Apparently I now have to wait to hear from Brentforxd - oh well its closer to Gatwick than Northampton!