The limit for proceeding to seek a sequestration order (bankruptcy) against an individual is in fact £3000.

Having just read the judgment, I have the following observation: 1. The judge holds that the customer is not in breach of contract where he or she enters into an unauthorised overdraft situation. This is very important, as being in breach of contract is the foundation for attacking any consequent charges as penalties. If the charge is not in response to a breach of contract, the law on penalty charges cannot be invoked to challenge the charges; that law only applies in a breach of contract situation. Breach of contract is also a necessary precursor to invoking UTCCR para 1(e) of schedule 2 to the Unfair Terms in Consumer Contract Regulations. Any appeal against this judgment would require to counter this legal ruling by demonstrating that the customer is indeed in breach of contract when they go beyond authorised limits. This requires an examination of the terms and conditions (Ts&Cs) of the contract to see if it says anywhere that the customer is obliged to keep his account within his authorised overdraft level (i.e. placing them under an obligation to maintain their account within agreed levels.). I should add that the comments which seek to portray this judgment as irrelevant due to its being from a court of little standing are misinterpreting its import. It is a judicial decision that the customer is not in breach of contract and any case which goes the distance again will only be won if the pursuer/plaintiff can show that the customer is in breach. This judge has found this not to be the case on the Ts&Cs he has seen, it is therefore important to look more closely at the Ts&Cs of your own account to determine if your contract imposes an obligation to maintain the account within certain levels. Only then will you be able to say that you are in breach and thereby bring the law on penalty charges and UTCCR into play. This should be the focus for the present. Eyes down...

Seahorse, If you had challenged the Bank some time ago regarding the legality of the charges and they had represented to you that, for example, they had cleared the nature and amount of the charges with the FSA and/or OFT. This may amount to a misrepresentation inducing you into error as to your right to make a claim. The fact that they impose the charges does not of itself induce you into error in the sense the term is used in 6(4). It is certainly possible to make an argument along the lines you imply, but I see stronger arguments against and in a litigation situation, while it is possible, and perhaps wise, to have various arguments to support your case, these takes time to formulate and argue and time is money, especially when your solicitor costs £250 an hour! Once your claim has been made (you have a summons served on the Bank), you are regarded as having made a relevant claim (see s.9) which stops the prescriptive clock, so what the Bank says following this is pretty much irrelevant to the question of prescription. Your solicitor will not require much convincing of the prescription point and, if he/she is any good, they really ought to advise you to try to push the boundaries. However, they should also make you aware of the dangers here. The Bank have deep pockets and, were you to push for too much and win in the sheriff court, the Bank may keep you in the appeal courts for years. They can afford to do that, you cannot. It is a game, just remember Jarndyce v Jarndyce and sometimes taking your gains/cutting your losses is the smartest thing to do.

FYI, Appointing a lawyer will always cost you something. You never get all your expenses back in court or through settlement. Expect to have to pay 1/3 of your legal costs if you win and all your own and 2/3 of theirs if you lose.

Seahorse, Your breach of contract is the trigger for the imposition of the charges. As a pursuer seeking return of these sums, you have to have a legal basis. You cannot cite your own wrongdoing as a justification for receiving a benefit (generally, the law does not allow a person to profit from their own wrongdoing). The legal basis here is that the Bank has been unjustifiably enriched by the imposition of charges based on a clause of the contract which, if unlawful, would be unenforceable. This being the case, the Bank have money taken in circumstances where they had no legal power to take it and there is no good equitable reason for them to retain it. This is the law of unjustified enrichment. Everyone else, The relevant section of the 1973 Act is indeed s.11(3). s.6(4)(a) deals with postponement of the period where there has been fraudulent activity by the Bank, or the Bank has induced the customer into error as to their right to claim. There has been no fraud or error (as defined in law)in this situation, therefore the section has no bearing.

Only a matter of time before this happened I am afraid, surprised that no Bank has yet sought to claim that an individual pursuer is abusing the court process by splitting up claims, as, in general, all claims arising from a particular cause of action should be brought within the one summons/initial writ. Indeed, there may even be an argument for seeking to have a pursuer with multiple claims declared a vexatious litigant. One to watch it seems.

Seahorse, The Bank have not breached their contract with the customer. The contract provides an express term which states that the Bank will apply a charge of a certain amount (changes in these amounts communicated to customers periodically in the leaflets which they send with your statements but few take notice off because the print is too small and lengthy) on the customer's default. When the customer defaults, the Bank apply the charge. The Bank is not in breach, on the contrary it is acting strictly in accordance with the contract. The area of law we are dealing with is not contract, but unjustified enrichment. This is related to, but distinct from contract and has separate rules and consequences. Robertxc, Ignorance of the law is generally no excuse, but sometimes it is . The case law is scant on this point, but drawing analogies from other situations where time bar arguments feature, the ability of the pursuer to seek legal advice often defeats their claim that they could not have know they had a right until some later point in time. This may seem unfair, but professionals exist to help and adise us all on matters which we know little about. Having said this, it is equally not possible to state that an argument on postponment of prescription would fail, although I would put my money on the Bank's lawyers being able to put up a more coherent and convincing case against. That is their job after all. As to the case you mention, I suspect this was a procedural hearing and not full legal debate involving the citation of case law and argument thereon. I do not think it is possible to draw many conclusions from this. It should also be remembered that the sheriff courts are notoriously unpredictable places. While it may not seem right, the sheriffs will not all view the same arguments the same way. The uncertainty is legendary amongst litigators, which is why it is difficult to advise clients on how best to proceed even when you are confident that the law is on your side (also depends on how good your lawyer is). Bong, Money can be taken or received by a defender in circumstances where there was no legal right for them to take/receive and no equitable reason why they should keep it. This kind of precision in language is necessary to ensure we know what law it is we are trying to rely on. This is what bank charge claims are based on. Simply could not be theft, as the basis for the taking was a term of a contract. The Bank was therefore contractually entitled (and you as customer consented by performing the contract) to take the money, even if they are not entitled to retain it. The Bank is not borrowing the money, as the contractual term states that the Bank will charge the customer. On this basis the money becomes the Bank's once they apply the charge, and the customer is indebted to the Bank, not the other way around. The reason why claims are time restricted is to encourage people to seek to vindicate their rights before the claim goes stale, witnesses are not available, documents lost etc. It is a good rule IMO, as otherwise court cases would more often than now turn into farce, wasting everyone's time. I have no doubt that a decent lawyer would have been able to identify that the bank were penalising people for breaching the terms of their agreement with the bank. They could then have written to the bank sounding them out, with a threat of litigation in the background. If action was necessary, they could then have drafted pleadings calling on the bank to provide the information justifying the charges and stataing that they would found on the Bank's failure to do so. This would have flushed the Banks out making them seek legal advice on the legality of their charges sooner than now and, as now, seek to settle the action. The process of going to court generally involves both parties investigating their claims, looking at documents, speaking to potential witnesses. It is not until all information has been gathered that a party will be able to say whether they have a strong case when compared to the other side. This is why so many cases settle just before the court hearing (proof) is to begin. It is often too uncertain at the outset to say who is likely to win as not all information has been gathered. To this extent, all civil litigation is speculative. Interesting stuff.

Robert, Essentially, yes. If someone has taken something from you without legal right to do so, you are expected to seek to have that returned to you within 5 years. The exception to this is where the item in question has been stolen from you, although even here there may be limits to what you can recover and from whom. You cannot say the Bank has "stolen" from you, as they have taken the money in implement of a contractual term "agreed to" by both parties. This does not meet the test of "theft", at least not in the eyes of the law! Bong, Court would not view something as borrowing of a sort simply to aid a supplementary question on time bar. It is pretty clear that the Bank appropriated the monies through charges and it is this taking or appropriation that will determine what the legal basis is for return of the monies and the time limits within which such claims should be made.

Bong, In terms of prescription (limitation in England and Wales), the question one has to ask is: what is the legal right that I am trying to assert and which may be lost if I do not seek to enforce my right within a period of time? The right which you are seeking to enforce in these cases is not contractual. In order for it to be so, it would be necessary for the customer to be able to point to a term of the contract, express or implied, which the Bank has, by applying these charges, breached. Here the contrary is true, the Bank is applying the express term of the contract which sets out the circumstances in which such charges will be applied. The act you are complaining about here is not a failure to repay monies lent by you to the Bank, rather it is the alleged unlawful application of charges. The result is to place the customer's money in the Bank's hands, which is to the same effect as depositing sums in an account. However, on depositing sums in the Bank, the customer lends the Bank money and the bank comes under a contractual obligation to repay that money following a demand by the customer. Joachimson states that the customer can only seek to raise an action to enforce that obligation after having demanded that the Bank repay it to them and the Bank has failed to repay as it is legally obliged to do. In respect of bank charges, the Bank is taking money from the customer rather than borrowing from them. It is doing this in implement of a express contractual term which, if unenforceable because these are penalty charges, means that the Bank has received a benefit without having a legal right to receive it and, in the absence of an equitable reason for the Bank to retain it, comes under an obligation to repay the sums to the customer. It is the borrowing/taking distinction which means that the legal basis for these actions and the rules as to prescription differ from those applying in Joachimson. Hope that makes things a little clearer? The law often turns on nuances such as this. I am, however, impressed by your thought processes to this question.

Joachimson v. Swiss Bank Corporation Here goes, Explanation of the decision The legal rule decided in the above case concerned the question: "...whether there is, arising out of the relation of banker and customer, the implied obligation on the part of the customer to make an actual demand for the amount standing to his credit on current account as a condition precedent to a right to sue for that amount." This was answered in the affirmative. The consequence for the plaintiff in the case was that they had raised an action for repayment of monies lent prematurely. They should have demanded repayment from the Bank and only on failure by the bank to repay could they then be said to have a "cause of action" to base a legal action on. Their action therefore failed. Significance for questions of prescription? The case supports the proposition that, in England and Wales, a right to claim money left on deposit at a Bank does not suffer from a limitation period until a demand is made. In Scotland, the same rule is expressly provided for in Schedule 2(2)(b) of the Prescription and Limitation (Scotland) Act 1973, which provides that [on the understanding that there is no express date agreed between the customer and banker for repayment of monies deposited by the customer] the obligation on the Bank to repay sums deposited will prescribe 5 years after the date on which a written demand for payment is presented to the banker. Significance of the case for the basis of these actions? There is nothing in this case which supports a contention that these actions are based on a breach of contract by the Bank. I say again that the Bank is adhering to the stated terms of the banking contract and cannot therefore be said to have breached any term. For completeness, there simply cannot be a term implied in this kind of contract that the Bank "act lawfully". In general contract law, such a term too wide to be implied. Significance of this case for prescription of bank charge claims Again, none. These cases are not about seeking repayment of monies lent to the Bank under a contract of deposit. Rather they are claiming that the Bank has unlawfully taken money from the customer. The Bank had no right to take those sums and therefore the customer has an equitable right to have those sums repaid. That, I am afraid, is the action for repetition under the law of unjustified enrichment. Such claims prescribe 5 years after the date when the particular charge was applied to the customer's account.

Espana07, If you raise an action against the bank in respect of charges applied to your account and you still owe money on that account, the Bank could seek to raise a counterclaim against you for full repayment of the money.

James, I have discussed this issue elsewhere on this forum (can't remeber where). I appreciate the argument that is being made, but do not believe it has any legal foundation. It may be possible to recover interest which was applied to each charge for the period within which the charge formed part of your unauthorised overdraft, but the minute you pay any money in, the charge will be repaid to the Bank first, which probably means that you were then back in the black, or at least the amount of the charge was taken out of your unauthorised overdraft, meaning further that the interest applied at the 29% rate was minimal (remeber, the overdraft interest is applied to all sums, charges and your withdrawals/direct debits which have been paid by the bank. It will be very difficult for you or anyone to work out exactly how much interest has been applied, but as the pursuer in the action it is always for you to state what you are owed and to be able to support that with evidence if required. If you are seeking payment of interest on each charge from the date it was applied to the date of service, you are asking for more back than the bank have taken from you; in effect asking the bank to pay a penalty, which is ironically what you are claiming the bank have imposed upon you. Sheriffs in Scotland will be well versed on the question of interest and I think you will have an uphill struggle in trying to convince one that you are entitled to anything other than 8% interest. Indeed, were this a contractual claim, you would only be entitled to 8% interest from the date of service, although I believe these are not contractual, but unjustified enrichment claims and while the law is not certain, it may be the case that you are entitled to claim interest at 8% from the date the money was taken from you if this is what you have asked for. Hope this helps.

There is a difference between what Banks may agree to settle on for commercial reasons and the law that applies to the matter and would guide the decision of a Sheriff. The arguments suggested on this forum are not ones which the law, in its current state in England & Wales or Scotland, would recognise. Some Banks seem more willing than others to settle these points, but there are certainly one or two who are requiring the plaintiff/pursuer to prove their cases in respect to these parts of their claim.

You can try, but think about the argument that you have to make to justify compound interest. This is not generally allowed in payment actions North and South of the border. Judicial interest is applied in order to compensate the plaintiff/pursuer for the interest they could have received had the money not been wrongfully witheld from them. It is set at 8% for a reason. Indeed, given interest rates on savings accounts generally, 8% is generous. The fact that the Bank may have charged you interest at a higher rate does not mean that you are entitled to interest on a claim at that rate. The claimant must be a legal argument to justify this, so far on the site I have yet to see anything which would succeed in court. Indeed, claiming such a sum may justify a strike out application, leading tomore work and possible costs against the claimant should they lose on this point.

Unicorn96, Two points. It is unlikely that a sheriff will find against RBS if they pay any refund back into your account, which is still open and will continue to be until the debt is repaid. Secondly, the Bank would be entitled to raise a counterclaim against you for the whole amount you owe. You could argue that you have a pre-existing agreement with them to repay this at £30 a month, but by raising the action against them you may be justifying them in defending the action with such a counterclaim. Your best shot appears to be to raise the action and rely on the pre-existing agreement, but if the Bank simply restore funds to your account, I know of no sheriff who would hold that, because the payment was not made by cheque, the claim has not been satisfied.