Why is no one claiming the contractual rate of interest???

[steven4064]

The majority opinion in Westdeutsche was that there was no need to change practice to allow compound interest except in cases of fraud or breach of trust. The minority opinion was that, in this daya and age, no one uses simple interest for anything and therefore compound interest should be allowed.

 

The majority opinion in Sempra was to uphold the minority view in Westdeutsche - that compound interest is allowable even in cases not involving fraud or breach of trust.

 

Thus Sempra removes the bar on compound interest. Of course, persuadiung a judge to actually award compound interest is a different matter as hagenuk implies.

[Paintball]

Actually, it's not about luck but about being right!

Have a great w/e everyone ...

[hagenuk]

The majority opinion in Westdeutsche was that there was no need to change practice to allow compound interest except in cases of fraud or breach of trust. The minority opinion was that, in this daya and age, no one uses simple interest for anything and therefore compound interest should be allowed.

 

The majority opinion in Sempra was to uphold the minority view in Westdeutsche - that compound interest is allowable even in cases not involving fraud or breach of trust.

 

Thus Sempra removes the bar on compound interest. Of course, persuadiung a judge to actually award compound interest is a different matter as hagenuk implies.

 

Very interesting debate. I think "removes the bar on compound interest" is a bit strong and what actually happened was that the Court decided that no interest, whether compound or simple, was recoverable at common law and the court was considered to have no jurisdiction to make an award of compound interest on a personal claim for restitution of a sum of money paid by mistake or following an unlawful demand (Westdeutsche v Islington), but sometimes interest, compound as well as simple, was recoverable in equity.

 

However, in Sempra Metals Ltdv Inland Revenue an award of compound interest was necessary to achieve full restitution and, hence, a just result. Lord Nicholls held that, in the exercise of its common-law restitutionary jurisdiction, the court had power to make such an award.

 

Here, as elsewhere, the law of restitution was sufficiently flexible to achieve a just result. To avoid what would otherwise be an unjust outcome the court could, in an appropriate case, depart from the market-value approach when assessing the time value of money or, indeed, when assessing the value of any other benefit gained by a defendant.

 

The interest rate for any restitutionary claim therefore should be the rate at which you could borrow the relevant amounts you state you have lost in the market at the relevant time. Somewhat far short of the rates that many of these claims are made for and very probably the reason that so many of them are bound to fail. Couple that with the desire to have these cases heard on the Small Claims Track and you begin to see why so many are simply dismissed.

[shazzzaaa]

I have been following this debate with interest as I need to put together a skeleton argument to support my credit card claim for contractual interest being paid out vs the standard 8% for a hearing to argue the point. I can't find any thread which has such a template. Would it be safe(ish) as far as these things go to use the #2051 argument as a starting point. And yes I do know that these are opinions not facts but I do need to start somewhere. Any help or opinions would be very welcome.

[Paintball]

I have been following this debate with interest as I need to put together a skeleton argument to support my credit card claim for contractual interest being paid out vs the standard 8% for a hearing to argue the point. I can't find any thread which has such a template. Would it be safe(ish) as far as these things go to use the #2051 argument as a starting point. And yes I do know that these are opinions not facts but I do need to start somewhere. Any help or opinions would be very welcome.

 

We're in the same boat and that's what I'll be doing. I trust Steven's knowledge and skills ... Go to the Cases Library and read the Sempra case

[steven4064]

The interest rate for any restitutionary claim therefore should be the rate at which you could borrow the relevant amounts you state you have lost in the market at the relevant time. Somewhat far short of the rates that many of these claims are made for and very probably the reason that so many of them are bound to fail.

I agree entirely. I have always advocate using one's ow bank's authorised overdraft rate for these claims on exactly those gruonds.

[Shoe Em]

I would like to claim the contractual rate in my store card claim against Argos, but I have come up against rather a huge snag. Either my maths is off (more than likely), or the calculator I used for my interest gave me an inaccurate total as it is scarcely more than the 8% I originally calculated.

 

There is more detail in my thread (linked below) if anyone can clarify things for me I would be very grateful.

 

Many thanks!

 

http://www.consumeractiongroup.co.uk/forum/other-stores/113927-shoe-em-argos-store.html

[steven4064]

If it is a very short timescale that may be right. Where compound interest really takes off is over long periods.

[Shoe Em]

The four charges are from September-December 2005 - does that sound about right to you then? They total £140.

[MacBoy]

Prelim and Schedule of charges for Currrent Account and Credit Card prepared for Halifax today. Am claiming all the way back to the late 1980s for the charges and am claiming Contractual Interest at the Authorised o/d rate for the bank a/c and the purchase rate for the card; with S.69 in the alternative for both.

 

Current A/c a £9000-ish claim in the first instance and a £4000-ish claim if S.69 is applied. (actual charges were c.£2400).

 

Card is much lower - only £350 charges over 15 years for this one (what a relatively good boy I was hehe!), interest approx. £800 total £1150.

 

Reading up on case law & arguments and preparing docs for the next stages.

 

Both posted, affixed with shiny colourful CAG labels and lovingly adorned with the Royal Mail's finest hand-peeled, seasonal stamps. Happy Christmas, Howard!

[noomill060]

Interest only £800?

 

How did you work that out? You cant have very many.

 

I have some £5 charges from 1986. @ Barclaycard's compounded CI it works out around £300 a piece.

[steven4064]

at 30% APR it roughly doubles every three years - a rule of thumb I use to check the interest is in the right ball park.

[MacBoy]

Hi

 

I used the 'blueyonder' spreadsheet. Although the charges went back a long time, they were few and far between. 15 charges between 1994 and 2007.

I used the purchase rate of 20.9%. Does this still sound wrong?

 

Mac

[steven4064]

at 20.9% it doubles (approximately) every 3 1/2 years. So the interest on charges in 1994 should be about 16 times the original charge, and so on.

[MacBoy]

Thanks Steven

 

This sheet is working it out at, for example:

 

26/04/94 Late Payment Charge @ £10 123.30

 

So about 12.5x. The worksheet is showing today's date. Do you think something might be wrong here?

 

Mac

[steven4064]

26/04/94 Late Payment Charge @ £10 123.30

That's right - I just checked it.

[MacBoy]

Thanks very much for checking , Steven.

 

noomil060

 

How did you work that out? You cant have very many.

You're quite correct - I don't have many charges on the Credit Card claim - only 15 over 15 years - small beer when compared with others on CAG - but just as worth claiming!

[pugsley]

I would like to charge this rate but it is too complicated for me, I would have to pay someone to work it out

 

my barclaycard since asking for charges back has gone from 400 to 770 all charges as they have not put me in default but are adding charges every month (no more statements arriving though) + interest at a very high rate:eek:

 

I am going to cca them this week just in case as if I just go for the charges and 8 per cent I will still be in debt + the fact I cannot even afford to lodge a claim with mcol at the moment

[phatram]

The spreadsheet works it out for you. It really is NOT as difficult as you think. Charge them the rate and if you get stuck we will help out.

Me and Mrs P haven't lost one yet charging rates up to 30 % plus.

Good luck

Mr P

[steven4064]

And I've done several at 30% ish as well.

[sn00psmum]

Hello Steven,

 

Sorry to jump in and ask what may by now be a silly question, but what is "Sempra"?? I have a large claim with Royal Bank of Scotland which has been on hold for a few months now as I wish to claim CI and they weren't playing ball so stopped everything when the test case was announced, only just getting back into it and i'm sure things have progressed

SM:p

[Fred_Funk]

The Sempra judgement - use the forum search tool to find more detailed discussions - provides the basis for claiming CI on the basis of restitution for your bank's unjust enrichment. Prior to this, most such claims relied on the principles of mutuality and reciprocity but this argument is now dead in the water.

[steven4064]

Sempra

[sn00psmum]

Thanks guys, very helpful.......i'll have a proper read of it tomorrow, going to bed now! :o

[ukaviator]

Lucky you, i'm at work until 6am.

 

Sempra is quoted when claiming CI on the basis of restitution for your bank's unjust enrichment.