Zoot v Halifax Mortgages ***SETTLED IN FULL*** *

[zootscoot]

Hi all,

 

Just realised I hadn't started a thread regarding my claim so here goes.

 

Paid a redemption fee on mortgage of 900. Not a great amount in comparison to other fees - I really feel for the Kensington crowd- but 900 for redeeming - wait for it ... a whole two days early, I thought was taking the bananas! :o We had to redeem early as we were moving and risked the whole transaction if we hung on the extra time.

 

Anyhow, prelim letter sent 7.7.06, LBA sent 21.7.06

 

Still have the paperwork as it was relatively recently so no need to do a S.A.R - (Subject Access Request).

 

As of yet no response whatsoever from Halifax - would have thought at least a fob off by now. Probably yet to draft a standard letter.

 

Keep you all posted

 

Zoot

[zootscoot]

Hi all!

 

Still no word at all from Halifax. LBA up today so I've made my on line claim.

 

Claim no 6QZ52134.

 

Been having real difficulties with my computer can't log in to this forum at all at home for some reason. So had to come in to work on my holiday to do my claim as I can't access any secure sites at home either.

 

I'm off work til the end of August so I might not be able to keep you updated for a while. Apologies to anyone waiting for replies from me but all me subscriptions have seemed to lapse as well.

 

I'm sure there was an IT support thread on here yesterday but that seems to have disappeared or am I going completely mad? Tried a search on IT help and nothing.

 

Any help would be greatly appreciated!!

 

Keep the faith

 

Zoot

[zootscoot]

Wahey...I managed to get on today... yet another system restore did the trick!

 

Thanks for your comments will be along to the IT support in a bit!

 

Regarding the claim, I had a letter from Halifax the day after making my claim stating you agreed to the redemption fee when you took out mortgage and got a reduced rate so no refund. As I'd already made my money claim I just ignored the letter.

 

Claim was issued on the 7th Aug deemed served on the 12th. Acknowledged on 9th with intention to defend.

 

Will wait and see if they do.

 

Zoot

[zootscoot]

Thanks Dolly,

 

 

I see that you are doing yours the other way round to me. I've just sent of my Preliminary letter for my charges!

 

 

I don't see there should be a problem with claiming ERCs. The banks still have to show the charges are a genuine pre-estimate of their losses. It is going to be pretty difficult for them to do this when the fee was 900.00 whether I redeemed after 2yrs and 1 day or 2 yrs and 364 days and yet their loss would apparently be zero if I ended 2 days later. So any arguments based on recouperating their losses for reduced interest are unlikely to stand.

 

 

Furthermore the fee reduced year on year so if I redeemed in the first year one fee was payable and this was reduced for second year and again for the third year. If the bank were to argue that they were recouperating lost interest you would expect the fee to go up rather than down. In the case of Campbell Discount Co Ltd v Bridge [1962] AC 600, the House of Lords struck down as a penalty a clause in a hire purchase agreement requiring the hirer to pay compensation for premature termination. The objectionable feature of this clause was that it provided a sliding scale which operated in the wrong direction. The less the depreciation of the vehicle, the greater was the compensation payable. Which further demonstrates the redemption fees are likely to be unlawful.

 

 

Also there is a presumption (but no more) that a charge is a 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" (Lord Watson in Lord Elphinstone v. Monkland Iron and Coal Co., 11 App.Cas. 332). So the fact that mortgage providers are levying a single fee irrespective of the actual loss of interest is indicative of a finding of a penalty.

 

 

Best of luck with your claims - although I'm sure we won't need luck!

 

 

Zoot

[zootscoot]

Ok I'm getting impatient! Its been 12 days since they acknoweldged so I've sent the following letter, I'm calling it my LAA letter after action! Lets see what transpires.

 

Dear A O’ Brien,

 

Please accept this correspondence in accordance with my duty under the Civil Procedure Rules to continue to pursue a settlement without the need to invoke the time of the courts.

For your convenience a brief summary of my claim is as follows:

7th July 2006 - I sent a preliminary letter requesting refund of the Early Redemption Charge levied on my mortgage account on the grounds that the ERC represents a penalty for a breach of contract and is thus unenforceable under English law. I also gave you the opportunity to explain that such charges were lawful and pointed out that should you not comply I would issue commence proceedings.

21st July 2006- having received no reply from my first letter, I sent another letter repeating the requests in the first letter.

4th August 2006 - having still received no correspondence from you I made an on line claim. The claim was deemed served on 12th August and was acknowledged with an intent to defend on the 9th August.

5th of August - I receive a letter from Gareth Griffiths dated the 1st of August which basically stated that in signing the declaration I agreed to the fees applicable to that product. With respect this correspondence clearly failed to comply with my request and demonstrates a distinct lack of knowledge on the legal issues involved.

I have to admit I am rather surprised at your decision to defend this case given that your chances of success are remote in the extreme. The Early Redemption Charge (ERC) imposed by the Halifax amounts to a penalty clause imposed for my breach of contract in terminating the mortgage before the contractually agreed period. To amount to a lawful liquidated damages clause you have to show that the fee you have taken represents a genuine pre-estimate of your losses (per Lord Dunedin Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79).

I understand that when I took out the mortgage I was offered a reduced interest rate and you may seek to argue that you can reclaim these savings from me in the event that I cancel the agreement. However, I would be very interested in seeing the figures which show how you reached the conclusion that the genuine cost to the Halifax would amount to £900 if I terminated the mortgage on the 27.2.2006 and would also be £900 if redeemed six months earlier yet would be absolute zero if I terminated on 2.3.2006. There is a presumption that a charge is a 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" (Lord Watson in Lord Elphinstone v. Monkland Iron and Coal Co., 11 App.Cas. 332). So the fact that the ERC was a single fee of £900 irrespective of the actual loss of interest is indicative of a finding of a penalty.

Furthermore the product I was on was a stepped tracker whereby the ERC would reduce over the period of time so if you seek to argue that the ERC was to recoup lost interest you would expect the redemption to increase rather than reduce. I would draw your attention to the case of Campbell Discount Co Ltd v Bridge [1962] AC 600, where the House of Lords struck down as a penalty a clause in a hire purchase agreement requiring the hirer to pay compensation for premature termination. The objectionable feature of this clause was that it provided a sliding scale which operated in the wrong direction. The less the depreciation of the vehicle, the greater was the compensation payable.

The lower interest offered with my mortgage product represents a legitimate considered commercial decision by the Halifax to attract my custom. Such practices of offering discounts are common place in the world of business and few companies have the audacity to pass such commercial risk on to their customers. Indeed to do so would amount to a breach of s.4 of the Unfair Contracts Terms Act which provides that a business can only require a consumer to indemnify their loss where it is reasonable (in accordance with s.11) to do so. I would be most surprised should a court hold that a consumer rather than a huge financial institution is better placed to bear the loss of its own commercial risk freely undertaken.

If you need further persuasion that the ERC is unlawful I would draw your attention to The Unfair Terms in Consumer Contracts Regulations 1999 which apply to my mortgage agreement because I am a consumer and the terms of mortgage were not freely negotiated as it amounted to one of your standard packages offered. Paragraph 1(e) of Schedule 2 to the Regulations provides that a term “requiring any consumer who fails to fulfil his/her obligation to pay a disproportionately high sum by way of compensation” may be unfair. I would vigorously contend that the fee of £900 was a disproportionate sum particularly given that had I redeemed the mortgage 2 days later the fee would be zero.

Having fully considered the legal position regarding my claim I have to reiterate my surprise at your intention to defend. However, I respect that this is the right of the Halifax and will await a full defence in eager anticipation in due course. However, be warned that I will draw the court’s attention to the fact that you have refused to correspond in this mater in refusing to attempt to settle.

Alternatively, in accordance with the overriding objectives of CPR I would like to give you the opportunity to settle this issue without the need to take the time of the courts. My claim is for £900 for the ERC, court costs of £80 and the statutory interest at 8% thereon. If you could ensure that this sum is paid into my current account by the end of the week I will inform the court that this matter is settled. If you wish to pursue this course please telephone me to obtain my account details.

Yours Faithfully

[zootscoot]

No nothing as yet,

 

They have until 10th Sept to defend. So wait and see.

[zootscoot]

Hi Dolly,

 

Feel free to use the letter you are probably on a simlar product to me so it should all be relevant to your claim too. I don't believe it you actually got a response? Perhaps they are beginning to get their act together... I've still had nothing....I wonder why?

 

Ryjael

 

Here is a letter, its not the one I sent in fact its much improved since I sent mine. Its taken from various sources including the templates and has bits added and ammended at various points!!! The bits in purple are if you are claiming late payment fees in addition to ERC delete if not required.

 

 

ACCOUNT NUMBER: XXXX

 

Request for repayment of charges

 

Dear XXXX,

 

 

Our request

 

 

We are writing to ask you to refund the charges which you have levied from our account in respect of late payment fees to the sum of £XXX , the sum of £XXX representing the contractual rate of interest applied by yourselves in respect of the said charges (Please find enclosed schedule of charges detailing dates, amounts and interest) and xxx in respect of a redemption fee. We now understand that such fees are unlawful at Common Law, Statute and recent consumer Regulations.

 

In the case of Castaneda and Others v. Clydebank Engineering and Shipbuilding Co., Ltd. (1904) 12 SLT 498 the House of Lords held that a contractual party can only recover damages for actual or liquidated losses incurred from a breach of contract as oppose to a charge which represents a penalty. This law was confirmed and upheld in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79. A charge will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison to the greatest loss that could conceivably be proved to have followed from the breach. A penalty clause is void in its entirety and unenforceable. (You may want to add something here relevant to how the charge they levied could not amount to a genuine pre-estimate. This will obviously vary depending on the particular product and lender)

 

In addition your charges appear to represent an unfair term of contract which is contrary to the Unfair Terms in Consumer Contracts Regulations 1999 (SI. 1999/2083). Our account falls within the ambit of Regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 as we are consumers. Your charges constitute an unfair penalty under Schedule 2 of the said Regulations 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 his obligation to pay a disproportionately high sum in compensation. We would vigorously contend that this is the position regarding the fee of XXXX which you deemed fit to apply to our account.

 

 

Furthermore a fee levied requiring us to indemnify you against any commercial risk to yourself in offering us a reduced interest rate in order to attract our cutom is also contrary to s.4 Unfair Contract Terms Act 1977. We are confident that a court is likely to consider this clause to be unreasonable within s.11 of the said Act as a large commercial institution such as yourselves is in a far better placed position than us as consumers to bear the burden of the vicissitudes of business.

 

 

 

I would like to bring your attention 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."

 

We believe that the charges you have levied of XXXXX for late payment, return of debit fees and early redemption far exceed any true cost to yourself as a result of our breach and any genuine pre-estimate you could conceivably reach. If you disagree, then will you please demonstrate this by letting me have a full breakdown of the costs to which you have been put to as a result of our breaches, in order to reassure us that your charges really do reflect your costs.

 

Your responsibilities

 

 

We would draw your attention to the terms of the contract which you agreed to at the time that we took out the loan. It is an implied term of that contract that you would conduct yourselves lawfully and in a manner which complies with UK law.

 

We are frankly shocked that you have operated our account in this way as we had always reposed confidence in your integrity and expertise. We consider that your repeated representations that your charges are fair and reasonable are deceptive and that they have deceived us into agreeing to pay them. Your concealment of the true nature of your charges has prevented us from asserting our rights until now.

 

 

Our targets to resolve this matter

 

We really hope that this matter can be resolved amicably and without the need for redress to the courts. Thus we are asking that you refund the charges which have unlawfully been levied on our account. Failure to refund all the money unlawfully taken from us will result in us taking further action. We will give you 14 days to reply accepting, unconditionally, our request in principle and letting us know a date by which we will receive payment. If you do not respond, or you do not respond positively, within this time period, we shall send you a letter before action giving you a further 14 days in which to reflect. We 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 us and we shall issue a claim at the expiry of the second deadline. Thus take this letter as 28 days written notice of our intention to issue a court claim should you not comply with my request. I hope that you will enter into a sincere dialogue with me about this matter and I am writing this letter to you on the assumption that you will prefer to do this than merely respond with standard letters and leaflets.

 

Yours faithfully,

 

XXXX

 

 

Hope this helps

 

Best of luck

 

Zoot

[zootscoot]

Thanks for your comments guys & girls..... breaking news.... I've won!

 

Got home to a letter from Halifax stating they are going to refund in full. Unfortunately no acceptance of liability... just a gesture of goodwill. Goodwill? where was that before I issued my claim?

 

Anyway good news for me and all you guys who are currently making claims or considering claiming

 

Go for it

 

A very happy

 

Zoot

[zootscoot]

Ahh Thanks for all you heart warming comments... I'm filling up!

 

A donation will be on its way as soon as I actually get my hands on the money! If it wasn't for this site I wouldn't have even considered reclaiming it. I'm well chuffed because its my first claim and I knew it wasn't as straight forward as the bank charges. I was sceptical at first but the more I looked ino the more I was convinced that ERCs are unlawful penalties. So LTWFB I'm sure I won't be the last!

 

I'll be watching the rest of your claims with interest, I think I've subscribed to most of the threads in this section! I'm sure Halifax are pussy cats in comparison to others lenders people are taking on particularly Kensington and GMAC so I'll be supporting you all the way.

 

I'm currently with GMAC and am already thinking about taking them on... once I've cleaned up my credit history and remortgaged...

 

I hope I've given you all a little more confidence to carry on your claims and wish you all every success!

 

All the best

 

Zoot

[zootscoot]

Hi Gina,

 

It was the LBA template with appropriate changes for ERC. I didn't add any legal bits simply referred 'to as outlined in previous letter' after the bit about being contrary to common law and statutes.

 

There's not really a great deal to add at this stage other than outline the fact that they could save themselves the cost and inconvenience of a court claim if they pay up now. But its unlikely they will payout before court in any event.

 

Hope this helps

 

Zoot

[zootscoot]

Yes Beserker you and many others! I bet the mortgage companies are quaking in their boots!

 

Cheque received this morning.

[zootscoot]

Hi Martin,

 

This is what I used. It just about fits when you add the standard bit about interest

 

I am claiming the return of money taken by the defendant in the way of a redemption penalty charge on xx/xx/xxxx from account no xxxx. This charge relates to my breach of contract in that I terminated the contract before the agreed period. The defendant's charge for my breach is a disproportionate penalty and therefore unenforceable as it is contrary to common law as established in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79. Further, as a disproportionate penalty it is invalid under the Unfair (Contracts) Terms Act 1977 s.4 and under the Unfair Terms in Consumer Contracts Regulations 1999. Para.8 and sch.2(1)(e). I have repeatedly asked the defendant to justify their charges but they have declined to do so.

 

Hope this helps

 

Zoot

[zootscoot]

Good luck Biffa & Treacle's Dad,

 

The preliminary letter is in this thread page 1 post 14, the LBA was simply an adapted template LBA from the library and the Particulars of Claim for MCOL is above in post 41.

 

All the best Zoot

[zootscoot]

I'm on the trail of Igroup now - what happened to you? The ***** tried to repossess my £300k house for being £600 in arrears. By the time I got tp court, it was over £1200 inc the charges.

 

 

Go get em ... revenge is sweet!

 

Hope you don't mind if I borrow your letters for it zootscoot.

 

Help yourself ...another mortgage company getting hit makes me happy!

 

Does the repossession affect a claim in any way, do you think?

 

No, although if there is any balance outstanding they might try to apply any pay out to it.

 

think IGroup might just go all the way because the ERC, or whatever it's called on a secured loan, was quite large.

 

That secured loan wasn't under 25,000 by any chance?

 

Best of luck to you all

 

Zoot

[zootscoot]

If your secured loan is governed by CCA 1974 (not all will be check out s.16 for exempt agreements) then s.95 (1) entitles you to a rebate of charges to credit.

 

http://www.passprotect.studio400.me.uk/Consumer_Credit_Act_1974.PDF

 

The Consumer Credit (settlement Information) Regulations 1983 requires the creditor to give a statement of amount required to pay off the loan and how this was calculated. The Consumer Credit (Early Settlement) Regulations 2004 (see link below) regulates the calculations and these cannot be contracted out of to the detriment of the consumer (s.173(1) CCA). So I would imagine an ERC which requires payment over that provided for in the Regs would be classed contracting out of the Regulations to the detriment of the consumer.

 

The Consumer Credit (Early Settlement) Regulations 2004

 

These Regulations only apply to loan agreements taken out since 31st May 2005. These Regulations replace Consumer Credit (Rebate on Early Settlement) Regulations 1983 which contained similar provisions. I can't find these anywhere at the moment. Trading Standards have software which can check the calculations provided by a loan company. Its often referred to as rule 78 and allows them to charge upto 6 months interest.

 

 

Hope this helps

 

Zoot

[zootscoot]

Hi Chelsea,

 

If so, I think maybe I should sent the correctly worded letter, give them another 14 days?

 

Yes I think that would be best.

 

Good luck

 

Zoot

[zootscoot]

I did the claim in my name alone as this is all that is allowed under mcol, but all the letters (prelim and LBA) were signed by myself and my husband and the cheque was made out to us both. No one ever queried it.

 

Hope this helps

 

Zoot

[zootscoot]

Ok just for completeness and so that everything is available in one thread, here is the LBA I used in my action:

Hope this helps

Zoot

LETTER BEFORE ACTION

 

Dear XXXXX,

 

ACCOUNT NUMBER: XXXXXX

 

 

 

We are very disappointed that you have failed to respond to our letter of the XXXXX relating to the repayment of the redemption fee of XXXX. Since paying the fee we now understand that such fees are unlawful and unenforceable as outlined in our previous letter. We would draw your attention to the terms of the contract which you agreed to at the time that we opened our account. It is an implied term of that contract that you would conduct yourselves lawfully and in a manner which complies with UK law.

 

We are frankly shocked that you have operated our account in this way as we had always reposed confidence in your integrity and expertise as our fiduciary. We require repayment in full of this money. If you do not comply fully within 14 days then we shall initiate court proceedings against you for the full amount, plus interest, plus costs and without further notice.

 

 

 

Yours faithfully,

XXXX

 

[zootscoot]

No it shouldn't affect the mortgage adviser. However, I've seen several letters where the mortgage co. have argued this was in the T&Cs which your mortgage adviser should have explained to you. It matters not that the mortgage adviser has explained as even if you know about it and agree to it if it is a penalty it is unlawful.

 

The mortgage companies are obviously taking their anger out elsewhere!

 

So if the mortgage advisers were to give correct advice their clients such as

 

'this mortgage product comes with an ERC but don't worry this is unlawful and you can claim it back once you've paid it'

 

Perhaps the mortgage companies would be happy!

 

I think not lol

 

Zoot

[zootscoot]

With loans under 25k you can claim back any late fees or bounced dd fees. Also any services which can relate to a breach of contract.

 

Generally ERCs are not levied on loans under 25K as these are regulated by CCA.

 

You can not claim any interest payments made in respect of the loan (unless it is the interest you have paid on charges). Nor any set up or arrangement fees incurred on taking out the loan.

 

Hope this helps

 

Zoot

[zootscoot]

Hi Julian

 

Sorry to hear of your recent difficulties.

 

Its still early days with ERCs. We have so far had 4 successes and no losers so its looking pretty optimistic.

 

Obviously its quite a drastic step to take, to sell your home in order to pay off debts so be sure that you consider all your options carefully. I'm sure you will be looking into reclaiming any other unlawful charges.

 

Things will get better

 

All the best

 

Zoot

[zootscoot]

Hi,

 

Sorry, I've not heard of a set aside mortgage how does that work?

[zootscoot]

Hi MLP,

 

You can copy and paste onto the site. You will be better starting your own thread to make it easier to track your progress.

 

All the best

 

Zoot

[zootscoot]

Lol! I've just responded to your question on another thread we must have been typing simultaneously!

[zootscoot]

Generally the Halifax will acknowledge with an intent to defend but pay out before submitting a defence.

 

If they have acknowledged this gives them 28 days from the deemed served date to lodge a defence or pay out. If they do neither you can then apply for judgment by default.

 

Best of luck

 

Zoot