20 year claim limit in Scotland

[Guest bong]

however, it has been cited in a Scottish court I believe COMPANGNIE COMMERCIALE ANDRE S.A. v. ARTIBELL SHIPPING CO LTD+THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, 21 February 2001, Lord Macfadyen

[Robertxc]

See also here:

40 Under Section 5 of the Limitation Act of 1980 and similar predecessor

legislation, an action may not be brought after the expiration of six

years from the date on which the cause of action accrued. In relation to

debt recovery, time does not begin to run until there is a debt presently

due and payable. In Joachimson v. Swiss Bank Corporation, 1921 3 KB

110, the Court held that a bank is not liable to pay the customer the full

amount of his balance until demand is made. The Court further held

that “the practical bearing of this decision [as to the necessity for a

demand] is on the question of the statute of limitations . . . the result of

this decision will be that for the future bankers may have to face claims

for balances on accounts that have remained dormant for more than six

years.” Id. at 130-131. Thus, under Joachimson, time does not begin to

run against the customer until demand for payment has been made, irrespective of the amount of time that has elapsed since the last transaction relating to the account. See, however, the Court of Appeal decision Mahomed v. Bank of Borada (November 16, 1998) which held that if, following a demand for payment, the dormant account holder did not

renew his claim within six years and the bank closed the account or

transferred the account to a suspense account, the dormant account

holder would be time-barred from making a fresh demand.

Taken from here: http://www.crt-ii.org/ICEP/ICEP_Report_Annexes_1-9.pdf

[mcuth]

40 Under Section 5 of the Limitation Act of 1980 and similar predecessor legislation, an action may not be brought after the expiration of six years from the date on which the cause of action accrued. In relation to

debt recovery, time does not begin to run until there is a debt presently due and payable.

Oh now, I like that phrase - that sets it a bit clearer than the demand for the return of deposited funds, I think - especially when accounts have been longstanding overdrawn. In that then, the prelim letter is our establishment of debt due and payable.....?

 

Cheers

 

Michael

[Guest bong]

I haven't really thought this through Michael but I was thinking that it could be argued that money the bank says you owe (overdraft) is as good as money in the bank for these purposes, in the first instance the refund due will perhaps be applied in reduction of the overdraft and in the second, it will result in a cheque being issued in your name.

[Guest bong]

and Michael, something further to think of, money that you have paid into the overdrawn account (assuming you have:p ) would have remained there if the charges part of the overdraft hadn't swallowed it up.

[mcuth]

Bong - hmmm, I'm not convinced. When I get a chance, I'll resurrect that bit of the discussion on your other thread on the demand for return (the overdrawn balance is the one bit of that argument that I don't like)

 

Cheers

 

Michael

[jo24]

Hi there!

I'm new to this & i'm in the process of claiming my bank charges back from the clydesdale bank (scotland). Can someone please tell me whether i can claim back 5 or 6yrs or further? as my claim is now being dealt with down in leeds @ yorkshire bank not @ head office in glasgow as i initially thought. I've recieved a letter from them saying that they are dealing with my complaint & will try get back to me shortly. I'm unsure what to do next, can some1 HELP plz?!!! Thanx

[Guest bong]

jo24 sorry I can't help you with your query. I hope someone else will be along.

 

Michael, had another thought - I think if you have paid atleast as much into the account as the value of the total charges that they have unlawfully deducted then you would be able to demand that the money is returned to you. Assume for the minute that the charges had not been deducted - presumably you would have had the facility of paying money in (reducing your o/d) and then withdrawing it again and remaining liable for the o/d debt. I think the difficulty would come if the deposits were less than the charges claimed.

[mcuth]

Michael, had another thought - I think if you have paid atleast as much into the account as the value of the total charges that they have unlawfully deducted then you would be able to demand that the money is returned to you. Assume for the minute that the charges had not been deducted - presumably you would have had the facility of paying money in (reducing your o/d) and then withdrawing it again and remaining liable for the o/d debt. I think the difficulty would come if the deposits were less than the charges claimed.

 

Good points Bong - I shall have to think further on this (seem to be doing a lot of that lately!). One thing I am including in my next letter to court on my RBoS case is this:

 

" Without prejudice to the Claimant’s previous statements in regards to the Limitations Act 1980, the Claimant would also respectfully request the Court to consider that the Claimant’s initial “Request for refund of charges” letter to the Defendant, dated 24th October 2006 (copy attached), is a demand for repayment as per Joachimson v. Swiss Bank Corporation, 1921 3 KB 110 and therefore not subject to the Limitation Act 1980. "

 

See if that does anything

 

Cheers

 

Michael

[Advocate]

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.

[Guest bong]

Significance of this case for prescription

 

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.

 

thanks for that Advocate. I do respect the fact that my own knowledge is nowhere as vast as yours. However, if you wouldn't mind, I have a few questions on what you have said.

 

Isn't the taking of money unlawfully from the customer the same as saying it should still be in the account ready for when I want/demand it? And further, I only have a cause to start an action for its recovery when they refuse to pay me?

 

Doesn't the breach of contract come about when they fail to repay on demand?

[Bookworm]

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.

 

Apologies in advance if this is irrelevant to the discussion, I was splitting the thread into 2 at Robert's request when I came across another post where you said the same, and thought I'd better bring it up.

 

Our argument has never been about the breach of contract by the bank. The argument is about the breach of contract by the customer. That breach of contract, namely going over the limit, is what the bank penalises by adding charges, which they justify by stating it is part of our T&Cs.

 

If it has no bearings on the discussion, then apologies again.

[Guest bong]

I agree Bookie, that up to this point we have been treating the claims as not based on breach of contract but upon the unlawful charging regime. However, I don't think that should stop us from taking a new approach to our claims, to allege breach of contract by the bank, if this is an approach which will allow for the recovery of money beyond the limitation/prescription period and if it is a valid argument.

[Advocate]

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.

[Robertxc]

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 there is no equitable reason why it should be allowed to keep it.

So, are you saying that if they've takenthe money, rather than borrowed it, they get to keep it if you haven't asked for it back within five years?

[Guest bong]

Sorry, I only just came across your replies by chance, since the site email system went down on Friday night.

 

Thanks Advocate, I can now see that there is a difference between money you expected to get back and money you thought you'd seen the last of.

 

However, as one who doesn't like to give up on a chance, I have been doing a spot of creative thinking and I wonder what you think about this plan (B!):

 

what if, we reverse the logic here. I know it hasn't been tested in court but I'm sure there's always time for a first try! We are entitled to assume the bank knew the law surrounding what constitutes a penalty charge. In that case, with reasonable dilligence, they c/should have known that the law would require that they repay what they were taking, and it therefore constituted borrowing of a sort.

 

I'm not sure if I'm getting back to the territory of grounds we already have for relief from limitation/prescription here though.

[Advocate]

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.

[Seahorse]

So, until the taking of money is confirmed as unlawful by a court, it cannot be relied on as a breaking of the contract by the bank? Is that what you are saying, Advocate?

[Robertxc]

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.

Ok, so what if there's no way I could have known that it was taken unlawfully until say seven years later? Incidentaly, there was a case recently where one of the banks tried to have a case dismissed for going back more than five years. It was quite a well prepared defence (i.e. more than just faxed instructions to a local agent). The defender's lawyer apparently went to some lengths to outline why it should be dismissed, but the sheriff just said that prescription and limitation are at the discretion of the court anyway. Apparently he was quite dismissive of the bank's argument.

[Guest bong]

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.

 

Advocate,

 

I can only think of three possible scenarios for the unlawful taking of customers' monies. One is theft, one is borrowing, and the other ignorance of the law. What other interpretation can we put upon the taking of money that is not legitimately/lawfully taken? It cannot be that they thought it was merely to cover their costs because they knew of the profits involved (whereas we were not privy to this information).

 

Ignorance of the law is no defence as far as I know.

 

If we allege theft we need to be able to prove beyond reasonable doubt that this was their intent, presumably, in criminal proceedings rather than civil. I don't know if I have this correct, I think I've seen it said somewhere. It seems more creditable than borrowing but there does't seem to be a fourth definition of the taking of money that they could be expected to have known to be unlawful.

 

I don't feel I have made a very good case for the taking of money equating to borrowing but what I am trying to get across here is that if the law permits a claimant to demand repayment of money that is in the account but not money which the bank unlawfully removed from the account, and therefore should by rights still be in the account, then the claimant is being denied legal redress to monies taken from the account more than 5/6 years ago. Surely the court would recognise this? I knew it was taken, yes, and I didn't expect then that it would be returned. I do not have any proof that they intended to break the law, but had I known what I know now I would have demanded it back at the time, not 7 years later. Even if I had sought legal advice 7 years ago, without access to the banks profit and loss account the lawyers wouldn't have known that either, so on what basis could they have advised me to make a claim?

 

It may be that I am going to have to accept your word on this as final if you don't feel there is anything else you can add to what you have already given here. Sorry if I've given you a headache! I appreciate your input.

[Advocate]

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.

[Vital Spark]

Oops!

[pict]

Sorry to butt into your thread. I have been reading this with interest for the last two weeks or so.

I currently have a claim going back more than 6 years. The return date was wed 28th march and the bank has failed to respond. The case details are as follows:

 

started Summary Action against BOS for first £1500 of claim on 14/01/07

 

Charges date are 22/12/99 to 01/09/2000

 

Return date set as 28 Feb- the bank has failed to respond

 

Handed in form 11 today(Form of minute - no form of response lodged by defender)

 

Will phone office again on Monday to check for response

 

Hearing Date 07/03/07

 

I am really surprised that the bank has failed to defend a case that in their eyes fall outside the limitations act(5 Years Scotland).

 

Has anyone else had this happen?

[Vital Spark]

Bet they've been readign up on this Scottish "20 year claim limit" of which Robertxc made us aware.

 

I hope you're successful in your claim. Will be thinking about you on teh 7th.

 

Let us know how a claim for further back goes: ineresting.

[7givenchy]

pict,

 

I too have been following the thread with interest, and I am greatly encouraged by your situation.

 

I started Small Claim Action against Bank of Scotland for period 12/01/2000 -13/07/2000 Hearing Date was 13/11/2006.

Bank defended the action - their defence being that it is time barred under Section 6.1 the Prescription and Limitation (Scotland) Act 1973

Case adjourned until 6th February.

 

At the hearing on the 6th Feb the judge listened to my defence and questioned me for more than an hour as to why I had not challenged the charges at the time, and indeed why I had allowed my account to become overdrawn on so many occassion. I quoted the article from Burness I told him that other claims over 5 years had been successful. He asked me to supply details of these cases, before the next hearing I submitted the statement from the OFT, which he said had no legal bearing. He said he could not make a decision at that time as the case had raised a number of legal issues. He advised me to prepare a much more legally based defence before the next hearing which is set for 6th April .

 

Your situation is looking favourable and I look forward to hearing what the outcome is.

 

I would be interested to know what your response would have been if they had defended the action

 

Very best of luck!!!