New strategy for Allocation Questionnaires

[pablo5150]

hi all

i too am thick!!

i have received an AQ from court (N149) and in section G (other info)

i was advised to fill in using this template http://www.consumeractiongroup.co.uk/forum/welcome-our-forum/53241-cant-find-what-youre.html

 

i have done this but not sent it back yet.

which template should i use?

 

thanks

paul

[pablo5150]

sorry the above web address is wrong , this is the correct link

 

http://www.consumeractiongroup.co.uk/forum/bank-templates-library/11644-allocation-questionnaires-guide-completion.html

[Robhughes]

Pablo - I think that info included in the link you've sent is correct and the template here is an add-on that should be referred to and included in section G

[XXneilXX]

I've got to submit my AQ by Jan 2nd. I'm interested in using this but I'm curious as to why Bookworm says that claimants should be very careful with their schedule, particularly if claiming contractual interest, which I am. All details of my case are in my thread on the Abbey forum.

Also, would I be right in thinking that the material this is requesting is the same as the Court Bundle? Thanks

 

I think that Bookworm is correct in that EVERYONE, when dealing with the legal system, must be sure that ALL details are correct. Some years ago I managed to get a repossession order for my house overturned because one entry in the banks statement was incorrect and the banks solicitor couldn't explain it to the judge.

 

Also the material this Statement for the AQ is calling us to supply does NOT go with the N149 form. It is only sent if and when the judge asks for it.

[XXneilXX]

hi all

i too am thick!!

i have received an AQ from court (N149) and in section G (other info)

i was advised to fill in using this template http://www.consumeractiongroup.co.uk/forum/welcome-our-forum/53241-cant-find-what-youre.html

 

i have done this but not sent it back yet.

which template should i use?

 

thanks

paul

 

Hi pablo

Again, as I understand it, the template you have found is the correct one for filling in the N149. However the statement at the very begining of this thread is a "new and improved" version for section G. This new version, if the judge agrees, puts some presure on the bank to disclose vital information regarding actual costs for their charges. People believe the banks do not want to disclose this information in open court and therefore will be more likely to settle out of court.

[pablo5150]

thanks guys

so its ok to send my original AQ

[XXneilXX]

thanks guys

so its ok to send my original AQ

 

It seems to have worked for everyone so far. Go for it and good luck.

[Delboy01]

So sorry to appear "not up to speed here" but can somone explain what this is all about in laymans terms? as I aint got a scooby doo Also what effect it may have on claim length?

 

Also how do i reg for newsletter?

[GaryH]

Right, from the start....

 

In section G (J if N150) of the AQ, you get the opportunity to add any other information you think may help the judge manage the claim, or make a request for specific orders that you want the judge to consider making.

 

Untill now, we have always requested an order of standard disclosure in this section, as per the AQ guide notes in the templates library.

 

A standard disclosure order, if it were ordered by the judge, would oblige the bank to fully substantiate exactly how its charges are made up and provide costings and documentary evidence, etc.

 

Trouble is, standard disclosure is not routinely availible in small claims cases - it is only usually ordered in the fast and multi-track. Judges do have the power to order it in small claims cases if they wish, but up untill now they have been very reluctant to do so. In fact I'm only aware of a handful of cases in which it has been ordered dispite it being requested in hundreds of AQ's.

 

So now, instead of requesting an order of standard disclosure in the AQ, there is the option of requesting the directions as per the draft order on the previous page.

 

If ordered, this would still oblige the bank to produce all the important documentation that a standard disclosure order would - but, in a form that is far more likely to be agreed by the judge.

 

These directions are already being routinely ordered by some courts in small claims track cases, and it is fairly likely that if proposed most judges would agree to them. There is certainly no obvious reason why they would'nt, as is the case with standard disclosure.

 

So, if you want to request the directions on the previous page rather than standard disclosure, you need to attach the draft order (as per BF's post #2) to the other info section of the AQ. If you have a N150, attach it to the 'proposed directions' section and see my post on the previous page (post #15) for a suggestion of what to put in 'other info'.

 

The AQ will then go off to be looked at by the judge to consider the AQ's and allocate your claim - set the date, issue directions, etc.

 

You will then in a couple of weeks receive your notice of allocation from the court, which will contain the track, the date and the directions the judge has ordered.

 

If the judge has aceeded to your request and ordered the directions as proposed, you will THEN have to submit the claimants documents as per a), b), c) and d) of the order.

 

It is VERY IMPORTANT that you then know exactly what you need to provide and submit it to the court and the other side within the date specified on the order.

 

If you don't submit it, or don't submit it on time, your claim will then be struck out!!!

 

Once you've filed and served your documents, the bank will then have to submit theirs within their specified timescale. Going on past evidance, it is highly unlikely (although not inconcevable) that the bank will comply. They will probably either settle before the deadline, or default and have their defence struck out.

 

As discussed previously on this thread, the other big advantage of these directions is that the defendants documents have to be submitted within 28 days of the order. Therefore, the claims timescale would be considerably shortened as opposed to the standard small claims track directions, which don't require document exchange to take place untill 14 days before the hearing - which obviously in some cases could be months!

 

Hope this helps clarfy it a bit!

[Glenn UK]

Excellent post Gary,

 

Seems to me that this draft order is an excellent way forward, having been wating since beginning of Nov for allocation it would have been good to have this back then but hey ho.

 

Glenn

[Delboy01]

Thanx for that Gary

 

Much appreciated and now understood.

[vicmar]

hi gary just be sure i have N149 AQ so in the other info section i can add this draft with out causing problems, then the judge will decide track and directions and the bank will have to submit info if they don't i win (in short)

am i right?

[GaryH]

Yes.

[vicmar]

thanks will print and drop off next week heres hoping:rolleyes:

[funbint]

What a great explanation Gary, it must of been even I understood it

 

Not to leave out a superb time saving tool excellent draft, great work.

 

Really the only extra thing for the claiment would be coping of the statements, as the rest of the points could be managed from the POC in most cases.

 

Rgds

FB

[GaryH]

Really the only extra thing for the claiment would be coping of the statements, as the rest of the points could be managed from the POC in most cases.

 

After the AQ's have gone back, if/when the judge has agreed to the directions in the draft order you will then need to provide;

 

a) Your schedule;

 

b) Your statements showing the charges. Alternatively the list of charges which the bank provided under your S.A.R - (Subject Access Request);

 

c) A statement of evidence - see post #55 below.

 

d) All the statutues and case law on which your claim relies. Ie, UTCCR's, UCTA's, SOGA, case law, etc. You'll find all of this in the Basic Court Bundle.

[funbint]

After the AQ's have gone back, if/when the judge has agreed to the directions in the draft order you will then need to provide;

 

a) Your schedule;

 

b) Your statements showing the charges. Alternatively the list of charges which the bank provided under your S.A.R - (Subject Access Request);

 

c) A statement of evidence. See post *24 or my sig for a link to the one I used for my Lloyds claim. In most cases it'll need amending to suit, although I'm working on it to make it more broad-ranging.

 

d) All the statutues and decided cases on which your claim relies. Ie, UTCCR's, UCTA's, SOGA, case law, etc. For this, I'd just submit the whole of the http://www.consumeractiongroup.co.uk/forum/bank-templates-library/33060-basic-court-bundle.html.

 

Thanks again more brilliant help consider your scales tipped

 

Was just wondering.........

 

I know I would'nt have to send any info till asked by the judge but could I send it anyway along with AQ. Would this have any positive effect on the time scales or any other aspect.

 

RGDS

FB

[fscot61]

Hi,

 

I've been proceeding with my claim against abbey using much of the info on this site. I have understood most of the advice given, however, I'm at the AQ stage and I think I'm getting out of my depth here.

 

grateful for any help on the following.

 

1. I'm claiming more than 5k therefore fast track AQ has been sent to me. Is there any advantage to using the directions template for the fastrack ? As I understand it the FT is subject to full disclosure anyway. Or is it good practice to spell it out as per the draft direction.

 

2. There is of course an option for small claims track (if both parties agree). Would it be wiser to to suggest small claims to the court and then attach the directions. Or better to just to stick with fast track ?

 

thanks

[GaryH]

What do you think about when the statement of evidence and what not are sorted in a template format we include this in the library with step by steps ?

 

Yes, good idea Karne. Fine by me anyway.

[GaryH]

I know I would'nt have to send any info till asked by the judge but could I send it anyway along with AQ. Would this have any positive effect on the time scales or any other aspect.

 

No, definately don't do that. You should'nt pre-empt the judges order and besides, the AQ is only for the judge to decide on allocation. The issues regarding the legalities of the charges, etc are not relevant at that point.

[GaryH]

1. I'm claiming more than 5k therefore fast track AQ has been sent to me. Is there any advantage to using the directions template for the fastrack ? As I understand it the FT is subject to full disclosure anyway. Or is it good practice to spell it out as per the draft direction.

 

2. There is of course an option for small claims track (if both parties agree). Would it be wiser to to suggest small claims to the court and then attach the directions. Or better to just to stick with fast track ?

 

Well I'm no expert, but if it were me, I think I'd request allocation to the small claims track stating the reasons as outlined in the AQ guide notes, and requesting the directions as per the draft order.

 

You could then add in the other info that in the alternative, if the claim is allocated to the fast track then you request an order of standard disclosure.

 

I don't think that both parties would necessarily need to agree for the claim to be allocated to the small claims track. The judge has the power to allocate the claim as he see's fit.

[funbint]

No, definately don't do that. You should'nt pre-empt the judges order and besides, the AQ is only for the judge to decide on allocation. The issues regarding the legalities of the charges, etc are not relevant at that point.

 

Understood

[GaryH]

Heres the 'Statement of evidence' which can be used for direction c).

 

Remember this is not to be submitted with the AQ, but after the judge has ordered directions.

 

The first statement is to be used if your bank has defended the claim on the basis that the charges are a legitimate contractual service charge - Ie. Lloyds TSB

 

The second statement is to be used if the bank has defended on the basis that the charges are proportionate to, or a pre-estimate of, their actual losses - Ie. Abbey

 

One or two banks don't plead in detail as to why their charges are not a penalty, only that they were debited in accordance with the T&C's, etc - Ie. Barclay's. If this is the case, this statement would be the most suitible - http://www.consumeractiongroup.co.uk/forum/barclays-bank/36692-peter-rabbit-barclays-2.html#post492578

 

Please think carefully about what does or does'nt apply to your own particular claim and amend as necessary. Similarly, if you can think of any more evidence relevant to your claim, add that in too.

 

Usual disclaimer applies - Im not a lawyer (far from it!) and the following is just my interpretation which I prepared for my claim and that I have amended to be relevant to others. Its offered without liability.

 

text in black - template

text in red - guide notes

text in blue - examples. Replace with your own information.

 

'SERVICE CHARGE' STATEMENT -

 

Claim Number:*******

 

In the ******* County Court

 

 

 

 

Between:

 

Your name

(Claimant)

 

 

and

 

 

 

Bank Plc

(Defendant)

 

 

 

_______________________________

 

STATEMENT OF EVIDENCE

 

_______________________

 

 

 

 

 

1. The Claimant submits that the charges levied to his bank account, as set out in the enclosed schedule, are, notwithstanding the defence of the defendant, penalty charges arising from and relating directly to breaches of contract, both explicit and implied, on the part of the claimant. As a contractual penalty, the charges are unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999, the Unfair Contracts (Terms) Act 1977, and the common law.

 

2. It is admitted that the Defendants charges were levied in accordance with the terms and conditions of the account in question. However, it is submitted that the Defendants charges are not related to or intended to represent any actual loss arising from a breach of contract, but instead unduly enrich the Defendant which, by virtue of the legislation cited in paragraph 10 above, exercises the contractual term in respect of such charges with a view to profit.

 

3. The Defendant avers that the charges levied are legitimate fixed price contractual services, unrelated to breaches of contract, which are therefore not required to be a pre-estimate of loss incurred on the part of the defendant. The Claimant further submits that this contention is merely an attempt to ‘cloak’, or disguise, their penalties in order to circumvent the common law and statutory prohibition of default penalty charges with view to a profit.

 

4. The Claimant believes the definition of a 'service' to be a provision of knowledge, skill or other transferable facility that benefits the consumer, and one that the consumer agrees is at a reasonable market rate commensurable with the service provided. The Claimant believes it to be inconceivable that the charges levied to his account by the defendant could be any form of ‘service’, rather than a penalty.

 

5. I understand the definition of 'breach of contract' to be the failure of a party, without legal excuse, to perform a contractually agreed obligation pursuant to any or all of the terms agreed within that contract. I have an overdraft with the defendant. This overdraft has a contractually agreed limit, which is an express term of the bank account contract between myself and the Defendant. When I exceeded this agreed overdraft limit, therefore breaching an express term of the contract between myself and the Defendant, I was consequentially penalised for each such breach by way of a charge of £**.

 

6. In the case of Dunlop Pneumatic Tyre Co v New Garage & Motor Co [1915] AC 79, Lord Dunedin stated that a clause is a penalty if it provides for;

 

"The essence of a penalty is a payment of money stipulated as in-terrorem of the offending part;”

I.e. if it is designed to scare or coerce or is used as a threat. It is submitted that the charges applied are not representative of any 'service' provided by the Defendant, but instead are punitive, and held "in-terrorem".

 

7. The Claimant further submits that the Defendant’s contention that the charges are now a legitimate service charge represents a contradiction to materials published by the bank previously. Here, add in details of any correspondence in which the bank referred to the charges as ‘penalties’, ‘defaults’ or ‘exist to cover costs’, etc. For example -In correspondence with Lloyds TSB’s ‘Customer Service Recovery’ department in July 2006, Martin Orton, who is manager of the department, stated this in a letter: “As you are aware, I am afraid that it is the case that any items that are returned incur a fee in order that we can recoup our costs”. This was in response to a direct and plain request to justify Lloyds TSB’s charges. Throughout the letter, no mention was ever made of the charges as being the cost of any sort of ‘service’.(If anyone wants a copy of this letter, drop me a PM with your address and I'll post it to you.)

 

8. Additionally, the [claimant believes there to be a high possibility that the] terms and conditions of [his / the claimants] account contract explicitly describe the charges as to be levied in instances of breaching those terms. This is true of the contracts of other customers of the defendant that the claimant is aware. However, the bank has failed to provide me with a copy of the account contract, despite repeated requests to do so, so unfortunately this cannot be proved. A right of subject access request for this document was submitted to the defendant under the Data Protection Act 1998, on 8th September 2006. The defendant has failed to comply. Here, if your account contract states the charges as ‘breaches’ use the text in black. The blue bit was true in my case and I’ve left it there as an example. If it applies to you, keep it in, if not, just take it out.

 

9. The Claimant refers to the statement from the Office of Fair Trading (April 2006), who conducted a thorough investigation into default charges levied by the British financial industry. While the report primarily focused on Credit card issuers, the OFT stated that the principle of their findings would also apply to Bank account charges. They ruled that default charges at the current level were unfair within their interpretation of the Unfair Terms in Consumer Contracts Regulations 1999. With regard to the ‘cloaking’ or disguising of penalties, the OFT said this;

 

“4.21 The analysis in this statement is in terms of explicit, transparent default fees. Attempts to restructure accounts in order to present events of default spuriously as additional services for which a charge may be made should be viewed as disguised penalties and equally open to challenge where grounds of unfairness exist. (For example, a charge for ‘agreeing’ or ‘allowing’ a customer to exceed a credit limit is no different from a customers default in exceeding a credit limit.) The UTCCR’s are concerned with the intentions and effects of terms, not just their mechanism”.

 

10. As submitted above, the Claimant believes the charges levied to his account to be disproportionate contractual penalties, arising from clear and demonstrable breaches of express terms of the account contract between itself and the Defendant. The Claimant vehemently refutes the Defences contention that they are legitimate contractual service charges.

 

11. However, and without prejudice to the above, in the event the charges were accepted by this honourable court as being a fee for a contractual service, the claimant submits that they are unreasonable under section 15 of the Supply of Goods and Services Act 1982.

 

12. Further, under the UTCCR:

 

"5. - (1) 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.

 

(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.

 

(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.

 

(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was."

 

Schedule 2 also includes such clauses (to define examples of unfair clauses) as:

 

"(i) irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract;

 

(j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;

 

(m) giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract."

 

The defendant is a multi-national corporation. The term regarding charges was inserted unilaterally in contract. The contract was pre and mass produced and I had no opportunity to negotiate the clause, or indeed any of the contract.

 

The cost of Lloyds charges have increased twice during the period in which my account was held, neither time was I given the opportunity to negotiate, or even notified of this increase. This means the bank has unilaterally altered the terms of my account contract to my detriment, and to their advantage.

 

13. Following on from the above, the claimant does not accept The Defendants contention that the charges are enforceable as a service charge. It is not disputed that the Defendant is entitled to recover its damages following my breaches of contract, and it is entitled to include a liquidated damages clause. I accept without reservation the banks right to recover its actual losses or a genuine pre-estimate thereof. A penalty however, is unenforceable.

 

14. The Claimant cites the case of Robinson v Harman [1848] 1 Exch 850 which states that a contractual party cannot profit from a breach and that the charge for a loss suffered from a breach of contract should be the amount necessary to put both parties in the same position before the breach occurred.

 

15. Lord Dunedin in the case of Dunlop Pneumatic Tyre Co v New Garage & Motor Co [1915] AC 79 set down a number of principles in definition of a penalty clause and how such clause may be ascertained from a liquidated damages clause. One of these principles being -

 

"The sum is a penalty if it is greater than the greatest loss which could have been suffered from the breach"

 

 

16. The Claimant will further rely on numerous recorded authorities dating throughout the 20th century up to the most recent case of Murray v Leisureplay [2005] EWCA Civ 963, all of which have upheld and reinforced the principles set down by Lord Dunedin defining contractual penalty clauses and the unenforceability thereof.

 

17. Further, under the Unfair Terms in Consumer Contracts Regulations 1999, schedule 2 (1) includes to define an example of an unfair clause as -

 

"(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;"

 

18. On numerous occasions, the Claimant has requested that the Defendant justify its charges by providing details of the costs incurred as a result of my contractual breaches. Each time those requests were rebutted or ignored.

 

19. In a recent study undertaken in Australia, (Nicole Rich, “Unfair fees: a report into penalty fees charged by Australian Banks”) it was estimated that the cost to an Australian Bank of a customers direct debit refusal was estimated to be in the region of 54 cents. By reviewing the charges against the above figure, the study estimated that banks could be charging between 64 to 92 times what it costs them to process a direct debit refusal. The study’s key findings stated that in its opinion the Australian Bank’s cheque and direct debit refusal fees were likely to be penalties at law.

 

20. The Defendant, or indeed any of the UK banks, has never published any information to support how their charges are calculated, or what their actual costs associated with such breaches are, or what revenue they derive from such charges.

 

21. For their recent BBC2 documentary “The Money Programme”, the BBC appointed a commission of former senior banking industry figures and business academics to attempt to ascertain the actual costs to the UK banks of processing a customer’s breach of contract. They concluded that the absolute maximum conceivable cost that could be incurred by a direct debit refusal or overdraft excess is £2.50, and of a returned cheque £4.50. They did state however, that the actual cost is likely to be much less than this. The commission also estimated that the UK banks collectively derive as much as £4.5billion in profit a year from their charging regimes.

 

22. It is submitted that the Defendants charges are applied by an automated and computer driven process. This process consists of a computer system ‘bouncing’ the direct debit, and sending out a computer generated letter. It is therefore impossible to envisage how the Defendant can incur costs of £** by carrying out this completely automated process. Note that the letter received notifying of a charge is identical in every instance, and if multiple breaches occurred on the same day, a separate letter will be sent in each instance.

 

23. Additionally, I asked the Defendant to provide evidence of any manual intervention that may have occurred in relation to my account, under a Data Protection Act 1998 right of subject access request. No such information was forthcoming.

 

24. On 22nd May 2006, the House of Commons passed an early day motion which welcomed the OFT's statement that default charges should be proportionate to the actual loss incurred. The house described such default charges as "exorbitant" and "excessive".

 

25. The Claimant also cites a radio interview in 2004 with Lloyds TSB’s former head of personal banking, Peter McNamara, in which he states bank charges are used to fund free banking for all personal customers as a whole.

 

26. As set out previously, it is submitted that The Defendant’s charges can not be considered to be a service charge. In arguing that they are, they also effectively admit that their charges make profits. The Defendant seemingly contends that their charges are not subject to any assessment of fairness whatsoever. This implies they can set these fees at whatever level they like without limit or regulation. Similarly, as set out above, the charges cannot be considered to be liquidated damages. They, by The Defendant's own admission, are not a pre-estimate of loss incurred as a result of the breach of contract. The charges are punitive, held “in-terrorem", and unduly and extravagantly enrich the Defendant. As such, they are a contractual penalties and unenforceable at law.

 

I, the Claimant, believe all facts stated to be true.

 

Signed, dated.

 

 

 

Documents attached in support of this statement

• Letter from Martin Orton, Lloyds TSB Customer Recovery Centre - or any letter or material in which the charges are described as 'defaults', 'penalties', 'covers costs', etc.

• Office of Fair Trading report, April 2006
  
• House of commons early day motion, May 2006
  
• Automated charge notification letter/s. Include a couple of examples. Preferably use ones where charges have been incurred over ridiculously small shortfalls and if possible, include 2 letters notifying of charges incurred on the same day
  
• BBC commission conclusion - BBC NEWS | Business | The Money Programme bank commission
  
• Australian Default charges report, Nicole Rich - Domain Names, Web Hosting, Web Design, Search Engine Optimisation, and Search Engine Marketing at Melbourne IT
  
• Transcript of telephone communication with Lloyds TSB 'personal banking' department.
  
• DPA Subject Access Request for evidence of manual intervention

This next statement is suitable for claims in which the defence contends that the charges are proportionate to or a pre-estimate of their actual loss.

 

Again, think carefully about what applies to your claim and amend to suit if necessary.

 

Text in black - template

Text in red - guide notes

Text in blue - examples, replace with your own.

 

'GENUINE PRE-ESTIMATE' STATEMENT -

 

Claim Number:*******

In the ******* County Court

 

Between:

 

 

 

Your name

(Claimant)

 

 

and

 

 

 

Bank Plc

(Defendant)

 

 

 

_________________________ _____

 

STATEMENT OF EVIDENCE

_________________________ _____

 

 

1. The claimant submits that the charges levied to his bank account, as set out in the enclosed schedule, are, notwithstanding the defence of the defendant, default penalty charges arising from and relating directly to breaches of contract, both explicit and implied, on the part of the claimant. As a contractual penalty, the charges are unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999, the Unfair Contracts (Terms) Act 1977, and the common law.

 

2. It is admitted that the Defendants charges were levied in accordance with the terms and conditions of the account in question. However, it is submitted that the Defendants charges are not related to or intended to represent any actual loss arising from a breach of contract, but instead unduly and extravagantly enrich the Defendant which exercises the contractual term in respect of such penalty charges with a view to profit.

 

3. The Claimant cites the case of Robinson v Harman [1848] 1 Exch 850, which states that a contractual party cannot profit from a breach of contract and that the charge for a loss suffered from the breach should be the amount necessary to put both parties in the same position before the breach occurred.

 

4. Lord Dunedin in the case of Dunlop Pneumatic Tyre Co v New Garage & Motor Co [1915] AC 79 set down a number of principles in definition of a penalty clause and how such clause may be ascertained from a liquidated damages clause. These principles include -

 

"It will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greater loss that could conceivably be proved to have followed from the breach" and;

 

"The essence of a penalty is a payment of money stipulated as in-terrorem of the offending part; the essence of liquidated damages is a genuine covenanted pre-estimate of damage"

 

5. The Claimant will further rely on numerous recorded authorities dating throughout the 20th century up to the most recent case of Murray v Leisureplay [2005] EWCA Civ 963, all of which have upheld and reinforced the principles set down by Lord Dunedin defining contractual penalty clauses and the unenforceability thereof.

 

6. Further, under the Unfair Terms in Consumer Contracts Regulations 1999, schedule 2 (1) includes to define an example of an unfair clause as -

 

"(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;"

 

7. The breaches of contract in this case relate to exceeding the contractually agreed limits of an overdraft facility, and having insufficient funds available to pay a direct debit or a standing order. Add an example of a charge incurred due to going over by a small amount, for example -On one occasion in June 2006, a direct debit payment was returned due to insufficient funds in my account. The shortfall was only one pound and nineteen pence. I was then penalised for this breach by way of a charge of £**. The claimant holds this charge and indeed every other charge in question, to be punitive in nature, and wholly disproportionate.

 

 

8. It is not disputed that the Defendant is entitled to recover its damages following the claimant’s breach of contract, and it is entitled to include a liquidated damages clause. The Claimant contends that the charges made by the defendant are disproportionate, excessive, exorbitant and extravagant, and believes it to be unconscionable that they represent, are a pre-estimate of, or are in any way related to; its actual loss suffered as a result of the Claimants breaches of contract.

 

9. The defendant has declined to answer the Claimant’s written requests for information regarding its administrative costs, or other such costs, incurred as a result of the contractual breaches from which its charges arise. Further, the Defendant has declined to offer any explanation whatsoever in regard of how its charges are calculated, or any other such justification thereof, despite repeated requests to do so.

 

10. In a recent study undertaken in Australia, (Nicole Rich, “Unfair fees: a report into penalty fees charged by Australian Banks”) it was estimated that the cost to an Australian Bank of a customers direct debit refusal was estimated to be in the region of 54 cents. By reviewing the banks’ charges against the above figure, the study estimated that banks could be charging between 64 to 92 times what it costs them to process a direct debit refusal. The study’s key findings stated that in its opinion the Australian Bank’s cheque and direct debit return charges were likely to be penalties at law.

 

11. The Defendant, or indeed any of the UK banks, has never published any information to support how their charges are calculated, or what their actual costs associated with such breaches are, or what revenue they derive from such charges.

 

12. For their recent BBC2 documentary “The Money Programme”, the BBC appointed a commission of former senior banking industry figures and business academics to attempt to ascertain the actual costs to the UK banks of processing a customer’s breach of contract. They concluded that the absolute maximum conceivable cost that could be incurred by a direct debit refusal or overdraft excess is £2.50, and of a returned cheque £4.50. They did state however, that the actual cost is likely to be much less than this. The commission also estimated that the UK banks collectively derive as much as £4.5billion in profit a year from their charging regimes.

 

13. It is submitted that the Defendants charges are applied by an automated and computer driven process. It is therefore impossible to envisage how the Defendant can incur costs of £** by carrying out a completely automated and computer driven process. This process consists of a computer system ‘bouncing’ the direct debit, and sending out a computer generated letter. Note that the letter received notifying of a charge is identical in every instance, and if multiple breaches occurred on the same day, a separate letter will be sent in each instance.

 

14. Additionally, I asked the Defendant to provide me evidence of any manual intervention that may have occurred in relation to my account, under a Data Protection Act 1998 right of subject access request. No such information was forthcoming.

 

15. The claimant also cites a radio interview in 2004 with Lloyds TSB’s former head of personal banking, Peter McNamara, in which he states the charges are used to fund free banking for all personal customers as a whole.

 

16. The claimant cites the statement from the Office of Fair Trading (April 2006), who conducted a thorough investigation into default charges levied by the British financial industry. While the report primarily focused on Credit card issuers, the OFT stated that the principle of their findings would also apply to Bank account charges. They ruled that default charges at the current level were unfair and unlawful within their interpretation of the UTCCR’s.

 

17. On 22nd May 2006, the House of Commons passed an early day motion which welcomed the OFT's statement that default charges should be proportionate to the actual loss incurred. The house described such default charges as "exorbitant" and "excessive".

 

18. Further, under the UTCCR:

 

“5. - (1) 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.

 

(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.

 

(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.

 

(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was.”

 

Schedule 2 also includes such clauses (to define examples of unfair clauses) as:

 

“(i) irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract;

 

(j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;

 

(m) giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract.”

 

The defendant is a multi-national corporation. The term regarding charges was inserted unilaterally in contract. The contract was pre and mass produced and I had no opportunity to negotiate the clause, or indeed any of the contract.

 

The cost of Lloyds charges have increased twice during the period in which my account was held, neither time was I given the opportunity to negotiate, or even notified of this increase. This means the bank has unilaterally altered the terms of my account contract to my detriment, and to their advantage.

 

19. As set out above, the Defendant’s charges can in no way be considered to be liquidated damages. They are not a pre-estimate of, or in any way related to, the Defendant’s loss incurred as a result of the breach of contract. The charges are punitive, held "in-terrorem", and unduly, substantially and extravagantly enrich the Defendant. As such, they are disproportionate contractual penalties and unenforceable at law.

 

I, the Claimant, believe all facts stated to be true.

 

Signed, dated.

 

Documents attached in support of this statement

• Office of Fair Trading report, April 2006
  
• House of commons early day motion, May 2006
  
• Automated charge notification letter/s. Include a couple of examples. Preferably use ones where charges have been incurred over ridiculously small shortfalls and if possible, include 2 letters notifying of charges incurred on the same day
  
• BBC commission conclusion - BBC NEWS | Business | The Money Programme bank commission
  
• Australian Default charges report, Nicole Rich - http://www.clcv.net.au/downloads/Med...20Report .pdf
  
• Transcript of telephone communication with Lloyds TSB 'personal banking' department.
  
• Data Protection Act Subject Access Request for evidence of manual intervention
  
• Transcript of radio interview with Peter McNamara, former head of personal banking, Lloyds TSB.
  
• All pre-litigation correspondence between the parties

Remember that all settled cases and statutes are to be submitted for direction d)

[fscot61]

Well I'm no expert, but if it were me, I think I'd request allocation to the small claims track stating the reasons as outlined in the AQ guide notes, and requesting the directions as per the draft order.

 

You could then add in the other info that in the alternative, if the claim is allocated to the fast track then you request an order of standard disclosure.

 

I don't think that both parties would necessarily need to agree for the claim to be allocated to the small claims track. The judge has the power to allocate the claim as he see's fit.

 

 

Thank you

[vicmar]

i have just ammended to statement in this thread i understand points a &b but notsure where to get the info if needed for parts c & d advise please