Stax68 v HSBC

[stax68]

Photoman: yes, I may do that - perhaps after I've posted my draft application - which I could do with some advice on!

 

Lateralus - I've had a look at Bong's thread and I know she got a settlement after she entered an application to strike/for summary judgement. I've had one which I've been tinkering with, but want to get it right before entering it because I think they may be hardening their attitude to claims with extras. I've also been strung along a bit by HSBCs gradually increasing offers. But I'm going to enter the application - I'll be posting a draft shortly.

 

Anyone else who may read this - as Lat. says, this case is complicated by the claim for compound interest. Since the claim goes back 10 years and is relatively large, the amount of compound interest is fairly sizeable and constitutes over half the amount claimed. If you're not claiming compound interest or if you're not claiming a large amount, they won't take it anywhere near this far, so don't worry.

[stax68]

OK, I'm planning to submit the following application notice first thing on Tuesday. I'd really, really appreciate any advice anyone can give me on any of these questions:

1. whether it has to be on a form N244 or if that is just a matter of convenience
   
2. what 'level of judge' I should specify
   
3. whether there is any point asking for it to be considered without a hearing, or by telephone (partly thinking of costs here)
   
4. whether it's hopelessly longwinded
   
5. whether it's likely to be unacceptable to combine the application to amend with the app to strike / for summary judgement
   
6. whether I could also add in an application for enforcement of my Part 18 request - perhaps saying it need only be considered if the application for summary judgement is unsuccessful
   
7. whether this whole thing is just likely to annoy the judge - since I may have to go to court, I don't want to do that since it could be the same judge/they might chat about it etc.
   
8. whether it is even tactically a good idea to submit it
   
9. whether it makes sense
   
10. whether the affidavit contains the right kind of material: it includes a few assertions which I am testifying to; documentary 'evidence' (which I suppose I am also testifying to the authenticity of); allusions to notorious facts and other stuff which I hope can be taken judicial notice of; some rudimentary legal argument; and argument about the construction of the contract.

I'll post the thing in chunks to improve the chances of at least someone reading at least some bit of it.

 

cheers,

 

stax

[stax68]

Notice of application to amend a statement of claim under Part 17 of the CPR

and of application to strike out a defence made under Parts 3 and 24 of the CPR

and of application for summary judgment made under Part 24 of the CPR

Part A:

I, XXXXXXXXXX the claimant

intend to apply for an order (a draft of which is attached) that:

1. The attached Addendum to the Schedule of Excess Charges and Interest be included in the applicant's particulars of claim, with the sums claimed in the applicant's statement of case being amended accordingly pursuant to CPR 17.1(2)(b). In relation to this is requested that the court exercise its discretion under CPR 23.8© to grant permission to amend without a hearing; and that no order or direction be issued under CPR 17.3(1)(a) requiring or permitting amendment of the respondent's defence.

2. The respondent's defence be struck out pursuant to CPR 3.4(2)(a),(b) and/or ©; and/or CPR 22.2(2).

3. Summary judgement, including an order for costs, be granted in favour of the applicant as sought in the amended Particulars of Claim, under CPR part 24.

because

1. The addendum does not introduce any new issue - the basis of the claim is a continuing situation and the addendum merely provides grounds on which to update the claim's value.

2. (CPR 3.4(2)(b)) The respondent's defence constitutes an abuse of process or is otherwise likely to obstruct the just disposal of proceedings.

3. (CPR 3.4(2)© and/or CPR 22.2(2)) There has been a failure on the part of the respondent to comply with a rule or practice direction.

4. (CPR 3.4(2)(a)) The respondent's defence, or part thereof, discloses no reasonable grounds for defending the claim.

5. (CPR 24.2 (a)(ii)) The applicant believes that on the evidence the respondent has no real prospect of successfully defending the claim.

6. (CPR 24.2 (b)) The applicant is aware of no other compelling reason why the proceedings should await disposal at trial.

Part B

I wish to rely on the attached affidavit

Signed XXXX Applicant

[stax68]

1. The addendum does not introduce any new issue

The addendum has already been sent to the respondent with a demand for payment. It is attached to this application marked 'Item 1'. The addendum consists of four new entries to the existing schedule, corresponding to the four months which have elapsed since the claim was entered. The information contained in these rows, and its subject matter, is of exactly the same type as that in the existing rows. It is submitted that the basis of the central issue in the proceedings may be regarded as, or is analogous to, a continuing cause of action, with the new entries simply recording an update to that cause of action.

No new legal issue is introduced, and the factual information is of the same type and provenance as that already contained in the schedule. For all practical purposes, therefore, the proposed amendment amounts merely to an amendment of the amount claimed. The revised statement of case which results from substituting only the items necessary to incorporate the new charges (viz., 1. the end date of the charging period and 2. the monetary amounts) is attached marked 'Item 1A'.

There is nothing in the new entries, the applicant contends, which could provide any new grounds for defence. Nor could the additional entries necessitate any significant further investigation by the defence, or threaten any existing ground of defence which might until now have been relied upon. The amendment does not therefore have any prejudicial effect on the defence. Additionally, the new entries could not have been included in the original claim and their exclusion was therefore due to no fault of the applicant.

The applicant respectfully requests that this application for amendment is considered prior to and independently of the following application to strike out, and submits that there is no reason either to refuse permission for the amendment or to conduct a hearing in regard of the proposed amendment.

The applicant further asks that no order be made requiring or permitting the defence to be amended consequent to a decision to permit the requested amendment, or that if such amendment to the defence is to be permitted, that it be restricted to such amendments as are demonstrably necessitated by the addition of the new charges to the schedule.

[stax68]

2. Abuse of process

The defence lodged by the respondent represents an abuse of process and/or forms part of a course of action which constitutes an abuse of process. This is the most serious of the allegations the applicant makes.

The claimant contends that the respondent has no intention of allowing this matter to reach adjudication unless, perhaps, the applicant should make a technical or procedural error. Further, it is asserted that this forms part of a consistent pattern of conduct by the respondent in relation to other claims with essentially the same subject matter. The applicant knows of 77 recent such claims that have been settled before adjudication and that can be identified by claim number. The majority of said claims are known to have been acknowledged by the respondent, with an intention to defend asserted. In no case is it known that such an intention was not asserted. In many of the 77 cases, and in almost all of those entered in the last nine months, a defence was entered. A schedule of these cases is attached, marked 'Item 2'. A legal precedent exists for the court's taking judicial notice of this list: Mullen v Hackney London Borough Council; CA (Civ Div); [1997] 2 All ER 906, [1997] 1 WLR 1103, 95 LGR 587, 29 HLR 592. A report of the case is attached, marked 'Item 3'.

The applicant, despite extensive investigation, has been unable to find any record of a case of this type in which the respondent has allowed the issue to reach a contested hearing. It is extremely improbable that such a case could have been heard in recent years without national press attention.

On the strength of this evidence, the applicant contends that the lodging of the defence forms part of an observable strategy of delay in settling the claim. To rebut claims of obvious lack of motive, and not as a proven allegation, the applicant suggests that such a strategy would plausibly be aimed at increasing the likelihood that claimants will be sufficiently discouraged, distracted, disorganised or impecunious to abandon their claims or agree to settle at a substantial discount.

As further evidence of the respondent's contemptuous attitude to the court system in pursuing a policy of strategic delay in this case, the claimant testifies to the accuracy of the following timetable laying out all relevant non-privileged communications between the applicant, the respondent and the court:

28 November 2006 The applicant hand delivers a letter demanding payment and requesting a response within two weeks.

13 December 2006 No acknowledgement or reply having been received from the respondent, the applicant hand delivers a letter before action requiring a response within 7 days and full compliance within 14 days.

18 December 2006 The respondent acknowledges 13 December letter before action, apologising for delay and indicating a response time of 6 to 8 weeks.

26 December 2006 The applicant files an online money claim, incurring cost of £250.

2 January 2007 The respondent writes a letter in acknowledgement of the applicant's initial (28 November) demand, indicating that no further response can be expected before 29 January.

3 January 2007 The respondent files acknowledgment of claim and intention to defend the whole of the claim.

It may be seen from this schedule that the bank did not provide any substantive response to the claim before legal proceedings had been instituted at some cost to the applicant. Further, the following timetable shows that the respondent delayed submission of its allocation questionnaire, imposing on both the resources and the indulgence of the court and delaying the progress of the claim for a further three weeks:

14 February 2007 On the deadline for filing allocation questionnaires, the applicant does so, incurring cost of £100.

6 March 2007 The court issues a conditional order to strike out the defence without a hearing unless the allocation questionnaire is returned with 7 days.

Delay in submitting allocation questionnaires is a feature of several of the most recent cases listed in the schedule of known settled claims ( 'Item 2'), suggesting a recently emerging pattern of behaviour.

Further, the applicant submits, the deficiencies identified below under headings (3), (4) and (5) show that the defence was not prepared with proper regard to the particulars of the claim, the facts of the case or the rules of procedure. The applicant contends some or all of the representations under headings (3)-(5), severally or in combination, provide independent grounds for striking out the defence. But it is also contended that said representations can and should be regarded as evidence that the standard defence entered by the respondent is a sham not intended to be tested in court and of use only as a ploy to delay payment of the sum claimed. This evidence is particularly compelling when viewed against the background of an established record of delay in other cases, increasingly many defended and invariably followed by settlement before trial, and to the failure in this case to respond to the claimant's demand for payment until after legal proceedings were initiated.

For these reasons the applicant requests that the defence be struck out as an abuse of process or as otherwise likely to obstruct the just disposal of the proceedings.

This strategy of the respondent and other banks is, notoriously, causing considerable congestion in the courts, contrary to the overriding objective in both its intrinsic and extrinsic (resource-conserving) aspects. It is respectfully suggested that the court may wish to consider what action may be taken against the respondent or their legal staff to curb this abuse. A news item (from BBC NEWS | Business | Judge attacks 'time-wasting' bank) is attached which reports a particularly flagrant example by a different bank, marked 'Item 3'.

[stax68]

3. Failure to comply with a rule or practice direction

 

The respondent has failed to comply with Civil Procedure Rule 22.1(6)(a) which states that the statement of truth attached to a statement of case must be signed by (i) the party or a litigation friend or (ii) the legal representative on behalf of the party or litigation friend. The signatory's post is given as 'Legal Executive' - which implies that she is not the defendant or capable of signing on behalf of the defendant by virtue of holding a senior position in the organisation. If her signature is to be in compliance with the Rule, then, it must have been made in the capacity of legal representative.

 

Civil procedure rule 2.3(1) provides that a 'legal representative' must be a barrister, a solicitor, solicitor's employee or other authorised litigator as defined in the Courts and Legal Services Act 1990. The signatory is a legal executive, and therefore, it may fairly be inferred, not a barrister or solicitor. Further, headed paper issued by DG Solicitors (a redacted copy of a sample of which is attached, marked 'Item 4') includes the legend: 'This firm is the practicing name of solicitors employed by the HSBC Group.' This entails that DG Solicitors do not themselves have employees - so the signatory is not a solicitor's employee. Practice direction 22, which supplements the Rule and at 3.11 provides examples of its application, confirms that "a person who is not a solicitor, barrister or other authorised litigator, but who is employed by the company and is managed by such a person is not employed by that person and so cannot sign a statement of truth".

 

The only remaining potential source of authority to sign is the status of 'other authorised litigator'. The Courts and Legal Services Act 1990 provides at S119(1) that 'other authorised litigator' status depends on possession of a right to conduct litigation granted by an authorised body. The body governing legal executives is the Institute of Legal Executives (ILEX), which is an authorised body within the meaning of the Act.

 

However, on 15 January 2007, the President of ILEX made the following statement: "...Government recognised us as an organisation able to award suitably qualified Legal Executives the right to conduct litigation, and we are working on an appropriate training scheme to enable that to happen." This quotation is taken from an ILEX press release (ILEX - Press Office) issued on 30 January 2007. A printout is attached with the relevant passage marked, labelled 'Item 5'. Unless the training scheme mentioned was introduced and approved, and the training undergone by the signatory, within ten days of the announcement - which the applicant submits is for practical purposes impossible - litigation rights cannot have been granted to the signatory before the time of signing.

 

The applicant therefore believes that the signatory had no authority to sign a declaration of truth under Civil Procedure Rule 22.1(6)(a).

[stax68]

4. Failure to disclose reasonable grounds for defending the claim

 

Each clause of the defence will be addressed in turn:

 

Clause 1: The Claimant?s account is governed by the Defendant's personal and/or business banking terms and conditions.

 

The defence thus does not properly identify the type of contract under which the account is operated. This suggests that the defence is a standard defence issued witout regard to the facts of the case, contrary to the requirement of reasonableness. Further, this clause cannot be read as an attempt to plead alternatives since there is no possibility that the court might rule that the account is a business account, and in any case the rest of the defence contains no alternative arguments addressed to the difference between a business and a personal account. The clause is therefore ambiguous and hence incoherent.

 

Clause 2: Pursuant to the Defendant's terms and conditions the Defendant is entitled to make a charge for its services as set out in the Defendant?s price list, including an overdraft review fee for considering whether to provide and providing and [sic] overdraft.

 

This is irrelevant, since the claim does not and need not address the issue of the existence of any such entitlement. The claim states only that the charges are in fact penalties, or that if they are not, the specific price charged is unreasonable within the meaning of the Supply of Goods and Services Act 1982 ("SGSA"). In any case the clause is incoherent, since it refers to an overdraft ‘review’ fee, but then describes the fee as payment for ‘considering whether to provide and providing’ an overdraft. Neither of these activities is consistent with the fee’s being an overdraft ‘review’ fee since a review always takes place after the event or fact being reviewed. This is not a merely verbal point, since such an inconsistency could only arise in an inaccurate, possibly fabricated, account.

 

Clause 3: The defendant denies that the charges applied to the claimant?s account amount to penalties at common law and/or unfair contract terms for the purposes of the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).

 

The inclusion of this clause reveals that the defence is a bulk response to many other claims, which has been applied indiscriminately to this claim. It is not relevant, since the statement of claim makes no mention of the UTCCRs. In any case, the clause can be seen to be irrelevant because the contract was entered into before the 1999 Regulations came into force.

 

Clause 4: [a] The charges applied to the Claimant?s account are reasonable and are properly and fully disclosed in the defendant's terms and conditions and published price list. The charges represent [c] the contractually agreed [d] price for the services [e] the UTCCRs are not applicable to them; alternatively, they are not unfair contrary to the UTCCRs. [f] Further, the charges are not default charges and, accordingly, cannot amount to a penalty.

 

a. The claim that the charges are 'reasonable' consists only of a bare denial of the claimant’s assertion (made in the alternative) that they are unreasonable

 

b. The issue of whether the charges are 'properly and fully disclosed' is irrelevant to the issue of their status as penalties, and also to the applicability of the requirement of reasonable price in the SGSA, which turns on the issue of prior argeement, not on the issue of disclosure, full or otherwise. The use of the term 'properly' has no ascertainable import since no indication is given as to how the adjective is to be interpreted in legal terms. It is at best a bare denial of undefined impropriety.

 

c. The claim that the charges are contractually agreed is either incoherent with Clause 1, or irrelevant. If the claim is meant to be taken as stating that the charges in question were individually negotiated or were brought to the attention of the applicant at the time of entering into the contract, then the claim is inconsistent with the (accurate) statement in clause 1 that the account is governed by the defendant’s personal banking terms and conditions and published price list - which are subject to unilateral alteration by the respondent, and which had been altered between the inception of the contract and the earliest charge cited in the claim. If, on the other hand, the claim is to be taken merely as stating that the charges arise under the contract, by reference to those standard terms and conditions and published price list, then it is irrelevant since the applicant’s claim does not and need not deny it.

 

d. The claim that the charges represent the ‘price for the services’ is incomplete since it gives no indication of what service is meant. Further it is irrelevant since the claim explicitly contemplates this possibility as one alternative, and therefore need not deny it.

 

e. Reference to the UTCCRs is irrelevant for the reason given above in response to clause 3 of the defence.

 

f. This is the only coherent, reasonable, relevant and adequately precise statement in the defence. It states that the charges are not penalties and gives a reason for the contention: that the charges are not default charges.

 

Clause 5: Save as set out above, each and every allegation made by the Claimant is denied. For the reasons set out above, it is denied that the Claimant is entitled to the relief claimed or any relief.

 

This clause discloses no grounds for defending the claim.

[photoman]

Stax

All good hard hitting stuff very eloquently put.

 

I really think you should get some interest and involvement from some Mods in this.

 

I think HSBCcrusher would probably be your best bet ?

 

By the way, I posted on the terms and conditions thread in response to your posts. Might be worth considering the Fraud act as a means to obtain information ?

 

http://www.consumeractiongroup.co.uk/forum/show-post/post-857196.html

[stax68]

This is still in progress and it just gets longer and longer. If anyone can give me a sanity check on the whole enterprise, I'd be very grateful!

 

In particular, do I need to cover all the T&Cs throughout the life of the contract, or just the situation when I first opened the account? Anyone?

 

5. Lack of any real prospect of the defence succeeding on the evidence

 

It is argued in section 4 above that clause 4(d): "the charges are not default charges and, accordingly, cannot amount to a penalty" is the only viable substantive statement in the defence. Even if the arguments of section 4 were not accepted, the defence relies on this clause. This is because there is no other argument against the charges being penalties. In particular, it is not pleaded in the alternative that the charges are liquidated damages or in some other way lawful default charges. The defence does not even include a bare denial that the charges are disproportionate or a statement that they are capable of reflecting a genuine pre-estimate of loss. If the defence is to have any real prospect of defending the claim, then, this statement must be sustainable.

 

It is clear that a 'default charge' in this context means a charge or fee imposed in response to a breach of contract. The proposition that the charges are not default charges is therefore disproved by the attached excerpt (marked "Item 6") from the 1997 Terms and Conditions governing the account. This is the earliest of a set of excerpts from Terms and Conditions furnished by the respondent in partial compliance with a Part 18 request for all relevant versions of the Terms and Conditions. To show tha the charges are default charges it is necessary to examine the relevant provisions in force in 1997. (All underlining is added by the applicant for emphasis)

 

7.3 You must not go over any overdraft limit that is agreed with us unless you get our agreement first.

 

This entails that that the customer is under an obligation not to go over an agreed overdraft limit without authorisation. If the charges were levied in response to breach of this obligation, then they are default charges.

 

7.7 If we pay a cheque or other item you issue and, as a result, your account goes overdrawn or goes over your agreed overdraft limit, this does not mean that we have agreed an overdraft or an increased limit. You must immediately pay enough money into your account to cover the overdrawn amount or the amount that is over your agreed limit.

 

This again entails that such an overdraft is not one which falls under the agreement, or a modified agreement, between the customer and the bank. It is unauthorised and in breach of contract. Further, if it were to be argued that the 'fee' is not payable not on the occurrence of the unauthorised borrowing but instead on failure to repay the excess borrowing immediately or within a given time, such argument would not show the fees to be other than default charges, since such a failure to repay is also a breach of contract - i.e. a default.

 

7.9 As well as charging interest for unauthorised overdrafts, we may also charge a fee to cover the cost of the administration involved (see the relevant price list).

 

This clause is unequivocal in stating that the 'fee' charged is to cover administration costs arising from the unauthorised overdraft. It has therefore been demonstrated that under these terms and conditions the charge amounted to a default charge, since they were levied in response to a breach of contract.

 

While this should be sufficient, given the arguments in section 4, to show that the defence pleaded cannot succeed, there remains the possibility that those arguments might not be taken to have completely ruled out the possibility that the respondent may argue that the charges are a fee for a service and do not arise as payments for breach of contract. Accordingly, this issue will be addressed.

 

Since the fee is specified as to cover the cost of the administration involved it cannot be a fee for a service, since a payment to cover another's costs is not the same as payment for receipt of a benefit. The clause specifies that - as one would expect - the price of the service of lending money takes the form of interest. The bank's performing administrative tasks and incurring costs as a consequence is an internal matter of no interest to customers and does not in itself constitute a service. It is not denied that provision of a service may entail some administrative overhead. In such a case, however, it is then that distinct service, and not the administration involved, that the customer purchases. It is submitted that the test of a 'service' in this context might be a question such as: would a normal person choose to pay for this activity to be performed? It is argued that no normal person would choose to buy a 'service' which consists only of the performance of some unspecified internal administrative tasks.

 

These terms remain substantially unchanged in subsequent versions up to and including that of July 2002 (excerpt attached, marked ‘Item 7’), except for the replacement of the final sentence of clause 7.7 and of its renumbered successors with: You must immediately pay enough money into your account to cover the overdrawn amount or the amount that is over your agreed limit, or contact us to discuss the matter, which provides an alternative to immediate payment, but not an alternative that was ever pursued by the applicant. In the extract from September 2002 (‘Item 8’) though, the wording of clause 7.3 (renumbered 7.4) was changed:

 

7.4 You should always stay within an agreed overdraft limit unless you get our agreement to change this first.

 

However, in the Terms and Conditions issued in August 2005 (attached as ‘Item 9’), a different clause 7.4 reads:

 

7.4 We will give you a letter setting out the terms of any agreed overdraft. You must stay within the agreed limit.

 

The chosen terminology has reverted to ‘must’. (A copy of these terms and conditions were supplied by the respondent in reply to the applicant’s Part 18 request – the only set of Terms and Conditions to be supplied in full – but were confusingly and incorrectly labelled ‘Terms and conditions 2004 – 30 Nov 2006’.)

 

The applicant submits that the change from 'must' to 'should' and back again to ‘must’ is merely verbal. Whether the word 'must' or should' is used, the effect is to instruct the customer to do or refrain from the action in question. In some cases, a term including the word ‘should’ might be regarded as merely offering advice which the customer is not obliged to take, but only, it is submitted, if the effect of the term is to make the ‘requirement’ conditional on some aim or preference of the customer. A list of examples of such terms is given in appendix A. If no such reason for compliance is specified, the use of should is categorical. There can be no purpose to the inclusion of a clause stating that a party ‘should’ do or refrain from some course of action except to impose an obligation. The new clause 7.4 consists simply of a statement that the customer should not do something. It must then be interpreted as imposing an obligation.

 

At the time of this change from ‘must’ to ‘should’, clause 7.7 (renumbered 7.9) retained its previous wording, including the use of 'must'. So the support offered to the applicants argument from that wording remained in force throughout. (See Item 8.)

 

In any case it is submitted that a consumer cannot be expected to appreciate some supposed difference between the impact of the words 'must' and 'should’. Furthermore, the practical effect of the clause remained unchanged throughout, despite the terminological switch and its reversal.

 

 

However, clause 7.9 (renumbered 7.13) was revised to read as follows:

 

7.13 As well as charging interest under 7.10, up to 28 November 2002, we may also charge our applicable fee for overdrafts not agreed in advance for any statement period when your Bank Account is overdrawn without an agreed overdraft or goes over any agreed overdraft limit, whether for one day or more, to cover our management and administration costs (see the relevant price list).

From 29 November 2002 we will be replacing this fee with a fee for reviewing overdrafts not agreed in advance. We may charge this fee on each occasion that your Bank Account goes overdrawn, or further overdrawn, without an agreed overdraft. We may also charge this fee when your Bank Account goes over, or further over, any agreed overdraft limit. This fee is to cover our management and administration costs. (see the relevant price list for details of the fee).

 

The claim that the fee for overdrafts not agreed in advance is being replaced by an (otherwise indistinguishable) fee for reviewing overdrafts not agreed in advance might appear to support the contention that such charges henceforth represent a fee for a genuine service. But the claim that This fee is to cover our management and administration costs remains, and as argued above militates against viewing the charges as a genuine fee for a service. Further, the supposed, rather arcane, change in the character of the charge is not acknowledged elsewhere. Another clause – 9.2.2 - was not included in the excerpts released by the respondent, but appears in other copies of terms and conditions which incorporate the change, for example those effective from 1 October 2003 (‘Item 9’) and from 30 December 2004 (‘Item 10’), and those issued in August 2005 (‘Item 7’):

 

9.2.2 You must not use your debit card to borrow from us on your Bank Account unless you are 18 or over and an overdraft has been agreed separately.…[provisions applying to other types of account omitted]…If your account goes overdrawn or, for Bank Accounts held by customers who are 18 and over, it goes overdrawn without an agreed overdraft or goes over any agreed overdraft limit, we may charge interest (if applicable) at our Standard Overdraft Rate. We may also/alternatively charge our applicable fee for overdrafts not agreed in advance. Please also see clauses 7.10, 7.12 and 7.13.

 

The first sentence quoted refers to borrowing where an overdraft has not been arranged ‘separately’ – which can only mean where an overdraft covering the amount borrowed has not been arranged in advance. It clearly states a contractual duty not to use a debit card to effect such borrowing. The second quoted sentence states that in addition to interest (which is the price of borrowing), the bank may charge a fee for overdrafts not agreed in advance. The clause does not specify a fee for ‘reviewing’ an overdraft.

 

It is submitted therefore that the advertised replacement of the overdraft fee with a review fee is illusory making no real change to the contract and certainly no change to the operation of the bank accounts governed by it.

 

It is submitted that, even if there should be any doubt that the above argument shows the charges to be penalties, there is a number of legal bases which require that such doubt be resolved in favour of the applicant.

 

(then a list of rules of construction, inc: the case that says the decision whether something is a penalty clause is a matter of construction based on the contract in context; the contra proferentem rule, the Supply of Goods and Services Act 1982, possibly the 1994 and 1999 UTCCRs, any other stuff I can find....)

 

In light of the evidence the charges can only be regarded as default charges and the only viable ground of the defence pleaded must therefore fail.

The respondent's attention is drawn to Civil Procedure Rule rule 24.5(1), which states: If the respondent to an application for summary judgment wishes to rely on written evidence at the hearing, he must:

(a) file the written evidence; and

(b) serve copies on every other party to the application,

at least 7 days before the summary judgment hearing.

Statement of Truth

[stax68]

Appendix A:

List of terms in which the word ‘should’ does not signify a contractual obligation.

All terms are taken from the August 2005 version of the respondent’s Personal Banking Terms and Conditions. It is submitted that the reason such clauses do not signify a contractual obligation is that in each case the imperative is conditional on some further aim or other reason, is explained by some further consideration in light of which it becomes clear that it is merely prudential and not obligatory.

This is a fixed term deposit and you should not open a HIDB if you may need your money before the end of the term you have chosen.

You should not make deposits if you may require access to your funds before the end of the term.

To use our Automated Service you will need a touch tone telephone and a security number. If you have a password with us, you should contact us to convert it into a security

number.

You should not use cordless or mobile telephones operating on an analogue network to telephone us. We are not responsible if any one else intercepts or overhears any telephone conversation between you and us.

You should only give us your email address, home, work or mobile telephone number, if you are happy for us to contact you in these ways services and other means. [sic]

You can also do this by signing a Power of Attorney but you should take legal advice before doing so. If you authorise another person to operate your account then you will be responsible for their actions or omissions as if they were your own.

If you want to know when you will be able to withdraw items paid into Foreign Currency Current Accounts and our Foreign Currency Instant Access Savings Accounts you should ask us.

If you know a payment is to be deducted from your account and you pay in to cover it you should tell us as we will try to ensure the payment is met by these funds.

To cancel a Direct Debit, or other regular payment, you should also tell the party that collects the payment from your account.

[photoman]

Appendix A:

 

List of terms in which the word ‘should’ does not signify a contractual obligation.

 

All terms are taken from the August 2005 version of the respondent’s Personal Banking Terms and Conditions. It is submitted that the reason such clauses do not signify a contractual obligation is that in each case the imperative is conditional on some further aim or other reason, is explained by some further consideration in light of which it becomes clear that it is merely prudential and not obligatory.

 

This is a fixed term deposit and you should not open a HIDB if you may need your money before the end of the term you have chosen.

 

You should not make deposits if you may require access to your funds before the end of the term.

 

To use our Automated Service you will need a touch tone telephone and a security number. If you have a password with us, you should contact us to convert it into a security

number.

 

You should not use cordless or mobile telephones operating on an analogue network to telephone us. We are not responsible if any one else intercepts or overhears any telephone conversation between you and us.

 

You should only give us your email address, home, work or mobile telephone number, if you are happy for us to contact you in these ways services and other means. [sic]

 

You can also do this by signing a Power of Attorney but you should take legal advice before doing so. If you authorise another person to operate your account then you will be responsible for their actions or omissions as if they were your own.

 

If you want to know when you will be able to withdraw items paid into Foreign Currency Current Accounts and our Foreign Currency Instant Access Savings Accounts you should ask us.

 

If you know a payment is to be deducted from your account and you pay in to cover it you should tell us as we will try to ensure the payment is met by these funds.

 

To cancel a Direct Debit, or other regular payment, you should also tell the party that collects the payment from your account.

 

 

Stax

 

In order to be considered as a "Penalty", then you MUST have broken a contractual term which has then given rise to the charge.

 

This is the very basis of our ability to act;

 

To summarise the case of Dunlop v New Garage

 

"A sum will be held to be a penalty if it is extravagant and unconscionable in amount in comparison with the greatest loss which could conceivably be proved to have followed from a breach of the contract or if the breach consists only in not paying a sum of money and the sum stipulated is greater than the sum which ought to have been paid, and there is a presumption (but no more) that there is a penalty when a single sum is made payable on the occurrence of one or more of all of several events, some of which may occasion serious and others trifling damage".

 

 

This is where the recent Berwick v Lloyds case fell down, by the claimant not proving or arguing the case that the charges had resulted from a breach of contract.

.........So I'm not sure what you are trying to say with this appendix here ?

 

pm

[pinkduchess]

well I'm reading with interest & trying to keep up but most of it is going whoooosh straight over my head.

 

Best of luck to you stax

[stax68]

P.D. - Cheers!

 

PM - The idea is that the term still imposes a contractual obligation even though it uses the word 'should' rather than 'must'. The appendix is referred to by the argument of part 5, which seeks to show that 'should' does impose an obligation in the case of the term about going over the OD limit.

 

I have to deal with the fact that 'should' doesn't always impose an obligation, because a judge is bound to think of that - and in a hearing teh bank would make much of it. So I point iout that in those cases where 'should' does not impose an obligation, it is always obvious from the context - i.e. the term in question makes it clear that the 'should' is just advice or a recommendation, by uncuding an 'if' or a 'because' (actual or implied). I haven't really expressed teh argument as well as I would like yet, but the appendix is supposed to show examples where 'should' is used in this way, and to show that in those cases there is always an 'if' or a 'because'. If there isn't some such reason or condition given, I want to argue, the only way to interpret an imperative 'should' in a contract is as imposing an obligation.

 

Not sure if that is much clearer actually.

 

re the fraud statute, I can't see criminal proceedings getting anywhere on that basis and they wouldn't take the threat of them seriously. But evidence of their dishonesty might be useful in proving deliberate concealment, or the tort of deceit, or various other stuff to do with fiduciaries and constructive trusts, which I'm still trying to get my head around...

[photoman]

Stax

I see where your coming from now.....

 

.... and I still suggest that you "should" contact some Mods !!

 

PM

[Spiceskull]

Very well argued and presented...I like it. For something else to chuck into the pot you may want to consider the following argument as well:

 

7.9 As well as charging interest for unauthorised overdrafts, we may also charge a fee to cover the cost of the administration involved (see the relevant price list).

This may, by definition, is an optional term for the "seller," but is binding on the consumer. This is the very specific term that banks rely upon when applying charges for overdrafts etc, and due to the optional/binding nature it is deemed an unfair term.

 

UTCCR 1999 replaced UTCCR 1994, primarily to incorporate EU law, specificaly EU Directive 93/13 on unfair terms, the objective being to produce a harmonious set of rules. Article 7(1) requires that "adequate and effective means exist to prevent the continued use of unfair terms in contracts concluded with consumers."

 

Schedule 2 specifically states which terms are regarded as unfair, and one of these is "...are binding on the consumer but optional to the seller..." The above term (7.9) is continuously used (in favour of the bank) and very rarely do they apply the term in favour of the consumer. As such this term is grossly unfair, as it is beyond any reasonable means of the consumer to take action on a "may also" decision.

[amsjks]

As Pink Dutchess says, most of this is way over my head.

 

But at the same time, an incredibly inspiring and interesting thread and I really wish you well.

 

Go get 'em

[stax68]

Phoenix: I don't think the 'may' does much work really. Even if they said they 'will', it would be open to them to waive the charges. Anyway, I don't really like statutes. Case law is much more fun.

[stax68]

Please ask for: Rachel Tomlinson

Your Ref:

Our Ref: DMD/NW/XXXXXXXX

Date: 31st May 2007

 

Dear Sir

 

XXXXX XXXX –v- HSBC Bank plc

Claim Number: 6QZXXXXX

 

We refer to the hearing that took place on 24 May in Brighton County Court and to our open letter of 22 May.

 

We wish to make it clear that HSBC's offer as contained in our letter of 22 May remains open to you. As stated in that letter (written on an open basis), we believe the offer of £4,309.71 to be a generous and fair offer in the circumstances, particularly in light of the fact that the offer includes £1,017.50 in respect of statute barred charges.

 

HSBC is not prepared to make any offer in relation to your claims for compound interest and overdraft interest.

 

Regarding your claim for compound interest, we have previously explained to you that the House of Lords case Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] 2 ALL ER 961 is authority for the proposition that, absent exceptional circumstances, the court has no jurisdiction to award compound interest. Westdeutsche established that in the absence of agreement or custom the court has no jurisdiction to award compound interest either at law or under section 35A of the Supreme Court Act 1981 (the same would apply to section 69 of the County Courts Act 1984). In this regard, two points should be noted. Firstly, there was no agreement between HSBC and you that you would be entitled to recover compound interest in the event that HSBC breached the contract (which is denied). The only provisions in HSBC's terms and conditions relate to the entitlement of HSBC - not you - to charge interest. Secondly, so far as custom is concerned, unlike a bank's entitlement to charge its customer compound interest (see National Bank of Greece SA v. Pinios Shipping Co No. 1 [1990] 1 A.C. 637, HL) there is no custom that a customer is entitled to claim compound interest from its bank.

 

The House of Lords also said that in the absence of fraud, the courts of equity would not award compound interest unless a fiduciary relationship could be established. It is well established that the relationship of banker and customer is that of debtor and creditor and, in the usual way, there is no fiduciary relationship between the bank and its customer. The core banking activities of deposit-taking and lending - which were the only activities that HSBC provided to you, - are not fiduciary in character: Bank of Scotland v. A Ltd [2001] 1 W.L.R. 751, [25], CA; Encyclopaedia of Banking Law, paras C(111) to C(120). Nothing exists in this case that sets the relationship between you and HSBC apart from the ordinary.

 

Hence, your claim for compound interest cannot succeed and, at most, you are entitled to recover only simple interest (at the rate of 8%per annum) under section 69of the County Courts Act 1984 (which forms part of HSBC's offer as set out in our letter of 22 May).

As for your claim for overdraft interest, as we have previously explained, you are, in effect, seeking a double recovery because your claim already includes interest. In any event, you have failed to explain to us the legal basis for this claim. There is no legal principle of mutuality or reciprocity which entitles you to claim interest at the same rate as the bank's interest rate.

Should you continue to reject the offer as set out in our letter of 22 May, we will issue an application on behalf of HSBC seeking to strike out your claims for compound interest and overdraft interest.

Finally, as we have previously pointed out to you and as the District Judge emphasised at the hearing, this case is in the fast track and you are therefore exposed to our client's costs incurred in connection with your claim (including in respect of any applications that may be made by either party) in the event that you lose at trial. HSBC's costs to date, including Counsel's costs to attend at the 24 May hearing, are approximately £1,300. These costs will mount considerably in the build up to trial, including complying with the various directions given by the District Judge. In addition, to the extent that there are any applications between now and trial, HSBC will seek to recover its costs in relation thereto, including preparation for and attendance at any related hearings. When deciding the extent of the costs payable by the losing party, the court will take into account the conduct of both parties, including the unreasonableness of any rejections of offers to settle.

 

We reserve our client's right to draw this letter to the attention of the Court at any stage of the proceedings, including at the final hearing.

 

Yours faithfully

 

 

DG SOLICITORS

[stax68]

With reference to the above letter, does anyone have any bright ideas fior a knockdown argument on the overdraft interest point? Preferably a unanimous HoL decision on near-identical facts, subsequenty applied in hundreds of other cases...

 

I think it's pretty clear that as the interest was charged on sums which should never have been taken, it is recoverable as it is a cost directly associated with the charges and arising directly from them.

 

Their argument was that I would just have spent more money if they hadn't taken the charges, so I would have ended up paying just as much interest anyway.

[lateralus]

ok, i'm going to put a few statements regarding o/d interest here: you can play with them and see if it helps you respond:

these are statements we've used before:

 

You will be aware of the fact that overdraft interest which was caused solely by the application of the bank's unlawful charges is reclaimable and it is that portion of the overdraft interest which I am claiming in this action. I am perfectly willing to pay interest on money's borrowed by way of overdraft - but absolutely not that which was levied on top of and solely as a result of unlawful charges

 

and this one:

'Interest is charged by the bank on any overdrawn balance. It is argued that had the penalties not been charged then the balance would be less overdrawn or even not at all, giving rise to a lower interest charge or none at all.(It could also be argued that if you had had the extra money you'd have spent it and therefore been overdrawn on another occasion anyway, but then, you never had that opportunity.)The interest on penalties calculation aims to demonstrate an estimate of the interest that would not have been charged had the penalties not been applied. If the bank disagrees with the calculation it is up to them to provide a more accurate figure.The following should be considered when using this estimated calculation:The calculations do not compound the interest, i.e. interest on previous unlawfully charged interest has not been included.Charges are deemed to have been applied to the whole of the month in which they have been charged.The date of the interest charged is arbitrary as the interest is a more complex calculation processed by the bank using a daily basis.The larger the balance of interest on penalties to be claimed, the greater the weight to the argument stated in bold above. The argument is stronger than the calculation!'

 

and this bit of analysis:

 

they are making out that you are claiming interest twice - this is not the case. the first is just to refund what they have unlawfully taken, the second is compensation you are entitled to claim because they forced you to take your claim to court. If they don't want to pay statutory interest they should start settling at the prelim/LBA stages.

 

 

 

all in all - that is why we came up with this for sending with the breakdown to dg:

 

I understand you have a policy of initially rejecting claims for overdraft interest. However, should this be the case after you have reviewed my claim, you should be aware that my claim for overdraft interest has been meticulously calculated and double checked. It only ever relates to the cumulative charges within the overdrawn balance of the account at the point that the overdraft interest was debited

 

If it is that in your view the interest is not claimable, I am prepared to discuss this with yourseves and the judge in court.

 

 

 

and this is from the description of charges thread:

 

Overdraft interest

 

This is the single most confusing part of most peoples claim, and one of the most frequently asked questions

 

overdraft interest is applied to your whole overdraft, however if some of your overdraft is made up from (unlawfull) charges,

then a proportion of the interest has been wrongly applied and is therefore reclaimable

 

Example

 

you have a £400 overdraft, you purchase something that day for £200 so now you are -£200 on your current account balance, but on the same day £200 of charges are placed on your account, which means that your current account balance is now -£400 and the bank will charge interest on the whole £400, but as we are contesting that these charges are unlawful, then the interest should not be placed on the whole amount, only on the amount that you have actually spent,

therefore in this example you can claim back 50% of the interest, however these calculations have to be done daily to truly reflect the amount which can be reclaimed,

 

 

that's probably the sum total of my overdraft interest references - but (don't shoot the messenger) i was helping out two guys back a couple of months and dg - hemmed and hawed and hemmed and hawed and in the end - both just got worn down over the overdraft interest argument and took a lower offer. i'm only telling you this as a sort of background -

my son's claim last sept. was for approx 1500 charges, 300 o/d interest and 300 8% interest - he and loads of others had it paid out no problem -

and some still are - they just seem to latch on to a claim now and then and just go back and forth and don't seem prepared to give at all - it may be yours is going to be one of them -

as i said - not to be putting you on a downer - quite the opposite - forewarned is forearmed. just telling you what i've seen - good luck.

[stax68]

thanks lateralus - beyond the call and all that!

 

Basically, this stuff confirms my view. It'd be handy to have an example/precedent in which this kind of thing has been done before though. But basically they are trying it on with OD interest - though I'm willing to believe they actually do think (temporarily) that the compound interest claim is defendable, poor deluded fools! Well, not poor...

 

I agree it looks as though they've selected my case for a bit of resistance, as they do with selected cases from time to time...they still don't let them get to court though, eh!! Hopefully lots of others will go through relatively easily while they're farting around with mine.

 

I'd be interested to see them try to strike out the OD and 'contractual' interest parts of the claim. I'll aim to have a response to the letter waiting for them on Monday morning, I think.

 

Cheers again L.

 

stax

[lateralus]

the only one i can point to is bong's 13 yr thread - for contractual - and i know you've seen it. i can point you to those two who tried to argue the o/d interest and ended up taking less - for someone like you who likes to know all the angles - it might be helpful - they are:Andy B v's hsbc About Ready to go.....(ish) and Eades Vs HSBC (1 2 3 4 5 ... Last Page)

[Spiceskull]

Phoenix: I don't think the 'may' does much work really. Even if they said they 'will', it would be open to them to waive the charges. Anyway, I don't really like statutes. Case law is much more fun.

Not sure I agree there - "may" implies an optional term/clause for the bank within the contract - you are agreeing that they have an option when you open the account, and that their decision is mandatory for you.

 

"Will" implies a mandatory action for the bank - they will make the decision, you will pay - that is balanced on both sides in so far as being held to the terms...that they will apply a charge, and then later will agree to waive it is not something in the contract that both parties agreed to...

 

That a term is "may" for the bank and "must" for the customer is by its very nature an unfair term as described earlier...

[Lonsi]

Any news Stax?,this thread has been a really interesting read.Keep up the good work

[freakyleaky]

Just finished reading this thread from start to finish! Man, do I need a coffee now!

Stax, this is fascinating stuff and I will watch with bated breath from now on. Like many other readers, most of it goes stright over my head but I really do wish you every sucsess!