Stax68 v HSBC

[stax68]

Thanks to all for your comments. Well, I decided against putting in the application to amend my case/strike out theirs/get summary judgement, partly because I didn't want to stump up the fee and partly because I wanted to see if the bank would settle in full. It seems they are not yet quite able to face the fact that they will have to do so.

 

Anyway, they have made a move - applying to amend their crappy defence to something slightly less ridiculous, and at the same time applying to have the compound interest componenet of my claim struck out/summarily decided in their favour! The cheek of it! I almost wish I could just do nothing, sit back and wait for them to fail in court. It would be satisfying and could get some publicity. But of course I had better try and save them from their folly, and avoid unnecessary use of court resources...

 

So, coming up next: a DG triple bill - letter to court, application notice and witness statement!

 

Gasp! as DG criticise my statement of case while seeking to replace their own manifestly inadequate one!

 

Swoon! as they claim that they are doing so in order to assist the court!

 

Cat up all down your shirt front! as they feign an air of puzzled disappointment tempered by superhuman patience, pretending that they have explained their case to me, but not I to them.

 

Gnaw off your own arm in seething frustration! as they ask for the trial timetable to be extended, despite the fact that the judge set up said timetable knowing that applications to strike out were in preparation, and on the explicit understanding that there would be sufficient time for this to be done - as there would have been had DG not waited nearly a month before submitting theirs...

[stax68]

DG SOLICITORS

12 CALTHORPE ROAD

EDGBASTON

BIRMINGHAM

B15 1QZ

DX 712630 Birmingham 32

Please ask for: Rachel Tomlinson

Your Ref:

Our Ref: DMD/GR/XXXXXXXXX

Date: 18 June 2007

The Court Manger [sic]

Brighton County Court

DX 98070

Brighton 3

By DX and Fax: 01273 602138

Dear Sir

XXXXXXX–v-

HSBC Bank plc

Claim number: XXXXXX

We act for HSBC Bank plc (HSBC) in relation to the above claim.

We enclose various documents in relation to an application from HSBC seeking: (a) that that part of the Claimant's claim relating to compound interest be struck out pursuant to CPR Rule 3.4(2)(a) and/or be summarily dismissed pursuant to CPR Rule 24.2; (b) that the Defendant be given permission to amend its Defence; and © that the case management timetable in respect of exchange of disclosure lists and witness statements set out in the Court's order following the directions hearing that took place on 24 May 2007 be postponed and a new timetable in respect of these steps be ordered at the hearing of the Defendant's application. The enclosed documents comprise:

1. HSBC's Application Notice;

2. the draft order sought; and

3. the witness statement of Deborah D'Aubney in support of HSBC's application, together with various exhibits including the Defendant's draft Amended Defence.

For the reasons set out at paragraph 22 of Ms D'Aubney's witness statement, HSBC believes that it would be in the interests of justice, and would save time and costs on both sides, to defer the forthcoming deadlines for exchange of disclosure lists and witness statements until after the hearing of this application. HSBC accordingly invites the Court to reschedule these events at the hearing of this application if the Claimant does not consent to such rescheduling.

We are writing to the defendant today inviting him to consent to HSBC’s draft Amended Defence.

Yours faithfully

DG SOLICITORS

cc XXXXXXXXX

[stax68]

N244 Application Notice

 

We(1 ) DG Solicitors on behalf of the Defendant intend to apply for an order (a draft of which is attached) that:

(i) The Defendant be given permission to amend its Defence in the form attached to the witness statement of Deborah D'Aubney;

 

(ii) The claim for compound interest (particularised in a schedule to the Particulars of Claim to be in the sum of £6,240.84) be struck out pursuant to CPR Rule 3.4(2)(a) and/or be summarily dismissed pursuant to CPR Rule 24.2.

 

(iii) The case management timetable in respect of exchange of disclosure lists and witness statements set out in the Court's order following the directions hearing that took place on 24 May 2007 be postponed and a new timetable in respect of these two steps be ordered at the hearing of the Defendant's application.

 

because(3)

 

The proposed amendments to the Defence facilitate the identification and resolution of the issues raised in the claim to the benefit of the Claimant and the Court. The substantive points that are the subject of the amendment have been raised in correspondence with the Claimant, and the Claimant can suffer no prejudice by reason of the amendments. The Defendant is seeking the Claimant's consent to the amendments.

The claim for compound interest, which makes up the bulk of the value of the claim, is legally devoid of merit. As a consequence, it is the Defendant's position that the Particulars of Claim disclose no reasonable grounds for bringing this component of the claim; and/or that the Claimant has no real prospect of succeeding on this component of the claim. In particular, the claim to compound interest is pleaded on the basis of a number of grounds which, as is clear from the decision of the House of Lords in Westdeutsche Landesbank Girozentrale v Islington BC [1996] AC 669, do not found a claim to compound interest as a matter of law, and which are devoid of merit as a matter of fact. Despite the Defendant explaining the applicable legal principles in open correspondence dated 22 May and 31 May 2007, the Claimant has persisted in pursuing his claim for compound interest. The Claimant has not responded to these substantive points.

The circumstances of the case and reasons for this application are set out more fully in the attached witness statement of Deborah D'Aubney.

Pursuant to paragraph 2(5) of Practice Direction 24, the Claimant's attention is drawn to CPR Rule 24.5(1) which states as follows: "If a respondent to an application for summary judgment wishes to rely on evidence at the hearing, he must - (a) file the witness evidence; and (b) serve copies on every other party to the application, at least 7 days before the summary judgment hearing."

 

Part B

We wish to rely on:

the attached witness statement of Deborah D'Aubney dated 18 June 2007 in support of my application

 

Statement of Truth The Applicant believes that the facts stated in Part C are true

 

 

IN THE BRIGHTON COUNTY COURT

BETWEEN:‑

XXXXXXX Claimant

-and‑

HSBC BANK PLC Defendant

 

Claim No. XXXXXXX

DRAFT ORDER

UPON the application by the Defendant by Application Notice dated 18 June 2007

AND UPON HEARING the Claimant and Counsel for the Defendant

IT IS ORDERED THAT:

1. The Defendant shall have permission to amend its Defence in the form attached to the witness statement of Deborah D'Aubney in support of the Defendant's application contained in the Application Notice dated 18 June 2007.

2. The claim for compound interest shall be struck out and the Defendant shall have summary judgment on the claim to compound interest on the grounds that the Particulars of Claim disclose no reasonable grounds for bringing the claim for compound interest and the Claimant has no real prospect of succeeding on the claim for compound interest and there is no other compelling reason why this issue should be disposed of at a trial.There shall be disclosure by lists by each party within 2 weeks of the date of this order.

3. Witness statements shall be exchanged within 4 weeks of the date of this order.

4. The Claimant shall pay to the Defendant those of its costs of this application that are referable to the strike out / summary judgment sought, summarily assessed at [£].

[stax68]

Defendant

D. M. D'Aubney

First

Exhibit DMD-I

18 June 2007

IN THE XXXXXX COUNTY COURT

Claim No. XXXXXXXX

BETWEEN:‑

XXXXXXXXXXXXXX Claimant

-and‑

HSBC BANK PLC Defendant

 

WITNESS STATEMENT OF

DEBORAH MARY D'AUBNEY

I, DEBORAH MARY D'AUBNEY, of 12 Calthorpe Road, Edgbaston, Birmingham, B15 1QZ, WILL SAY:

1. I am a solicitor employed by HSBC Holdings plc and I have conduct of this matter on behalf of the Defendant. The in-house litigation department of HSBC operates under the name of "DG Solicitors".

2. I am duly authorised by the Defendant to make this witness statement in support of the Defendant's application to amend its Defence and to strike out and/or obtain summary judgment in its favour on the compound interest element of the Claimant's claim.

3. There is now shown to me marked "DMD-1" a paginated bundle of documents to which I will refer (by page number) in this witness statement.

4. The claim is for more than £10,000 and arises out of bank charges levied by the Defendant on the Claimant's account between 1997 and 2006.

5. The Claimant has served a dense and somewhat unclear spreadsheet purporting to substantiate the calculation of this sum. Insofar as it is possible to identify the components and basis of the claim from that table, it appears that £6,240.84 of the claim relates to compound interest upon the bank charges and overdraft interest that had been charged to the account.

6. A copy of the draft Amended Defence is at pages 1 to 5. The Defendant anticipates that the proposed amendments will facilitate the resolution of the issues by the Court. No prejudice will be caused to the Claimant by permitting the Defendant to amend in the terms proposed. The Defendant further anticipates that the strike out/summary judgment application will considerably narrow the wide range of issues raised by the claim form, saving time and costs at the final hearing and that such clarity will facilitate a settlement of the remaining issues between the parties.

Compound interest

7. The bulk of the Claimant's claim is an attempt to claim from the Defendant compound interest on (i) the bank charges levied by the Defendant and (ii) overdraft interest levied by the Defendant on that portion of the unauthorised overdraft that is allegedly attributable to the hank charges (the basis on which the so-called overdraft interest has been calculated is erroneous and is disputed by the Defendant). Compound interest on (i) and (ii) is alleged to amount to £6,240.84. Although the formulae and calculations upon which these sums are based is not provided by the Claimant, it appears that this sum is based on some form of compound interest at the same rate that the Defendant charges interest on unauthorised borrowing (varying between 1.16% per month and 2.18% per month).

8. As a matter of law, I understand that compound interest is available only in very limited circumstances. The House of Lords decision in Westdeutsche Landesbank Girozentrale v Islington BC [1996] AC 669 (pages 6 to 60) 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 (I believe that the same would apply to section 69 of the County Courts Act 1984).

9. In this regard, and before I come on to deal with the Claimant's pleaded case, I would like to make two observations. Firstly, there was no agreement between the Claimant and the Defendant that the Claimant would be entitled to recover compound interest in the present or any circumstances. The only provisions in the Defendant's terms and conditions relate to the entitlement of the Defendant - not the Claimant - to charge interest.

10. Secondly, so far as custom is concerned, unlike a bank's entitlement to charge its customer compound interest there is no custom that a customer is entitled to claim compound interest from its bank (see paragraph 15 below).

11. 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 the Defendant provided to the Claimant - are not fiduciary in character: Bank of Scotland v. A Ltd [2001] 1 W.L.R. 751, [25], CA (pages 61 to 78); Cresswell (Ed) Encyclopaedia of Banking Law, paras C(111) to C(120) (pages 79 to 82).Nothing exists in this case that sets the relationship between the Claimant and the Defendant apart from the ordinary.

12. The Defendant has written to the Claimant on an open basis referring to this judgment (see the letters from DG Solicitors to the Claimant dated 22 May and 31 May 2007 at pages 83 to 86) and the principles it sets out, and seeking an explanation of his response and the principles on which the Claimant relies, but the Claimant has persisted in his claim without providing any substantive response to the points raised in these two letters.

13. The Claimant has pleaded that compound interest is claimed:

(i) ‘under the contract construed as fair and balanced'

(ii) 'per SGSA s15 or otherwise’

(iii) ‘or under trade usage'

(iv) ‘or in response to fraud or to misapplication by a fiduciary'

(v) ‘or as special damages’

 

14. As a matter of law, claims (i), (ii) and (v) - even if the allegations were made out - do not found a claim for compound interest, as described in Westdeutsche. Nor do they have any merit as pleaded, for the additional reasons set out below.

15. Further, although Westdeutsche established that compound interest might be awarded if the circumstances identified by (iii) existed, as stated at paragraph 10 above, there is no such trade usage or custom in respect of any right by customers to charge banks compound interest. The Claimant has provided no evidence of such trade usage or custom. The Claimant relies on the Defendant's contractual right to charge the Claimant compound interest on unauthorised borrowing, which is not evidence of such trade usage or custom since it is an express contractual right that relates to the Defendant's ability to charge its customer interest on unauthorised borrowing, in a situation in which there is no similar right in the customer.

16. Westdeutsche also established that compound interest might be awarded if the circumstances identified by claim (iv) existed. However, claim (iv) is in fact a baseless and wholly unparticularised and embarrassing allegation of fraud against the Defendant. Further, as a matter of law, a bank is not a fiduciary for its customer in respect of the day-to-day operation of a current account (seeparagraph 11 above).

17. Claims (i), (ii) and (v) are hopeless on their own terms. As for claim (i), the terms and conditions are a comprehensive description of the terms applicable to the terms of the account. They do not provide for interest to be charged in these circumstances by the customer. The only provision for interest by the customer is when the account is in credit.

18. Claim (ii) is equally ill-founded: the implied term referred to in the Supply of Goods and Services Act 1982 relates to consideration for services provided in which the consideration is either not determined by the contract, left to be determined in a manner agreed by the contract or determined by the course of dealing between the parties. That is manifestly inapplicable to a claim to interest upon the Claimant's claim. Moreover, the terms and conditions, which are comprehensive, do not provide for interest in these circumstances.

19. Claim (v) is unparticularised and devoid of legal merit.

20. Accordingly, even if successful at trial on the issue of whether the charges themselves are recoverable (which the Defendant will, if necessary, vigorously contest), at most the Claimant should be limited to recovering simple interest at the usual statutory rate.

21. In all the circumstances, I invite the Court to grant permission to the Defendant to amend its Defence in the terms of the draft at pages 1 to 5 and to strike out, or give summary judgment in the Defendant's favour on, the compound interest component of the claim described above and identified in the draft order attached to this application. The Particulars of Claim disclose no reasonable grounds for bringing this component of the claim, the Claimant has no real prospect of succeeding on this component of the claim and there is no other compelling reason why this component should be disposed of at a trial.

22. Since this application may not be heard until after the date for disclosure, but that it will ultimately (a) narrow the scope of the claim and thereby reduce the scope of the parties' obligations under the pre-trial case management timetable as regards the evidence required for the final hearing and (b) facilitate a settlement of the remaining issues between the parties, I believe that it would be in the interests of justice, and would save time and costs on both sides, to defer the forthcoming deadlines for exchange of disclosure lists and witness statements until after the hearing of this application. I accordingly invite the Court to reschedule these events at the hearing of this application if the Claimant does not consent to such rescheduling.

23. I believe that the facts stated in this witness statement are true.

Signed:

DEBORAH MARY D'AUBNEY

Dated: 18 June 2007

--------------------------------------------------------------------------------------------------------------

 

DRAFT AMENDED DEFENCE

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

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 overdraft.

3 The Defendant denies that the charges applied to the Claimant's account amount to penalties at common law and/or are 'unenforceable under statute'. The relevant statute relied on by the Claimant in this regard is not particularised and accordingly that part of his claim is liable to be struck out. The Defendant reserves the right to plead further to such allegation if it is properly pleaded. It is denied if it is alleged that such charges and the contractual provisions on which they are based are unfair contract terms for the purposes of the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs).

4 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 the contractually agreed price for the services provided and the UTCCRs are not applicable to them; alternatively they are not unfair contrary to the UTCCRs. Further, the charges are not default charges and, accordingly, cannot amount to a penalty. It is denied if it is alleged that the charges were imposed by reason of any breach of contract on the part of the Claimant.

4.1 In the premises, it is denied that an implied term was capable of arising or arose that the Claimant would pay only a reasonable charge for the services provided either pursuant to section 15 of the Supply of Goods and Services Act 1982 or at all; alternatively, if (which is denied) such an implied term was capable of arising and arose, the charges imposed were reasonable.

4.2 As to the claim in relation to overdraft interest levied on the account, the basis of this claim is unspecified. Such overdraft interest was a charge for borrowing. Furthermore, the basis on which the Claimant has arrived at the sum claimed in respect of the overdraft interest element of his claim is not understood. Accordingly, this element of the claim is denied.

4.3 It is denied that the Claimant is entitled to the alleged compound interest or any interest for the reasons set out above. Further or alternatively, it is denied that the Claimant is entitled to compound interest on any sums found to be due on the alleged or any basis, whether at the same rate as the Defendant's unauthorised borrowing rates or otherwise. In particular:

(1) As a matter of law, save for the claims that the present case is one of fraud and/or misapplication of funds by a fiduciary and that there is a trade usage whereby a customer is entitled to claim compound interest from a bank, the court has no jurisdiction to award compound interest on any of the alleged bases.

(2) Further or alternatively, as to the claim to compound interest `under the contract as construed as fair and balanced', insofar as it is necessary to plead to such a vague allegation which is liable to be struck out for uncertainty, it is denied that there is any principle of construction that a contract is to be construed as fair and balanced'. Further or alternatively, paragraph I is repeated and the terms and conditions are comprehensive and do not provide for compound interest to be payable to the Claimant as alleged or otherwise.

(3) Further or alternatively, as to the claim to compound interest 'per SGSA s15 or otherwise', paragraph 4.1 is repeated. The reference to ‘or otherwise’ is not understood.

(4) Further or alternatively, as to the claim to compound interest ‘under trade usage', it is denied that there is a trade usage to compound interest in these circumstances. Further or alternatively, paragraph 1 is repeated and the terms and conditions are comprehensive and do not provide for compound interest to be payable to the Claimant as alleged or otherwise.

(5) Further or alternatively, as to the claim to compound interest ‘in response to fraud or misapplication by a fiduciary’, it is denied that the Defendant was a fiduciary for the Claimant. The relationship of banker and customer in the day-to-day operation of a current account is not fiduciary in nature. Further, the unparticularised allegation of fraud and misapplication of funds by a fiduciary are denied.

(6) Further or alternatively, as to the claim to compound interest as ‘special damages', such claim is not understood.

(7) The Defendant is presently unable to plead further to the allegations, but reserves the right to plead further if these allegations are properly pleaded.

4.4 For the reasons given in paragraph 4.3 above, if which is denied the Claimant is entitled to recover any interest, he is only entitled to simple, not compound, interest.

5 Insofar as the claim is composed of and/or is based on charges levied before 28 December 2000, or overdraft interest attributable to such charges, or interest on such charges and overdraft interest, such claim is time-barred pursuant to the Limitation Act 1980. Further or alternatively, the Defendant is not required to retain, and does not retain, records of charges more than six years old and the Claimant is put to strict proof of the same. The Defendant notes that the Claimant does not rely on bank statements for the period between March 1997 and September 2000.

6 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.

DG SOLICITORS

STATEMENT OF TRUTH

 

 

The Defendant believes that the facts stated in this Amended Defence are true. I am duly authorised to sign this Amended Defence on the Defendant's behalf.

 

Signed ............................................. Deborah Mary D'Aubney

Solicitor for the Defendant

 

Dated ..............................................

Re-served as amended on 18 June 2007 by DG Solicitors, 12 Calthorpe Road, Edgbaston, Birmingham, B15 1QZ.

[libbyfromlondon]

Hi stax, personally I am in favour of the fraud angle. Fraud by false representation and abuse of position, under the Fraud Act 2006 which came into force in Jan 2007 - The CPS : The Fraud Act 2006.

 

You could ask for their application to be dismissed on the grounds that they are seeking to unjustifiably delay and/or avoid disclosure of evidence which would prove/disprove your allegation and claim to compound interest.

 

Did they put in a figure for their costs in their draft order?

[stax68]

Thanks. I'll have a look at the fraud stuff, but I don't think I'll be trying to get any criminal proceedings started just now.

 

I'm certainly planning to consent to their amended defence - on condition that they consent to my amended claim - I'll also consent to them making any changes within a reasonable time in response to my new improved claim.

 

I'll also be vigorously oppposing their summary judgement application - on the grounds that they haven't shown that I have no realistic chance of success. I'll also be making quite a thing of their delay in submitting it and the request for further postponement. I'll point out that the judge set the trial timetable on the explicit understanduing that it would allow ample time for the defence's strike-out/summary judgement application to be heard, and that they have delayed for a month.

 

They didn't include a figure for costs.

[stax68]

Left out the draft defence - the most important bit! - which was appended to DMD's witness statement. I've added it in now.

[stax68]

Right then, things are coming to a head. I was stayed and I'll post all the relevant stuff once I dig it all out and get back into the swing of things. One thing I've thought of recently while researching the arguments made in the appeal is that the variation clause in the original T&Cs is very likey to be adjudged unfair under the 94 UTCCRs (or indeed the 1999 ones, except they were't in force at the time).

 

The trend of the arguments and responses in the appeal suggest that the UTCCRs might also be useful as a 'penalty clause doctrine lite' in that if the charges arise even indirectly from a breach, they would probably stand to be assessed for fairness and hopefully struck out, and also possibly (LJ Waller suggested this at one point) that if a proper effort were made to show that exceeding the OD limit was a 'near-breach' - or best categorised alongside breach as giving rise to 'secondary payment obligations' as one of the supporting cast of bank counsel put it, then that would be good enough for the UTCCRs to kick in.

 

Anyeay, that's all thinking aloud so to speak so probably a bit unclear. But the key terms in the 96 T&Cs provide some pretty good material to work with. One of the benefits of the OFT's arse-about-face approach of starting with the nobbled T&Cs and working backwards is that the banks' arguments are aimed at a correspondingly easy target. This stuff is pure gold:

7.2 You must always keep your current account in credit unless we have agreed an overdraft with you.

 

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

 

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.

 

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).

 

9.5.2 We may authorise a Switch transaction but if there are insufficient cleared funds or no agreed overdraft is available on your account to cover the transaction we shall refuse to authorise such a transaction.

 

11.6 We may change our banking hours, our charges, banking practices, the availability of branches and self-service machines and similar matters at our discretion by giving at least one month's notice in our branches or in the national press or sent to you by post. The change will apply from the date specified in the notice.

 

Add to that the recent Sempra Metals Ltd v. Revenue & Anor [2007] UKHL 34 (18 July 2007) on the issue of compound interest, and I reckon things are looking pretty good from here.

[Castlebest]

Hiya Stax, effectively as we stand at the moment all we have lost are the common law grounds for claiming back penalty charges, the Judgments to date have backed the idea that the OFT do have the right to decide if the level of charges is unfair under the UTCCRs.

 

If the OFT follow the same route as they did with credit cards they are likely to set a limit where they wont investigate banks if the charge is below a certain figure and as with credit cards this will leave the door open for us to question these levels in court if we so wish .

 

Having said that the dust is still flying in the test case so we will wait and see

 

pete

[stax68]

I'd say we haven't even lost the penalties basis - the OFT conceded that 'going over your limit' wasn't the kind of thing that was plausibly seen as a breach of contract. I disagree.

 

I'm not sure that the Appeal judges will find for the OFT - I thought they muffed it a bit. LJ Waller seems in sympathy but I think he's also the junior partner.

 

Even if the banks succeed in excluding 'price' assessment of the charges, the theoretical possibility of other kinds of assessment remains, but I'm not sure how much room the OFT have left themselves with their over-defensive and rather unfocussed approach.

 

Anyway as you say we shall see. It appears the banks will appeal everything, the OFT nothing (if so that's a nicely hidden bit of bias in the overall setup), so either the banks will win, or leave to appeal will be refused, or we'll see a Lords appeal (which would be interesting I suppose).

 

I didn't refer to the UTCCRs anyway in my original claim though the bank defended it anyway, so I shouldn't have any trouble adding it in if necessary.

 

I haven't come across anyone else raising the issue of challenging the variation clause on UTCCR or other grounds - but if that runs - and in my case I'd say it's a pretty good bet - then the T&Cs have in effect never changed from the original ones. I dunno if anyone has any thoughts on that.

[stax68]

Note to self - the unfairness (thus ineffectualness) of the variation clause will strengthen the prospect of pursuing S14 of the Supply of Goods and Services Act 1982 - (implied term as to reasonable charge where this is not explicitly determined by the contract but instead left to be specified by some other means or in the course of dealing).

 

But the SGSA S13-15 also supplies a clear rationale for the bank to make 'going over the OD limit' a breach - and thus the charges not a price. This helps to rebut the judge's obiter (conceded by OFT) aside that it is unlikely to be intended to be a breach (even though he adds it logically could be) since the bank would have not only to acquiesce but actively to assist in that breach.

 

This line would run EVEN if it were always the case (which it isn't, e.g. with guaranteed cheques and offline or unchecked Switch transactions) that they would have an entirely free (non-loaded) choice whether to honour the payment, and would cover those cases where they do have an unfettered discretion - i.e. usually, these days since switch, atm and dd payments are all pre-approved.

 

(But then there might be a related point - not the judge's - that the bank's agreement introduces a further causal step, so that the breach does not give rise directly to the payment. But then basically that is the route the judge considered by regarding 'attempting to go over the limit' as the putative breach. The theoretical point is that the fact or event which puts me in breach does not have to be a self-contained action of my own.)