20 year claim limit in Scotland & other ramblings

[Vital Spark]

Compound basically means interest on interest.

 

For the sake of simplicity, let's say the compound rate is 10% per day, and the original sum is £100:

 

On day 1 you will have £100

On day 2 you will have your original £100 plus 10%. = £110

On day 3 you will have the £110 from day 2 plus 10%. = £121

On day 4 you will have the £121 from ay 3 plus 10%. = £133.10

 

Total after 4 days = £131.10

 

Compare this to normal interest, where you only get to apply it to the original sum:

 

On day 1 you will have £100

On day 2 you will have your original £100 plus 10%. = £110

On day 3 you again apply 10% to your original £100, giving you another £10 = £120

On day 3 you again apply 10%. to your original £100, giving you another £10. = £130

 

Total after 4 days = £130

 

You can see that even after just 4 days, the compund rate is already accumulating much quicker than the normal rate. If you scale this up to a thousand pounds over several years, it can make a huge difference to your claim.

 

The good news is that there are spreadsheets which work all of this out for you in the library section! Enjoy.

 

Thank you Robertxc.

 

:idea: Before proceeding further let me wish the fleas of a thousand camels on the ass off any person who F's up 2007, for you and all others on this board, with the curse that their arms shrink so that they can't reach to scratch. :lol:

 

It would seem that a visit to our banks will be an amusing experience, if nothing else.

 

I can see the difference without fully understanding it. The charges are not all applied at the same time so do we calculate the interest, as a lump, on the total amount charged or work the interest on each charge out separately then tot up?

 

Are the spreadsheets, to which you refer, the ones Vampiress offers?

 

At present, I don't even know what a spreadsheet is although I have a vague idea that it's some sort of specialised, automatic, numeric calculator. SCARY!

 

Another question (ain't I full of them with few answers?): Where do I find those forms required for filing in court? And another: how do I use them or decide to which court I should take the case/s? (I cheated, that was two.)

 

Martin gave me the e-mail address of a Duncan McIntosh to whom I should address all communication to Lloyds TSB, (Scotland) plc. Should I cc these mails to a journalist friend using their "Record" e-mail address?

 

CONDOLENCES, btw, to Martin who travelled up to Glasgow, yesterday morning, for the New Year celebrations, which were cancelled. I hope you met up with some world-reknowned for their friendliness Glaswegians who welcomed you into their celebrations.

[Advocate]

I am pleased to see that this thread is moving back to interesting legal territory after a bit of a lull.

 

I must first state once again that these claims are not based on contract. For this to be the case, the pursuer would have to be able to point to a term in the contract, express or implied, which the Banks have breached by their action in imposing the charges.

 

The imposition of the charges is in implement of an express term of the contract between the Bank and customer in which the Bank states it will charge the customer £X amount for default. The Bank is not breaching the contract by enforcing this provision, quite the contrary, it is adhering to the terms of the contract to the letter. Some have suggested that there is an implied term in the contract that the Bank will act lawfully. This is simply not the case. A term such as that is too wide to be implied in a commercial consumer contract and in any event, no term will be implied in a contract where it would be in direct contradiction to an express term. These claims are not based on breach of contract.

 

JonCris' statement about interest at the unauthorised rate being allowed on the charges is not correct. There is no contractual right for the customer to receive anything other than the published interest rate on their current account. This is only on sums which are in credit.

 

In Scotland, the right to interest on these claims, if any, is found not in the County Courts Act 1984, as this applies only in England and Wales. The Scottish legal rules on interest are determined by the common law. This allows 8% (the current judicial rate) from the date of service of the summons on the defender until the date of decree. This is because from the date of service the defender is made aware of the claim against them and should they fail to settle and then lose, the pursuer's right to payment dates from the date the claim was made in judicial proceedings.

 

Compound interest is not generally allowed in Scotland (or in England). There are very limited circumstances where this has been allowed and these claims fall far short of those circumstances (it is pretty complicated).

 

It may be possible for a party to claim the interest that has been applied in respect of each charge as part of their claimed amount. In order to do this the pursuer will have to work out exactly how much interest at the unathorised rate has been applied to their account in respect of each charge. Given that the interest is accrued on not only the charge but also other sums which are part of the unauthorised overdraft (i.e. the DDs paid and continued withdrawals of sums not authorised by the agreed overdraft limit), the calculation of this interest poses a significant arithmetical and evidential difficulty for the pursuer. The Bank's charges are repaid before other sums and so when one pays money into the account the charge is paid to the bank before those cashline withdrawals. The question is therefore fow how long has the charge been part of the overdraft on which interest has accrued at the unauthorised rate? And, what part of the monthly interest charge is referrable only to the charges which form part of the unauthorised overdraft level? This kind of calculation is for those of us adept at complex mathematical formula. Perhaps someone here can suggest a method.

 

Interest is not automatically available at 8% from the date of each charge. Such interest payments are at the discretion of the sheriff. In personal injury cases it is possible to claim interest on the principal sum claimed for from the date of the accident, but in payment actions such as these this is not the norm.

 

If pushed, I can provide authority for these points, although I am pretty busy at the moment and it will take me some time.

[bandonbhoy]

I calculated the amount of interest based on the published figure of22.5% plus baae arte as currently being applied by the bank. They hav refunded my charges and thier interest calculation at 8% and say they will contest the remainder. I intend to have ago, but my court date is next thurs am. I have read GaryH posts concerning his claiming the contractual rate. HBOS initially totally refused, offering 8% but eventaullt paid up. Whether the bank was admitting liability or cutting its costs, I dont know but suspect the latter. The differenc that I am claiming is about 800 more. If you mange to get hold on any details that would be helpful in front of sheriff, I would be very grateful for your assistance.

[Advocate]

Bandonbhoy,

 

First off, the Bank in question wil not be admitting liability.

 

If you are put in a position where you have to justify your right to interest at a rate higher than the judicial rate, there is no authority known to me which would support that in the current circumstances. It has been suggested by some that compound interest ought to be allowed more generally, as, if money is held by another wrongfully, it deprives the claimant of the possibility that they would be able to invest that money and receive interest on a compounded basis on their invested sum. However, in general, at the moment, the rule is that compound interest is not allowed.

 

As I said above, if you can work out how much interest at the unauthorised rate has been taken from you, and which is referrable only to the charges and not to sums withdrawn over and above you unauthorised rate (for example, you go over your authorised rate when the Bank pays a direct debit for you and you then incur a charge. The interest at the higher rate on the amount of the direct debit would not be recoverable, but the interest on the charge that has accrued as a result of the payment of the direct debit may be). The difficulty is in the calculation of this, as the Bank does not separate the interest amounts depending on the transaction, it merely looks at all sums within the unauthorised overdraft and calculates interest on that.

 

Good luck.

[JonCris]

Reciprocity of contract

[Advocate]

JonCris,

 

Contracts have rights and correlative obligations for both parties. These rights and obligations differ for each party. Mutuality of contract (the appropriate term for what you describe in Scotland) simply identifies the rule that where one party fails to adhere to a contractual obligation, the other party need not fulfill their correlative obligation. For example, a contract for the sale of goods imposes an obligation to deliver the goods to the buyer in a satisafctory quality and fit for the purpose for which it is bought (express or implied). If this obligation is not fulfilled, mutuality of contract means that the buyer need not fulfill their obligation of tendering the agreed price for the goods unless and until the seller complies with the obligation to deliver as discussed.

 

In Bank contracts, the Bank has a right to impose interest at the unauthroised rate. This is what the consumer agrees to when he or she enters into the contract. There is no right in the contract for the consumer to receive interest at anything other than the published rate on credit balances. Any right to interest must be found under the common law.

 

I reiterate again, these claims are not based on contract. They are rather claims for repetition under the law of unjustified enrichment. Contractual rights and obligations may set the background, but there is no remedy in contract for the consumer in relation to bank charges.

 

Perhaps you could enlighten me as to the texts or authorities you rely on to inform yourself of your belief that contract is the basis for these actions?

[Bigmac versus]

I successfully claimed contractual interest from Clydesdale bank at 29.25% as have many others and by the way im in scotland, I believe that for the moment the banks will avoid going to court and settle the likes of contractual interest claims as late in the day as possible, i do feel that there is nothing in the contract that allows us to claim for contractual interest and that this could be decided by the common law or if the banks are scared s???less to appear in court them thereselves, which is where i believe most will be settled.

[Advocate]

George,

 

It may sound pedantic to state it is wrong to refer to it as "contractual interest", but it is important to realise that the legal basis for these claims can simply not be contractual. The reason for this is that different rules apply according to the basis for a particular claim.

 

In contract, one claims damages, the measure of loss being those amounts the pursuer has lost as a result of the defender's breach of contract. For example, failure to deliver a wedding cake that cost £500 and has been paid for. This may require a pursuer to spend £750 to get a replacement. In such circumstances, while the pursuer has lost their £500, their measure of damages is actually £750, while they would also have a claim in unjustified enrichment for their £500. In respect of their £500, they may be able to get interest on this from the date they paid the money, although as noted above the law remains unclear on this. In respect of the £750 (the claim for "damages"), they can only claim interest from the date they serve the summons on the defender.

 

Another feature is in relation to prescription. While claims for breach of contract are expresly defined as coming within the term "reparation" covered by s.11(3) of the 1973 Act, which allows the pursuer to postpone their date due to the fact that they could not have known they had a claim, there is a question as to whether unjustified enrichment claims are in fact actions for "reparation". In general, they would not be so understood by lawyers, as they are claims for repayment and not to repair damage caused by a legal wrong. Technical stuff, but it is possible that the term "reparation" as used in s.11(3) may include these UR claims. Unfortunately, it is another one of these questions for which there is no authoritative judicial decision and will remain uncertain until a case reaches the superior courts.

 

However, the legal rules are only the background. When they are uncertain, legal advice may suggest it is too dangerous to risk a decision going against you. A commercial decision must then be made whether to settle the matter, both due to such fears, and also because instructing lawyers to appear in court costs money and in small claims, even if the Bank was to win, it could only ever get £75 in expenses from the Pursuer. This, I believe, and I take it to be what you believe also, is a, if not the main, driving factor behind settlement of these claims.

[Bigmac versus]

Yes i would agree that it is one that some banks have based decisions on, but that decision is theirs to make and if they feel they have a case to defend then we all know they would, this i believe is not ( how much can we get back if we win ) it is the fear factor of losing or the knowledge they know they will lose, this reflects on all other claimants so they would if they thought win defend in court.

[Robertxc]

For those who haven't seen it, this is Bankfodder's take on it: http://www.consumeractiongroup.co.uk/forum/general/7252-new-way-looking-interest.html

[Advocate]

Robertxc,

 

I have read the thread and would not agree with BF's interpretation of the law. Terms are only implied in contracts where without that term the contract would fail to make sense. In effect stating that the parties (both of them) must have intended that the term which is sought to be implied would be part of the contract. There is likely already a right to interest for the customer stated in the contract, albeit at a rate which changes and which is a great deal lower than the rate charged by the Bank for unauthorised lending.

 

Mutuality is as stated above and does not mean that because a term in the contract is in favour of party A, then party B should also be entitled to a term in the same or similar effect. Indeed, mutuality does not mean that if party A fails to fulfil an obligation under the contract, then party B need not fulfil all their obligations. Rather it means that if party A fails fulfil obligation X, party B need not fulfil the correlative obligation on their part. If party B fails to fulfil an obligation which is not correlative of obligation X, then they may find themselves on the losing side of a breach of contract action for damages.

 

However, I agree there is nothing to lose, although if pursuers push it too far there is a risk of expenses being awarded against them should they fail to concede a point made by the Defender which has been well made.

[orka]

Accepting for the sake of the argument, that we're 'aw doomed' for our fecklessness, in the meantime here's a real situation for everybody to get their teeth into.

 

The story so far:

I have retrieved records of charges totalling almost £1500 on a Bank of Scotland account which I held from 1997 to 2003.

 

Having reached final LBA stage the Bank has now written offering to refund £270, being the amount that falls within the last six (sic) years "as a gesture of goodwill."

 

What is interesting is that from talking to them they seem to be offering no defence to the £270 and would happily accept paying the full £1500 if it had been within the last six (sic) years. No mention of interest mind you.

 

However, I am now on the horns of a dilemma whether to pursue this over the slightly more dodgy ground outwith the five years or take the money and run whilst signing over my right to ever bothering them again.

 

It seems a shame to wave goodbye to all that lovely cash but then £270 in the hand is worth quite a lot in the proverbial shrubbery, especially when I'd previously written it off to the greedy so and so's anyway.

 

I remember writing to the Bank years ago in protest over say, £90 in charges incurred because a cheque had taken four days to clear rather than the expected three and tipped my account a couple of quid into the red, triggering a string of returned £10-£15 DD's. I made the point on more than one occasion that surely this was an excessive amount for the work involved and the bank simply said it wasn't. I presume that the fact that they asserted this and I didn't take it further at the time counts as me not taking reasonable steps to ascertain that the charges were unreasonable. If only I'd known then what I know now!

[JonCris]

Your entitled to complian without believing their charges were unlawful. In other words although upset by their charges you assumed (as we all did as was reasonable to do) that the banks were acting lawfully

[Bigmac versus]

They act unlawfully then say No we wont pay you back because the law protects us from having to, disgusted.

[v13cky]

1 year ago, any, and I mean ANY solicitor consulted on penalty charges would have patronised an "ordinary" consumer right out of his office. As for the CAB, they STILL to date do not advise to reclaim charges, and instead advise to "enter into a dialogue with the bank" or to go to the Ombudsman.

 

 

BW Thought i would keep you up to date with CAB advice, we do advise to reclaim charges, and have a great success rate.

 

Charges

58

It is part of the contract between the bank or building society and the customer that charges can be made for services. These must be set out in the bank's or building society's terms and conditions.

59

Details of the charges must be given when a client becomes a customer of the bank or building society or whenever a client requests them. Under the Banking Code, if any charges are increased or a new charge is introduced, the customer must be personally informed at least 30 days in advance.

60

Charges for services which are not covered by the terms and conditions must be made clear to the client at the time the service is offered or if the client asks about a particular service.

61

Under the Banking Code, a bank or building society must give at least 14 days' notice of the amount to be deducted from a client's current or savings account for charges and interest arising during the charging period.

62

If the client is not clear why a charge has been made, s/he should ask for an explanation and a breakdown of the charge. If the client is still not satisfied and feels that the charge should not have been made, s/he should make a complaint. In addition, senior bank or building society staff may have discretion to waive all or part of a charge, so it may be worth negotiating for a charge to be removed. It may also be possible to challenge excessive or unreasonable charges through the courts. The client should be referred to a specialist adviser if s/he wants to do this.

Challenging excessive default charges

62a

Creditors, such as banks, credit card and store card companies, may apply a reasonable charge for breaches which are in default of an agreement, for example, for late payment of a credit card bill, exceeding a credit limit or going into an unauthorised overdraft. The default charge should be limited to the actual administrative cost to the creditor of dealing with the breach. Some of the default charges that banks and other credit providers routinely apply have been successfully challenged as excessive.

62b

The following steps are intended as a guide for the client to challenge excessive charges. Letters may need to be adapted depending on the client’s circumstances and how much information s/he already has about the charges that have been applied to her/his account.

62c

Step One

 

The client needs to know the amount and date of the charges s/he wishes to challenge. S/he can make a claim for a refund of charges paid during the last six years. If the client has not kept all her/his bank statements for this time, s/he will need to write to the bank and ask them to provide this information. The bank must provide this under the Data Protection Act 1998 and, if they do make a charge for it, they cannot charge more than £10.

More about asking for information under the Data Protection Act 1998

62d

Step Two

 

Once the client has all the relevant information, the next step is to write to the bank and ask them to waive or reduce the charges as a goodwill gesture. Banks are often willing to consider this where the client has been a customer for a long time or has a good record in managing her/his account. Explain any good reasons for the default, highlight any positive aspects of the case, like customer loyalty, and ask the bank to use their discretion in favour of the client.

62e

Step Three

 

If Step Two is not successful, the client may need to write a stronger letter pointing out the legal arguments for refunding or reducing the charges. These arguments are likely to be more persuasive if the amount of the charge is large in relation to the amount of the overdraft or balance outstanding, and less persuasive if the amount of the unauthorised overdraft is high, or the client frequently breaches the agreement, for example, by regularly making late payments. The client should consider her/his payment history when putting her/his arguments together. The legal arguments include the following:-

• the charges applied to the account are unfair under paragraph 1(e) of schedule 2 of the Unfair Terms in Consumer Contracts Regulations 1999 because the bank has charged an amount which is disproportionately high compared to the amount borrowed; and
  
• the amount charged by the bank is an unlawful penalty charge which does not reflect any actual or real loss and which the bank is therefore not entitled to recover (see endnote 1); and
  
• the client is entitled to get back the amount of the charge because it has been automatically debited from her/his account, even though the bank was not entitled to the payment.

62f

Step Four

 

If the bank still does not agree to refund the charges, the client could take the bank to the small claims court to try to get her/his money back. The arguments in court are the same ones as in Step Three. The client will have to pay a fee to the small claims court which s/he can get back if s/he wins the case. A fee exemption or waiver may apply depending on the client's circumstances. Court action should only be used as a final resort and it is a good idea to get specialist help first.

More about small claims

More about fee exemptions and waivers

62g

Aternatively, the client could make a complaint to the Financial Ombudsman Service (FOS) which is a free service. The client will need to have attempted to resolve the issue with the bank prior to an approach to FOS. The ombudsman may be able to help if there has been maladministration by the bank or if the charges build up so as to cause financial hardship. If a client reaches a position where s/he cannot repay the debt because of the charges, further charges might be deemed unfair. Any decision of the ombudsman is not binding on the client and therefore s/he can take the matter to court if s/he is not happy with the outcome.

 

Hope this keeps you up to date with the advice that CAB are giving out.

[Seahorse]

Vicky, a couple of wee points if I may. It would APPEAR from the first part of your post where you have a numbered list that the advice from CAB would be to try to overturn charges if looks like there is a warranted reason to have them removed, although I don't know what criteria you would consider justified. It doesn't seem that your stance is that the charges as such are unlawful, and therefore should never have been levied in the first place. Am I correct, or am I missing your point here?

 

Secondly, and perhaps OT a bit here but still relevant to your post, I see you have tried to link to various files. However, they link to local files on your computer, and we can't see them. Is it possible to point to them on the web, rather than locally?

 

Seahorse

[v13cky]

The only point i was trying to make seehorse "sorry", was infact to Bookworm. The CAB do everthing that is possible to get the best for there clients and that does include getting unfair back charges back to them.

[v13cky]

Vicky,

Secondly, and perhaps OT a bit here but still relevant to your post, I see you have tried to link to various files. However, they link to local files on your computer, and we can't see them. Is it possible to point to them on the web, rather than locally?

 

Seahorse

 

No not possible sorry, i was just a bit quick to respond to BW and her lack of knowledge with CAB advice currently given. My post was not intended to link you to these files and i am aware that you can not see them but did not have time to cut them before post.

 

Sorry again for the lack of time to prepare my post but i really should be working. lol

[Seahorse]

Sorry again for the lack of time to prepare my post but i really should be working. lol

 

Aye, get back to work wummun, you've parents with starving families to get sorted.

 

And sterling work you lot do too. I've had need of your services in the past. A pity nobody was aware of all these shenanigins 15 years ago, then maybe my local CAB could have helped me sort out a few rogue DCA's. (Sorry, did I say rogue? A Mr Ken Maynard knows what that word means.)

 

Seahorse

[7givenchy]

Hi mackie 68

I had contacted one of the moderators who gave me excellent advice regarding the second hearing of my claim against the Halifax for repayment of charges from 2000. I would appreciate confirmation from anyone that I am interpreting the advice correctly and putting forward the correct argument at court on Tuesday.

 

Their defence:

I have recieved a copy of their proposed defence from the court.

Their defence is ....that the case is out of time under section 6(1) of the Prescription and Limitation (Scotland ) Act 1973 which provides for a prescription period of 5 years. i.e that the five yers 'stopwatch' started running when the charges were incurred. They'll say that a reasonable person could have known or found out that penalty charges are not lawful, and so if I had a problem with it, I should have claimed at the time.

 

My Response is :

While it true that I could have found out that penalty charges are unlawful, there is no way I could possibly have known that HBOS's charges were penalties, since they refuse to disclose how they arrive at these charges. and they strenuosly deny that they're penalties. I should argue that the that the trigger for the five year limitation was actually in June 2006, when the OFT made its statement on penalty charges.

 

Should I submit the article from Burness on the 'Act'

[JonCris]

I should add something like whilst I might have found their charges to be unlawful I in keeping with most cinsumers assumed that the bank would act with fairness and honesty in the conduct of it's business with me

[7givenchy]

Hi JonCris

 

Thanks for this

[Vital Spark]

Hi, I have been trying to get a PM to RobertCX/XC who I believe is a moderator on the Scotland forum but I keep getting a message that his message quota is full and I can't send message.

 

7givenchy, can you tell me how you managed to contact a moderator, please? I really need their help.

[Guest bong]

I reiterate again, these claims are not based on contract. They are rather claims for repetition under the law of unjustified enrichment. Contractual rights and obligations may set the background, but there is no remedy in contract for the consumer in relation to bank charges.

 

Perhaps you could enlighten me as to the texts or authorities you rely on to inform yourself of your belief that contract is the basis for these actions?

 

I have just discovered this thread, and have a question for Advocate on the above post.

 

I have fairly recently come across a case which I think might show that these claims are based on breach of contract; the contract which provides that the bank will return money the customer has deposited in their account when the customer issues a demand for repayment. Our preliminary letter demanding the return of money unlawfully taken from the account in penalty charges is such a demand, and is therefore our cause of action when the bank refuses to make the repayment. If this is correct, the limitation period would only start to run at this point.

 

The case is this one

 

The argument is based on the following Court of Appeal case:

 

Joachimson v Swiss Bank Corporation [1921] 3 KB 110

 

The court held that for time to start running for limitation there needed to be a demand for payment from the customer. In his judgement Atkin LJ pointed out:

 

‘The practical bearing of this decision [as to the necessity for a demand] is on the question of the Statute of Limitations … The result of this decision will be that for the future bankers may have to face legal claims for balances on accounts that have remained dormant for more than six years.’

 

 

I would be very interested to hear your take on this.

[Robertxc]

Very interesting. And logical!