GaryH v Lloyds TSB - WON !! UNCONDITIONALLY !!!!

[cathrionas]

Its a roller coaster. eh. Good to see you have gone all pink. well deserved. Bye for now,

Cat

[GaryH]

Thanks Cat, much appreciated. And what a lovely shade of pink it is too!

[sweetpants]

Yes I was beginning to think I had done something wrong on the form and it had been rejected.Was hoping it would get sorted b4 xmas but still it will be something to look forward to in the new year wont it.

I hope the 2nd interview went well for you. I believe Tyco are recruiting.....no on second thoughts I like you so forget that lol

And I second Cats post...well deserved

[GaryH]

Sent off my 'statement of evidance' yesterday, in compliance with the directions of the judge. If anyone wants to use any of it, feel free. Obviously its offered without liability though! Thanks to Wolfcub too - I borrowed a couple of bits from her excellant case notes.

 

These are the directions;

 

IT IS ORDERED THAT

l.This claim is allocated to the small claims track.

 

2.The claimant shall by 4:00pm on 26th October 2006 file and serve:

 

a)a schedule setting out each charge repayment of which is being sought,showing the date,amount and alleged reason,if any,for that charge;

 

b)copies of any statement or other document relied upon as showing that each and every such charge has been made;

 

c)a statement of his evidence,if such is to be relied upon as tending to show that the alleged charges have been made,or that they are irrecoverable as penalties or otherwise.

 

a) and b) are self explanitory. Here's what I submitted for c);

Note - this is what I put together specifically for my claim vs Lloyds. There is now an amended version in a more 'template' type format here - http://www.consumeractiongroup.co.uk/forum/general/53570-new-strategy-allocation-questionaires-3.html#post450746

STATEMENT OF EVIDENCE

 

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

 

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

 

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

 

- The law clearly states that a company cannot profit from a breach and the charge for a loss suffered from a breach of contract should be the amount necessary to put both parties in the same position before the breach occurred. This means that Liquidated damages are charged.

 

This is backed up by case law – Robinson Vs Harman 1848.

 

The law says that the charge for loss or damage must be proportionate to the loss incurred.

 

- The breaches of contract in this case relate to exceeding overdraft limits, and having insufficient funds available to pay a direct debit or a standing order. On one occasion in June 2006, a direct debit payment was returned due to insufficient funds in my account. The shortfall was only one pound and nineteen pence. I was then penalised for this breach by way of a charge of £35. The claimant holds this charge and indeed every other charge in question, to be punitive in nature, and wholly disproportionate.

 

- The law states that a clause is a penalty if it provides for “a payment of money stipulated as in-terrorum of the offending party”. i.e. if it is designed to scare or coerce or is used as a threat.

 

Lord Dunedin stated in the case of Dunlop Pneumatic Tyre Co v New Garage & Motor Co 1915:-

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

 

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

 

Under the Unfair Terms in Consumer Contracts Regulations 1999, Sec 2 Par 1 states that:

“A term that allows a party to unilaterally raise of price or for a price to be determined on delivery is unfair”

 

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

 

Further under the UTCCR:

5. - (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

- Additionally, the claimant believes that it is a high possibility that the terms and conditions of his account contract explicitly describe the fee’s as to be applied in instances of breaching those terms. This is true of the contracts of other customers of Lloyds TSB that the claimant is aware. However, the bank has failed to provide me with a copy of the account contract, despite repeated requests to do so, so unfortunately this cannot be proved. A right of subject access request for this document was submitted to the defendant under the Data Protection Act 1998, on 8th September 2006. The defendant has failed to comply.

 

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

 

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

 

- Additionally, if these charges are incurred a certain number of times within a given period, i.e. a month, they may be registered as ‘defaults’ on the account holders credit file with credit reference agencies.

 

 

I, the claimant, believe all facts stated in this statement to be true

 

Signed:

 

Dated:

 

 

The cases and statutes have got to be submitted at a later date. This is just evidance that the charges are a penalty and not a service as the defendent claims, and that even as a service they contravene the UTCCR.

 

The above deals with the 'Service charge' arguement. Now having proved (hopefully!) that the charges are indeed penalties, the next stage to winning the case is to prove (as far as is possible) that the penalties are disproportionate and therefore unlawful and unenforceable. The statement below deals with that part. I did'nt send this in accordance with the directions as I did'nt feel it was relevant to what was requested. This was in fact prepared afterwards, so some of the content may be repeated from the first statement.

 

THE TRUE COST TO LLOYDS TSB OF MY CONTRACTUAL BREACHES

 

 

Following on from the above, the claimant does not accept Lloyds defence that the charges are enforceable as a service charge.

It is not disputed that Lloyds is entitled to recover its damages following the claimant’s breach of contract, and it is entitled to include a liquidated damages clause. A penalty however, is unenforceable.

 

To decide whether Lloyds charges are a penalty or is liquidated damages, the likely costs incurred by the bank need to be examined to establish whether or not the banks charge represents a genuine attempt at pre-estimating its likely loss caused by my contractual breaches.

 

In a recent study undertaken in Australia* it was estimated that the cost to an Australian Bank of a customers direct debit refusal was estimated to be in the region of 54 cents. No data was published by the Australian banks to confirm or deny this. By reviewing the banks’ charges against the above figure, the study estimated that banks could be charging between 64 to 92 times what it costs them to process a direct debit refusal.

 

*Nicole Rich, “Unfair fees: a report into penalty fees charged by Australian Banks”

 

The study’s key findings stated that in its opinion the Australian Bank’s cheque and direct debit dishonour fees (bank charges) were likely to be penalties at law.

 

Further in an American study* (also referred to in the above Australian study) it had been estimated that the American’s Banks’ cost to process a dishonoured direct debit payment was between US$0.48 and US$0.65 (estimated actual cost therefore being 9 to 11 times less than the banks’ actual charge).

 

*1998 American Study on cheque dishonour fees by the Consumer Federation of America “Bounced Cheques: Billion Dollar profits II”.

No such research is available for the United Kingdom’s Banks. Further, the United Kingdom Banks do not publish any details to support how their bank charges are calculated, nor what their actual costs associated with such breaches are, nor what revenue they derive (after actual costs) from such bank charges.

 

Therefore, in light of the findings reported in the American and Australian studies, and the use of computer automation similarly employed by the banks in the United Kingdom, it is impossible to envisage how a Lloyds can incur costs of £30 - £35 by carrying out a completely automated and computer driven process. This process consists of a computer system ‘bouncing’ the direct debit, and sending out a computer generated letter. Note that the letter received notifying of a charge is identical in every instance, and if multiple breaches occurred on the same day, a separate letter will be sent in each instance.

 

In a telephone conversation with the personal banking department of Lloyds TSB on May 24th 2006, a member of staff actually told me directly that the charges were imposed automatically. A transcript of this conversation is provided. I made a Data Protection Act 1998 right of subject access request to Lloyds for a recording of this conversation. Unfortunately it “could not be located”.

 

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

 

As set out previously, it is submitted that Lloyds TSB’s charges can not be considered to be a service charge. In arguing that they are, they also effectively admit that they make profits from these fees. Lloyds seemingly contend that their charges are not subject to an assessment of fairness. This implies they can set these fees at whatever level they like without regulation. Similarly, as set out above, Lloyds charges cannot be considered to be liquidated damages. They, by Lloyds own admission, are not a pre-estimate of loss incurred as a result of the breach of contract. The charges are punitive, and unduly and substantially enrich Lloyds TSB. As such, they are a contractual penalties and unenforceable at law.

 

I'm adding this in retrospect. In the event the case had gone to court I would probably have amelgamated the two statements to form case notes.

[GaryH]

I suppose I should be pleased. After 6 months of wrangling and argueing, stays, stay removals, refusing conditions, etc, thats it. All over. Just rang Mr Thomas (yes, I actually got to speak to him at last!) to ask him why I have'nt been served with any of Lloyds documents as per the court order, and he told me that a cheque was dispatched yesterday for the total amount of the claim, including interest and the fee. So...

 

I WON!!!! (UNCONDITIONALLY!!!!!!)

Its all a bit of an anti-climax after all that though. I was geared up ready to go to court. Oh well!

 

To every other Lloyds claimant who can't yet see the light at the end of the tunnel - Keep the faith, and whatever you do DON'T GIVE UP, you WILL get there in the end!!!

[mcuth]

Congratulations Gary, a sweet victory indeed - shame they'd just put you to all that trouble of gearing up for court though!

 

Cheers

 

Michael

[elsinore]

CONGRATULATIONS!!

 

Well done Gary.

 

If I hadn't cracked my head open on a concrete staircase and been given an anti-tetanus jab and told not to drink anything for 24 hours, I'd drink your health this evening!

 

I'll just have to do it tomorrow!!

 

Elsinore

[natsmanc]

Nice One Gary, Congratulations!!!

 

Natalie

[leamarie]

CONGRATULATIONS!

Thats absolutely fantastic!!! It just goes to show a bit of hard work and alot of persistance pays off. It's very encouraging to the rest of us.

 

Well done you really deserve it :grin: :grin:

[purplerain]

Congratulations GaryH

Purple X:(

[stadium_arcadium]

CONGRATULATIONS!!!

 

well deserved and excellent news Gary:D It definately gives the rest of us hope, we will prevail!!

 

If I hadn't cracked my head open on a concrete staircase and been given an anti-tetanus jab and told not to drink anything for 24 hours, I'd drink your health this evening!

Ouch!! Hope you recover soon Elsinore!

[midge61]

Congratulations:)

[BARTY]

Congratulations Gary!!!

[ukaviator]

Well done..Great result against those bandits.

 

Uk..

[stanton]

Gary - I am so pleased for you, as one of the most helpful people on the site i could`nt be more pleased for you. Have a drink on me !! Enjoy the victory however hollow it feels.:D:D

 

YEEHAW !!!!!!!

[sagaloo]

Gary - well done.

[GaryH]

Thanks everyone - much appreciated:) .

 

I hope I'm not celebrating to early though. Mr Thomas said the cheque was sent Thursday and I have'nt received it as yet. Mind you, they probably sent it second class, we all know how desperate SC&M are to "keep costs to a minimum".

[myzeejon88]

C O N G R A T U L A T I O N S

well done

[GaryH]

Thank Myra:). Keep going with yours, you WILL get there eventually!

[miss_squeezy77]

That's fantastic news Gary, a well deserved outcome! A big thank you to you for posting all the details on here, I'm waiting for Lloyds' defence to be filed and have a feeling I may well be referring to some of the information you've shared with us all to prepare myself for potential stays etc...

 

Congratulations:)

[jonni2bad]

Well done Gary, looks like you gave them a bashing!

 

Great work on the letter outlining the position regarding their cloaking of penalty charges -I'm likely to use this for some friends I'm helping off site at the moment.

 

CONGRATULATIONS

[freebird]

Oh Gary, well done mate I'm so chuffed for you.

You give everyone on here so much help and advice and it's so good to see you get what is rightfully yours. I think too it's good to see that if you stick it out then you can get the conditions lifted and payment by cheque which is all most of us are asking for.

Congratulations mate.xx

[sweetpants]

Well done Gary.Im so pleased for you

 

SP

[GaryH]

Thanks for all those messages everyone, really appreciate it.

 

Looks like you'll be celebrating soon too Freebird, nearly there! I'll keep an eye on your thread for any more developments.

 

Not to much longer for you either SP - stick with it, your on the last lap.

 

Still no cheque though:rolleyes: . Mr Thomas will be getting another call this morning methinks.

[saj]

CONGRATULATIONS GARY!! Fantastic news. Enjoy it.

Saj x