Adara v's HSBC

[Adara]

Thanks freaky, very true. I'll just sit tight and send some nudges.

[Adara]

Hi

 

Can somebody please take a quick look at my Statement of Evidence as I have personalised it. I have added the first few lines from Nawanda's and changed point 10, 11 & 25.

 

Thanks

 

Adara

 

 

Claim Number: 7XXXXXXX

In Welshpool and Newtown County Court

 

 

 

Between:

Adara

(Claimant)

and

 

HSBC Bank Plc

(Defendant)

 

_________________________ ______

STATEMENT OF EVIDENCE

_______________________

 

 

 

1. The Claimant holds the account xxxxxxxxx with the Defendant which was opened on the 28th xxxxx 1999.

 

2. During the period in which the Account have been operating the Defendant debited numerous charges to the Accounts in respect of purported breaches of contract on the part of the Claimant and also charged interest on the charges once applied.

3. A list of the charges applied is attached to these particulars of claim.

 

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

 

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

 

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

 

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

 

8. I understand the definition of 'breach of contract' to be the failure of a party, without legal excuse, to perform a contractually agreed obligation pursuant to any or all of the terms agreed within that contract. I have an overdraft with the defendant. This overdraft has a contractually agreed limit, which is an express term of the bank account contract between myself and the Defendant. When I exceeded this agreed overdraft limit, therefore breaching an express term of the contract between myself and the Defendant, I was consequentially penalised for each such breach by way of a charge of £1,386.00

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

 

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

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

 

10. 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. Clause 7.9 in the terms and conditions dated January 1999 state;

“As well as charging interest for overdrawn savings accounts and unauthorized overdrafts, we may also charge our unauthorized overdraft fee for any statement period when the account is overdrawn or the overdraft limit is exceeded, whether for one day or more, to cover the cost of the administration involved.”

11. Additionally, clause 7.3 in the terms and conditions of the claimants account contract states;

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

suggesting the charges are due to a breach of contract.

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

 

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

 

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

 

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

 

15. Further, under the UTCCR:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

21. The claimant has requested that the Defendant justify its charges by providing details of the costs incurred as a result of my contractual breaches, including a written letter dated on 26th March 2007. Each time those requests were rebutted or ignored.

 

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

 

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

 

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

 

25. It is submitted that the Defendants charges are applied by an automated and computer driven process. The claimant has never even received a letter setting out these charges; they appear on the monthly statement. It is therefore impossible to envisage how the Defendant can incur costs of £1,386.00 by carrying out this completely automated process.

 

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

 

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

 

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

 

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

 

 

Signed:

Date:

 

 

[Adara]

My court date is 23rd August, do you think the new test case will effect my case in any way? Can they apply for a stay at this point?

[freakyleaky]

It is the generall concensus that any cases at the later stages will probably be unaffected. It is up to the judge to allow a stay so if they do apply for one you will have to see what the judge does. I think that it will reach conclusion though being so far into the process.

Fingers crossed for you!

[Adara]

Bunldes waiting to be posted special delivery today to reach the court and DG by the 9th, 14 days before my case on 23rd.

 

No news from the court or DG so business as usual as far as I am concerned.

 

Please no stay... **cross fingers**

[freakyleaky]

Fingers crossed!

[Adara]

Thanks for your continued support, much appreciated =)

[Adara]

The deadline for me to receive the banks paprework was today and I have had nothing. Just called the court and they too have not received the bundle. I asked if a stay has been applied for and they say no, the hearing is going ahead on the 23rd. Should I give DG a call to see what they are up to?

[jowalshy]

If DG were supposed to submit paperwork to you by today and they have not done so, then I think that you are well within your right to file for judgement for non-compliance with judges orders. There are some templates somewhere on here (and Freaky doesn't beat me to it) I will find them and post them on your thread.

[jowalshy]

It looks that you have to file for judgement by completing form N224 or N227. Wait until tomorrow morning and give the court a ring again and ask whether you can file for judgement, if they say yes, then go ahead and do it straght away.

[freakyleaky]

This is a link for the n227

http://www.hmcourts-service.gov.uk/HMCSCourtFinder/GetForm.do?court_forms_id=469

 

Just let me know if it doesn't work and I will try and find another link for you.

[Adara]

Thanks Freaky and belated birthday wishes!

[freakyleaky]

Cheers!

[Adara]

I phoned the court again and they said I should wait until my hearing and then express my concerns to the Judge. I'm going to give DG a call (if they haven't chnaged their number again) and see what they say.

[jowalshy]

Keep us posted and good luck

[Adara]

I just spoke to Jason and he said they are sending a barrister along to my case to apply for a stay on the day. Can they do this and what do I need to do to be ready for it?

[Adara]

Ok I've calmed myself back down again. I have the stay typed up and printed out, I am going to call the courts again on Monday and tell them what DG are intending to do and hope the Judge is kind... I can't believe they don't even bother to tell us and don't even comply with Judge's directions. They are juist wasting my time and the courts.

 

Going home for extra large glass of wine now! Have a good weekend all =)

[freakyleaky]

Sorry Adara, meant to get back to you earlier but got side tracked with other stuff. I will get back to you over the weekend and post up what you need. I think there will be more info on this coming in all the time.

Enjoy the wine!

Personally I am off for a Rib Eye with all the trimmings with the rest of the Freakys! Well me Mrs F and stroppy 13 year old Daughter, Miss F.

No Doubt a few large blue nuns will wash it all down nicely. Have a good weekend!

[Adara]

Freaky do not apologise, you lot run around helping us all so much!

 

I hope you get a large slice of choccy cake too, much deserved =)

[Adara]

I was on holiday most of last week so need to catch up with what has been happening. I had aletter of DG saying they were applying for a stay. The court sent a letter today saying they are staying all cases but because mine is so close it will go ahead unless I agree to the stay. So, I'm in court on Thursday to battle. I'm gussing DG will still send someone along to try for the stay still. I have the objection of a stay ready to take with me and UI'm also going to battle for a default judgement since DG have still not sent any court bundles to me.

[Castlebest]

Thats exactly right Adara.

 

One thing to ask for if your Judge does grant a stay.

 

All further costs and charges to your account be suspended until the OFT case proves their lawfullness.

 

Its one thing to have your claim stayed until the law behind it is proved but I dont see why HSBC should cary on charging what could be unlawfull charges and interest in the mean time.

 

pete

[Adara]

Please have everything crossed for me, my case is at noon.

[jailbird]

GOOD LUCK Adara. Let us know how you go on.

 

Will be thinking of you.

 

Chris:)

[Adara]

Stayed =(

 

DG didnt turn up. Judge would not award default judgement at this stage of proceedings. He did comment on the hard work which had obviously put into my court bundle and gave it me back so I can add to it and keep it safe until the high court case is concluded. I'm guessing 12 noon on a sunny day is a bad time to go to court, I'm thinking he just wanted to get outside and have lunch!

 

Anyway, thank you all for the help you have provided me. I will make a donation towards the site and hang about to keep up to speed with the test case.

[Castlebest]

Never mind Adara, well done for trying

 

pete