Adara v's HSBC

[Adara]

Hello

 

I sent my 1st letter to HSBC recorded delivery yesterday. Unfortunately I did not find this site until last night. The information here is vast, I'm glad I found you. When they don't respond to my first letter I will send a LBA and give them another 14 days. The SS has been a great help to calculate interest, at the moment my claim is for £1,386 but I can add another £362 of interest later.

 

Any help will be much appreciated and I will keep you informed of how I get on.

 

One question: I already have a 2nd bank account set up with HSBC. Would this do as a parachute or should I look elsewhere. I have a credit card and loan with HSBC - the credit card will be paid off before anything happens and I have never missed a loan payment.

 

26/03/06 - 1st letter sent

16/04/07 - LBA Sent

08/05/07 - MCOL Submitted

08/05/07 - Letter with 2 copies charges sent to court

[Adara]

Thank you Livelylad. I've read the faqs a few times, have an account set up on MCOL already and interest calculated. Hopefully I won't have to ask too many questions, it seems most things are covered here.

[Adara]

Sorry. One more point!

 

My first letter was taken off the BBC site and was more a LBA - giving them 14 days to pay money in full to my account or I would start court action without further notice. Can I just ammed the LBA to say I am giving them an extra 14 days (beacuse I'm a nicer person than you) or just start MCOL? An extra 14 days does not make any difference to me and it will show willingness but I don't want to look like a push over!

[Adara]

LBA to be sent today.

 

1st May noted in diary for MCOL submission.

[Adara]

oops...

[Adara]

OK, MCOL submitted today. A few days late due to illness but can't be helped.

 

Letter with 2 copies of charges and interest ready to be posted to courts.

 

Total Charges £1,386.00

Stat Interest £ 375.13

Court Fee £ 120.00

Total Claim £1,881.13

[Adara]

Thank you =)

 

I'm going to spend the time following some people on here who are ahead of me, I see we are not getting AQ's through MCOL so I need to re-learn the process!

 

So anybody around who is a a few weeks ahead of me and fancies holding my hand?? ;-)

[Adara]

I received the notice of acknowledgment today. The claim was deemed to be served on the 14th May. I guess they have 28 days from that date to file their defence, so 11th June?

 

I will send DG my SOC in the meantime.

[Adara]

Ok, I have sent 2 copies of SOC to Court and 2 to DG. Now the wait! I'm currently pulling the house apart looking for T&C's. I have found the original letter dating back to 2000 agreeing my overdraft with 2 pages of terms and conditions (all my charges are for exceeding my overdraft limit) which I emailed to Alan. Looks like we may have all the old T&C's between us reading other threads =) Also good to see some offers coming through as I got a little worried last week!

[Adara]

DG submitted their defense on Saturday 9th June.

 

So, now I need to wait for transfer papers?

[Adara]

Can someone help please?

 

As I have internet banking I never did a S.A.R - (Subject Access Request). The 1st letter I sent to HSBC was off the BBC web site,

 

"Due to recent media coverage on bank charges I now believe that you, HSBC have been charging me charges that are contrary to the Unfair Terms in Consumer Contracts Regulations 1999. Schedule 2 (e) of the said regulations gives a non-complete list of terms, which may be regarded as unfair, such as a term that requires me as a consumer who fails in his obligation, to pay a disproportionately high sum in compensation.

 

I believe that your charges are disproportionately high and therefore they are contrary to the Unfair Terms in Consumer Regulations 1999. In addition I believe that your charges are a Penalty. Penalty charges are irrecoverable at common law. The precedent for this was Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor co Ltd [1915] AC 79 along with Murray v. Leisure play [2005] EWCA Civ 963. It was held that a contractual party can only recover damages for an actual loss or liquidated losses. It is clear that your charges do not reflect any actual and or real loss.

 

Furthermore if you fail to comply with this letter, I request without further notice a breakdown and proof of all costs involved, in regards to your actual or liquidated losses involved in any breach of contract to which these charges relate with yourselves, and that these charges reflect your true costs in relation to the said charges, and are proportionate to the charges levied on my account as defined in Unfair Terms in Consumer Contracts Regulations 1999. Schedule 2 (e).

 

Therefore I require you to refund me a total of £1,386.00, representing the total, unlawful amount charged during the last 6 years. I attach a copy of my workings. I hereby give you 14 days to refund the charges back on to my account. For the avoidance of doubt, if this is not done within 14 days, I will commence my claim in the courts without further warning. This action will inevitably involve you in additional costs.

I also hereby request a detailed report of which clause in your terms and conditions each charge has been applied against."

 

-----

On the statement of evidence point 8 it mentions the SAR but am I right in thinking this is just for T&C’s? I opened my account in 99 and I have the T&C’s Stax got from D&G which say 7.4 – I MUST not go over any overdraft limit that is agreed with unless you get our agreement first and 7.10 which says the charge is to cover man/admin costs. I think I’ve got it covered but I’m getting a little panicked now.

[Adara]

Thanks for reassurance Jowalshy and Pete! I calmed down and after reading the new Court bundles for Dummies felt more in control. Maybe I shouldn't even look at this until I get home and have glass of wine firmly clasped in hand.

 

So, I have now had the transfer paperwork. I am going to send Lattie's 1st nudge letter to DG.

 

Do I wait now to hear from my local court before doing anything else?

 

How did people get on with the draft orders, I couldn't see much feedback?

[Adara]

Thanks Freaky =) I shall wait on Welshpool courts then.

[Adara]

I got my notice of allocation to the small claims track yesterday. I just gave the court a call to check if I need to pay an allocation fee and the lady said beacuse I was so honest calling to check I would not have to =)

 

I have a court date set for 23rd August. 14 days before thatI need to do the usual filing and serve other party.

 

I guess another letter to DG is in order now!

[Adara]

I have my court bundle ready, anybody think I'd get anywhere quicker by sending it to DG now? That way they know I'm not going to miss the deadline and I mean business?

[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?

[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**

[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?

[Adara]

Thanks Freaky and belated birthday wishes!

[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.

[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 =)