MacBoy Vs. Halifax and Hello To the Group!

[MacBoy]

Thanks Stone - and the very best of luck with your hearing. I'll be rooting for you!

[kennythecelt]

Greetings OLD Friend!!!!

 

Hope all well with you, will be in touch!

[MacBoy]

Hey Kenny me OLD mucker! Great to see you back speak soon

[stonedecroze]

Good to see you back Kenny. You have been sorely missed

[kennythecelt]

Thankyou Stone

 

I am really glad to be back. It was always temporary.

 

Missed everyone and, your risky jokes!!! Brought a big smile to my face on several occassions when I was not here.

 

I hope you are well. Been Fishing!!!!!!

[MacBoy]

Right - I've been busy starting a new job and travelling over the past few weeks and I've put my cases on the back burner. It's time to swing into action. Both credit card and current accounts now need to go to court.

 

I'll be getting off my lazy ass and getting started today.

[**Tilly**]

all systems goooooooooooooo:D boot at the ready to kick lazy ass

[MacBoy]

Easy now Tils I'm drafting my credit card POC at the moment - and what a War & Peace it is too - 14 years spread of charges, Limitation Act AND compound interest!!!!

[**Tilly**]

okay boot lowered:grin: toooo delicate this morning :o:p

 

 

[sallysas]

Wow - 14 years. I wont ask here how come you got statements going that far back. Just going to file for non-compliance next week as they only sent me statements going back to '96. I know where to come for advice when doing my poc. Your thread is about to get even more interesting. (When I have woked up I will sit down with large cuppa and reread this thread.) All the best:p:p:p

[MacBoy]

Thanks, sallysas - just remember if you want to get all your statements:

 

• File at court if necessary
  
• DO file a complaint with the Information Commissioner
  
• Persevere!
  

 

Mac

[MacBoy]

Naughty Tils!!!!

 

And what state did you get into last night?

 

Hope a good time was had by all!

[sallysas]

I had complained to the Information Commissionaire who wrote to Halifax ordering them to send me all data. They did sent me currenta/c data back to 1992 but only '96 with visa. I was assuming that I let the court know on Tuesday that they have failed to comply with commission's order for all data. Am I wrong?

 

Tilly I do hope noone has been leading you astray.......... Keep taking the tablets

[**Tilly**]

Naughty Tils!!!!

 

And what state did you get into last night?

 

Put it this way,Tilly was trashed

 

Hope a good time was had by all!

 

ermmmm,judging by the hangovers, i think they did:D

[MacBoy]

Right

 

After almost a year, I think I'm finally ready

 

Following this post, I'll be posting the POCs for both the Credit Card and the Current Account and I have decided on the following approach:

 

• I shall be claiming in the alternative between contractual and statutory interest
  

 

• I shall be claiming in the alternative in terms of the different sections of the Limitation Act.
  

 

I'd appreciate it if you could have a look over them to see if I've made any howlers

 

Plan is to submit to both cases to Lambeth County Court on Wednesday. If allowed to claim compound, the two claims total over £10,000 (around £6000 if not).

 

Your feedback as always very much appreciated!

Mac

[MacBoy]

Current Account POC

 

Claim No.

 

IN THE LAMBETH COUNTY COURT

 

BETWEEN

 

XXXXX XXXXX

 

Claimant

 

and

 

HALIFAX (BANK OF SCOTLAND PLC)

 

Defendant

PARTICULARS OF CLAIM

 

Summary

1. The Claimant had between NN/NN/19NN and NN/NN/20NN a bank account (Account number NNNNNNNN, branch sort code NN-NN-NN), with the Defendant (‘The Account’); governed by the Defendant's Personal Banking Terms and Conditions ('The Contract').

 

2. The Claimant admits to breaches of the terms of the contract that require the Claimant to stay within any agreed overdraft limit.

 

3. The breaches have led to the Defendant debiting the account with numerous default charges, and interest on the default charges, between NN/NN/19NN and NN/NN/20NN. A detailed calculation of the charges and interest on the charges is annexed to the Particulars of Claim at Schedule 2.

 

4. The Defendant has declined to answer the Claimant's written requests for information about any manual intervention necessitated by, and/or any administrative costs incurred as a result of, the said breaches. The Claimant avers that the Defendant's default charges are not intended to represent any alleged actual loss, but instead unjustly enrich the Defendant, which exercises the contractual term in respect of such charges with a view to profit.

 

The Charges

5. The Claimant will rely on a report from the Competition Commission entitled 'Northern Irish Personal Banking', published on 20/10/2006, as evidence that the Defendant is aware that the income derived from its default charges is calculated to generate material profits and is not merely a means of recouping losses incurred in relation to account defaults.

 

6. The claimant will further rely on the statement of the Office of Fair Trading (OFT) concerning default charges in credit agreements, published on 5/4/2006, to demonstrate that:

 

a). The OFT’s recommendations regarding standard default terms in credit card contracts have wider implications, as regards bank current account agreements.

b). In a consumer contract, where the parties are not of equal bargaining power, any estimate that included costs which could not legitimately be claimed as damages from an individual consumer in a case brought at common law, and which made a material difference to the overall charge, is likely to constitute a penalty at law.

 

c). The interest ordinarily charged on an overdrawn balance of account would of itself be deemed sufficient compensation to the defendant in a claim for damages arising from account breaches of the said nature.

 

Penalty

7. Accordingly the Defendant's default charges are:

 

a. A penalty and therefore unenforceable, as they are an unreasonable pre-estimate of the probable loss to the Defendant and therefore contrary to common law - Dunlop Pneumatic Tyre Co. Ltd v New Garage and Motor Co Ltd [1915] AC 79.

 

b. Invalid under s.4 Unfair Contract Terms Act 1977 and therefore not binding on the Claimant.

 

c. In the event that the court finds that the charges are not a penalty, they are unreasonable within the meaning of s.15 Supply of Goods and Services Act 1982.

 

8. The Claimant is seeking the return of charges totalling £NNNN.NN and interest applied on the charges totalling £NNN.NN.

 

Limitation

9. The Claimant seeks permission to proceed with the claim under s.32 (1)(b) Limitation Act 1980 on the ground that the Claimant could not reasonably have discovered the Defendant' deliberate concealment of the facts relevant to the Claimant's right of action before the report of the OFT was published on 5/4/2006.

 

The facts relevant to the Claimant's right of action are that the Defendant is unjustly enriched by exercising the contractual terms in respect of default charges with a view to profit. If the Defendant has elected to present its charges as if they were a legitimate loss or cost, whilst it is in actual fact profiting in a material sense from the charges, the Defendant can be seen to have been operating without accountability to its customers; and to have consciously concealed the facts. The Defendant is clearly in a privileged position to have a direct means of withdrawing monies from the Claimant's bank account. The Claimant is entitled to know whether the charges paid represent a justifiable business cost, or whether they are in fact a penalty, and to expect that the Defendant will always conduct itself with integrity.

 

10. Alternatively, the Claimant seeks permission to proceed with the claim under s.32 (1)© Limitation Act 1980, on the ground that the payments were conceded on the mistaken presumption that the said charges and interest thereon did not amount to penalties - Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 - and that the Claimant would not reasonably have discovered the said mistakes before the report of the OFT was published on 5/4/2006.

 

Interest

11. The Claimant claims compound interest on the amounts claimed - using the rate and method specified in the said contract, and applied by the Defendant to monies it is owed. A schedule of the interest calculated is annexed to the Particulars of Claim at Schedule 2.

 

12. The Claimant is aware and respects that the court has no statutory power or discretion under the County Courts Act 1982 to award compound interest. Further, the Claimant seeks to distinguish the basis of the claim for compound interest in the present case from the recent High Court judgment in the case of Halliday v Halifax Bank of Scotland [2007] A11 ER (D) 66 where it was found that, on the assumption that the bank charges which formed the principle claim were found to be unenforceable penalties, the Claimant was not entitled to be awarded the banks rate of interest as provided for in the account contract by virtue of an implied mutual or reciprocal term, and that no such term could be implied.

 

13. The claimants case for compound interest is not reliant on any implied contractual term, and indeed it is the Claimants assessment that notwithstanding the aforementioned judgment, such a claim based upon the allegation of the existence of an implied reciprocal term of contract would always have been likely to fail in any event, by virtue of the five factors necessary to imply a term as set down by His Honour Judge Thayne Forbes QC in Davy Offshore v Emerald Field Contracting (1991) 55 BLR 1 and the “Business efficacy test” from The Moorcock (1889) 14 PD 64, C.) It is therefore submitted that the case of Halliday v Halifax Bank of Scotland holds no relevance whatsoever to the issues of the interest claim in the present case.

 

14. It is the claimant’s case, which is more fully stated below, that the Defendant would be unjustly enriched if the Claimant’s entitlement were limited to the recovery of the bank charges and simple interest at the statutory rate. The Defendant has been in wrongful possession of funds over a number of years and as a lending institution would have earned profit by way of interest by re-lending those funds at its commercial compounded rates. Conversely, the Claimant has been denied use of the funds in the defendant’s wrongful possession. The Claimant therefore seeks a full remedy, which allows complete restitution of the wrongful and unjust gains of the Defendant.

 

15. The Claimant submits that the issues of restitution raised in this case bring up serious points of law. It is respectfully requested therefore that the court considers them on their merits with proper examination of the issues and evidence, without prejudice to the current situation and publicity in respect of the hundreds of customers litigating en-masse on the issue of credit card and bank charges.

 

16. It is the claimant’s contention that a constructive trust arises upon payment of the charges, which form the principal claim, and that the Defendant’s unconscionable behaviour in profiting unlawfully and without consent or authorisation breached the duty of trust owed to the claimant. As compound interest is available in equity in situations where a trustee has made wrongful profit from its position, the claimant relied on invoking the equitable jurisdiction in order that the court may be open to grant a complete remedy, which provides full restitution of the unjust enrichment enjoyed by the defendant. The Claimant’s submissions were in mind of the established position that the court had no power at common law or in statute to award compound interest under English law. This position prevailed despite recommendations from the Law Commission calling for legislature to allow compound interest, as well as criticism from several eminent judges and Law Lords that the situation was outdated and out of touch with modern reality, and had lead to many unjust outcomes.

 

 

17. However, since the Defendant submitted a statement in compliance with the Civil Procedure Rules, a recent House of Lords judgment in the case of Sempra Metals v Inland Revenue Anor [2007] UKHL 34 has been published, which establishes a new ground for the awarding of compound interest at common law. The House held by a majority that compound interest is now recoverable at common law in restitutionary claims for money paid under a mistake. Lord Hope of Craighead stated in his majority judgment; “The time has come to recognise that the court has jurisdiction at common law to award compound interest where the claimant seeks a restitutionary remedy for the time value of money paid under a mistake.”

 

18. It is therefore no longer necessary for the claimant to invoke the equitable jurisdiction by demonstrating the existence and breach of a trust or fiduciary relationship between it and the Halifax in order that the court may be open to grant a restitutionary remedy of compound interest. This new authority provides that in cases such as the present compound interest is available at common law as a matter of right rather than being a discretionary equitable principle.

 

19. The Claimant has already demonstrated that the charges levied to its credit card account were wrongfully debited by the defendant, contrary to common law and statute. The claimant further submits that such charges were therefore paid under a mistake – a mistake of fact.

 

20. The Claimant accepted the charges in the belief that they reflected the true cost of administering the contractual breaches. The charges were and are presented as being a legitimate charge to compensate loss. The claimant has approached the Defendant several times to complain about the charges and each time the Halifax were adamant that such charges were fair and reasonable and imposed to compensate the loss caused to the Defendant by the claimants own actions in the “mismanagement” of the Credit Card account. The claimant has always believed and the Defendant has always asserted, that the charges were imposed as a result of manually operated and labour-intensive procedures. Furthermore, the claimant was referred to a clause of the account agreement, which states that the Halifax may take money out of the account to cover any losses or expense incurred by it in relation to the customers account.

 

Unjust Enrichment

21. The Claimant submits that the Defendant would be unjustly enriched if the Claimant’s entitlement were limited to the statutory rate of simple interest. The Defendant, a powerful financial institution, has had use of the sums wrongfully and unlawfully gained by virtue of charges levied to the Claimants account, over a period of up to 5 years. The absolute fundamental core of the business of the Defendant is to acquire funds and profit from those funds in the form of interest by re-lending at higher commercially compounded interest rates. Therefore, it is the claimants submission that the sums wrongfully and unlawfully acquired from the claimant by way of penalty charges would over the considerable time they have been in the Defendants wrongful possession, have earned considerable profit by virtue of the commercial rates of compounded interest charged by the Defendant on its lending. Therefore, for complete restitution to occur the Claimant submits that an award of compound interest is necessary to provide full restitution of the ‘time value’ of the money and thus a just result. I submit that it is unconscionable that the Defendant may be allowed to profit in any way from unlawful, wrongful and unauthorised use of the Claimants funds.

 

22. The Defendant bank continues to levy penalty charges to its customer’s accounts despite increasing public awareness that they are challengeable as disproportionate contractual penalties and unenforceable at law. Such charges account for a highly significant proportion of the banks revenue stream and annual turnover (approx 12% - see paragraph 24 above). The defendant continues to levy its charges on a huge scale despite its knowledge that the charges it imposes are unlawful, and despite its realisation that it may one day have to pay each such charge back. When proceedings are brought by the banks customers to recover the charges, in some cases years later, if the Defendant is only ever forced to repay the sum wrongfully taken plus simple interest at the statutory rate, the Defendant is in the position whereby it is has still made significant unlawful profit by virtue of the sums earned in compound interest whilst the charges were in its possession and reinvested at its commercial compounded rates. Even if the Defendant repaid every charge to every customer its profit of compound interest earned by reinvesting the sums when in its wrongful possession would be highly significant. The Defendant could therefore continue to consciously and willfully put wrongfully-debited charges to use to generate further unlawful profit with no form of redress. The Claimant submits that this situation is inherently wrong and contrary to the law of restitution and principles of unjust enrichment.

 

23. In relation to the matters set out above, it is submitted that by virtue of the development of the law recently established in Sempra v Inland Revenue, it is open to the court to award compound interest in a case such as the present. Before this new ground was established, the awarding of compound interest was limited to cases involving fraud or where a breach of fiduciary or other trust duty was established. In the case of Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, Lord Goff of Chieveley and Lord Woolf delivered powerful judgments in favour of extending the jurisdiction in order that full restitution could be provided even in cases where no breach of trust could be found. Lord Goff;

 

“I wish however to record that Hobhouse J. was in no doubt that, if he had jurisdiction to do so, he should award compound interest in this case. He said [1994] 4 All E.R. 890, 955: “Simple interest does not reflect the actual value of money. Anyone who lends or borrows money on a commercial basis receives or pays interest periodically and if that interest is not paid it is compounded. I see no reason why I should deny the plaintiff a complete remedy or allow the defendant arbitrarily to retain part of the enrichment which it has unjustly enjoyed”.

 

With that reasoning the Claimant is in complete agreement. The Council has had the use of the bank's money over a period of years. It is plain on the evidence that, if it had not had the use of the bank's money, it would (if free to do so) have borrowed the money elsewhere at compound interest. It has to that extent profited from the use of the bank's money. Moreover, if the bank had not advanced the money to the council, it would itself have employed the money on similar terms in its business. Full restitution requires that, on the facts of the present case, compound interest should be awarded, having regard to the commercial realities of the case. As the judge said, there is no reason why the bank should be denied a complete remedy.”

 

24. The passage above represented the minority view. The majority held that compound interest could not be awarded in the absence of a trust or fiduciary duty, even if it was just to do so, as it would be to usurp the function of Parliament. Lord Browne-Wilkinson commented that legislature had twice made provision for interest, but never compound interest. However, the minority approach of Lords Goff and Woolf has prevailed in the recent House of Lords case of Sempra v Inland Revenue. Lord Mance’s statement in relation to the minority approach in the Westdeutsche case; “In my view, the House can and should now adopt this approach. I would in these circumstances respond to Sempra's invitation to revisit the Westdeutsche case, by adopting the minority approach in preference to that of the majority and also by determining that in appropriate circumstances equity can go further and provide relief in respect of any actual interest benefit received from any principal sum paid by mistake, even though such principal may be recouped before action brought.”

 

25. This new ground in the law of restitution establishing the availability of compound interest at common law in cases such as the present was confirmed and stated authoritatively by Lord Nicholls in his leading Judgment: “There can only be one answer on this important question of law. Nobody has suggested a good reason why, in a case like the present, an award of compound interest should be denied to a claimant. An award of compound interest is necessary to achieve full restitution and, hence, a just result. I would hold that, in the exercise of its common law restitutionary jurisdiction, the court has power to make such an award.”

 

26. It is thus submitted that it is now wholly within the courts jurisdiction to make a restitutionary award of compound interest in this case. There is no conceivable reason why, upon the facts of the present case, that the defendant should be allowed to retain part of the unjust enrichment which it has undoubtedly enjoyed, or that the Claimant should be denied a complete and just remedy which recognizes the reality and true extent of the unjust enrichment enjoyed by the Defendant and allows complete restitution of the wrongful gains made.

 

27. The defendant may assert that the specific amount of profit derived from the use of the funds cannot be accurately measured and thus the level of unjust enrichment cannot be proved. However, it is submitted that proof of the exact use of the money or an account of profits is not required in order for a restitutionary award of compound interest to be made. This position was stated in the Sempra case by Lord Hope; “Money has a value, and in my opinion the measure of the right to subtraction of the enrichment that resulted from its receipt does not depend on proof by Sempra (claimant) of what the Revenue (defendant) actually did with it. It was the opportunity to turn the money to account during the period of the enrichment that passed from Sempra to the Revenue. This is the benefit which the defendant is presumed to have derived from money in its hands.” Thus only the opportunity to turn the funds to profit is required to be established rather than the proof of precisely what profits were actually made. In the present case the as the defendant is a lending institution, it is inconceivable that it could have put the wrongfully debited sums to any other use but to earn further profits. The defendant has undoubtedly derived significant benefit from the money in its hands.

 

28. In the case of Sempra v Inland Revenue it was finally recognised by the English legal system that compound interest is a necessary part of modern financial reality. Lord Nicholls in the leading majority Judgment stated; “We live in a world where interest payments for the use of money are calculated on a compound basis. Money is not available commercially on simple interest terms. This is the daily experience of everyone, whether borrowing money on overdrafts or credit cards or mortgages or shopping around for the best rates when depositing savings with banks or building societies. If the law is to achieve a fair and just outcome when assessing financial loss it must recognise and give effect to this reality.”

 

29. The claimant therefore submits that for a fair and just result, compound interest must be awarded in this case. Not only has the defendant derived benefit from the money in its hands, the claimant has also been denied use of the money. This means the claimant was forced to replace those funds by way of an overdraft on a separate account, and loans at a higher rate. The reality is that any funds borrowed commercially carry compound rates of interest. There are no financial products or credit facilities which carry only simple interest. Furthermore the claimant whilst wrongfully denied benefit of the funds was denied the opportunity to invest it. Such investment would have invariably earned compounded rates of interest.

 

30. The Claimant seeks an award that can, insofar as it is possible, put both parties in the same position as before the wrongfully debited charges were imposed. Restitution requires that the time value of the money is also considered when the Claimant seeks a remedy for money paid under a mistake. Upon the facts of this case, simple interest at the statutory rate patently does not achieve restitution nor a just result. It would leave the defendant, a powerful financial institution, unjustly enriched at the expense of the Claimant, a self-litigating consumer. The Claimant urges the court therefore to exercise its power at common law to grant a restitutionary award of compound interest.

 

And the Claimant claims

a). The return of £NNNN.NN taken by the Defendant in charges and £NNN.NNin interest applied on the charges between NN/NN/19NNand NN/NN/20NN.

 

b). Court fees.

 

c). Compound interest at the contractual rate (the current authorised overdraft rate) of 15.9% EAR from NN/NN/19NN to NN/NN/20NN of £NNNN.NN, and also interest compounded at the same percentage rate (equivalent to a daily rate of £1.23), up to the date of Judgment or earlier payment.

 

d). In the alternative to c., interest under s.69 County Courts Act 1984 at the rate of 8% a year, from NN/NN/19NN to NN/NN/20NN of £NNNN.NN and also interest at the same rate up to the date of Judgment or earlier payment at a daily rate of 66p.

[MacBoy]

Credit Card POC

 

Claim No.

 

IN THE LAMBETH COUNTY COURT

 

BETWEEN

 

XXXXX XXXXX

 

Claimant

 

and

 

HALIFAX (BANK OF SCOTLAND PLC)

 

Defendant

 

 

PARTICULARS OF CLAIM

Summary

1. The Claimant entered into an agreement (“The Agreement”) with the Defendant on or around NN/NN/19NN, whereby the Defendant was to advance credit facilities to the Claimant under a running credit account, Account no NNNNNNNNNNNNNNNN ("The Account").

 

2. The Agreement essentially consisted of the Defendant providing the Claimant with a credit card (“The Card”), which would allow the Claimant to make purchases and receive cash advances on credit. In return the Defendant was entitled to charge interest at the published rate.

 

3. The Agreement was a Regulated Agreement for the purposes of the Consumer Credit Act 1974.

 

4. At all material times the contract was subject to the Defendant’s standard terms and conditions, which could be varied from time to time.

 

5. Throughout the course of the Agreement, the Defendant has added numerous default charges to the Account for the Claimant’s failure to make the minimum payment on the due date and/or for exceeding the credit limit and/or if a payment is returned. (Full particulars are set out in Schedule 2).

 

6. The default charges were applied in accordance with the standard terms of The Agreement which were:

 

a). A penalty payable on breach of contract and thus unenforceable: and

 

b). Invalid under s.4 Unfair Contract Terms Act 1977 and therefore not binding on the Claimant.

 

7. The Claimant is accordingly entitled to repayment of the sums wrongly added to the Account.

 

 

The Charges

8. The standard Terms of the Agreement in substance provided as follows:

 

(a) The Defendant would provide the Claimant with the Card. The Claimant was entitled to use the Card to make purchases and receive cash advances up to a credit limit (“the Limit”) set by the Defendant. The Defendant could unilaterally change the Limit by giving the Claimant notice in writing.

 

(b) The Defendant was entitled to charge interest on the purchases and cash advances at the published rate.

 

© The Claimant was to pay the minimum payment of 5% of the amount owed or £5 (whichever was the greater), by the due date as notified in the monthly statements.

 

(d) In addition, the Defendant was entitled to charge default fees (“the Charges”) where the Claimant exceeded the Limit, did not pay on the due date or had a payment returned. The Charges are currently £12 for each transgression. Prior to 2007, the Charges ranged between £10 and £25.

 

Penalty

9. The Charges were payable on breach of contract by the Claimant.

 

10. The amount of the Charges exceeded any genuine pre-estimate of the damage that would have been suffered by the Bank in relation to the Claimant’s transgressions.

 

11. In the premises the Charges were punitive and a penalty and thus unenforceable at common law.

 

The Regulations

12. At all material times the Claimant was a consumer within the Regulations.

 

13. At all material times the terms of the Agreement providing for the Charges were unfair within regulation 5 of the Regulations, in that, contrary to the requirement of good faith, they caused a significant imbalance in the parties' rights and obligations to the detriment of the Claimant.

 

14. Without prejudice to the burden of proof, the Claimant will refer to the following matters in support of the contention that the terms are to be assessed as unfair as at the time of the conclusion of the Agreement, and of each revision to the Standard Terms.

 

(1) The terms relating to Charges were standard terms; they would not be individually negotiated.

 

(2) The Charges were a penalty for breach of contract.

 

(3) The Charges exceeded the costs that the Bank could have expected to incur in dealing with the exceeding of the credit limit, late payment or returned payment.

 

(4) Accordingly, the Charges were a disproportionate charge incurred by the Claimant for their failure to meet their contractual obligation and thus within the ambit of Schedule 2 (1) (e) of the Regulations and indicative of an unfair term.

 

(5) As the Defendant knew, the Charges were of subsidiary importance to the customer in the context of the Agreement as a whole and would not influence the making of the Agreement.

 

(6) As the Defendant knew, the Claimant had no means of assessing the fairness of the Charges.

 

(7) In the premises, the effect of the Charges would be prejudicial to the customer who incurred them, and cause an imbalance in the relations of the parties to the Agreement by subordinating the customer’s interests to those of the Defendant, in a way that was inequitable.

 

15. Without prejudice to the burden of proof, the Claimant will contend that the terms imposing the Charges are not core terms under Regulation 6 and relies on the following matters:

 

(1) The assessment of fairness does not relate to terms that define the main or core subject matter of the Agreement.

 

(2) The assessment of fairness does not relate to the adequacy of the price or remuneration as against the goods or services supplied in exchange (in other words, whether or not the relevant services were value for money).

 

(3) The Charges are correctly described as default charges by the Defendant in the key information that is provided to new customers.

 

16. By reason of the said matters the terms were not binding under regulation 8 of the Regulations.

 

17. The Defendant wrongly applied Charges to the Account, totaling some £NNN.NN between NN/0NN19NN and NN/NN/20NN. Particulars appear in Schedule 2.

 

18. On NN/NN/20NN the Claimant demanded repayment of the sums wrongly applied.

 

19. The Defendant has not repaid them or any of them.

 

Limitation

20. The Claimant seeks permission to proceed with the claim under s.32 (1)(b) Limitation Act 1980, on the ground that the Claimant could not reasonably have discovered the Defendant's deliberate concealment of the facts relevant to the Claimant's right of action before the Office of Fair Trading (OFT report concerning default charges in credit card contracts, published on 5/4/2006.

 

The facts relevant to the Claimant's right of action are that the Defendant is unjustly enriched by exercising the contractual terms in respect of default charges with a view to profit. If the Defendant has elected to present its charges as if they were a legitimate loss or cost, whilst it is in actual fact profiting in a material sense from the charges, the Defendant can be seen to have been operating without accountability to its customers; and to have consciously concealed the facts. The Defendant is clearly in a privileged position to have a direct means of withdrawing monies from the Claimant's bank account. The Claimant is entitled to know whether the charges paid represent a justifiable business cost, or whether they are in fact a penalty, and to expect that the Defendant will always conduct itself with integrity.

 

21. Alternatively, the Claimant seeks permission to proceed with the claim under s.32 (1)© Limitation Act 1980 on the ground that the payments were conceded on the mistaken presumption that the said charges and interest thereon did not amount to penalties - Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 - and that the Claimant would not reasonably have discovered the said mistakes before the report of the OFT was published on 5/4/2006.

 

 

 

Interest

22. The Claimant claims compound interest on the amounts claimed - using the rate and method specified in the said contract, and applied by the Defendant to monies it is owed. A schedule of the interest calculated is annexed to the Particulars of Claim at Appendix A.

 

23. The Claimant is aware and respects that the court has no statutory power or discretion under the County Courts Act 1982 to award compound interest. Further, the Claimant seeks to distinguish the basis of the claim for compound interest in the present case from the recent High Court judgment in the case of Halliday v Halifax Bank of Scotland [2007] A11 ER (D) 66, where it was found that, on the assumption that the bank charges which formed the principle claim were found to be unenforceable penalties, the Claimant was not entitled to be awarded the banks rate of interest as provided for in the account contract by virtue of an implied mutual or reciprocal term, and that no such term could be implied.

 

24. The claimants case for compound interest is not reliant on any implied contractual term, and indeed it is the Claimants assessment that notwithstanding the aforementioned judgment, such a claim based upon the allegation of the existence of an implied reciprocal term of contract would always have been likely to fail in any event, by virtue of the five factors necessary to imply a term as set down by His Honour Judge Thayne Forbes QC in Davy Offshore v Emerald Field Contracting (1991) 55 BLR 1, and the “Business efficacy test” from The Moorcock (1889) 14 PD 64, C). It is therefore submitted that the case of Halliday v Halifax Bank of Scotland holds no relevance whatsoever to the issues of the interest claim in the present case.

 

25. It is the claimant’s case, which is more fully stated below, that the Defendant would be unjustly enriched if the Claimant’s entitlement were limited to the recovery of the bank charges and simple interest at the statutory rate. The Defendant has been in wrongful possession of funds over a number of years and as a lending institution would have earned profit by way of interest by re-lending those funds at its commercial compounded rates. Conversely, the Claimant has been denied use of the funds in the defendant’s wrongful possession. The Claimant therefore seeks a full remedy, which allows complete restitution of the wrongful and unjust gains of the Defendant.

 

26. The Claimant submits that the issues of restitution raised in this case bring up serious points of law. It is respectfully requested therefore that the court considers them on their merits with proper examination of the issues and evidence, without prejudice to the current situation and publicity in respect of the hundreds of customers litigating en-masse on the issue of credit card and bank charges.

 

27. It is the claimant’s contention that a constructive trust arises upon payment of the charges, which form the principal claim, and that the Defendant’s unconscionable behaviour in profiting unlawfully and without consent or authorisation breached the duty of trust owed to the claimant. As compound interest is available in equity in situations where a trustee has made wrongful profit from its position, the claimant relied on invoking the equitable jurisdiction in order that the court may be open to grant a complete remedy, which provides full restitution of the unjust enrichment enjoyed by the defendant. The Claimant’s submissions were in mind of the established position that the court had no power at common law or in statute to award compound interest under English law. This position prevailed despite recommendations from the Law Commission calling for legislature to allow compound interest, as well as criticism from several eminent judges and Law Lords that the situation was outdated and out of touch with modern reality, and had lead to many unjust outcomes.

 

 

 

28. However, since the Defendant submitted a statement in compliance with the Civil Procedure Rules, a recent House of Lords judgment in the case of Sempra Metals v Inland Revenue Anor. [2007] UKHL 34 has been published, which establishes a new ground for the awarding of compound interest at common law. The House held by a majority that compound interest is now recoverable at common law in restitutionary claims for money paid under a mistake. Lord Hope of Craighead stated in his majority judgment; “The time has come to recognise that the court has jurisdiction at common law to award compound interest where the claimant seeks a restitutionary remedy for the time value of money paid under a mistake.”

 

29. It is therefore no longer necessary for the claimant to invoke the equitable jurisdiction by demonstrating the existence and breach of a trust or fiduciary relationship between it and the Halifax in order that the court may be open to grant a restitutionary remedy of compound interest. This new authority provides that in cases such as the present compound interest is available at common law as a matter of right rather than being a discretionary equitable principle.

 

30. The Claimant has already demonstrated that the charges levied to its credit card account were wrongfully debited by the defendant contrary to common law and statute. The claimant further submits that such charges were therefore paid under a mistake – a mistake of fact.

 

31. The Claimant accepted the charges in the belief that they reflected the true cost of administering the contractual breaches. The charges were and are presented as being a legitimate charge to compensate loss. The claimant has approached the Defendant several times to complain about the charges and each time the Halifax were adamant that such charges were fair and reasonable and imposed to compensate the loss caused to the Defendant by the claimants own actions in the “mismanagement” of the Credit Card account. The claimant has always believed and the Defendant has always asserted, that the charges were imposed as a result of manually operated and labour-intensive procedures. Furthermore, the claimant was referred to a clause of the account agreement, which states that the Halifax may take money out of the account to cover any losses or expense incurred by it in relation to the customers account.

 

Unjust Enrichment

32. The Claimant submits that the Defendant would be unjustly enriched if the Claimant’s entitlement was limited to the statutory rate of simple interest. The Defendant, a powerful financial institution, has had use of the sums wrongfully and unlawfully gained by virtue of charges levied to the Claimants account, over a period of up to 5 years. The absolute fundamental core of the business of the Defendant is to acquire funds and profit from those funds in the form of interest by re-lending at higher commercially compounded interest rates. Therefore, it is the claimants submission that the sums wrongfully and unlawfully acquired from the claimant by way of penalty charges would over the considerable time they have been in the Defendants wrongful possession, have earned considerable profit by virtue of the commercial rates of compounded interest charged by the Defendant on its lending. Therefore, for complete restitution to occur the Claimant submits that an award of compound interest is necessary to provide full restitution of the ‘time value’ of the money and thus a just result. I submit that it is unconscionable that the Defendant may be allowed to profit in any way from unlawful, wrongful and unauthorised use of the Claimants funds.

 

33. The Defendant bank continues to levy penalty charges to its customer’s accounts despite increasing public awareness that they are challengeable as disproportionate contractual penalties and unenforceable at law. Such charges account for a highly significant proportion of the banks revenue stream and annual turnover (approx 12% - see paragraph 24 above). The defendant continues to levy its charges on a huge scale despite its knowledge that the charges it imposes are unlawful, and despite its realisation that it may one day have to pay each such charge back. When proceedings are brought by the banks customers to recover the charges, in some cases years later, if the Defendant is only ever forced to repay the sum wrongfully taken plus simple interest at the statutory rate, the Defendant is in the position whereby it is has still made significant unlawful profit by virtue of the sums earned in compound interest whilst the charges were in its possession and reinvested at its commercial compounded rates. Even if the Defendant repaid every charge to every customer its profit of compound interest earned by reinvesting the sums when in its wrongful possession would be highly significant. The Defendant could therefore continue to consciously and willfully put wrongfully-debited charges to use to generate further unlawful profit with no form of redress. The Claimant submits that this situation is inherently wrong and contrary to the law of restitution and principles of unjust enrichment.

 

34. In relation to the matters set out above, it is submitted that by virtue of the development of the law recently established in Sempra v Inland Revenue, it is open to the court to award compound interest in a case such as the present. Before this new ground was established, the awarding of compound interest was limited to cases involving fraud or where a breach of fiduciary or other trust duty was established. In the case of Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, Lord Goff of Chieveley and Lord Woolf delivered powerful judgments in favour of extending the jurisdiction in order that full restitution could be provided even in cases where no breach of trust could be found. Lord Goff;

 

“I wish however to record that Hobhouse J. was in no doubt that, if he had jurisdiction to do so, he should award compound interest in this case. He said [1994] 4 All E.R. 890, 955: “Simple interest does not reflect the actual value of money. Anyone who lends or borrows money on a commercial basis receives or pays interest periodically and if that interest is not paid it is compounded. I see no reason why I should deny the plaintiff a complete remedy or allow the defendant arbitrarily to retain part of the enrichment which it has unjustly enjoyed”.

 

With that reasoning the Claimant is in complete agreement. The Council has had the use of the bank's money over a period of years. It is plain on the evidence that, if it had not had the use of the bank's money, it would (if free to do so) have borrowed the money elsewhere at compound interest. It has to that extent profited from the use of the bank's money. Moreover, if the bank had not advanced the money to the council, it would itself have employed the money on similar terms in its business. Full restitution requires that, on the facts of the present case, compound interest should be awarded, having regard to the commercial realities of the case. As the judge said, there is no reason why the bank should be denied a complete remedy.”

 

35. The passage above represented the minority view. The majority held that compound interest could not be awarded in the absence of a trust or fiduciary duty, even if it was just to do so, as it would be to usurp the function of Parliament. Lord Browne-Wilkinson commented that legislature had twice made provision for interest, but never compound interest. However, the minority approach of Lords Goff and Woolf has prevailed in the recent House of Lords case of Sempra v Inland Revenue. Lord Mance’s statement in relation to the minority approach in the Westdeutsche case; “In my view, the House can and should now adopt this approach. I would in these circumstances respond to Sempra's invitation to revisit the Westdeutsche case, by adopting the minority approach in preference to that of the majority and also by determining that in appropriate circumstances equity can go further and provide relief in respect of any actual interest benefit received from any principal sum paid by mistake, even though such principal may be recouped before action brought.”

 

36. This new ground in the law of restitution establishing the availability of compound interest at common law in cases such as the present was confirmed and stated authoritatively by Lord Nicholls in his leading Judgment: “There can only be one answer on this important question of law. Nobody has suggested a good reason why, in a case like the present, an award of compound interest should be denied to a claimant. An award of compound interest is necessary to achieve full restitution and, hence, a just result. I would hold that, in the exercise of its common law restitutionary jurisdiction, the court has power to make such an award.”

 

37. It is thus submitted that it is now wholly within the courts jurisdiction to make a restitutionary award of compound interest in this case. There is no conceivable reason why, upon the facts of the present case, that the defendant should be allowed to retain part of the unjust enrichment which it has undoubtedly enjoyed, or that the Claimant should be denied a complete and just remedy which recognizes the reality and true extent of the unjust enrichment enjoyed by the Defendant and allows complete restitution of the wrongful gains made.

 

38. The defendant may assert that the specific amount of profit derived from the use of the funds cannot be accurately measured and thus the level of unjust enrichment cannot be proved. However, it is submitted that proof of the exact use of the money or an account of profits is not required in order for a restitutionary award of compound interest to be made. This position was stated in the Sempra case by Lord Hope; “Money has a value, and in my opinion the measure of the right to subtraction of the enrichment that resulted from its receipt does not depend on proof by Sempra (claimant) of what the Revenue (defendant) actually did with it. It was the opportunity to turn the money to account during the period of the enrichment that passed from Sempra to the Revenue. This is the benefit which the defendant is presumed to have derived from money in its hands.” Thus only the opportunity to turn the funds to profit is required to be established rather than the proof of precisely what profits were actually made. In the present case the as the defendant is a lending institution, it is inconceivable that it could have put the wrongfully debited sums to any other use but to earn further profits. The defendant has undoubtedly derived significant benefit from the money in its hands.

 

39. In the case of Sempra v Inland Revenue it was finally recognised by the English legal system that compound interest is a necessary part of modern financial reality. Lord Nicholls in the leading majority Judgment stated; “We live in a world where interest payments for the use of money are calculated on a compound basis. Money is not available commercially on simple interest terms. This is the daily experience of everyone, whether borrowing money on overdrafts or credit cards or mortgages or shopping around for the best rates when depositing savings with banks or building societies. If the law is to achieve a fair and just outcome when assessing financial loss it must recognise and give effect to this reality.”

 

40. The claimant therefore submits that for a fair and just result, compound interest must be awarded in this case. Not only has the defendant derived benefit from the money in its hands, the claimant has also been denied use of the money. This means the claimant was forced to replace those funds by way of an overdraft on a separate account, and loans at a higher rate. The reality is that any funds borrowed commercially carry compound rates of interest. There are no financial products or credit facilities which carry only simple interest. Furthermore the claimant whilst wrongfully denied benefit of the funds was denied the opportunity to invest it. Such investment would have invariably earned compounded rates of interest.

 

41. The Claimant seeks an award that can, insofar as it is possible, put both parties in the same position as before the wrongfully debited charges were imposed. Restitution requires that the time value of the money is also considered when the Claimant seeks a remedy for money paid under a mistake. Upon the facts of this case, simple interest at the statutory rate patently does not achieve restitution nor a just result. It would leave the defendant, a powerful financial institution, unjustly enriched at the expense of the Claimant, a self-litigating consumer. The Claimant urges the court therefore to exercise its power at common law to grant a restitutionary award of compound interest.

 

 

 

 

 

 

And the Claimant claims

a). The return of £NNN.NN taken by the Defendant in charges and interest applied on the charges between NN/NN/19NN and NN/NN/20NN.

 

b). Court fees: £75.00

 

c). Compound interest at the contractual rate (the current purchase rate) of 20.60% EAR from NN/NN/19NN to NN/NN/20NN of £NNN.NN; and also interest compounded at the same percentage rate up to the date of Judgment or earlier payment.

 

d). In the alternative to c), interest under s.69 County Courts Act 1984 at the rate of 8% a year, from 2NN/NN/19NN to NN/NN/20NN of £NNN.NN and also interest at the same rate up to the date of Judgment or earlier payment at 10.6 pence per day.

[**Tilly**]

A liccle bump :grin:

[stonedecroze]

CURRENT ACCOUNT PARA:27

 

hands.” Thus only the opportunity to turn the funds to profit is required to be established rather than the proof of precisely what profits were actually made. In the present case the as the defendant is a lending institution, it is inconceivable that it could have put the wrongfully debited sums to any other use but to earn further profits. The defendant has undoubtedly derived significant benefit from the money in its hands.

 

Nit picking Mac, is there a word missing here or an extra "the"? Otherwise absolutely superb, well done and very good luck, stone

[**Tilly**]

 

Nit picking Mac,

ooooh yuk, there is special lotions for that complaint stone

 

absolutely superb, well done and very good luck, stone

 

See Good luck Mac, go file your War and peace :grin:

[MacBoy]

Spotted Stone - duly removed. Many thanks!

[MacBoy]

Update

 

Finally got around to it! HFX Credit Card Claim filed at Lambeth C.C. this morning. Current Account case to follow shortly

[kennythecelt]

Brilliant- glad to here it OLD friend!!:o

 

Welcome back, nice to meet up with you.

[MacBoy]

And you Kenny Thanks for the, er, handkerchief contribution

[kennythecelt]

No probs!!

 

Busier round here these days with the new forums and increased debt!

 

Good laugh with April Fool. Kept me amused anyway!:o