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key arguments for and against compound contractural threads


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Ok read a few of the threads on contractural compound interest including the horrid 88 page post and have now posted here what i believe to be the key issuses and elements in regards this subject

 

I have tried to keep the information in the context it was meant and include points of contention in regards this subject

 

this post is by no means definitive and I will keep updating as i find information i think relevant

 

If anyone thinks they have something relevant to the subject feel free to add or pm me a link to the thread and i will add

  • Haha 1

MY CASE

 

Newbody Vs Abbey

 

NB: Please read the FAQs & step-by-step instructions thoroughly & completely before commencing any action

 

the following is a link to a web archive of abbey websites over the time click on month under year to access Abbey's site for that time period to get what the terms and conditions were for when you opened your account Internet Archive Wayback Machine hope it helps or here for where i have started to pull them out to http://www.consumeractiongroup.co.uk/forum/abbey-bank/91707-archives-abbeys-web-pages.html

 

Advice & opinions given by me are my views or how i would respond, and are not endorsed by the Consumer Action Group & are offered informally, without prejudice & without liability. Your decisions & actions are your own - if in any doubt, seek the opinion of a qualified professional

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Information taken from site in regards contractural interest at the Banks rates

 

Information from following threads

Why is no one claiming the contractual rate of interest???

Mad Nick Vs Abbey

RedDeath Vs LloydsTsb

contractual-interest-judge-doesn't seem to think so

new-way-looking-interest

Bong Vs HSBC

mcuth v RBoS

 

Sorry about not responding but I've been away.

 

What is the contractual rate?

 

It is whatever rate your own bank has decided that they will charge you if you borrow their money

 

Authorised or unauthorised rate?

Either. Both are the contractual rate. Apply the lower one if you want to be charitable. Apply the higher one if you are looking for vigorous justice.

 

Which will the court order?

Who knows. Argue each one in the alternative. Once again, there is a fair bet that the bank will back down as they will not want to start revealing their charging regime. - But be aware of the risks. They may not do.

 

Should you claim contractual rate from the beginning?

Yes, you must do. It would not be at all proper to give prelims and LBAs for one amount and then to sue for a different amount. If you have already started, then bgin again.

 

The contractrual rate of interest has nothing to do with the interest they have already taken from you

The contractual rate is what you are charging your bank for having borrowed your money.

So if you have paid £100 in charges + £29 interest, the bank has effectively borrowed £129 from you.

You will then claim the return of your £129 plus, say, 16.5% (or whatever their interest rate is) on the whole sum that they have borrowed from you. Because their charges are unlawful, and you have not authorised their seizure of your money, you may be justified in charging interest at the unauthorised rate - say, 29%.

 

Can you claim the contractual rate plus s.69 interest?

No

 

Supposing that the court refuses the grant me the contractual rate of interest?

This is a possibility. Protect against it by claiming the s.69 rate in the alternative

 

 

Will claiming the contractual rate make the bank go into court?

Probably not - but it is your risk. You should be ready and willing to go to court from the moment you send your preliminary letter. otherwise, don't start the process

 

 

Not sure I understand this debate.

 

Contractual interest does not count towards the value of the claim for track allocation purposes. If the charges were say £4,000 and the contractual interest were £3,000, the case would not be allocated to another track on the basis of its total value. The charges themselves would have to exceed £5,000 before this would be a real risk.

 

Contractial interest does count towards the calculation of the court fee so in the above example the claim for these purposes would be £7,000.

 

Bear in mind that none of this is set in tablets of stone and the judge could decide to do something outside the norm.

 

 

This is contrary to the information I have had from the County Court where I submitted my claim against abbey. The CC told me that for both determination of the fee and allocation to track contractual interest was included.

 

The logic is that the contractual interest is a part of your claim and in theory is simply a matter for judgement of whether your claim is right or not.

 

Sec 69 interest on the other hand is not part of your claim, you are asking the court to determine and award interest.

 

Its clear for the purposes of valuing the claim that interest is included (see CPR 46.3.a) where the courts is determining the allocation of costs.

 

I have struggled to find a different view in the CPR where it talks about allocation or the value of a claim.

 

This issue has come up a number of times, if anyone has a definitive source then please ost it to put us all out of our misery.

 

Glenn

 

 

The Patricia Pearl book clearly states that interest is not included when considering the value of a claim for track allocation purposes. This site's initial view was that interest should be included but PP is a district judge with years of experience. Her views on this subject were expressed very explicitly in the book. That's good enough for me.

 

If you have a moment it would be helpful if you could speak to the court again and ask them for the basis on which they asserted that interest was included.

 

I have read through Pearl a number of times and hadn't noticed previously the reference to CRP 26, 26.8.2(b) does seem to exclude interest as she and you say. Its probably because i hadn't been using CPR for reference until recently.

 

All i can tell you is that my claim is well within the SCC track until you add interest, I rang the court and the listings clerk spoke to a judge on my behalf.

 

The advice was that it was fast track based on the amount of interest apparently from the judge.

 

Now it could be that this was only the judges view in this case because of the amount of interest.

 

But when i submit the next claim to court I will quote the relevant CPR and ask if my understanding is correct or not.

 

As i understand it, the CPR are primarily guidance for the courts, this allows them to move a claim from SCC up, or from multi down if they feel its appropriate.

 

Anyway its good to at least have finally found a reference in CPR which supports that some have said.

 

So for future reference its CPR 26.8.2(a) which suggests that interest is disregarded when allocation to track is determined.

 

Thanks for making me look again.

 

Glenn

 

Forgive the slight deviation, but still on the subject of claiming contractual interest, the main justification I've seen is "mutuality and reciprocity" but, try as I might, I can't find an legal mumbo-jumbo to back it up.

 

What do you think about playing the "fairness and balance" argument in relation to contractual interest. Is it, in fact, the same thing as "mutuality and reciprocity". If it is, then F&B has the advantage of some legal mumbo-jumbo to back it up (which I found when I was background reading) :

 

The legal basis of "fairness and balance" appears to be UTCCR Schedule 2, para 1(b) : inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations, including the option of offsetting a debt owed to the seller or supplier against any claim which the consumer may have against him;

 

and the associated OFT Guidance document (OFT 143 @ http://www.oft.gov.uk/NR/rdonlyres/7...0/0/oft143.pdf

which says at Annex B : “Terms Excluding Or Limiting Liability, paras 1a and 1b of Schedule 2 : Fairness and balance require that both parties to a contract are equally bound by it, and equally liable to pay compensation for failure to abide by it. A term which could be used – even if that is not the intention – to prevent or hinder customers from seeking redress when the supplier is in default tends to upset the balance of the contract to the consumer’s disadvantage.”

 

Is one interpretation that we paid "compensation" for breaching an overdraft limit in the form of contractual interest, so they should pay similarly for breaching the contract by imposing an unlawful charge.

 

Interested to hear any comments (including "get off my thread" or "Mad Nick, you're talking cobblers" - I wouldn't be the least bit offended by either.

 

Regards Mad Nick

 

PS Happy Christmas everyone.

 

If you're missing it then i think a lot of us are. Perhaps someone who knows about such things could explain or point us in the right direction.

 

Originally Posted by Mad Nick

 

 

I want to nail Abbey for contractual interest and I've seen "mutuality & reciprocity" endlessly, but never the actual legal reference and/or the legal mumbo-jumbo to quote at the Bank or in Court. That makes at least two of us then!Does anyone have the low-down ? They're slippery sods, so forewarned is forearmed !If they do they haven't posted it.

 

 

 

I've looked. All I could find was "fairness and balance". The legal basis of this appears to be UTCCR Schedule 2, para 1(b) : inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations, including the option of offsetting a debt owed to the seller or supplier against any claim which the consumer may have against him;I don't believe this has anything to do with r&m. The bank doesn't have to under perform or withold your rights for there to exist the principle of r&m IMHO. It could be argued that even if the bank charges were lawful but that they had been incorrectly applied i.e. a mistake on the banks part, that r&m would allow you to ask for contractual interest until such time as the debt was repaid, i think.

 

 

 

and the associated OFT Guidance document (OFT 143 @

http://www.oft.gov.uk/NR/rdonlyres/7...0/0/oft143.pdf

 

 

which says at Annex B : “Terms Excluding Or Limiting Liability, paras 1a and 1b of Schedule 2 : Fairness and balance require that both parties to a contract are equally bound by it, and equally liable to pay compensation for failure to abide by it. A term which could be used – even if that is not the intention – to prevent or hinder customers from seeking redress when the supplier is in default tends to upset the balance of the contract to the consumer’s disadvantage.”this seems more likely to be the route to argue but it would be better if there was some case law and i have searched and like you can find nothing.

 

 

 

Any observations ? Is "mutuality and reciprocity" an urban myth ? Should it be "Fairness and balance" (which sounds like the same principle to me) ? Or am I missing something ??

 

 

 

If you're missing it then i think a lot of us are. Perhaps someone who knows about such things could explain or point us in the right direction.

 

 

 

Glenn

 

 

 

PS good question

 

 

 

 

 

 

 

 

Quote:

 

 

Originally Posted by Mad Nick

 

 

Forgive the slight deviation, but still on the subject of claiming contractual interest, the main justification I've seen is "mutuality and reciprocity" but, try as I might, I can't find an legal mumbo-jumbo to back it up.

 

 

 

What do you think about playing the "fairness and balance" argument in relation to contractual interest. Is it, in fact, the same thing as "mutuality and reciprocity". If it is, then F&B has the advantage of some legal mumbo-jumbo to back it up (which I found when I was background reading) :

 

 

 

The legal basis of "fairness and balance" appears to be UTCCR Schedule 2, para 1(b) : inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations, including the option of offsetting a debt owed to the seller or supplier against any claim which the consumer may have against him;

 

 

 

and the associated OFT Guidance document (OFT 143 @

http://www.oft.gov.uk/NR/rdonlyres/7...0/0/oft143.pdf

 

 

which says at Annex B : “Terms Excluding Or Limiting Liability, paras 1a and 1b of Schedule 2 : Fairness and balance require that both parties to a contract are equally bound by it, and equally liable to pay compensation for failure to abide by it. A term which could be used – even if that is not the intention – to prevent or hinder customers from seeking redress when the supplier is in default tends to upset the balance of the contract to the consumer’s disadvantage.”

 

 

 

Is one interpretation that we paid "compensation" for breaching an overdraft limit in the form of contractual interest, so they should pay similarly for breaching the contract by imposing an unlawful charge.

 

 

 

Interested to hear any comments (including "get off my thread" or "Mad Nick, you're talking cobblers" - I wouldn't be the least bit offended by either.

 

 

 

Regards Mad Nick

 

 

 

PS Happy Christmas everyone.

 

 

 

 

 

I've been searching for some legal precedent for this mutuality & reciprocity argument and my googling brought up a paper written by unlockingthelaw.co.uk about contract law and a statement in it that the effect of the UTCCR (which implemented EU Directive 93/13) is that "the party dealing with the consumer cannot insert advantageous terms into contracts where there is no comparable term in favour of the consumer".

 

I then searched this thread to see if this had been debated in here before which brought up the above post made on 20 Dec which doesn't look like it got any discussion. It seems to me that the UTCCR and the OFT's interpretation of the UTCCR "fairness and balance require that both parties to a contract are equally bound by it and equally liable to pay compensation for failure to abide by it" (as quoted by Nick) could provide our answer to the bank's challenge of the contractual interest claim at the unauthorised rate.

 

Simply that the contract is currently weighted in favour of the bank (and against the consumer) by entitling the bank to charge interest at x% on unauthorised borrowings, and that until the bank addresses the fact that its charges were and are unenforceable, and/or unreasonable at law, you fully expect the court to uphold the OFT's standards and interpretation of the UTCCR and endorse your claim to interest at the rate specified in the contract, in the interests of the legal requirement of fairness and balance.

 

I think that this, used in addition to the unjust enrichment argument, gives further weight to our claims for contractual interest.

 

 

Milktrayman

 

Read your link.

Although I too strongly feel we are justified in claiming the Unauthorised O/D rate, please forgive me if I'm wrong, but, I think your own reasoning seems to based mainly upon "consequential loss"?

This is liable to be contested more vigourousley by a defence solicitor, or dismissed by a judge. These actions are civil actions and as such do not generally cover consequential losses or compensation as that is a whole different action. As I say, please forgive me if I've misunderstood your reasoning.

 

 

Millymollymoo,

 

Like many others who have posted views on this very thread, I myself prefer;

 

1/ "Mutuality and Reciprocity" pure and simple. ie. They took your money, and they took it without your authority. In a reverse scenario, they charged you Unathorised Overdraft rates when you did this, so you do likewise.

 

2/ "Unjust enrichment". Statutory law is very clear, in that contracts cannot contain clauses that enable a party to profit from the others breach. Your claim for interest above statutory is to ensure that they have still not profited as (especially given the nature of their business) they would almost certainly have profited more than the 8% statutory would impose upon them. So you charge contractual. ie. it is not about recouping your losses, it is about preventing their gains.

 

Using arguement 2, how you determine what rate will prevent their gains (auth. or unauth.) is debatable and so upto yourself. Given the nature of their business, their use of the money for so long, their investment power, their use of such funds to finance free banking and attract more customers and lenders etc. I think personally Unauthorised is justified if using arguement 2.

 

Regardles of reasoning, remember though that any award for other than Statutory is subject to a judges approval, so you should also put in the alternates (including statutory), and the judge will work down until they decide which rate is most appropriate.

They will not work upwards, so given that possibility, I see this as further reason to put in the Unauthorised rate, and your reasonings, as your first option.

 

You are not legally entitled to this money, this is to misunderstand the issues at stake and the legal basis for a claim for unlawful charges.

 

You are claiming that you have been subjected to an unfair penalty for a breach of contract, your breach in fact, which resulted in the bank levying a charge. It has been ruled that charges that exceed what is reasonable are penalties.

 

Lord Dunedin laid down rules which are still applied today in these types of cases:

i) The sum is a penalty if it is greater than the greatest loss which could be suffered from the breach – in other words, if it is "extravagant and unconscionable".

ii) If it agreed that a larger sum shall be payable in default of paying a smaller sum, this is a penalty. Ford Motor Co. v. Armstrong (1915)

To attempt to claim more is to levy a penalty yourself, you can only claim for material loss, for what you have actually lost.

You are entitled to claim interest at any level you wish, but the claim must have some basis in logic. In order to claim interest at 29.9% you must be able to show that you have lost 29.9% return on the money.

 

This is why the statutory rate is set at 8%, which in fact is generous given the savings rates on offer today. To claim more is possible, but do not be surprised if your claim is reduced to the statutory 8%.

 

The basic principle of charging contractual interest, is not that you are giving yourself the equal status of a financial institution, it is because the law does not permit them to have profited (I think the actual term is "unduly enriched" themselves) as a result of thier unlawful actions.

Thus, as financial experts, they would have taken your initial charges, and loaned them out again & again & again. They have the expertise to make great deals of money from every penny they get.

As such, simply charging them the statutory rate of interest would still have allowed them to have unduly enriched themselves, which should not be allowed.

That is the principle of charging Contractual interest. It is not by way of repayment of the interest you would have otherwise earned, although the secondary effect of this does go some way to compensate you for your losses.

 

 

Quote:

 

 

Originally Posted by miss_CORErupted

viewpost.gif

 

 

I'm getting a migraine just reading this thread

 

 

 

so i don't think i will be claiming

 

 

also it feels a bit greedy to me, i don't what other ppl think about that

 

 

 

 

 

 

 

 

 

I understand where you're coming from, no i haven't got a migraine, the greed however, there are a couple of points that you should understand.

You have a contract in law that is supposed to be bilateral ie. its fair to both parties and doesn't favour one over the other.

If it isn't bilateral then it means its unfair and when its unfair the law favours the interpretation in the consumers favour.

So bearing these issues in mind it seems reasonable that you can benefit from the contract in the same way that the bank does, and that seems reasonable and fair to me.

If the sums of money that arise out of applying the contractual rates, its not greed, its a simple consequence of the terms that both parties were working to.

Finally something else is that most of us have had the bank impose these terms on us and have been charged the contractual rate. The big difference is that the sums of money we have paid have by and large been relatively small and have been paid out over a number of months and years.

If you had the time and inclination to input all of your account transactional history into a spreadsheet you could work out exactly how much difference there would be if the bank hadn't imposed these unlawful charges and punitive interest rates.

I suspect that many of us would be surprised at how much we have actually paid and that our claims are typically significantly less than those figures.

Vamps might have a view on this issue since she developed the spreadsheets many people use, or maybe mindzai because he did something similar.

In essence i don't agree it is greedy, i do think its a consequence of the banks greed, but because of the way contract law works its the only option you have to get a fair redress since i don't believe that Sec 69 interest reflects a fair return under these circumstances.

JMHO

Glenn

MY CASE

 

Newbody Vs Abbey

 

NB: Please read the FAQs & step-by-step instructions thoroughly & completely before commencing any action

 

the following is a link to a web archive of abbey websites over the time click on month under year to access Abbey's site for that time period to get what the terms and conditions were for when you opened your account Internet Archive Wayback Machine hope it helps or here for where i have started to pull them out to http://www.consumeractiongroup.co.uk/forum/abbey-bank/91707-archives-abbeys-web-pages.html

 

Advice & opinions given by me are my views or how i would respond, and are not endorsed by the Consumer Action Group & are offered informally, without prejudice & without liability. Your decisions & actions are your own - if in any doubt, seek the opinion of a qualified professional

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Paintball,

 

If you don't want to claim contractual interest that is fine of course, but despite all the waffle, it really isn't that hard of a concept when you get right down to it.

 

When we use the Bank's money without authorisation (using a debit card without funds available, paying a direct debit without funds available etc), the bank charge us a penalty. The also then charge interest at their unauthorised rate (usually 25-30%) on the amount of their money that has been used.

 

So for example if you have a £100 direct debit come out of your account, but you only have £50, you will use £50 of the bank's money without authorisation so you pay interest on that £50 at their unauthorised rate until you have repaid it.

 

The ability for them to charge you this rate is written into the contract you have with them.

 

English contract law states that a contract between two parties must be fair to each party. The argument for charging contractual interest relies on this fact. If they have a clause in the contract that they can charge you 30% if you take their money without authorisation, it is only fair if you can also apply the same rate when they take your money without authorisation.

 

The phrase you will often see associated with this idea is "mutuality and reciprocity". There is another phrase, "fairness and balance" which essentially means the same thing.

 

The Unfair Terms in consumer Contract Regulations are intended to regulate the fairness of contracts, and so unsurprisingly they have something to say about "fairness and balance":

 

Quote:

 

 

Originally Posted by UTCCR Schedule 2 Para 1(b)

 

 

...inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations, including the option of offsetting a debt owed to the seller or supplier against any claim which the consumer may have against him...

 

 

 

This is not the easiest thing to interpret and understand, but fortunately the Office of Fair Trading publishes guidance for these regulations. Their guidance document clarifies the above regulation:

 

Quote:

 

 

Originally Posted by OFT Guidance Doc 143

 

 

Terms Excluding Or Limiting Liability, paras 1a and 1b of Schedule 2 : Fairness and balance require that both parties to a contract are equally bound by it, and equally liable to pay compensation for failure to abide by it. A term which could be used – even if that is not the intention – to prevent or hinder customers from seeking redress when the supplier is in default tends to upset the balance of the contract to the consumer’s disadvantage.

 

 

So this is the basis for claiming contractual interest. It really boils down to the fact that the clause in the contract that allows them to charge us contractual interest has to work both ways.

As for the calculation of contractual interest, that is definitely a more complicated matter! However there are spreadsheets to do this for you. I can't comment on the Google sheets because I haven't properly used them, but they seem to work for a lot of people. The spreadsheet in my sig is designed to be as simple to use as possible, but if you need help I will be happy to provide it, you just have to PM me.

There are a few concepts and processes that are common to each of the spreadsheets.

When you will them out you include the date a charge was taken from you, the description of the charge and the amount of the charge. For my sheet, and I assume the Google sheets, this is all the information you need to include aside from the interest rate (which is entered on the 'notes tab' in the case of my sheet). From there the spreadsheet will work out how long you have been without your money, apply the contractual rate and tell you how much you are owed in interest.

From a user's perspective, this is no different to using the 8% sheet. The only differences occur behind the scenes in the workings of the spreadsheet, which you don't need to worry about.

You then may want to work out how much interest you have paid to the bank that you would not have had to pay had they not charged you. You are also entitled to claim contractual interest on this amount (it all boils down to the same thing - they have taken your money in the form of charges and interest on those charges, so you can claim contractual interest on it). Again this is also the situation with simple 8% interest, with the only differences being behind the scenes. You just need to enter the interest amount, the date it was taken and your account balance at the time.

My contractual interest sheet, and I would bet Vamp's ones too, are exactly the same to use as the 8% statutory ones with the only exception being that you have to put in your bank's unauthorised rate into a box. Although the calculation methods used are very different, the end result is the same - you put in your info, and get out a list of how much you are owed.

Again if those general guidelines are of no use I am always happy to help with looking at people's sheets, and if you used the Google sheets I'm sure bill-k or vampiress will be happy help too.

At the end of the day the choice to claim contractual interest or not is yours, but please don't make the choice because you don't understand how contractual works. It's seems a very difficult concept with various mysterious formulas and random jargon, but it is understandable by anyone, you don't need an accounting degree!

If you need any further clarification don't hesitate to ask. Understand your options fully and then make a decision.

 

 

Originally Posted by The_Phoenix

viewpost.gif

 

 

There is surely a difference between the legality of penalty charges and the legality of contractual interest, and I do believe that too much emphasis is being placed on claiming for contractual:

 

 

 

That the charges are penalties, and not reflective of the true cost to the bank to rectify, is not in question. Therefore any gain to the bank by the application of such penalties is fully recoverable.

 

 

I agree. The penalties should reflect the true cost to the bank, as you say. However, the legality of contractual interest is in the required reciprocity of any fair contract between the parties to it.

 

 

That the bank charges interest on the penalty charges, and any alleged overdraft, is also questionable: without the application of unlawful penalty charges over the years it is debatable whether or not any accounts would actually be in a state of genuine overdraft, and therefore liable for overdraft interest. Again, I would contest that "overdraft interest," or at least that part that applies to penalties, is fully recoverable.

 

 

I have no problem with reclaiming the interest actually charged on the portion of our balance that was made up of these penalties. It is the interest charged on the remainder of the balance which I cannot see the unlawfulness of.

 

 

However, and this is where I believe a contractual claim would hit obstacles: banks in general, are governed by rules relating to their consumer credit licences, whereas we, as customers, are not. They are licensed and authorised to lend money, and to charge a "reasonable" return on these loans; we are not.

 

 

I believe this is their problem - not ours. They drew up the contracts - not us. If there are good reasons for their being able to charge more than the other parties to the contract, then it should be in the contract. If they claim the extra responsibility of licensed lenders, then they should demonstrate that by drawing up contracts to reflect this. They failed to do this, so they failed themselves in that respect and demonstrated that they have not earned the right to a "slanted" contract, IMO !!!

 

 

I believe that if a contractual claim were to actually be heard, then the claimant would lose the contractual part of the argument. It is for this reason that the County Courts Act 1984 allows a statutory rate of interest for claimants, by way of compensation, for not being in the "authorised" position to charge a "reasonable" return.

 

 

I believe that the statutory rate is for claims where there is no pre-determined interest rate, as in a delayed refund of money from a trader for faulty goods, etc. Where there is a contract that specifies an interest rate, then that is the rate to employ, I reckon.

 

 

That said, if the bank settles on a contractual claim, whether willingly or in error, then only a fool would turn down such a settlement...

 

 

 

 

 

 

 

 

Indeedy - ignorance can be such bliss !!!

 

.

 

Quote:

 

 

Originally Posted by The_Phoenix

viewpost.gif

 

 

I won't get into a really heavy discussion here, but the following should be borne in mind before pressing ahead for contractual:

 

 

 

Bank account Ts&Cs will usualy have words to the effect that: "...if any term/amendment is detrimental to the customer, then we will give 28 days notice before such terms are applied..." - the customer chooses whether or not to accept the terms of the contract, unbalanced or not.

 

 

 

Customers choose to bank with certain banks, and it is incumbent on them to read through the Ts&Cs - again, should the contract appear unfair or unbalanced, the customer has a right not to accept.

 

 

Indeed so, but the customer does not appear to have the right to negotiate the terms being dictated by the bank. Sure enough, they can say "If you don't like it, don't sign it" but when every contract with every bank is essentially the same, this isn't really a free choice, is it ?

 

 

Banks offer banking facilities to customers, by virtue of their consumer credit licence, not the other way around. They are bound by certain, and strict, regulations if they are to continue with a licence.

 

 

Yes, and as such they should be competent enough to draw up contracts that reflect this, but haven't. If they then agree to that contract, then they must abide by it. Their fault - not ours.

 

 

That interest rates (contractual or otherwise) are widely publicised (usually) and that by continuing to operate your account you are deemed to have accepted the rates - "acceptance by conduct"

 

 

Agreed. Works both ways, too !! Reciprocity, etc.

 

 

I am not saying that people should not claim contractual - indeed I have done (unsuccessfully so far) and continue to do so. What I am saying is that if the bank puts forward an argument against the contractual element of your claim, then it is likely that you will lose the argument on that element of your claim.

 

 

But what argument ?

 

 

That the bank can charge contractual interest, on lawfully applied overdrafts, is established, but it is not established that the customer can do likewise. There is no implied term that suggests the customer has this right (at least not in the HSBC Ts&Cs) However, where the bank has acted with impropriety, then the customer has every right, in law, to recover their money...

 

 

I agree, too, and cannot see how we can lawfully reclaim interest charged on our overdrafts, other than that charged on penalties, etc.

 

 

One last point - the nature of the small claims process is about recovery of funds/goods that have been taken unlawfully - it is not about generating a profit, which would undoubtedly be an argument the bank would use in court against people claiming contractual...

 

 

 

 

 

 

 

 

 

Surely, it is reclaiming a loss. It is the cost we would reasonably have expected to incur in having to borrow that money from other similar sources, IMO.

 

Phoenix/Bill

You are forgetting something about the interest, the banks have unlawfully used your money since they took it and have benefited unlawfully, ie they have unlawfully enriched themselves (Edit : thats enough 'unlawfullys' in one sentence for anyone i reckon :-) )

When the contract was entered into the consumer didn't envisage the bank borrowing money from them, or at least without permission by way of unlawful charges and punitive interest rates.

The bank has enriched itself and had the use of the money they unlawfully took.

The customer is entitled to the benefits of the use of that money which the bank has enjoyed. The quesiotns should not be whether the excess overdrafdt is the right rate, but rather how much the bank had made on that money?

I think if you have a read through at least the DMG vs IR, which follows on from Klienwort Vs Benson you will get the drift.

incidentally entering a clause in a contract between a business and a consumer doesn't render that term lawful or enforceable if it is deemed unfair.

 

Repasted!!!! This may help concerning Mutuality and Reciprication as it deems this to form part of a valid contract;

Definition of a Contract

A contract is an agreement between two or more competent persons, having for its purpose a legal object, where each of the persons acts in a certain manner or promises to act or to refrain from acting in such a manner. There are four component parts to a valid contract:

  1. Agreement, offer, and acceptance.
  2. Mutuality, consideration.
  3. Competent parties.
  4. Legal object (or purpose).

1. Agreement, offer, and acceptance. One of the first steps in the formation of any contract lies in arriving at an agreement between the contracting parties. This agreement is spoken of as "a meeting of the minds," but it's better known as offer and acceptance. No offer becomes effective until it has been communicated to the offeree. The motives that induce parties to make a contract are not material as long as they intend to make a binding agreement.

A person accepting an offer is charged with knowledge of the terms of the offer, and cannot set up his ignorance of them if reasonable means were adopted by the offeror to bring them to his attention. The offer must be 1) communicated, and 2) it must be definite as to its terms.

2. Mutuality and consideration. Mutuality means reciprocation, or an acting by each of two parties. Consideration means something of value received or given at the request of the promisor in reliance upon and in return for his promise. It should not be confused with motive. Consideration is defined in various ways, and knowing the various ways in which it is defined will help in obtaining a better understanding of the term.

Consideration is the price for which the promisor bargains in exchange for his promise. Whenever a right has been surrendered or a promise to surrender a right has been made at the request of another, the promise then becomes enforceable. Consideration is the inducement to a contract. It's an act, or the forbearance of an act, which is offered by one party and accepted by the other as an inducement to that other's act or promise

Contracts are classified according to the following characteristics:

  1. Formal or simple.
  2. Executed or executory.
  3. Express or implied (in law or in fact).
  4. Bilateral or unilateral.
  5. Valid, voidable, or unenforceable

Express or Implied: A contract may result from an agreement in which all of the detailed terms are clearly set forth either in writing or orally at the time of making, in which event, it is said to be an express contract. The Pure Contract Trust is an express contract. On the other hand, a contract may be entirely implied from facts such as acts of the parties, the acts being such that a contract may be inferred from them. In other instances, the contract may be, and often is, partially expressed and partially implied.

Also found these definitions and are taken from a legal dictionary.So there is a definition to M & P in a legal sense.

1] Mutuality. Reciprocation; interchange. An acting by each of two parties; an acting in return. "Mutuality of contract" means that obligation rests on each party to do or permit doing of something in consideration of other's act or promise; neither party being bound unless both are bound. Called also, mutuality of obligation. (Ibid.)

Contract. An agreement between two or more persons which creates an obligation to do or not to do a particular thing. As defined in Restatement, Second, Contracts § 3: "A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty." A legal relationship consisting of the rights and duties of the contracting parties; a promise or set of promises constituting an agreement between parties that gives each a legal duty to the other and also the right to seek a remedy for the breach of those duties. Its essentials are competent parties, subject matter, a legal consideration, mutality[1] of agreement, and mutality of obligation.

Under U.C.C., term refers to total legal obligation which results from parties' agreement as affected by the Code. Section 1-201(11). As to sales, "contract" and "agreement" are limited to those relating to present or future sales of goods at a future time. U.C.C. § 2-106(1).

The writing which contains the agreement of parties, with the terms and conditions, and which serves as a proof of the obligation.

Contracts may be classified on several different methods, according to the element in them which is brought into prominence... Black's Legal Dictionary, Abridged Sixth Edition, page 224

 

 

Quote:

 

 

Originally Posted by TideTurner

viewpost.gif

 

 

Unjust enrichment is a

legal term in English law and in several other jurisdictions, denoting a particular type of causative event in which one party is unjustly enriched at the expense of another, and an obligation to make restitution arises, regardless of liability for wrongdoing.

 

 

When a

court orders restitution it orders the defendant to give up his gains to the claimant Therefore, to give up his gains, this must include any interest paid, and where you have paid unlawful charges in the past, your money has been invested by them and therefore represents a gain.

 

 

Agreed but i think we need some cases or relevant acts in which to argue the rate we are entitled to as it is not proveable where our money was invested or re-lent so on these grounds i would think the courts would deem sec69 8% as just unless we followed on from this with disgorgement of the gains

 

Disgorgement is the forced giving up of profits obtained by illegal or unethical acts. A court may order wrongdoers to pay back illegal profits, with interest, to prevent unjust enrichment. Disgorgement is a remedy and not a punishment. However, disgorgement payments are not only demanded of those who violate securities regulations. Anyone profiting from illegal or unethical activities may be civilly required to disgorge their profits.

 

Hi, Newbody

 

"Agreed but i think we need some cases or relevant acts in which to argue the rate we are entitled to as it is not proveable where our money was invested or re-lent so on these grounds i would think the courts would deem sec69 8% as just unless we followed on from this with disgorgement of the gains"

 

I don't know about you, Newbody but my bank charges me 17.65% interest while my overdraft is within its agreed limit and 29.65% when it isn't. In that case, any court that deems 8% as 'just' must have a very different definition of equity, fair dealing and the other elements that go towards making up the justice we seek.

 

Why is it that there is such energetic back-pedalling from contractual interest, all of a sudden? I'm seeing retreat from this area as if claimants have been suffering a series of defeats on the matter. Please point me in the direction of anyone who has made a sensible claim based on contractual interest and has lost.

 

I have seen people talking about contractual interest and unauthorised interest in addition and I firmly believe they will get beaten, very soundly. But contractual alone? Authorised plus 8%? Please tell me - who has lost?

 

The courts will, if they find in favour of the claimant (us) seek to restore the situation as it was before the unlawful event. The unlawful even means charges; if the defendant has levied interest on those charges, that interest should be returned as well, on two grounds: to restore the status quo ante (the situation as it was before the unlawful event) and to prevent unjust enrichment. The claimant can claim denial of benefit as well. The court should, if interest has been charged, restore to the claimant that interest. And, to prevent unjust enrichment and to compensate for denial of benefit, something on top. At that point, yes, the 8% comes in. Alternatively, argue unauthorised on the lot.

 

I can see no reason for creeping along, begging for the charges plus 8% and tugging our forelocks in grateful thanks when the bank tosses that particular scrap our way. They owe us back our money - all of it - and some recognition of denial of benefit.

 

JMHO

 

I agree natwesttookmymoney that we should not be grateful for the peanuts that fall from the banks tables and that they should be made to pay back as much as we can get from them As in my case with abbey they have took 28.7% off me when i went outside the O/d every month when the charges hit and think it was 16.7% while i was within the O/D (lived in it each month)

That is why i am trying to claim back Bank Charges and Compounded interest at the unauthorised rate on the said charges (my belief of their unjust enrichment/ Profits they should disgorge)

what i was trying to get at unsuccessfully in my previous post is that some form of case law relevent to our situation where we cannot prove what the banks have done with our money would be of benifit

 

Did they take my charges and invest on stock market and loose

Did they invest on stockmarket and win big

did they relend to someone else who had gone overdrawn unauthorised

did they lend as a morgagte

did they lend as a loan

was it used to cover their overheads wages etc

 

We cannot prove and nor could the bank prove Specificly where one persons money particulary went to state to what extent they were enriched by their act to the individual

 

Yes we can show they took our money unjustly thus commiting a wrong/tort/unlawful act/breach of contract and as such they are not entitled to be enriched by these acts (imho)

 

But i believe standing before a judge saying they done it to me so it only fair that i do it to them would not substantiate a good enough platform or argument to be awarded the higher than sec69

 

Which is why i was saying some relevant acts or case law would be helpful to point the judge in the direction of though we cannot prove that our money was used in this or that manner then the fairest rate to apply to the banks to truly reverse their unjust enrichment would be to apply it at the said banks rate of XXX as this is most likely the way in which the plantiff(claimants money was used)

 

The compund interest side of things i think is covered here

 

Quote:

 

 

Traditionally Compound interest has been awarded where the wrong has been carried out by a fiduciary (president of India Vs La Pintada Compania Navigacion SA (1985) ac 106, 116 Lord Brandon))

 

 

Compound interest is paid on the amount of money owed to the Claimant and on the interest of that money owed as well

 

 

the supreme courts act 1981 does not specifically exclude the award of compound interest at common law claims Rather it recognises that the court can award simple interest and the courts have the right to award compound interest to appropriate claims It would be down to the defendant to prove if they had borrowed the same sum of money from another financial institution they would have only paid simple interest then it is only fair that the defendant pays simple interest not compound. However the interest awarded in commercial transactions would normally be compounded Sempra Metals Ltd Vs Irc2005 ewca civ 389, 2005 3 wlr 521 539 para 44 (Chadwick L.J)

 

 

 

 

 

 

 

from the thread http://www.consumeractiongroup.co.uk/forum/general/63596-contractual-interest-judge-doesent.html

my main concern is now justifiying that we are entitled to the rate we apply and after typing this out i believe i have just undermined my own belief that i am (really) entitled to the Unauthorised rate though it has confirmed my belief that the argument for authorised rate is just

to say all my money was used to help offset others unauthorised borrowing at 28.7% would be deemed impractible (imo) but to say most of my monies were used in the form of loans to others within the authorised overrdraft thus earning the banks 16.8% compounded interest would sound more plausable

But hey it why i like this forum for it is the exchange of ideas and points of views that allow us to decide on the best way to progress with our claims and try to find the pitfalls before we get to court still gonna pursue the 28.7%(unauthorised) with the authorised rate as back contingence

 

Westy

 

Quote:

 

 

Originally Posted by Glenn UK

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Westy

 

 

 

For clarification when talking about claiming 'contractual interest' i mean charging the bank the rate they applied to my account in response to their unlawful removal of my money (they unlawfully removed the charges and charged me the a rate of interest on those charges, which was in accordance with the T&C ie unauthorised borrowing rate).

 

 

 

Thanks for the clarification - we are in agreement.

 

 

 

This would be charged on top of the charges and interest i had actually paid out and is where the concept of M&R comes from. Now, this is where we disagree, assuming I understand you correctly - see below.

 

 

 

I believe this is what most people who talk about claiming contractual interest when they refer to this term i.e. applying the excess overdraft rate to the money they had actually paid out.

 

 

 

The 8% a court would apply is applied in the same way ie to the charges plus interest you actually paid out.

 

 

 

Agreed - that's what I am claiming.

 

 

 

I have seen no one charging two lots of interest in any form (OK there have been some who have not understood and mistakenly claimed sec 69 and contractual but it isn't widespread as far as i know and they have normally been put right).

 

 

 

I should probably get out more but I have seen people seeking unauthorised on top of contractual. There's someone taking Capital One on in this way: CapOne has already repaid the charges, plus interest levied, plus 8% and she's going for the full monty - 29%. I have said I think she has already won and is unlikely in the extreme to get anything more - she may, even, be in danger of finding herself liable for the other side's costs. She is not the only one but I'll post a link to the thread if you want it. There are a couple of others, too, but it would be a hunt to find them.

 

 

 

I agree if she has already been paid and accepted that then a court is unlikely to award further interest.

 

 

 

 

Isn't this what you're arguing in your second para above?

 

 

 

I am arguing that you claim what you have paid out (charges plus the interest you have been charged) then you apply the contractual rate to the lot and claim that. This is what i believe was the original intent of the thread 'why is no one claiming contractual interest based on the implied term using the UTCCR.

 

 

 

You are right that the banks owe us our money back and no one needs to go cap in hand. This thread i believe was started with a view to claimants charging the same rates to the bank as they charged us for unauthorised borrowing, the term mutuality and reciprocity were used although no one seems to be able to provide any legal definition of this. in concept at least it seems a reasonable argument based on the UTCCR as they stand now.

 

 

 

Are you saying you think this is wrong?

 

 

 

Absolutely not and I'm not clear how you got that impression. My point is: restoration of status quo ante; prevention of unjust enrichment; recognition of denial of benefit. On all three points, authorised rate (where the claimant has been charged interest) plus recognition of denial of benefit are very reasonable. Charges+interest+S69 are pretty easy to argue, I suggest: a case can also be made for charges plus unauthorised interest (as the charges themselves are levied when the arrangement is exceeded and therefore unauthorised will be levied, for at least some of the time), but not statutory in addition.

 

 

 

I think, and always have thought, that if you claimed using what we might call 'my way' that if it got to court that they wouldn't award the full unauthorised rate, even if they agreed with the approach and the implied terms, it is such a huge enrichment of the claimant that they would shy away from it. However, the principle of charging the bank for the unlawful removal of out money seems entirely just based on the UTCCR.

 

 

 

When it comes to unjust enrichment and disgorgement then the arguments are entirely different and could be argued in the alternative to the payment of interest. interestingly the judge at my allocation hearing agreed that the removal of the benefits from the bank was a reasonable idea and common sense, what i didn't have at that time were any legal arguments to back the idea up and he wouldn't go further than that, ie say it was logical.

 

 

 

 

The civil courts are not going to award punitive damages - that's an American system and is not what our civil courts are here for. We go to court to seek redress, to have our losses returned to us and to be restored to the situation we would have been in if the unlawful activity had not occurred. I do not expect a court to award unauthorised interest IN ADDITION TO authorised. neither do i, however, if the UTCCR and argument is of any value, it implies that the bank cannot impose a term which allows it a significant advantage without allowing the customer the same right in reverse. In that sense then the terms are at least unfair or they should be allowed to be applied in reverse.

 

 

 

Think of it this way, if the contract said the bank or the customer can charge for unauthorised borrowing at a rate then there would be no argument over the rights or wrongs of the rate. The only issue would be whether the charges had been unlawfully imposed.

 

 

 

this is basically the argument that was proposed that the contractual term should work both ways.

 

 

 

HTH

 

 

 

Glenn

 

 

 

But all the stuff in red is just my humble opinion!

 

 

 

Westy

 

 

 

 

 

 

 

 

 

All in all some interesting points, personally i think that the arguments for unjust enrichment and disgorgement have some mileage in them as well.

 

Glenn

 

Hi, Glenn

 

"however, if the UTCCR and argument is of any value, it implies that the bank cannot impose a term which allows it a significant advantage without allowing the customer the same right in reverse. In that sense then the terms are at least unfair or they should be allowed to be applied in reverse.

 

Think of it this way, if the contract said the bank or the customer can charge for unauthorised borrowing at a rate then there would be no argument over the rights or wrongs of the rate. The only issue would be whether the charges had been unlawfully imposed. "

 

I see your point but, as I understand it, the way the courts operate in this country is that they restore the situation as it should have been without the unlawful act.

 

Therefore:

1) you should get your charges back, if they fall foul of case and statutory law (which we know they do)

2) you should get back any consequent losses thereon, which are the interest charged on them.

3) you should receive recognition for loss of benefit.

 

The mutuality and reciprocity and/or disgorgement arguments may have some mileage in them but, until it has been established in the High Court, there's no case law or precedent to establish it (unless someone can point me in an appropriate direction...). Therefore, while the argument for charges+interest charged+unauthorised rate may have some moral weight, I don't expect to see a court award that sort of level, as it would look like punishment - and that's not what civil courts do in the UK.

 

Anyway, I have to do some paying work or the bank will be entirely justified in giving me a sound spanking for not having any money!!

 

W

 

LOL

 

W the argument about the UTCCR though is compelling though since it then begs the question of whether the term allowing the bank to charge a punitive rate without alllowing the consmer to return the favour is itself unlawful.

 

indeed I have long been of the view that not only are the charges themselves unlawful but the imposition of the punitive rates of interest are too.

 

It cannot be that a term for a breach can charge more than the liqiduated losses and since the impoostion of the higher rate of interest is imposed upon our breach of contract then it follows this too must be unlawful if the charges are.

 

JMHo

 

Glenn

 

PS it doesnt help arguing that whats sauce for the goose is sauce for the gander though.

 

 

 

 

Sorry if this seems not directly related to the heading of the thread, but there was some debate on here earlier regards this.

 

 

Perhaps I shall try to link this post also onto some other relevant threads.

 

Anyhow, the earlier debate was whether or not it could be viewed dimly by a judge if a claimant continued with an action by pursuing it into court, even if the defendant had made an offer to repay the charges, but not any interest. ie; should you expect sec69 interest before it gets before a judge. In short I think this says you can expect it.

I've highlighted the relevent part, with the particularly interesting part underlined.

 

Interest under the Supreme Court Act 1981

 

 

2.18 Section 35A of the Supreme Court Act 1981 confers a power to award simple interest in a judgment for a debt or damages:

(Section 69 of the County Courts Act 1984 is in virtually identical terms)

 

The section also provides for interest on a debt that has been wholly paid after the institution of the action otherwise than under a judgment.

 

Since there is then no judgment for the principal sum, the relevant subsection reads “the defendant shall be liable to pay the plaintiff” rather than “the judgment may include”

 

So this implies that if the offer was made after the claim was already filed (as opposed to at the prelim or LBA stage), then as there has not been a judgement on the claim for the principal charges, you are within your rights to refuse such a "charges only" refund and insist on the interest or continue.

 

Note , however that this seems to only apply to simple sec69 interest.

IMHO, I suppose that in relation to CCI interest,.... if an offer is made, one should consider your whole claim including interest as the principal claim. So if any offer does not cover this totally, then once again you could not be accused of being unreasonable by refusing the offer and continuing.

 

 

 

 

 

 

Quote:

 

 

Originally Posted by taylormandy viewpost.gif

 

 

Well I was told the argument for claiming unauthorised contractual rate was a load of bo**ocks last night in the chat room. This has really done my confidence a great deal of good seeing as I have to go to court in 3 days time. I know it is untested. I know many people have different theories about it. I have read and read and read and thought I had got my rationale sorted based on Unfair Contract Terms etc, discussing equity, fairness and balance etc.

 

 

I am not greedy.

 

 

I only ever wanted my charges back, but the spirit of the first post in this thread, and the new way of looking at interest thread state quite clearly it was thought to be a reasonable approach. I was also encouraged by PM to think about going for contractual interest by a senior member.

 

 

 

I really don't want to add to the ever decreasing circle of the contractual interest debate, but, if it now seems that CI is seen to be greedy and unreasonable by judges, which is the impression I was given last night, then perhaps this should be made clear.

 

 

 

I really wish I had not gone down this route, but it is too late now.

 

 

 

 

 

 

 

 

 

The comment that the argument was bo**ocks was a tongue-in-cheek misquote of the discussion between Captain Blackadder and Private Baldrick regarding the reason for the start of the First World War.

 

Quote:

 

 

Captain Blackadder: "Yes, that's right. You see, there was a tiny flaw in the plan."

 

 

Private Baldrick: "What was that, sir?"

 

 

Captain Blackadder: "It was bo**ocks."

 

 

 

 

 

 

 

Having said that, it is well known that I do not agree with claimants attempting to justify almost six times the Bank of England base rate for charges claims on current bank accounts. I cannot see how it fits with the law regarding restitution and undue enrichment. Not only that, what of clean hands? We are relying here on a breach of contract, our breach in fact in order to seek a remedy. Somewhat at odds with equity I think.

I understand the principle upon which these claims are made and the reason for statutory interest existing and therefore the logic behind making a contractual compound interest claim. However, making claims for punishingly high rates of interest will not endear us to the Judiciary or further our cause.

I had cause to telephone a County Court recently and in the course the conversation I was told of many cases where claims for bank charges were rejected and the claimants contacted in order to amend their claims as the interest rates claimed were far higher than the statutory figure according to the County Courts Act 1984.

The Court is aware of the fact that some claimants are attempting to claim far higher rates of interest than is allowed under the County Courts Act 1984 and that no judges at that court have allowed a single one, although some cases have gone to a directions hearing, the judges have not allowed the high rate of interest and awarded statutory interest only.

The lady I spoke to is of the opinion and her judges have confirmed to her, that they would not allow a claimant to claim rates of interest that exceed the 8% allowed by statute.

I was told that these claimants were entering "punitive rates of interest" and that the Judges would not allow it.

We are claiming that we have been subjected to an unfair penalty for a breach of contract, our breach in fact, which resulted in the bank levying a charge. It has been ruled that charges that exceed what is reasonable are penalties.

Lord Dunedin laid down rules which are still applied today in these types of cases:

i) The sum is a penalty if it is greater than the greatest loss which could be suffered from the breach – in other words, if it is "extravagant and unconscionable".

ii) If it agreed that a larger sum shall be payable in default of paying a smaller sum, this is a penalty. Ford Motor Co. v. Armstrong (1915)

CPR 16.3 and 16.4 covers interest and the claiming of it and of course we are entitled to claim interest at any rate, but the claim must have some basis. In order to claim interest at 29.9% we must be able to show that we have lost 29.9% return on the money.

Many companies have cash reserves that they put to work and earning interest is one way they do this. Most people however, do not and so to my mind there is simply no basis for claiming the unauthorised rate. Certainly one cannot claim to have "lost" it, as one would never have had the ability to earn that level of interest in the first place, never mind lose it. Westdeutsche v Islington BC [1996] A.C. 669, [1996] 2 All E.R. 961 states there was no basis for compound interest under unjust enrichment.

Furthermore you may have difficulty arguing that the bank lent all your money at the unauthorised rate and even if you could you would have difficulty convincing a judge that compound contractual interest was available at all under unjust enrichment given the fact that there is a House of Lords precedent stating its not available.

It is simply not credible to assume that, had the bank not taken a sum in charges, we would have been able to earn 29.9% (or higher) interest on it and therefore we are entitled to claim that back on the whole sum for the entire period we are claiming for.

There is no legal basis for the “mutuality and reciprocity” argument. It is my opinion that the banks taking these charges and charging this interest rate cannot be interpreted as us lending them money.

Mutuality of contract is the reciprocal understanding or agreement between parties that is a requirement in the creation of a legally enforceable contract. It means that an obligation must rest on each party to do or permit to be done something in consideration of the act or promise of the other. Neither party is bound unless both are bound. It does not mean that you are entitled to charge the other party just because they are able to charge you.

In Bank contracts, the Bank has a right to impose interest at the unauthorised rate. This is what we agree to when we enter into the contract. There is no right in the contract for us to receive interest at anything other than the published rate on credit balances. Any right to interest must be found under the common law.

The statutory rate of interest at 8% is generous given the current savings rates today and unless charges were central to the issue of the claim then I would not entertain making a claim for almost 30% interest.

Contractual interest claims have been successful but not because the argument is strong, it is because the banks have paid without contesting the claim.

 

Hagen

a well though out answer and of course a point of view, it is useful to have those against the viewpoint to comment as well as those for, some of what you say i agree with some i don't.

There is no doubt that whether you are for or against the application of contractual interest that its contentious.

i have said a number of times that the i would be surprised if a court, even where we were able to convince them that the principle was right, would in fact award the contractual rates, particularly for excess overdraft.

However, what is clear to me is that when we took out a bank account we never expected the bank to take money unlawfully from our accounts.

There is no term in the t&c which deals with this premise directly however, there is clearly a provision which allows the bank to charge us for doing this to them. Arguably what we do when we remove money from the bank without prior authorisation though its a lot different, the banks in effect support it by not refusing the facility which is entirely within their power but thats an aside.

It seems to me that the UTCCR provides relief that for a contract to be fair it should work both ways, if the consumer had expected the bank to take money without authorisation would it have been fair for them to charge the same rates that the bank charges?

One could argue the costs to the bank, credit licenses etc, but IMHO there is no significant loss incurred by the bank which would justify the imposition of interest at those rates, it is a for profit charge and no more in the same way that the charges themselves are primarily for the generation of profit.

I cannot see any real logic in allowing the bank to impose such interest rates and yet not allowing the consumer to claim them too.

i can see an argument for not allowing either party to claim such rates though.

As for the law not allowing compound interest to be awarded, I don't have the details to hand but I'm pretty sure that as with most things there are cases where the courts have moved towards this position.

In terms of unjust enrichment/disgorgement it wouldn't be unreasonable for some consideration of the banks profits made using this money and for them to return some or all of that profit to the person the money rightly belongs to. To not do so leaves the bank unjustly enriched.

Arguably if you are arguing unjust enrichment then the application of such interest rates would unjustly enrich the claimant, however, if the term allowing the banks to charge such rates is fair, then IMHO this is no bar to paying the claimant such rates.

Re the courts not having allowed such a rate so far, one presumes that if a contract explicitly allowed such a rate then the court would support it?

It would be likely that in the case of a default by a consumer that the support for such interest already applied to a debt would be upheld? I am presuming of course i could be entirely wrong.

The point is not that they wont award such interest, but maybe, just maybe that the right case hasn't been presented?

JMHO

Glenn

 

Ok as i understand the state of play at the minute it is as follows

with no arguments and we all agree you can claim

Charges(bounced dd cheques s/o : unauthorised clearing payment charges etc : unauthorised overdraft fees (if charges put you into that postion)) + the interest the bank charged you for these fees (debited interest) at that point in time ( from here on in i will refer to these as the bank charges)

 

the above has not yet produced any failures for settlement and is what was origionally being claimed

now if like some of us you decide the bank has been unfairly enriched by it's charging regime then you can decide to try and claim for additional interest which follows 3 courses non of which are proven to work or not

1) is to claim bank charges and Simple interest as of Sec69 8% (this is normall asked for at the time of filing your intial claim at court on the N1 mcol stage as far as i am aware no one has lost with this situation as it is in the courts power to award this )

 

2) is to claim bank charges and then the banks authorised borrowing rate compounded on top of this (the general concenus on if you are going down this path is to apply for it from the outset i.e in your Prelim letter and Lba. Some have won with this but the sums claimed for have been small so easier for the banks to payout and swallow the cost. )

 

3) is to cliam bank charges and the banks Unauthorised borrowing rate compounded on top of this (the general concensus again on this is you apply form it from the outset in your prelim and lba letters Yet again some have won with this and i believe it was GlennUk who got to a hearing with the judge and didnt gett awarded this but only Simple interest at 8% but as he said the judge was listening to his arguments but he went to the hearing prepared to argue statute of limitations and was caught out as the bank didnt argue that but the interest side instead read his thread for more information on it )

 

Ok that the basic ways mentioned now claiming back the BANK CHARGES is not in dispute atall just follow the set out procedures in the step by step guide

 

no disagreements on claiming 1 above as it is within the courts powers

Now with claiming 2 or 3 above then this is where the disscussions (and confusion ) have evolved from on here and there is no real guidence or set path or proven arguments for them

from thoose of us trying to claim this additional interest the general feeling is that you need to try and keep your claim intact i.e no part payments gestures of goodwill so when you reach court the bank has to argue their charges as well as the interest you are trying to claim

At the moment it is not thought of in general to be in the situation of being in front of a Judge saying the bank has paid me back XX which is the equivelont of my charges but not paying me the interest i want from them as well (there is nothing stopping you trying for this but be warned this area has not been tried yet so you would be trying new ground as most of us going for additional interest are)

If you do get before a judge with your claim intact it is still no garuntee that you will be paid the interest you need to have arguments ready to say why you belive you are entitled to this money and there is alot of different views on this in different threads the main points being mutuality and recipitory - Fairness and balance - Disgorgement - Quasi contract -and misrepresentaion but it will be down to you to argue these points to convince a judge why you should be awarded this rate instead of the simple interest 8%

From this point of view i tend to believe the best interest to cliam for is the unauthorised rate (3 above ) following the philosphy that they did and do it to me so under M&R i am allowed to do it to them as they borrowed my money without permission though i doubt a judge would see it that way under arguing for disgorgemnet and unjust enrichment but i am working on different angles to support most of the above points to put before a Judge to get my way

On 2 & 3 above i would at the N1/MCOL stage include all 3 as an option for the judge to consider see my thread for more detail on what i mean

 

to re-cap

claiming BANK CHARGES back no arguments - no issues

Claiming BANK CHARGES and Simple 8% sec 69 -at court stage - no issues

Claiming Bank CHARGES and Compound Authorised Rate -Not a proven method and you will have to have arguments ready to say why you entitled to it (some have won with this )

Claiming Bank Charges and compounded Unauthorised Rate - Not a proven method and you will have to have arguments ready to say why you entitled to this (some have won with this)

As far as i am aware no one has yet had costs awarded against them whichever track they were on in regards bank charges though some have now lost in regards cliams on morgagates so be warned claim for what you are comfortable with don't let bigger figures influence your decision and be prepared to attend court and maybe have the possibility of costs awarded against you

 

For what it's worth I am currently going for the unauthorised rate with Abbey but feel happy to argue my corner but that is my choice after reading alot of the comments for and against on here

 

Just been doing some research on Contractul interest:

Has anyone looked into the following cases?

Both won in favour of the Claimants right to claim Compounded Contractual interest.

Sempra Metals v IRC [2005] EWC civ389

&

Banque Financiere de la cite v Parc (Battersea) ltd [1999] AC221

Do a Google on them, and have a read through

Any comments anyone ??

Photoman

 

Subrogation & Restitution

Here goes chaps, this is to back up your claim for compound interest and many thanks for photoman for supplying me with the material to resume' these arguments.

The term “restitutional damages”is being used to reflect the remedy which is being awarded where a wrongdoer has obtained a profit at the expense of the Claimant.

Edelman in particular has argued that in such circumstances that the appropriate remedy is properly described as restitutionary, since it restores to the Claimant what the Defendant has gained.

Subrogation is a restitutionary remedy which” transfers rights from one person to another……..by operation of law”.

Since subrogation is a restitutionary remedy this notional assignment of the charge is only effective as against a Defendant who is liable to make restitution to the Claimant.

In the leading case of Banque Financiare’de la Cite’ v Parc (Battersea) Ltd the House of Lords recognised that there are two forms of subrogation that are recognised in English Law . The second one I feel is applicable to this thread.

The award of interest.

Since it is a function of restitutional remedies that the Defendant should be deprived of those gains obtained as a result of being unjustly enriched having committed a wrong, it should follow automatically that whenever pecuniary restitutional remedies are rewarded the Claimant should be awarded interest. This is because immediately the Defendant has

Received a benefit which he/she is liable should pay the Claimant for its use.

Should simple or compound interest be awarded?

Simple interest may be awarded by virtue of s35a of the Supreme Court Act 1981.

Compound interest has traditionally been awarded in equity where money has been obtained or misapplied by a fiduciary President of India v La Pintada Compania Navigation SA. Compound interest is awarded both on the amount of money which is owed by the Defendant to the Claimant and on the amount of interest which is already due to the Claimant.

Lord Goff and Woolf asserted that the policy of the Law of restitution was to remove benefits from the Defendant and that compound interest should be available on all restitutional claims regardless whether they arise at Law or equity.

If the Defendant was to borrow an equivalent amount of money from a financial institution he would be liable to pay compound interest. It follows that the Defendant has saved that amount of money so this is the benefit that the Defendant should restore to the Claimant in addition to the value of the money which the Defendant received in the first place lbid 719 (Lord Woolf) see also Black v Davies 2004

This has now been recognised by the Law Commission which has recommended that there should be a presumption that compound interest is available for awards over £15k or when the Claimant has requested it. see Pre-judgement & interest on debts & damages (Law Com.no.287.2004).

The significance of compound interest on restitutional claims has been recognised by the Court of Appeal in Sempra Metals v IRC [2005] EWCA Civ 389

Leech

Subrogation & Restitution

Here goes chaps, this is to back up your claim for compound interest and many thanks for photoman for supplying me with the material to resume' these arguments.

The term “restitutional damages”is being used to reflect the remedy which is being awarded where a wrongdoer has obtained a profit at the expense of the Claimant.

Edelman in particular has argued that in such circumstances that the appropriate remedy is properly described as restitutionary, since it restores to the Claimant what the Defendant has gained.

Subrogation is a restitutionary remedy which” transfers rights from one person to another……..by operation of law”.

Since subrogation is a restitutionary remedy this notional assignment of the charge is only effective as against a Defendant who is liable to make restitution to the Claimant.

In the leading case of Banque Financiare’de la Cite’ v Parc (Battersea) Ltd the House of Lords recognised that there are two forms of subrogation that are recognised in English Law . The second one I feel is applicable to this thread.

The award of interest.

Since it is a function of restitutional remedies that the Defendant should be deprived of those gains obtained as a result of being unjustly enriched having committed a wrong, it should follow automatically that whenever pecuniary restitutional remedies are rewarded the Claimant should be awarded interest. This is because immediately the Defendant has

Received a benefit which he/she is liable should pay the Claimant for its use.

Should simple or compound interest be awarded?

Simple interest may be awarded by virtue of s35a of the Supreme Court Act 1981.

Compound interest has traditionally been awarded in equity where money has been obtained or misapplied by a fiduciary President of India v La Pintada Compania Navigation SA. Compound interest is awarded both on the amount of money which is owed by the Defendant to the Claimant and on the amount of interest which is already due to the Claimant.

Lord Goff and Woolf asserted that the policy of the Law of restitution was to remove benefits from the Defendant and that compound interest should be available on all restitutional claims regardless whether they arise at Law or equity.

If the Defendant was to borrow an equivalent amount of money from a financial institution he would be liable to pay compound interest. It follows that the Defendant has saved that amount of money so this is the benefit that the Defendant should restore to the Claimant in addition to the value of the money which the Defendant received in the first place lbid 719 (Lord Woolf) see also Black v Davies 2004

This has now been recognised by the Law Commission which has recommended that there should be a presumption that compound interest is available for awards over £15k or when the Claimant has requested it. see Pre-judgement & interest on debts & damages (Law Com.no.287.2004).

The significance of compound interest on restitutional claims has been recognised by the Court of Appeal in Sempra Metals v IRC [2005] EWCA Civ 389

Leech

 

 

Quote:

 

 

Originally Posted by Glenn UK viewpost.gif

 

 

The problem with this approach ie Subrogation & resitution, is that it only realises interest at a commercial rate for borrowing the sums concerned.

 

 

 

Whilst it is an argument for compound interest it doesnt reflect the contractual rate sadly.

 

 

 

The second obstacle to using this approach is demonstrating the banks are a fiduciary to their customers. As much as i beluieve that this may be true, I believe its an argument that has yet to be made and establisehd with any authority.

 

 

 

Be good to find some though.

 

 

 

Glenn

 

 

 

 

 

 

 

 

Glenn see here:

 

Quote:

 

 

In Barclays Bank v. Quincecare Ltd the Court of Appeal set out the following principles: that the relationship between a bank and its customer in relation to the drawing and payment of cheques against the customer’s account balance was that of principal and agent and as an agent the bank owed a fiduciary duty to the customer and prima facie was also bound to exercise reasonable care and skill in carrying out the instructions of its principal, the customer.

 

 

Quote:

 

 

In Westminster Bank Ltd v Hilton (1926) 43 TLR 124, 126 Lord Atkinson explained the relationship in this way: "It is well established that the normal relation between a banker and his customer is that of debtor and creditor, but it is equally well established that quoad the drawing and payment of the customer's cheques as against money of the customer's in the banker's hands the relation is that of principal and agent. The cheque is an order of the principal's addressed to the agent to pay out of the principal's money in the agent's hands the amount of the cheque to the payee thereof."

 

 

 

 

 

 

 

HTH

Tanz

Glenn also this:

 

Quote:

 

 

The Australian Position

 

 

 

 

Since 1848 3 , it has been well established in England and Australia that the banker-customer relationship is that of debtor and creditor and is not, in the absence of special circumstances, fiduciary in nature. In other words, a bank is not generally bound to exercise rights and powers in good faith for the benefit of its customers. Accordingly, for a customer to establish the existence of an ongoing obligation on a bank to advise the customer when the customer would benefit from any new product or service, it would be necessary for the customer to establish that any contract governing the particular banker-customer relationship included a term to that effect. In the absence of special circumstances, and particularly in light of Suriya’s Case, a customer would have little chance of arguing successfully that such a term should be implied.

 

 

3House of Lords Decision in Foley v Hill

 

 

(184 2 HL Cas 28

 

 

The Federal Court has ruled 4 that where a bank has created in its customer an expectation that it would advise in the customer’s interests, the bank assumes the responsibilities of a fiduciary. Although a number of cases have recognised the capacity of a bank, through advisory roles of its officers, to assume the responsibilities of a fiduciary, they have generally related to advice in respect of transactions between the customer and third parties, particularly investment transactions. There is limited authority relating to a bank’s duty to advise on the advantages of its own products. The Australian litigation arising from unsuccessful foreign exchange loans in the 1980s provides some guidance about a bank’s responsibilities in advising its customers about its products. A number of forex borrowers have succeeded in actions against their banks for losses caused by changes in foreign exchange rates, but their success usually has been based on common law negligence or misleading and deceptive conduct under section 52 of the Trade Practices Act, rather than a breach of a contractual or fiduciary duty. Although there is clear authority under the law of negligence that a bank giving advice on investments owes a duty of care to the customer, there is also authority that banks generally are not expected to review and update their advice in light of changing circumstances 5

 

 

In the absence of an express representation that the bank will provide ongoing advice, a bank would be unlikely to be liable for a failure to provide advice unless the customer can establish that the bank was a fiduciary, having created an expectation that it was acting in the customer’s interests in both providing a forex loan and in managing the risk.

 

 

 

 

 

 

 

 

 

 

Tanz

How about this?

 

Quote:

 

 

Originally Posted by Glenn UK viewpost.gif

 

 

Tanz

 

 

 

The second of your postings was my understanding of the current postion, I have seen the preceeding text but havent seen anyhting recent to support the wider view that in making deposits and withdrawing moeny the bank acted as a fiduciary.

 

 

 

In truth when arguing that the banks are, it is easy to show, imho that they present themselves as such in all their advertising and literature.

 

 

 

I would also add that it would be up to the CLaimant to show they acted in that belief for the courts to consider it.

 

 

 

JMHO

 

 

 

GLenn

 

 

 

Quote:

 

 

The Nature of Fiduciary Duty

 

 

 

Professor Austin Scott, who for many years was the leading American scholar in the field of trust law, wrote in 1949 an important article showing that the fiduciary principle extended far beyond the law of trusts to include many relationships including the duties of agent to principal, attorney to client, guardian to ward, and executor to legatee. As we will see, the fiduciary principle also includes duties of corporate managers to the corporation and its shareholders. Scott defined the term fiduciary to mean “a person who undertakes to act in the interest of another person.”1 In most fiduciary relationships, the fiduciary is given control over some aspect of the life or property of another (the beneficiary) with the expectation that the fiduciary will exercise that control for the benefit of the beneficiary. The salient elements of a fiduciary relationship are “the actual placing of trust and confidence in fact by one party in another and a great disparity of position and influence between the parties to the action.”2

 

 

Underlying the fiduciary relationship is the element of trust, which is a necessary condition of social harmony and of the proper functioning of organizations. Indeed, trust can be regarded as a “precontractual” element in all social arrangements. In fiduciary relationships, because of the fiduciary’s position of dominance and control over some aspect of the life or property of the beneficiary, the latter must necessarily trust the fiduciary to give proper consideration to the beneficiary’s interest. The fiduciary relationship thus gives rise to an ethical obligation of loyalty on the part of the fiduciary. This aspect of the moral law is regularly enforced by courts of equity.

 

 

The fiduciary principle is of great antiquity. It is clearly reflected in the provisions of the code of Hammurabi (c. 1700 b.c.) that set forth the rules governing the behavior of agents entrusted with property. Virtually every source of primitive law deals with the entrusting of property for safekeeping, pledges of good faith, and other indicia of trust.3 In the Judeo-Christian tradition, the religious roots of the fiduciary principle can be traced to the Old and New Testaments. In the Old Testament, the Lord told Moses that it is a sin not to restore that which is delivered unto a man to keep safely, and penalties must be paid for the violation (Lev. 6:2–5). Other examples include the fraudulent betrayal by Jacob of Isaac’s trust to obtain his father’s blessing (Gen. 27), the requirement to redeem pledges (Ex. 22:26), and prohibitions against unjust weights (Deut. 25:13–16). The New Testament contains a particularly clear example of the fiduciary principle in the parable of the unjust steward (Luke 16:1. An employer had accused his steward of wasting his goods and threatened to fire him. Knowing that he might soon be looking for a job, the steward decided to advance his own interest by agreeing with his employer’s debtors (some of whom might later employ the steward) to release them from their obligations to the employer upon payment of a fraction of what they owed. The steward, who was entrusted with the management of his master’s property, thus violated a fiduciary duty by serving his own interest rather than that of his master. Saint Luke states the underlying principle clearly: “No servant can serve two masters” (Luke 16:13). (See also Matthew 6:24, “No man can serve two masters.”) This principle is particularly appropriate, of course, when one of the masters is oneself. It has often been said by the courts that the fiduciary duty of loyalty is based upon the biblical precept that no person can serve two masters.4

 

 

 

 

 

 

 

 

 

 

Tanz

..

 

 

 

 

 

 

MY CASE

 

Newbody Vs Abbey

 

NB: Please read the FAQs & step-by-step instructions thoroughly & completely before commencing any action

 

the following is a link to a web archive of abbey websites over the time click on month under year to access Abbey's site for that time period to get what the terms and conditions were for when you opened your account Internet Archive Wayback Machine hope it helps or here for where i have started to pull them out to http://www.consumeractiongroup.co.uk/forum/abbey-bank/91707-archives-abbeys-web-pages.html

 

Advice & opinions given by me are my views or how i would respond, and are not endorsed by the Consumer Action Group & are offered informally, without prejudice & without liability. Your decisions & actions are your own - if in any doubt, seek the opinion of a qualified professional

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Tanz

From My reading the yanks take a wider view than we do, however, I am not saying that banks don dont have a fiduciary duty towards us, on the contrary i am certain they do.

However, all the case law i have seen for the UK has been regarding cheques i think and are quite old.

That doesn't mean they're irrelevant but i don't think it makes our claim watertight.

I think that their representations to the claimant plus their power in the current economic climate over customers will be overriding factors, but like most things without something specific to state it will come down to how the arguments are made.

So i don't mean to be negative i have searched reasonably hard for something of equivalence to your American text and don't think i have.

Edit i posted this a while back

Glenn

 

fiduciary: Definition and Much More from Answers.com

Legal Encyclopedia

 

Library > Legal > Legal Encyclopedia

This entry contains information applicable to United States law only.

Fiduciary

An individual in whom another has placed the utmost trust and confidence to manage and protect property or money. The relationship wherein one person has an obligation to act for another's benefit.

A fiduciary relationship encompasses the idea of faith and confidence and is generally established only when the confidence given by one person is actually accepted by the other person. Mere respect for another individual's judgment or general trust in his or her character is ordinarily insufficient for the creation of a fiduciary relationship. The duties of a fiduciary include loyalty and reasonable care of the assets within custody. All of the fiduciary's actions are performed for the advantage of the beneficiary.

Courts have neither defined the particular circumstances of fiduciary relationships nor set any limitations on circumstances from which such an alliance may arise. Certain relationships are, however, universally regarded as fiduciary. The term embraces legal relationships such as those between attorney and client, broker and principal, principal and agent, trustee and beneficiary, and executors or administrators and the heirs of a decedent's estate.

A fiduciary relationship extends to every possible case in which one side places confidence in the other and such confidence is accepted; this causes dependence by the one individual and influence by the other. Blood relation alone does not automatically bring about a fiduciary relationship. A fiduciary relationship does not necessarily arise between parents and children or brothers and sisters.

The courts stringently examine transactions between people involved in fiduciary relationships toward one another. Particular scrutiny is placed upon any transaction by which a dominant individual obtains any advantage or profit at the expense of the party under his or her influence. Such transaction, in which undue influence of the fiduciary can be established, is void.

 

Library > Business > Real Estate Terms

Fiduciary One who acts, in a legal role, in the best interests of others.

Examples:

• A Broker is a fiduciary for the seller.

• A banker is a fiduciary for the bank's depositors.

• An attorney may be a fiduciary for the client.

• A Trustee is a fiduciary for the Beneficiaries.

With regards the arguments about a Banks Fiduciary role, it appears that most references and postings here are more applicable to the American system. It appears that American (and some other countries) legal systems do have a view that they do indeed act as Fiduciaries. However, I’m not sure if the English legal system takes the same view?

After reading around I found the following reference made in a particular case in 2004:

"That there is no fiduciary relationship between a banker and customer was established by Foley v Hill (1848) 2 HL.Cas 28"

I have not read the actual case, in order to see in what context this applies to ie; only with regards certain matters, or generally. So, whether or not this is an accepted established principle to date in English law, or has been overtuned needs to be looked into, and I would welcome any comments or findings by anyone on site as to whether or not this is the case.

So at present, in the absence of finding more recent cases that reverse this principle, if we presume that relying on the Fiduciary argument is difficult to prove, we may be better using the "duty of care" and "special relationship" argument as laid out here:

 

 

 

 

 

 

In White v Jones [1995] 2 AC 207 at 274 F Lord Browne-Wilkinson said;

"I am not purporting to give any comprehensive statement of this aspect of the law. The law of England does not impose any general duty of care to avoid negligent misstatements or to avoid causing pure economic loss even if economic damage to the plaintiff was foreseeable
.
However, such
a duty of care
will
arise if there is a special relationship between the parties
. Although the categories of cases in which such special relationship can be held to exist are not closed, as yet only two categories have been identified, viz. (1) where there is a fiduciary relationship and (2)
where the defendant has
voluntarily answered a question or tenders skilled advice or services in circumstances where he knows or ought to know that an identified plaintiff will rely on his answers or advice
. In both these categories the special relationship is created by the defendant voluntarily assuming to act in the matter by involving himself in the plaintiff's affairs or by choosing to speak. If he does so assume to act or speak he is said to have assumed responsibility for carrying through the matter he has entered upon. In the words of Lord Reid in Hedley Byrne

, 486 he has "accepted a relationship . . . which requires him to exercise such care as the circumstances require," i.e. although the extent of the duty will vary from category to category,
some
duty of care arises from the special relationship. Such relationship can arise even though the defendant has acted in the plaintiff's affairs pursuant to a contract with a third party."

I think however this may be more (but not exclusively) applicable to specific circumstances when we call upon their advice for example when looking for a loan, Insurance, Mortgage or indeed PPI. (and according to the last paragraph of the quote, this also applies to reccomending a third party)

Whether or not we can argue that they owe us a duty of care generally, and how this can also be applied to charges is something we need to determine, and formulate our arguments for? I offer this as one possible argument:

They claim that these are charges for a service, and as such we trust their claim that they have provided that service at the correct price. Thus we relied on their advice in the letters sent to us that the charges were fair and proper. Certainly with Lloyds on the statements the charges do also often carry the description "Charge as advised"

 

 

http://www.consumeractiongroup.co.uk/forum/general/64487-banks-fiduciaries-their-customers.html

This case is from 1926 so its later than yours at 1848 I think.

Alhtough it refers to cheque related matters i think.

Having said that you are going in the same direction i have been in the absence of any supporitng case law to establish the fiduciary relationship.

Glenn

 

My belief is that the charges the Bank levied on me whilist ridiculous were to cover staffing and administration and as such i was prepaired to swallow the cost of them But scince being pointed in direction of this site and recent media coverage and reading of threads and external links it is my contention that the charges were not just

And as such i wish for it to be rectified and as such recompensed for my loss of use of that money.

Now as wistleblower showed the other night the banks have people working within them that figure out what the cost of every act and action will cost the bank so it knows it's costing

So if the charges are true and just then the banks would just call that employee or a sworn statement from that employee in to prove the charges are lawful and not payout as they have done

The excuse of cost efficentcey doesn't wash as they have sent solicitors and barristers to some hearings only to settle rather than divulge the costs

I agree that in the contract their is no provision that says if we the bank borrow your money without authorisation then you can claim XX% interest from us. But then again who expects a bank to take money it is not entitled to also

 

Quote:

 

 

 

 

The new 1999 UTCCR introduce an important additional criterion for assessing whether contract term is unfair to consumers. Incidentally, it does not effect, or refer to, the Unfair Contract Terms Act 1972 which means that estate agents (along with all other traders and suppliers) must

 

 

 

 

 

 

ensure their contracts and terms of business comply with both the 1972 Act and the new 1999 UTCCR.

 

 

 

 

 

The most critical new Sections of the UTCCR read:

 

 

 

“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.

 

 

 

“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.

 

 

 

“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.”

 

Therefore as i wasnt able to negotiate my contract in person that to me would make the contract unfair and the fact that there is no recipitory action in the contract for breeches by the bank would make its terms unfair

 

 

Now for the life of me i cant remember at this minute where i read it but i did read that if a contract or condition is unfair then the most favourable option to the claimant shall be used I will edit and insert it when i find it

So therefore as the bank has took money in excess of what it was entitled to i want this money back and i wish to be recompensed for the loss/use of it

Thus meaning i start court action seeking restitution

 

Quote:

 

 

The law of restitution is concerned with the award of a generic group of remedies which arise by operation of law and which have one common function, namely to deprive the defendant of a gain rather than to compensate the claimant for loss suffered

 

 

 

The award of such restitutionary remedies to the claimant can be justified on the ground that, where the defendant has obtained a benifit at the claimants expense, justice demands that this should be restored to the claimant Moses Vs Macferlan (1760)

 

From this you can then delve into the different type of restitionary remedies available Which my understanding of them is to remove any enrichment the defendant may have obtained by the benifit it gained at the claimants expense.

 

which there are many different thoughts on the best way forward the general reasoning behind the usage of the banks own rates as this is what is stated in black and white from the bank.

Due to the fact that you did not authorise them to take the excess amount of money in charges this would deem that that the unauthorised rate would be the one to claim for but depending on what form of restitutionary remedy you are following this may be hard to justify and the authorised borrowing rate maybe easier to argue but these are points that thoose of us who are trying to argue for this Additional money are trying to sort out now

End of the day no in the contract it doesnt say you are entitled to this rate

But in the contract it doesnt say we will only let you have XXX of your balance back a day unless you give us XX amount of notice

It also doesnt say in the contract that we as your bank may take money from you that we are not entitled to and if you find us out we will give you 8% statatory interest on it if you file at court

At the end of the day if nobody was prepared to challange the banks actions we wouldnt all be here now claiming back our charges in the first place and it is only by open disscussion and debates and people prepared to take a risk and use the arguments that we can push the boundries of what we can and cannot claim back from the banks

As for the claiming of compound interest in general it hasnt been ruled out as an option in common law or even small claims

 

Quote:

 

But the supreme court act 1981 does not specifically exclude the award of compound interest in respect of common law claims Rather it recognizes that the court can award simple interest for such claims The equitable jurisdiction to award compound interest is still available in appropriate cases.

 

In two very strong disseting judgements Lords Goff and Woolf rejected the arguments of the majority They asserted that scince the policy of the law of restitution was to remove benifits from the defendant compound interest should available in respect of all restitutionary claims regardless of wheather they arise at law or in equity This argument can be illustrated by the following example

 

 

In the straightforward case where the claimant pays money to the defendant by mistake and the defendant is liable to repay that money, the liability arises from the moment the money is recieved by the defendant who has the use of it and so should pay the claimant for the value of that benifit This was accepted by all the judges in the case The difficulty relates to the valuation of this benifit. If the defendant was to borrow an equivilent amount of money from a financial instituiton he or she would be liable to pay compound interest to that institution It follows that the defendant has saved that amount of money and so this is the value of benifit which the defendant should restore to the claimant, in addition to the value of the money which the defendant recieved in the first place .

 

 

If it could be shown that had the defendant borrowed the equivilent amount of money the institution would only have paid simple interest it would be appropriate for the interest awarded to the claimant to be simple rather than compounded. Usually however the interest in commercial transactions will be compounded interest.

 

 

So it is at the judges discretion based on your arguments for why you should get it though most will opt for the 8% as it is the easier option

At the end of the day it is down to the banks on weather they wish to continue paying out and how much they want to pay out for to stop the pay outs all they need do is disclose the true costs if they dont want to do that then we will continue pursuing them and pushing for what we can get until they are prepared to enter a court room to prove the legality of their charges

 

lellypea,

Opinion seems to be a bit divided here?

According to the Court Procedure Rules (CPR) on allocation, it states that interest is NOT included in the calculation....... however it doesn't really expand upon that, ie explain whether that is just Statutory or any interest that is part of the claim itself?

So perhaps one could argue that the Contractual interest portion of your claim should not be included for allocation purposes ?

 

HOWEVER !

In any case, the Court procedure rules are just a guide, and it is at a courts discretion to allocate a case to whichever track it see's most relevant to the case... so even a claim for £100 could be allocated to a higher track if the court feels it more relevant !

 

In any case you should be prepared for this possability.

 

It is also not considered good practice to split claims anyway, as this raises the danger of being regarded as a "vexatious litigant" (ie: abusing the court processes). So this should really be avoided.

 

Here is the relevant Court Procedure Rules (CPR) for track allocation which I have copied from their website:

 

 

Matters relevant to allocation to a track

 

CPR . 26.8

 

(1)

When deciding the track for a claim, the matters to which the court shall have regard include –

(a)the financial value, if any, of the claim;

(b)the nature of the remedy sought;

©the likely complexity of the facts, law or evidence;

(d)the number of parties or likely parties;

(e)the value of any counterclaim or other Part 20 claim and the complexity of any matters relating to it;

(f)the amount of oral evidence which may be required;

(g)the importance of the claim to persons who are not parties to the proceedings;

(h)the views expressed by the parties; and

(i)the circumstances of the parties.

 

 

(2)

It is for the court to assess the financial value of a claim and in doing so it will disregard –

(a)any amount not in dispute;

(b)any claim for interest;

©costs; and

(d)any contributory negligence.

(3)Where –

(a)two or more claimants have started a claim against the same defendant using the same claim form; and

(b)each claimant has a claim against the defendant separate from the other claimants,

 

the court will consider the claim of each claimant separately when it assesses financial value under paragraph (1).

 

 

SO:

 

Part 1(a) would probably override 2(b)

 

 

Then again,

The court does also consider the circumstances of the parties as stated in part 1(i)

.... and we generally hope that a court would look favourably upon us, as litigants in Person, without the same financial means, as the Defendants to pursue a case through a higher track.

There has also been occasions where a court will allocate a case to a higher track BUT still order that Small claims costs rules apply (ie no costs burden upon losing party) to protect the litigant (us).

 

Here is the web -link to the Court procedure part 26 which deals with allocation (you can, after you've read this, go further back in the website and look up other parts of the CPR, so maybe save the link for future reference)

 

PART 26 - CASE MANAGEMENT – PRELIMINARY STAGE

 

 

Do bear in mind that these are just my own opinions, and to check for yourself on their validity before acting upon them (just as you should always do generally on this site).

 

Best regards

 

hi RD, have followed your link hear from mcuth's thread. I have been doing some thinking about CI, and was struck by something that was stated in the westdeutsche landesbank decision

don't get me wrong, I'm really just dabbling here in new territories, but this got me wondering about whether, if we (well not me anymore 'cos my claim is finished now) but you and other CI claimants, can make a case that albeit that there was no express trust (re. fiduciary) in relation to monies received by bank from penalty charges, there was a constructive trust - in view of the fact that the bank cannot claim ignorance of the law - the rest might follow, if you get my meaning.

 

I then dug up this Law Commission report on compound interest and I think para 2.41 on page 21 could be useful The Law Commission COMPOUND INTEREST

2.41 Outside the trust field, equity will order interest against an agent or receiver who

fails to render an account.111 A constructive trust found to exist because of fraud,

or because of profits made from a fiduciary position (whether or not by an actual

trustee), may be treated in the same way as an express trust if it is possible to

identify the money and ascertain its investment history. Often however a

constructive trust differs from an express trust in that there is no trust fund which

preserves its identity throughout a history of investment. The existence of such a

fund must then be supposed as a kind of fiction, as in the equitable remedy of

tracing. In such cases, compound interest will be awarded, on the analogy of the

earnings that the putative trust fund ought to have made.112 Traditionally, in these

cases as in the express trust cases, compound interest was only awarded when the

fiduciary had a trade in which the money could be invested. It has been argued113

that since the Westdeutsche case this condition is no longer essential;114 but its

existence is still assumed in Clef Aquitaine SARL v Laporte Materials (Barrow)

Ltd.115 This kind of interest presents no analogy to compensatory interest on debt

or damages: it depends on the proprietary character of the claim, and represents

the deemed profit of the defendant rather than the deemed loss of the claimant.

111 Earl of Harwicke v Vernon (180 14 Ves 504, 33 ER 614; Pearse v Green (1819) 1 Jac & W

135, 37 ER 327.

112 Wallersteiner v Moir (No 2) [1975] QB 373.

113 Elliott, “Rethinking Interest on Withheld and Misapplied Trust Money” [2001] Conv 313,

333, citing Kuwait Oil Tanker Company SAK v Al Bader (unreported 21 December 1990,

varied [2000] 2 All ER (Comm) 271.

114 [1996] 1 AC 669, 702 per Lord Browne-Wilkinson.

115 [2000] 3 All ER 493.

 

 

I don't know if this is a case of wishful thinking or if it has been discussed before in the main CI thread. I suppose I ought to copy this post over there too, if you and others think its worth it, just to see whether it is something that can be developed.

 

I hope all this makes sense

 

seems we might be beating up the wrong track anyone heard of disgorgement before?

 

Quote:

 

 

Disgorgement is the giving up to a claimant of a gain made by a defendant, as a consequence of a wrongdoing committed against the claimant, but received from a third party. This dichotomy presents a difficult problem: what happens if a defendant, who is liable only in unjust enrichment and not in wrongdoing, makes a gain causally related to the unjust enrichment but by receipt from a third party? An answer to this question has important consequences for the coherence of an independent claim in unjust enrichment.

 

 

 

Glenn

What i have read and deemed relevant the black is copied (almost)

blue is case notes or bits i thought important

red what i believe our point in case is

If i have made any mistakes in my reading of this please feel free to say so i can try to understand it

 

The law of restitution is concerned with the award of a generic group of remixes which arise by operations of LAW

And which have one common function to deprive the defendant of a gain rather than to compensate the claimant for loss suffered

These are called the the restitutionary remedies.

 

The 2 main categories of restitutionary remedy are

 

(i) Personal restitutionary remedies

 

These are remedies which restore to the claimant the value of a benefit which the defendant has received

These remedies are said to operate IN PERSONAM

 

This means the defendant is liable to pay the value of the benefit to the claimant rather than transfer the benefit itself

 

(ii) Property restitutionary Remedies

 

The function of these remedies is to enable the claimant to assert their property rights in or on an asset which the defendant holds.

 

Of these 2 I believe in our claims for interest from the banks that part (i) applies

 

The characteristics of Restitutionary gain

 

(i) Restoring what the claimant has lost

 

Since restitutionary remedies are assessed by reference to the defendants gain they operate in a different way from compensatory remedies where the measure of relief is assessed by reference to the claimant’s loss.

Despite this in many cases the measure of relief is assessed by reference to the claimant’s loss

 

The award of such restitutionary remedies to the claimant can be justified on the ground that where the defendant has obtained a benefit at the claimant’s expense, justice demands that this should be restored to the claimant

 

Our expense is the removal of money in charges

 

(ii) Disgorgement

 

In some cases the remedy which is awarded though it is still assessed by the defendants gain results in the claimant receiving property which they never had before. Property in this case I would view being monetary gain

 

For example the defendant may have obtained some money from a third party due to their breech to the claimant by taking our money they have had it to relend to others thus giving us the right to make a claim in respect of the money so though it is not fully right to call this restitution as it is giving the claimant something they didn’t have it is more appropriately called asking the defendant to disgorge benefits to the claimant

 

A fundamental principle of the Law of restitution is that no defendant should profit from his or her wrong doing.

 

Also corrective justice also demands that a defendant should disgorge these benefits to the claimant because the claimant is the victim of the wrong doing.

 

The law of restitution is the law relating to all claims which are founded upon the principle of unjust enrichment relending of our money to make a profit

This equation of the law of restitution in reversing the defendants unjust enrichment has been recognised by the judiciary as well Case MOSES Vs Macferlan (1776 2 burr 1005,1012;97 er 976,981) Lord Mansfield recognised that the defendant is obliged by the ties of equity to refund the money

 

Lord Wright aa leading proponent of an independent law of restitution (Fibrosa Spolka Akcyjna Vs Fairbairn Lawson Coombe Barbour Ltd 1943 ac32,61)

 

Such remedies in English law are generically different from remedies in contract or tort and are now recognised to fall within a third category of the common law which has been called quasi-contract or restitution

 

 

For careful analysis of the case law suggest that the law of restitution is not founded on 1 principle but that of three

 

(1) The reversal of unjust enrichment

 

(2) The prevention of a wrongdoer from profiting from his or her wrong

 

(3) The vindication of property rights with which the defendant has interfered

 

Restitution is available in respect of each of these points but it is important that the claimant keeps them separate as each needs a different description from the outset

 

The substantive sense of unjust enrichment

 

Unjust enrichment should be used as a way to determine in what circumstances restitutionary remedies should be available to establish this four main points need to be considered

 

(a) The defendant must have received an enrichment they had my money to invest or lend to others

 

(b) The enrichment must have been at the claimant’s expense if they didn’t have my money they would have had to get it from else where

 

© The enrichment must have been received in circumstances of an injustice (meaning that it must fall within one of the recognised grounds of restitution) (A Link to these if anyone knows one would be appreciated

 

(D) The defendant is not able to rely on a defence which defeats or reduces the claim (they haven’t and never have disclosed the true cost of what our charges cost them)

 

If the first 3 are satisfied and the defendant doesn’t have a defence that extinguishes the claim i.e. validates their charges are lawful and a true administrative cost a restitutionary remedy can be awarded to enable the claimant to recover the value of any enrichment which had been received by the defendant

 

The depravation of benefits from a wrongdoer

 

In certain cases the victim of a wrong maybe able to bring a restitutionary claim to recover the value of the benefit obtained by the defendant as a result of the wrong doing

 

E.g.

Sometimes where the defendant commits a tort against the claimant.

 

A similar response may also arise in respect of benefits accruing to the defendant as a result of a breach of contract the commission of equitable wrongs such as a breach of fiduciary duty by over charging us they are wronging us

 

It is sufficient that defendant has committed a wrong against the claimant and that it is the wrong that has triggered the restitutionary response

 

The award of interest

 

Since it is a function of restitutionary remedies that the defendant should be deprived of its gains of being unjustly enriched having committed a wrong it should automatically follow that the claimant be awarded interest as well.

This is because immediately the defendant has received a benefit which they are liable to restore to the claimant as the defendant is not entitled to the benefit thus should pay it to the claimant .The law of restitution accepts this argument thus meaning the defendant is liable to the claimant for the use of the benefit by means of interest.

 

Traditionally Compound interest has been awarded where the wrong has been carried out by a fiduciary (president of India Vs La Pintada Compania Navigacion SA (1985) ac 106, 116 Lord Brandon))

Compound interest is paid on the amount of money owed to the Claimant and on the interest of that money owed as well

the supreme courts act 1981 does not specifically exclude the award of compound interest at common law claims Rather it recognises that the court can award simple interest and the courts have the right to award compound interest to appropriate claims It would be down to the defendant to prove if they had borrowed the same sum of money from another financial institution they would have only paid simple interest then it is only fair that the defendant pays simple interest not compound. However the interest awarded in commercial transactions would normally be compounded Sempra Metals Ltd Vs Irc2005 ewca civ 389, 2005 3 wlr 521 539 para 44 (Chadwick L.J)

 

I think this might be two problems disguised as one. I think Golfscape's Judge might have had a basic problem with a claim for compound interest per se and then another problem with the contractual rate being claimed.

 

This link provides very good support for claims for compound interest :

House of Lords - Westdeutsche Landesbank Girozentrale v. Islington London Borough Council particularly where the interest claimed explicitly restores the Claimant to the status quo ante (ie interest rates relevant to the account balance)

 

I've always been uneasy about claiming the unauthorised overdraft rate, and I think that this is where the ice gets thinner. Regards, Mad Nick.

Progenic,

 

Quote:

 

 

Originally Posted by progenic7

viewpost.gif

 

 

Hi all,

 

 

 

on gary's point of unjust enrichment (very valid point) it is very well known that in case law almost every case that goes by a judge on the unjust enrichment basis he almost always doesnt award contracual interest.

 

 

There is a few circumstances in which this would happen though its highly unlikely to be awarded in a bank fee case (if and i doubt this very much that the judge would accept an argument of unjust enrichment) The whole subject is in itself a very complex one as far as the law goes, and is fraught with dangers for the claimant.

 

 

I have read over 50 cases on the subject of late and most of them either failed on that issue, were struck out, or the claimant ended up using the defence in the alternative.

 

 

 

I would seriously recommend that anybody wanting a good argument for contractual interest try using the misrepresentation act s2. And on studying the subject in detail you will find that the judge almost always awards interest at contractual rate, almost always awards costs ect and on the face of it the whole subject is far less risky.

 

 

The case would have to be bought under whats known as "quasi contract law" and in this situation a couple of interesting things occur.

 

 

The issue of proof is moved to the other side, ie instead of you needing to prove your case the defence has to prove that you are wrong (then ofcourse prove their costs - not gonna happen)

 

 

The judge will almost certainly then award you full compensation for this.

 

 

 

Their is loads of good case law on this matter, more than enough to blow the defence right out of the water

 

 

 

good luck to all

 

 

 

Very interesting points regards Misrepresentation act '67, and its application to claiming claims for contractual rates.

Particularly interesting also that the burden of proof falls upon the defendent to prove that they could not have reasonably known the unfair terms were misrepresentative. Difficult, given the vast amounts they spend on lawyers and solicitors.

 

Just wondering about the reference to "Quasi-Contract"?

Is this.

a/ A verbal or implied agreement that constitutes a contract that effectively nullifies any writen contract?

b/ A verbal or implied agreement that constitutes a contract that operates alongside any written contract?

c/ Neither of the above?

 

ALSO:

Just wondering if the Misrepresentation act could also be used in any way to invoke sec32c of the Statutes of Limitations act (concealment), thus raising the bar on claims prior to 6 years ??

 

For anyone interested in commenting on Misrepresentation act, heres a link to it,

Misrepresentation Act 1967 (c.7) - Statute Law Database

 

Indeed,

 

Quote:

 

 

Originally Posted by natwesttookmymoney

viewpost.gif

 

 

The terms and conditions I was supplied by the bank say 'English Law applies to the contract between you and us'.

 

 

 

The charging regime isn't in accordance with established English Law - statute, precedent and practice.

 

 

 

Is it not potentially a misrepresentation to say that English Law applies, thus giving the impression that the bank will abide by the LAw and behave in a lawful manner, and then behave otherwise?

 

 

 

W

 

 

 

I was induced into entering into the contract with them (as opposed to some backstreet or foreign bank) by being given the impression that I would be protected by English law. Misrepresentation !!

..
  • Haha 3

MY CASE

 

Newbody Vs Abbey

 

NB: Please read the FAQs & step-by-step instructions thoroughly & completely before commencing any action

 

the following is a link to a web archive of abbey websites over the time click on month under year to access Abbey's site for that time period to get what the terms and conditions were for when you opened your account Internet Archive Wayback Machine hope it helps or here for where i have started to pull them out to http://www.consumeractiongroup.co.uk/forum/abbey-bank/91707-archives-abbeys-web-pages.html

 

Advice & opinions given by me are my views or how i would respond, and are not endorsed by the Consumer Action Group & are offered informally, without prejudice & without liability. Your decisions & actions are your own - if in any doubt, seek the opinion of a qualified professional

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Excellent Newbody, thanks for the effort and time.

I will further subscribe to this thread in the near future as I have some interesting experiences (quite a few) regarding compounded unauthorized interest being paid ( and not) by the banks,before court date.

Leech

http://www.consumeractiongroup.co.uk/forum/site-questions-suggestions/53182-cant-find-what-youre.html#post436526

click my scales if you think i am helpful ! yes LHS down there !!

Once more into the breach dear friends,once more

or close the wall up with our banks dead ,

The games afoot,follow your spirit and upon this charge

Cry 'God for Harry' England and St George

Henry V battle of Agincourt 1415

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Well done indeed, Newbody. I am not capable of this kind of work, but I have been been hoping somebody would do this eventually. Not before time, either. We may actually be getting somewhere, thanks to good people like you. :)

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Well done indeed, Newbody. I am not capable of this kind of work, but I have been been hoping somebody would do this eventually. Not before time, either. We may actually be getting somewhere, thanks to good people like you. :)

 

Ditto, i'll second that.

 

Good work.

 

Tanz

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For thoose of you more used to legal arguments and analysing things reading through a case and saw this extract now to me it reads as if there is a certain duty emposed upon the banks if so do you think this would hold water in proving they have this duty to us

 

75 ) That is the point on which I have found this appeal more difficult than the rest of your Lordships. If this issue affected only banks, I would be slow to conclude that there could never be liability for carelessly failing to comply with a freezing order. Banks are already subject to strict regulation and potential sanctions in connection with money-laundering and similar activities. They are enjoined to know their customers. They become liable for breach of fiduciary duty if they shut their eyes to dishonest dealings by their customers. VAT (and PAYE) collected on behalf of HM Revenue and Customs by trading companies is not trust money, but banks cannot be unaware that VAT (and PAYE) collected in this way is often not properly accounted for, through fraud or mismanagement. There is a public interest in banks responding with particular care, promptness and vigilance to any freezing order obtained by HM Revenue and Customs.

 

 

case : [2006] UKHL 28 on appeal from [2004) EWCA CIV 1555

 

Her Majesty's Commissioners of Customs and Excise (Respondents)

v.

Barclays Bank plc (Appellants)

MY CASE

 

Newbody Vs Abbey

 

NB: Please read the FAQs & step-by-step instructions thoroughly & completely before commencing any action

 

the following is a link to a web archive of abbey websites over the time click on month under year to access Abbey's site for that time period to get what the terms and conditions were for when you opened your account Internet Archive Wayback Machine hope it helps or here for where i have started to pull them out to http://www.consumeractiongroup.co.uk/forum/abbey-bank/91707-archives-abbeys-web-pages.html

 

Advice & opinions given by me are my views or how i would respond, and are not endorsed by the Consumer Action Group & are offered informally, without prejudice & without liability. Your decisions & actions are your own - if in any doubt, seek the opinion of a qualified professional

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There is no doubt that in law if the rate of interest is specified in the contract then you are entitled to claim that rate. That is the "contractual rate" of interest. It is only a question of arguing to the judge that there is an implied term which permits a contractual rate. In any other type of contract which interest is not referred to at all this would probably be impossible and you have to rely only on the 8% in court. However because you are dealing with a financial institution and there is an express rate of interest in the contract for the benefit of the bank when it lends money, in my view it now becomes possible to say that there is an equivalent term which benefits the customer when the bank owes the customer money.

 

I certainly don't see any risk. You simply have to claim the 8% under the County Court act in the alternative. You'll get one of them. Hopefully it will be the higher implied contractual rate.

 

Charging the unauthorised rate is of course much more attractive. The arguments are exactly the same and in theory if you could win on the basis of one being you could succeed on the faces of the other. The principle of mutuality is identical. It is simply that it seems a little bold to me. I would want to feel my way on this. But go ahead if you want. However you would have to start introducing the idea of this implied contractual rate in your preliminary letter. If you have already sent preliminary letter but you would like to increase your claim by the implied contractual rate of interest, then you should send another preliminary letter with the adjusted amount and explain how you arrived at that new total.

 

I think that it is worth trying. There is nothing to lose. It can't hurt.

 

If anybody tries this please keep me informed. It will be useful for others to know about

 

I know this is only slightly relevant, but I have used a different Act for recovering debts in my business life. The legislation that provides small businesses with a mechanism to claim interest on late payments (the fabulously descriptive and surprisingly compact) The Late Payment of Commercial Debts (Interest) Act 1998.

 

I know that this legislation SPECIFICALLY excludes consumer credit agreements and that the Act we rely on (CCA1984) is a *totally* different ballgame .... but I think there are some interesting aspects.

 

 

 

 

 

 

 

The definition of "Interest" that this Act employs is;

1. If the contract has a stated right to charge interest, then the claim cannot include statutory interest - the rate stated in the contract will apply.

2. Statutory interest is calculated by a formula set down by the secretary of state and in doing so, the Sec. of state will consider the following criteria; a) To protect suppliers whose financial position makes them particularly vunerable ... b) To deter generally late payments.

Where it does apply, the rate of statutory interest is not fixed. It is determined by taking the Bank of England base rate at the beginning of each half year and adding 8%. For the first half-year of 2006, the rate is 12.5%. (there is a full list of rates here; http://www.payontime.co.uk/legislation/legislation_main.html [Edit: Link fixed]

 

As I said - I know this is all very different because it only relates to small businesses taking on customers, but there are a couple of interesting parallels in this legislation - specifically the bit about the interest rate used *MUST* be the one in the contract if stated and that under such circumstances, statutory interest cannot apply.

 

Does anybody actually have access to the full wording of s.69 of CCA84? And are there any appropriate amendments? How/where would we find such beasts?

..

 

 

Excellent particulars Bong very detailed and thorough!

 

You might want to add the full citation for Kleinwort Benson Limited v Lincoln City Council which is:

 

[1999] 2 AC 349

 

Also I'm not entirely sure about your claim for compounded interest. My understanding is that compound interest is only recoverable where there exists a trust or there is a claim for unjust enrichment. See

 

House of Lords - Westdeutsche Landesbank Girozentrale v. Islington London Borough Council

 

If this is correct you should change para 11 to state something on the lines of:

 

The claimants ground for seeking restitution of the compounded contractual rate of interest is that the defendant would be unjustly enriched if the claimant's entitlement was limited to the statutory rate of interest in that the defendant has had use of the sums and would have used these sums to relend at commercial compunded rates.

 

It may well be that asking for the unauthorised rate is a little optimistic as the right to claim compound interest is based on the law of unjust enrichment so stripping the defendant of any profit they have made out rather than compensating loss. Whilst a court may well accept that the bank will relend at a compounded authorised rate it is a rather big assumption that the money will be used to relend at the unauthorised rate as banks generally do not allow people to operate their accounts in unauthorised rate for too long.

 

Ultimately the decision is yours. You coud perhaps give the authorised rate as an alternative.

 

Best of luck

 

Zoot

 

Extract from Defence filed by HSBC and the parts of Bong's POC it refered to

 

and the amended defence (with excerpts from my POC inserted by me in BLUE)

 

 

8. It is denied that the Claimant is entitled to, or has any basis for claiming, compound interest as alleged in paragraph 11 of the Particulars of Claim, which should be struck out.

 

[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 pages 3 & 4.

The claimant’s ground for seeking restitution of the compounded contractual rate of interest is that the defendant would be unjustly enriched if the claimant's entitlement was limited to the statutory rate of interest in that the defendant has had use of the sums and would have used these sums to re-lend at commercial compounded rates.]

 

9. Paragraphs 12 and 13 of the Particulars of Claim are denied.

 

[12. Alternatively, if the court decides that the claimant is not entitled to the contractual rate of interest, then the claimant claims interest under s.69 County Courts Act 1984. A schedule of the interest calculated is annexed to the Particulars of Claim at pages 5 & 6.

13. Accordingly, the claimant claims:

a. The return of £2,805.53 taken by the defendant in charges and interest applied on the charges between 26/7/1993 and 13/11/2006.

b. Court fees

c. Compound interest at the contractual rate of 15.9% EAR from 26/7/1993 to 13/11/2006 of £2,700.91, and also interest compounded at the same percentage rate up to the date of judgement 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 26/7/1993 to 13/11/2006 of £766.30 and also interest at the same rate up to the date of judgement or earlier payment at a daily rate of 61p. ]

 

 

 

 

And an extract from Bongs response to the amended Defence

  • As to Paragraph 9 of the witness statement, the defendant asserts that there is no valid basis for the claimant to claim compound interest at 15.9%.

The claimant notes that Paragraph 8 of the Amended Defence, which purports to deal with this aspect of the claim, does not give a reason for the defendant’s denial of the claim.

The claimant contends that this aspect of her claim should not be determined until there has been a judicial ruling on the lawfulness of the defendant’s charges. The claimant acknowledges that the terms of the contract only provide for the defendant to charge and receive compound interest on monies the claimant borrows from the defendant. The claimant’s case for claiming interest at the rate applied by the defendant to the claimant’s borrowing, is based in equity and a legal requirement for fairness and balance:

 

a. When entering into the contract with the defendant, the claimant had no reason to anticipate that the defendant, having a long-established reputation in the banking industry, would make unlawful deductions from her account. Had this been a foreseeable event, the claimant might well have taken a different view about whether to agree to a contract which did not provide the claimant with a mutual right to charge the defendant interest in the event that monies were wrongly taken from her account, over a considerable number of years, thus producing a false picture of the claimant’s indebtedness to the defendant over the entire period covered by the claim, and unjustly enriching the defendant at the same time.

b. The claimant’s case is not that the contract should provide for the claimant to be entitled to charge interest at the rate which the defendant reserves for itself in the ordinary everyday course of dealings. The claimant is inviting the court to award interest and therefore compensate the claimant at the same rate that the defendant deems fair compensation for allowing the claimant to use its money, given that the defendant’s withdrawals from the claimant’s account were unlawful, and given that unlawful withdrawals were unforeseeable at the time of the entering into the contract.

c. If the defendant avers that its charges are fair, reasonable and therefore enforceable, its remedy will be to provide evidence of its actual losses or pre-estimate of costs in relation to the claimant’s account breaches. Since the defendant has been invited to do so prior to the issue of court proceedings, and has refused, and since the claimant is aware that the defendant has failed to defend any other similar claim at trial, the claimant deems the defendant’s charges to the account to be indefensible, and unenforceable at law. It was clearly not in the claimant’s contemplation when entering into the contract, that the claimant would authorise the defendant to apply penalty charges to the account, or to profit in an unlawful manner from the claimant’s account breaches.

d. It should also be noted that the claimant had no bargaining power to determine the terms of the contract and as all banks trade in similar terms, the claimant had no effective choice in the matter.

e. For the contract to confer advantageous terms (i.e. entitlement to compensation) on one party (the defendant) where there is no comparable term in favour of the other party (the claimant) is to create an imbalance in the parties’ rights and is contrary to the requirements of Regulation 5 (1) of the Unfair Terms In Consumer Contracts Regulations 1999 (“UTCCR”).

 

Regulation 5 (1) of the UTCCR states as follows:

 

“Unfair Terms

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.”

 

Therefore, to satisfy the requirement of fairness within the definition given by the UTCCR, the contract should provide a mutual or reciprocal term permitting the customer to apply the same rate of interest on any unauthorised withdrawals from the customer’s account by the bank. The interest claimed is therefore deemed to provide an equitable remedy in the context of the claim.

 

f. The claimant’s claim for compound interest should be viewed in the in the context of the claim rather than in isolation, and with full regard for the seriousness of the defendant’s misdemeanours which have led to the defendant profiting unlawfully from the claimant’s account defaults. It is entirely inequitable that the defendant should have deprived the claimant of the use of her monies for this length of time without repaying it with interest at the rate which it charges the claimant in equivalent circumstances; monies which it is in the business of re-lending at the same commercial rate of interest and which will only restore the defendant to the position where it had not received any benefit from having had use of the claimant’s money.

 

 

 

 

 

JUST AN EXTRACT FROM Mcuths AQ papers

Ok Here's what went in my AQ & Reply to Defence..........The relevant sections of the AQ (N150) look like:

6.1.3 As a company regulated under the Financial Services Authority (“the FSA”), the Defendant has agreed to abide by the Principles for Businesses, as outlined in Chapter 2 of the FSA Handbook:

 

1. Integrity - A firm must conduct its business with integrity.

2. Skill, care and diligence - A firm must conduct its business with due skill, care and diligence.

3. Management and control - A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.

4. Financial Market Conduct - A firm must maintain adequate financial resources.

5. Market Conduct - A firm must observe proper standards of market conduct.

6. Customers’ interests - A firm must pay due regard to the interests of its customers and treat them fairly.

7. Communications with clients - A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.

8. Conflicts of interest - A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.

9. Customers: relationships of trust - A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment.

10. Clients' assets - A firm must arrange adequate protection for clients' assets when it is responsible for them.

11. Relations with regulators - A firm must deal with its regulators in an open and cooperative way, and must disclose to the FSA appropriately anything relating to the firm of which the FSA would reasonably expect notice.

 

6.1.4 This document is produced under the powers given to the FSA within the Financial Services and Markets Act 2000, and provides a benchmark by which financial companies should operate within the United Kingdom. Paragraph 9, places a duty on companies to “take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment”. The Claimant contends that a bank’s fiduciary responsibility is encapsulated in law, and therefore if such a regulated company informs a customer that it is entitled to levy a charge against an account, it would be reasonable to expect the account holder to believe that the actions of the bank are lawful, and that the charge does relate to it’s internal costs, as they continue to contend is the case.

 

 

Cheers

 

Michael

MY CASE

 

Newbody Vs Abbey

 

NB: Please read the FAQs & step-by-step instructions thoroughly & completely before commencing any action

 

the following is a link to a web archive of abbey websites over the time click on month under year to access Abbey's site for that time period to get what the terms and conditions were for when you opened your account Internet Archive Wayback Machine hope it helps or here for where i have started to pull them out to http://www.consumeractiongroup.co.uk/forum/abbey-bank/91707-archives-abbeys-web-pages.html

 

Advice & opinions given by me are my views or how i would respond, and are not endorsed by the Consumer Action Group & are offered informally, without prejudice & without liability. Your decisions & actions are your own - if in any doubt, seek the opinion of a qualified professional

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newbody, the bits in blue were my POC. did you want me to post up my response to this section of the defence and their reply?

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no bong thought i left the comment in saying bits in blue were your response just believed it was a good reference point in the argument for this type of cliam in the way to answer a banks defence

MY CASE

 

Newbody Vs Abbey

 

NB: Please read the FAQs & step-by-step instructions thoroughly & completely before commencing any action

 

the following is a link to a web archive of abbey websites over the time click on month under year to access Abbey's site for that time period to get what the terms and conditions were for when you opened your account Internet Archive Wayback Machine hope it helps or here for where i have started to pull them out to http://www.consumeractiongroup.co.uk/forum/abbey-bank/91707-archives-abbeys-web-pages.html

 

Advice & opinions given by me are my views or how i would respond, and are not endorsed by the Consumer Action Group & are offered informally, without prejudice & without liability. Your decisions & actions are your own - if in any doubt, seek the opinion of a qualified professional

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sorry newbody, I must be having a thick moment - this wasnt an answer to the banks defence. As long as you're sure you know what you're doing then that's fine, just ignore me:)

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never ignore you or glenn or mad nick or couple others your information is what guides me :D

MY CASE

 

Newbody Vs Abbey

 

NB: Please read the FAQs & step-by-step instructions thoroughly & completely before commencing any action

 

the following is a link to a web archive of abbey websites over the time click on month under year to access Abbey's site for that time period to get what the terms and conditions were for when you opened your account Internet Archive Wayback Machine hope it helps or here for where i have started to pull them out to http://www.consumeractiongroup.co.uk/forum/abbey-bank/91707-archives-abbeys-web-pages.html

 

Advice & opinions given by me are my views or how i would respond, and are not endorsed by the Consumer Action Group & are offered informally, without prejudice & without liability. Your decisions & actions are your own - if in any doubt, seek the opinion of a qualified professional

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  • 2 weeks later...

Isn't the answer to the contractual interest debate as follows? A bank charged you at a contractual interest rate say 29% and took £100 in charges and £29 in interest over a year for example.

 

So because the charge and therefore interest is unfair:

 

1. You are entitled to claim the £129 back.

 

2. However, because they took that £129 from you it then PREVENTED you from the option of REDUCING your balance by £129 if you so wanted at that time. (You had to fork out £129 in paying off charges and interest instead of spending that £129 in reducing your balance). As a result therefore you were not able to reduce your balance by £129 and therefore suffered a double wammy being charged contractual interest on £129 which you weren't able to pay off due to unlawful charging.

 

So basically you have been charged:

 

1. £129 AND

 

2. Interest at 29% on £129 on your balance which you weren't able to pay off due to having to pay off the charges!!!!

 

So in effect guys and girls Halibunny is saying that every time you have a charge applied we have been double whammied.

 

1. by the charge plus interest and

 

2. By the inability to reduce your balance by that charge(plus interest) amount and therefore you are charged interest on a balance higher than it would have been if you had not been charged and reduced your account balance accordingly with your available funds. Charging unlawfully denies you the ability to reduce your balance. Therefore the resulting contractual interest applied on your account will be on a higher amount than it would have been if you hadn't been charged because you have lost the ability to reduce your balance.

 

So with a penalty charge on an overdrawn balance or credit card with oustanding balance you are hit TWICE NOT ONCE. Think about it. And that is why in my humble opinion it is right and fair and just and reciprocal and everything else to claim contractual interest!!!!

 

Amen!

 

Do you dig it brothers?

 

Halibunny

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Isn't the answer to the contractual interest debate as follows? A bank charged you at a contractual interest rate say 29% and took £100 in charges and £29 in interest over a year for example.

 

So because the charge and therefore interest is unfair:

 

1. You are entitled to claim the £129 back.

 

2. However, because they took that £129 from you it then PREVENTED you from the option of REDUCING your balance by £129 if you so wanted at that time. (You had to fork out £129 in paying off charges and interest instead of spending that £129 in reducing your balance). As a result therefore you were not able to reduce your balance by £129 and therefore suffered a double wammy being charged contractual interest on £129 which you weren't able to pay off due to unlawful charging.

 

So basically you have been charged:

 

1. £129 AND

 

2. Interest at 29% on £129 on your balance which you weren't able to pay off due to having to pay off the charges!!!!

 

So in effect guys and girls Halibunny is saying that every time you have a charge applied we have been double whammied.

 

1. by the charge plus interest and

 

2. By the inability to reduce your balance by that charge(plus interest) amount and therefore you are charged interest on a balance higher than it would have been if you had not been charged and reduced your account balance accordingly with your available funds. Charging unlawfully denies you the ability to reduce your balance. Therefore the resulting contractual interest applied on your account will be on a higher amount than it would have been if you hadn't been charged because you have lost the ability to reduce your balance.

 

So with a penalty charge on an overdrawn balance or credit card with oustanding balance you are hit TWICE NOT ONCE. Think about it. And that is why in my humble opinion it is right and fair and just and reciprocal and everything else to claim contractual interest!!!!

 

Amen!

 

Do you dig it brothers?

 

Halibunny

 

That is basicaly our reasoning Halibunny for why we are claiming unfortunatly as most of us see it the banks will claim that the interest charged at the 29% was only while you were in excess of your credit limit and not on the entire amount therefore when you paid money into the account it bought you either into credit or within your agreed credit limit so that amount of interest is not acceptable especially scince we are trying to charge CI from date of charge not over the period of ytime the charges had us over our limits

 

Though your comments i feel are just and as said before the reasoning most of us use in court i feel it would not hold water without some form of legal backup as the banks would claim if their charging regime is found to be unlawful then sec69 8% interest is sufficent recompense for the time you were without your money

 

that is why there is many a thread on here discussing the merits and dangers to a claim with CI and this thread was composed of what i saw as the main legal points that could be used to argue for CI from the threads and also some of the warnings others had expressed as well to try and give a balanced view to it all

MY CASE

 

Newbody Vs Abbey

 

NB: Please read the FAQs & step-by-step instructions thoroughly & completely before commencing any action

 

the following is a link to a web archive of abbey websites over the time click on month under year to access Abbey's site for that time period to get what the terms and conditions were for when you opened your account Internet Archive Wayback Machine hope it helps or here for where i have started to pull them out to http://www.consumeractiongroup.co.uk/forum/abbey-bank/91707-archives-abbeys-web-pages.html

 

Advice & opinions given by me are my views or how i would respond, and are not endorsed by the Consumer Action Group & are offered informally, without prejudice & without liability. Your decisions & actions are your own - if in any doubt, seek the opinion of a qualified professional

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As I understand it if you go beyond any agreed overdraft which is exacerbated because of penalty charges then the WHOLE of the O/D is subject to the increased rate including the originaly authorised portion

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As I understand it if you go beyond any agreed overdraft which is exacerbated because of penalty charges then the WHOLE of the O/D is subject to the increased rate including the originaly authorised portion

 

It depends on who your account is with, you have to read the O/D T&Cs fine print.

 

My Lloyds TSB account only charges me the unauthorised rate on the amount I am over my O/D limit for each day it is over the limit. My O/D interest rarely varies more than a few pounds each month.

 

My Nationwide Flex?:lol: Account however, charged me the unauthorised rate on my entire o/d balance for the entire month. My O/D interest charge could be £15 one month then upto nearly £40 the next.

 

So as I say they aren't all the same.

 

Keep up the good work everyone:D

 

IAN

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Yes but as well as claiming the unathorised overdraft interest you should also add the an unauthorised borrowing rate if you have paid their charges.

 

Those charges you have not yet paid only attract one unauthorised rate as this forms part of their unlawful penalty

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