Bluejay v HSBC

[Castlebest]

As long as its obvious what each charge is (you have the description the bank used on the statement against each one) the dates when they were deducted from your account and the values of each charge and the overdraft interest and statutory interest can be followed through I dont think it will matter how many bits of paper its on.

 

Obviously the easier it is to follow the better.

 

pete

[bluejay]

Thats what I thought, all the dates marry up so it should be fairly simple to follow. I will send that in soonest and sit and wait as to what happens next.

 

Thanks Pete

[lateralus]

let's talk about this - pete and bluejay - as the judge is asking for some pretty detailed information - i'm thinking a witness statement like this one -PLUS-

[lateralus]

let's talk about this - pete and bluejay - as the judge is asking for some pretty detailed information - i'm thinking a statement of evidence like this one(calling it particulars of claim) -PLUS- the schedule of charges done correctly would fill the bill a little better -

 

see this one:

 

Claim Number:*******

 

In the ******* County Court

 

Between:

 

 

Your name

(Claimant)

 

 

 

and

 

 

 

 

Bank Plc

(Defendant)

 

 

 

 

_________________________ ______

 

 

PARTICULARS OF CLAIM

 

 

_______________________

 

 

 

 

 

1. The Claimant [has] [had] an account 1 ("the Account") with the Defendant which was opened on or around 2 [and closed on or around 2 ]

 

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

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

 

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

 

5. It is admitted that the Defendants charges were levied in accordance with the terms and conditions of the account in question. However, it is submitted that the Defendants charges are not related to or intended to represent any actual loss arising from a breach of contract, but instead unduly enrich the Defendant which, by virtue of the legislation cited in paragraph 4 above, exercises the contractual term in respect of such charges with a view to profit.

 

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

 

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

 

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

 

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

 

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

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

 

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

 

11. Additionally, the [claimant believes there to be a high possibility that the] terms and conditions of [his / the claimants] account contract explicitly describe the charges as to be levied in instances of breaching those terms. This is true of the contracts of other customers of the defendant that the claimant is aware. However, the bank has failed to provide me with a copy of the account contract, despite repeated requests to do so, so unfortunately this cannot be proved. A right of subject access request for this document was submitted to the defendant under the Data Protection Act 1998, on 8th September 2006. The defendant has failed to comply. Here, if your account contract states the charges as ‘breaches’ use the text in black. The blue bit was true in my case and I’ve left it there as an example. If it applies to you, keep it in, if not, just take it out.

 

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

 

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

 

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

 

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

 

15. Further, under the UTCCR:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

21. On numerous occasions, the Claimant has requested that the Defendant justify its charges by providing details of the costs incurred as a result of my contractual breaches. Each time those requests were rebutted or ignored.

 

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

 

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

 

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

 

25. It is submitted that the Defendants charges are applied by an automated and computer driven process. This process consists of a computer system ‘bouncing’ the direct debit, and sending out a computer generated letter. It is therefore impossible to envisage how the Defendant can incur costs of £** by carrying out this completely automated process. Note that the letter received notifying of a charge is identical in every instance, and if multiple breaches occurred on the same day, a separate letter will be sent in each instance.

 

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

 

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

 

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

 

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

 

30. Accordingly the Claimant claims:

 

a) the return of the amounts debited in respect of charges in the sum of £ 3 and any interest charged thereon;

 

 

b) Court costs;

 

c) The claimant claims interest under section 69 of the County Courts Act 1984 at the rate of 8% a year, from [date when the money became owed to you] to [the date you are issuing the claim] of £ [amount] and also interest at the same rate up to the date of judgment or earlier payment at a daily rate of [enter the daily rate of interest]

 

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

 

Signed, dated.

 

 

 

what do we think?

[Castlebest]

THE COURT DIRECTS OF ITS OWN INITIATIVE AS FOLLOWS:

 

1. The Claimant shall, within 21 days of the date on which this order was drawn up by the court, file at court and deliver to the Defendant answers to the following questions, concluding with the following statement, dated and signed 'I believe that the facts stated in this response are true':

 

-Provide a typed list of the charges in dispute, showing the date and amount of each charge and the rate of interest applied;

 

-If only part of the charges is in dispute, show how much is admitted and explain why;

 

2. UNLESS the Claimant complies with paragraph 1 of this order, the claim shall stand struck out and the Defendant may file a formal request for Judgement in default and for the assessment of any costs incurred in the proceedings;

 

3. A party affected by an order made of the court's own initiative may apply to have it set aside, varied or stayed within 7 days of service.

 

4. Parties to inform the court within 21 days of any dates to avoid for listing of the case."

 

 

Think thats overkill Lattie the judge has only asked for a schedule of charges

 

pete

[lateralus]

ok, i'm good with that.

 

these court directions come in so many different wordings - it really taxes my brain to the limit trying to know what's best to send.

 

maybe i should be sticking to the pre -court stuff - like the newbies - and the head cheerleader of the morale boosters club!

[Castlebest]

Dont you dare Lattie , its good we question each other it makes sure we get it right

 

pete

[Catlover64]

ok, i'm good with that.

 

these court directions come in so many different wordings - it really taxes my brain to the limit trying to know what's best to send.

 

maybe i should be sticking to the pre -court stuff - like the newbies - and the head cheerleader of the morale boosters club!

 

Please don't do that - Where would we be without you? :o

[lateralus]

i wasn't threatening to quit or go away! - it's just these court directions vary so much - i don't want to tell anybody the wrong thing - i think my strong point is the tlc aspects of this business! and also finding where things are - i seem to have that done pretty well

[Castlebest]

Yes the directions vary and its good to have more than one set of eyes reading and more than one brain interpreting what it means, you have picked me up twice this week and you were right, so keep doing it

 

pete

[lateralus]

you keepin track.......

i think it was 3 times -

only kidding!!!!

[bluejay]

Thanks guys,

 

Just so that I am straight,we are sticking with Plan A and sending the two spreadsheets per account. One detailing the charges, descriptions and dates and the other showing the charges and the 8% interest?

 

I will print these off and kill two birds with one stone and deliver them to the court when I go to make the payment and at the same time post the copies to DG.

[Castlebest]

Correct Blue

 

pete

[bluejay]

Hi All,

 

Again many thanks for your help so far, dashed to Horsham on Monday and paid fee and handed in another spreadsheet! Also posted the spreadsheets to DG the day after.

 

It's been about two weeks since I sent a nudge letter to DG (basically when I received the General Form of Judgement or Order) do you think its time for another?? I have not heard anything from DG yet

 

Cheers

 

bluejay

[jowalshy]

I never heard anything from DG until they sent me an offer. I, in total, sent 4 nudges every 2 weeks. You can do another nudge letter now, but don't get too upset if you don't get a response from them.

[bluejay]

Good Afternoon all,

 

Right now that I have yet another round of Night shifts out of the way I can return my concentration to this!!!

 

Received in the post today from the court a "Notice of Allocation to the Small Claims Track (Hearing)"

 

Here is the notice word for word

 

"DISTRICT JUDGE TAYLOR has condidered the statements of case and allocated the claim to the small claims track.

 

The hearing of the claim will take place at 1500 on the 30th August 2007 at Horsham County Court, The Lawcourts, Hurst Road, Horsham, West Sussex, RH12 2EU and should take no longer than one hour.

 

The court must be informed immediately if the case is settled by agreement before the hearing date.

 

PLEASE NOTE: This is a PROVISIONAL hearing date.

To enable us to make full use of judicial time and to offer you an earlier date, this case is one of two listed for the date and time shown on this notice. PLEASE CONTACT THE COURT 48 HOURS BEFORE THE HEARING FOR CONFIRMATION AS TO WETHER YOUR HEARING DATE WILL BE EFFECTIVE. If your case does have to be adjourned, it will be given a new PRIORITY hearing date as soon as possible.

 

1. Each party shall deliver to every other party and to the court office copies of all documents (including any experts' report) on which he intends to rely at the hearing no later than 14 days before the hearing.

 

2. The original documents shall be brought tot he hearing.

 

Date: 02 August 2007"

 

OK then there is a bit more blurb that seems to be general advice etc.

 

So if I read this right I need to prepare my court bundle so that it arrives at the right places no later than the 16th August! To play it safe in that case I need to have it all ready to post by Friday.

 

Right first things first I need to send the 2nd Nudge, I am going to use Latties one in this post "New---after 28 Days - Maybe No Aq!!!!!!!" and get that in the post today.

 

It all seems to be moving a little quicker now, is this normal??

 

Thanks

[freakyleaky]

Yes you need to get court bundle in 2 weeks before court date. 1 to the court, 1 to dg and keep 1 for you with all original documents.

 

There is no normal at the moment! The fact that it is still moving is good!

[bluejay]

OK here is what I am sending to DG, slightly adapted from Latties letter

 

DG Solicitors 04 August 2007

12 Calthorpe Road

Edgbaston

Birmingham

B15 1QZ

 

Dear Sir/Madam

Re: ******* - v - HSBC

Account Nos: ******** and ********

claim no: ********, Filing date 12th June 2007.

 

I am writing to you today in a further effort to ask you to consider my claim. I am most disappointed that you have not even acknowledged my previous correspondence.

 

I have been notified that the Allocation Questionnaire is being dispensed with in this case and that it has been transferred to Horsham County Court and allocated to the Small Claims Track (Hearing) for a hearing on the 30th August 2007. I have written to you in the past, asking for you to consider my claim and reply to me. I have heard nothing. Were this to come before a judge, it is obvious who is making any and all attempts at resolution.

It is my feeling that you seem to have no intention of defending this claim in court and are simply procrastinating.

I am mindful of the vast number of claims with which you are currently dealing. In order to more speedily resolve this matter, I am willing to accept the sum of £3942, this is made up of the original claim amount of £2921, the statutory interest claimed under section 69 of the County Court Act 1984 at 8% (801.80, the court fee of £120 and the Allocation fee of £100 as full and final settlement of this particular claim. I do not agree to waive my rights in respect of any other actions, nor do I agree to a clause of confidentiality.

 

Please find enclosed another copy of my schedule of charges relating to this claim.

 

I hope to hear from you very soon so that a reasonable conclusion to this claim might be achieved. I am sure that the courts would whole heartedly approve of our settling this matter in a timely manner and without their further intervention.

I look forward to hearing from you.

 

Sincerely,

[bluejay]

Just thought, realistically to have all of the court bundles sorted in time I really only have a week to do it. this is if I use the normal post. To give myself more time I suppose I could courier it up to DG, now if I did this do you think I would be able to reclaim the cost of this as well?

[lateralus]

i think i'd worry about getting the court one in on time and just send the dg one when you send the court one - recorded delivery -

the bundle can be done in about 6 hours at a pinch (mind you that's without eating, drinking and potty breaks!)

[bluejay]

thanks lattie, looks like it was a good thing that I have booked leave for Friday, at least it gives me a head start

[jowalshy]

If there is anything that you need for your bundle and can't find it, I might have it. Once you have got together what you have, put the list up here and if there is anything that you are short of, let us know.

[bluejay]

Oh well it looks like the court bundle can wait, got a letter from the court today saying

 

"The courtis aware that a test case has been issued to be heard in the Commercial Court (2207 folio 1186 issued on 27 July 2007) between 14 January and 28 February 2008, to determine the issues of legal principle in relation to the recovery of charges debited to bank current accounts

 

Upon it appearing to the court that the issues raised in the test case will affect this claim

 

IT IS ORDERED THAT

 

1. Hearing listed on 30 August 2007 is hereby vacated

 

2. Claim stayed until further order

 

3. Permission for either party to apply to lift the stay sp[ecifying why the claim should not await the test case decision

 

4. The parties are to notify the court no later than 07 March 2008 in writing whether the claim has settled or is withdrawn or a hearing is required for directions for trial

 

5. The file will be reveiwed by a District Judge as soon as practicable after 07 March 2008"

 

 

Any advice

 

Thanks

 

bluejay

[lateralus]

so now you apply for the stay to be lifted.

[freakyleaky]

And ask for a hearing for the application to be heard! If judges are doing this in order to empty their courtrooms (as has been suggested) lets not let that happen!