ERC refund against West Brom - before court stage

[yourturntopay]

Help please.

 

We have paid ERC to West Brom last year and have sent letters to request this is repaid to us.

 

The redemption period was for 3 years and we were 43 days off being released from this when the mortgage was repaid in full. However they insisted the full redemption amount was payable, which our solictor sent to the company on the 1st August 2006. It seems really unjust that they could charge the full amount of redemption when we just 43 days off the end period.

 

To work out what the true cost of the redemption was I divided the redemption figure by 1095 (as that was the number of days (3 years) it was vaild for) After I have that figure i mulitipled it by the amout of days the redemption had left to run (42 days) then minus that from the figure paid i.e

 

redemption figure 6399.77 dvided by 1095 = 5.8445388 = daily rate

5.8445388 x 42 = 245.47062 amount left

 

6399.77 - 245.47062 = 6154.2994 Is the amount was over charged.

 

However I have asked for £70% of the figure, which is £4479.89 as this keeps me in the small claims court and shows i am trying to be reasonable. I have stated in the letter I have sent them that no interest has been added at this stage however if I go to court, then i'll add the court's daily rate from the date the money was charged.

 

The argument I have used is this:

 

Having taken legal advice on this matter it is very clear, as you will no doubt be aware, that English contract law requires such charges to be a genuine pre-estimate of your losses. In the case of Castaneda and Others v Clydebank Engineering and Shipbuilding Co Ltd., (1902) 12 SLT 498 the House of Lords held that a contractual party can only recover damages for actual or liquidated losses incurred from a breach of contract as opposed to a charge which represents a penalty. This was upheld in the case of Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79. In addition to this, your charges would represent an unfair term of contract which is contrary to the Unfair Terms in Consumer Contracts Regulations 1999 (SL. 1999/2083). Your charges would constitute an unfair penalty under Schedule 2 of the said regulations which provide an indicative and non-exhaustive list of terms which may be regarded as unfair. Under paragraph 1(e) of schedule 2 this specifically includes terms which have the object of requiring any consumer who fails his obligation to pay a disproportionately high sum in compensation.

 

We would also like to bring to your attention the following statement by the Office of Fair Trading:

 

A term in a mortgage agreement which requires the borrower to pay more for breaching the contract than actual costs and losses caused to the lender by the breach (or a genuine pre-estimate of that) is likely to be regarded as an unfair penalty and to be unenforceable at Common Law and (in a consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations.

 

The fact that we signed the mortgage offer containing the term relating to the early redemption charge does not make this term enforceable, as I’m sure your legal department are fully aware.

 

I have had the standard response from them - i.e. give us 14 days etc, to which i responded with not a chance sunshine - pay up by the 8th May or it's court time - only more politely and professionally put!!

 

I faxed this letter to them today and they phoned to confirm receipt of the fax (am also sending it recorded delivery) The person i spoke to on the phone stated that they will respond by the 8th May. I very much doubt they are going to roll over and pay up, so my next step is court.

 

Could anyone offer any advice on what the POC should be and whether it is better to do it online or in person (for my bank charges i have used the online route)

 

I want to gather as much info prior to making a court application, so I am all prepared and have time to understand the legal arguments that will throw at me and how I can best answer these.

[yourturntopay]

Is anyone able to offer some advice or help on this please???

[rbrears]

If you do a search against ERC you will find some big threads on this topic. There is no breach of contract with an ERC payment and therefore the payment cannot be a penalty charge. This is the entirely unsatisfactory state of the law as it stands at present, despite the Law Commission saying as far back as the 1970s that this should change.

 

I think the main threads are Zoots and you should be able to find them by searching against the name.

 

If you have a small claim beware because that may not stop the indemnity clause in the mortgage agreement from operating so that West Brom could ask that you pay their costs.

 

Anyway read the threads fully and then decide.

[yourturntopay]

How would I know if the mortgage has an indenity clause? i don't have any of the orginial paperwork anymore. To complicate matters further the mortgage was orginially taken out with GMAC but they sold it to West Brom.

 

Do GMAC have this as a standard clause?

[rbrears]

All mortgage lenders do - it will be in the Mortgage Conditions document you should have been given when you received your mortgage offer originally. Doesnt matter if GMAC were the original lender - if they sold your mortgage as part of a mortgage book sale to West Brom then West Brom would have to adhere to those original mortgage terms as if they stood in GMAC's shoes.

 

You should be able to get a copy of GMACs terms and conditions from their website by going to this page Literature

 

Hope this helps

[lickthewallfatboy]

you really should have done your homework before taking this on.One of the CAG members got stung for around £7k legal fees when their ERC claim was thrown out of court.

 

You cannot split a claim for an ERC in any case even if it was a penalty.Zoot has explained why these would have to be claimed in their entirety....

 

I would negotiate a speedy exit from this claim,and ask West Brom to agree to drop all costs against you and see what happens

[yourturntopay]

Hi thank you for responding but i think there is some confusion regarding my claim.

 

Firstly I haven't split the claim, the figure is what i think is owed. I have no need to split the claim and never intended to either. I haven't added interest ect either. All i have requested from West Brom is a 70% refund of what I paid - after all i had paid 34 and half months of the 36 month ERC term. All that was outstanding was 42 days of the ERC term when it was paid in full by the solicitor.

 

2nd I haven't made a claim as yet, this is why i wanted the advice, -hence the legal homework is being done and advice beign sort. I wanted to know what i was getting into before commitming myself to legal action.

 

All i have done so far is request a refund of monies i have paid. I have indocated that I am willing to take court action if neccesary but am open to negotiation.

 

What i am askign for is some advice on where I stand in regards to the fact that the ERC only had 42 days left and yet the company insisted on a full 6% ERC being paid - is there some legal argument i can use as unjust penatly/financial punishment?

[lickthewallfatboy]

sorry-crossed wires obviously

 

I personally would not advise you to pursue this-until the law is changed you could be out of pocket big time.

 

If you are requesting 70% of what you actually paid to keep you under the small claims limit,you are in effect splitting the claim.

[yourturntopay]

Why is spilting the claim? I worked out what their interest would have been of the remained of the loan and then added a precentage on for admin costs. Surely spliting claims is when you claim one amount of money under 2 court claims???

 

I have been looking under GMAC T&C and i can't find a referrence to them having to pay court costs for this. There is reference to th mortgage holder being liable for courts costs/soclictors fees/.disbursements etc for reposession/recovery of debt, but nothing for defnding claims against unfair charges - which is my argument for the ERC. Am i readign this wrong or have i missed a section in the T&C????

[Bona]

I took advice yesterday erc is a no goer except in special circumstances some GMAC mortgages mine included has a clause that you can not pay erc if you give them 28 days notice , if you have had the mortgage for three years they took erc of us saying that we did not give them notice and I am fighting that saying that allthough we did not write a letter 28days before we redeemed we kept them informed. if you have no such cluase the advice I got was write ask threaten issue a summons if no go pull out some will get it some wont dont go any further there is no leg to stand on in court

[yourturntopay]

I have received a phone call from West Bromwich this afternoon. They have agreed to refund the full amount we were asking for, which is very very good news for us

[zootscoot]

Congratulations!!!!!!!!!!!!!!!

:D

 

 

 

 

[humbleman]

excellent news:D

[Bona]

Well done

[Don4071]

Fab!

[brechiner]

Well Done

 

I knew she woud win

[mochamoo]

Woohoo! Another one bites the dust!

[mrsfoot]

Well Done!! This is great news.

 

This is the first time I have read this thread. I have to say your argument was quite strong in my opinion. You used your figures well and shown the mortgage company that you were being reasonable. They would not have paid such a sum out if they had thought you did not stand a chance in a civil court.

Having 42 days left of an ERC period and being chargeed the full amount was unreasonable and I think they thought they would get away with it......all other ERC claimants should take heed from this thread if they are in a similar position. If you have been charged a full amount so close to the end then you may just have a strong enough argument to follow this through.

 

Well done again for your perseverance!!

 

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