CONTRACTUAL INTEREST - Is this simple to claim form

[Guest TractorGirl]

Hi guys

 

I have just claimed against Nationwide for £623 + 8% interest and WON 3 days before the 28 days MCOL deadline.

 

I am now just about to submit the pre lim letter to Lloyds for £380. As this amount is quite small but the period was 2003/2004, would it be worth while to try the CONTRACTUAL interest route.

 

I need some advice on whether this is easy or not and is the process different ? Do I send different letters etc

 

Help needed asap

 

TG xx

[GaryH]

I would'nt advise it personally. Its a highly contentious and complex subject, and there is nothing in law which substantiates a claim for interest at the accounts contractual rate.

 

If you want to claim it, you must understand the arguements fully, along with the risks and potential implications.

 

Chances are that Lloyds will pay the charges + 8% and defend the contractual.

[Guest TractorGirl]

i think i will stick with the 8% as I know this does work.

 

If the account was closed in 2004 and the claim was successful, where does the rfund of charges go ?

 

Do they send a cheque, or credit a different bank account you hold ?

[Guest Mumofthreeboys]

Do they send a cheque, or credit a different bank account you hold ?

 

Yes they do, if you tell them to.

[Guest TractorGirl]

At what point would you tell them ?

 

Pre Lim, LBA or MCOL stage

[Guest Mumofthreeboys]

Tell them at every stage.

[TeamD]

If anyone wants it, I have evidence that LloydsTSB pay greater than 8% on unjustified charges when they refund, therefore why should they be able to argue in court that they should pay a lower interest rate when ruled against for making unlawful charges?

 

I personally am going to charge them their unauthorised borrowing rate.

[GaryH]

They have paid some claims, yes, but recently they have defended quite a few as well.

 

I would say that if you really are set on claiming contractual, then you should put your claim on hold for at least 2 weeks so as you can fully understand it first.

 

Firstly, its not just about pleading it on the claim form - you must be fully willing and prepared to argue it in court, and also understand that there is a high possibility of this happening. A barrister from Lloyds has indicated to another user at a hearing last week that they are now planning to defend all contractual interest claims in court. See this thread - Darling 2 takes on the TSB**won**, and also this one - http://www.consumeractiongroup.co.uk/forum/lloyds-bank/65047-lucy-lloyds.html

 

If it turns out that they do do this, it will be becouse if you add CI to your claim it adds a weakness to it that the bank can seek to exploit. There is no basis in law for claiming contractual interest. There are arguements for it, yes, and good arguements, maybe, but nobody has ever shown me anything which substantiates it in law.

 

Therefore, before you file a claim containing contractual interest, you must be able to answer yes to the following questions, or else you should not even consider it -

 

Are you confident of your arguments in respect of the basis of your contractual interest claim?

 

Do you understand the principles of the implied term argument?

 

Do you firmly believe in these arguements and are you confident that you could put them succinctly to a judge in court?

 

Do you know what you'd rely on in court to substantiate your CI claim?

 

And do you know the flaws in the CI arguements, and how you would counter them?

 

Its also potentially risky in terms of the possibility of costs being awarded against you if you were to lose, although admittedly much less so if its heard in the small claims track.

[TeamD]

I've got to say that I'm not the most clued up on here, but in my own case the logic goes something like this...

 

TeamD: Dear Mr Lloyds, Did you or did you not make unjustifiable penalty charges upon my account? And upon refunding these charges what rate of interest did you apply?

 

Mr Lloyds: Ahem...mumble....12%...but...but

 

TeamD: For the duration of the period between your levying these unlawful charges and refunding them what interest rate were you charging me upon my overdraft that would have either been less or non-existant altogether?

 

Mr Lloyds: Our Unauthorised Borrowing Rate of 29.4%APR

 

TeamD: So you would like me to accept a lower rate of interest upon your unauthorised debts to me than you apply to my unathorised debts to you? Resulting in a situation whereby you have charged me for yourselves acting in breach of contract and therefore any settlement you make at a reduced interest rate ultimately will not reflect the true amount of my losses incurred in this matter?

 

Maybe I'm wrong but surely it cannot be lawful for the bank to have profited by their own mistakes and rely upon a grey area in the law of avoid full, just and final settlement?

[Glenn UK]

Its not a grey area of law, there is no specific clause in the contract allowing you to claim contractual interest.

 

If anyone wishes to claim contractual interest then they have to do the work to understand the possible justifications for doing so.

 

I don't agree with Gary's viewpoint and have claimed contractual interest on all my claims. In one case i made a mistake which prevented me from claiming it, but I have learnt and am still submitting claims with contractual interest.

 

I currently have claims against the Co-op and Abbey, both include CI.

 

 

Incidentally if we are relying only on substantiated case law then we wouldnt be claiming back the bankcharges either. There is no case where charges have been deemed unlawful.

 

IF a bank wants to defend all CI claims then it is up to the claimants to make sure it has to happen at a full hearing along with the lawfulness or otherwise of the charges.

 

I doubt they will defend them at full hearings they will try to defeat the claim for CI at AQ hearings i supect.

 

JMHO

 

Glenn

[GaryH]

Yes, actually I totally agree. It does seem fair that you should be able to charge them the same rate that they charge you. Not quite as simple as that though unfortunately.

 

They charge you 29.whatever% becouse there is an express term of your account agreement which permits them to. Granted its extortionate, but unfortunately it is also perfectly legitimate - you agreed to it when you opened your account and you signed the contract.

 

There is no term of contract which allows you to charge them the same rate in reverse. You are arguing an implied reciprical term, under a principle of contractual mutuality. This is an untested - therefore risky - and some would say totally invalid arguement.

 

Is them having taken money in charges really comparable to them having an overdraft with you? I would'nt say so personally.

 

The rate of interest allowed by statute is simple 8%. Its highly unlikely, IMHO, that a judge would depart from the rate set down by parliament as being adequate 'compensation' for you being deprived of your money for x amount of time, to award a massively higher compounded rate.

 

With regards to the unjust enrichment arguement, Westedeutse v Islington BC is a clear authority against the awarding of compound interest in this type of claim.

 

Obviously others will have different opinions, and there are other arguments for, but many of these are highly complex legal arguments, and the fact is that its always going to be a risk.

 

In the small claims track its less risky, but even then, if you refused the charges + 8% and pursued for CI, then the judge found no basis to award it, you could have the realistic prospect of costs against you on the basis that you acted unreasonably.

[GaryH]

Crossed posts:)

[GaryH]

Incidentally if we are relying only on substantiated case law then we wouldnt be claiming back the bankcharges either. There is no case where charges have been deemed unlawful.

Yes, I agree that technically that's true, although I don't think you can realistically use that comparison. I don't think there could be too much arguement that bank charges are not contractual penalties!

[TeamD]

I kind of think that you guys have missed the point here, if Joe Bank takes my money and then charges me for the beneift, once found out then refunds less than what he took, then surely I have a case?

[Guest Mumofthreeboys]

I've got to say that I'm not the most clued up on here

 

Really?

[Glenn UK]

Yes, I agree that technically that's true, although I don't think you can realistically use that comparison. I don't think there could be too much arguement that bank charges are not contractual penalties!

 

Oh really?

 

Ask any bank!

 

Incidentally when these issues have been debated in court at various hearings, the courts havent been to sure either!

 

GLenn

[TeamD]

Really?

 

And your point is?

 

Anyway, consider the following situation...

 

Bank charges me £10 in error (no justification and completely wrong)

 

I end up £10 OD due to this and ultimately am charged 29.4%APR on this "debt".

 

Once the issue addressed, the bank pays back the original penalty + 12% Gross. This means that I am out of pocket, how can anyone justify this?

[GaryH]

Oh come on Glenn, there is a multitude of authorities and statutues directly relevant to these claims and you know that very well.

 

There is nothing anywhere near as substantial to base a claim for CI on. Penalty charges have a solid bases in law, CI is untested and unsubstantiated - that was the point that I was making.

 

Perhaps I didn't word the above post quite as well as I could have, but you knew precisely what I meant.

 

Besides, the banks do not deny that their account agreements are contractual anyway.

[Glenn UK]

Gary

 

You are confusing what you think with what you know.

 

You think the charges are unlawful and exceed the banks costs, I agree with you, but i think this.

 

I know this hasn't been ruled on in a court of law.

 

The statues don't confirm or specify that the bank charges are unlawful, only what constitutes a penalty, this is not the same as knowing the bank charges are unlawful.

 

Your assertion that there is no basis for claiming contractual interest is incorrect.

 

It is valid to say that it hasn't been tested and neither has the lawfulness of the charges.

 

However, well prepared claims for contractual interest are meeting with success in the same way the well prepared claims for bank charges alone are.

 

Your arguments for not considering CI valid are entirely debatable, for instance part of the logic for your excepting is not to do with the principle of contractual interest but the rate applied. One presumes that if the rate was lower you would find it more acceptable?

 

This is a spurious argument and one often trotted out by those against.

 

As has been said before the founder of the site thought it a good enough idea to suggest that claimants try this approach and has not as far as I'm aware rescinded that suggestion?

 

Having said all that, there are potential pitfalls, none of which are to do with how its calculated or the actual values returned but simply the brinkmanship which goes along with making a claim against a bank with a lot of resources.

 

JMHO

 

Glenn

[GaryH]

Gary

 

You are confusing what you think with what you know.

No, I don't think so at all.

You think the charges are unlawful and exceed the banks costs, I agree with you, but i think this.

 

I know this hasn't been ruled on in a court of law.

Absolutely. I'm very well aware of this and have not, or would not, deny it. Lets not forget though, the reason why it has not been ruled on.

The statues don't confirm or specify that the bank charges are unlawful, only what constitutes a penalty, this is not the same as knowing the bank charges are unlawful.

Again, of course I totally agree, but I fail to see the relevance of this to the point that I was making!

Your assertion that there is no basis for claiming contractual interest is incorrect.

No solid or substantiated basis is what I said. This is absolutely not incorrect.

It is valid to say that it hasn't been tested and neither has the lawfulness of the charges.

I really can't see how you can even attempt to make this comparison! The fact that the banks are willing to pay the charges back without any real resistance, but are trying to split claims to defend CI, speaks volumes.

So, in fact, does your and many others advice that part payments should not be accepted so as to keep the CI intact with the rest of the claim - in order that the CI issue is not argued in isolation away from the issues of the legalities of the charges.

However, well prepared claims for contractual interest are meeting with success in the same way the well prepared claims for bank charges alone are.

Yes, if the bank can't split the claim! Can you show me a case where CI has been argued successfully in court? Every court in which the CI issue has been debated, it has been dismissed as far as I'm aware.

Your arguments for not considering CI valid are entirely debatable, for instance part of the logic for your excepting is not to do with the principle of contractual interest but the rate applied. One presumes that if the rate was lower you would find it more acceptable?

Not correct! I would say that my main argument's against are that there is a clear authority against the award of compound interest under unjust enrichment. Its hard to see past this!

On the contractual mutuality arguement, as I mentioned above, I really cannot see how the bank having charged us (alledgedly!!) unlawfully is comparable in reverse to our borrowing of money by way of overdraft.

Not to mention the fact that these actions are brough initially from our own breaches of contract, not to mention that there is already a rate of interest set down by parlaimant in statute, which is the rate applied by the courts under the CCA in these situations.

This is a spurious argument and one often trotted out by those against.

 

As has been said before the founder of the site thought it a good enough idea to suggest that claimants try this approach and has not as far as I'm aware rescinded that suggestion?

Having said all that, there are potential pitfalls, none of which are to do with how its calculated or the actual values returned but simply the brinkmanship which goes along with making a claim against a bank with a lot of resources.

 

JMHO

 

Glenn

Sorry Glenn, as much as I would love to be able to believe in CI, I just can't. There are some fundemental sticking points which I just cannot see past - a couple of which are set out in the post above.

 

I hope I'm wrong, and of course I might be - who knows? - but I honestly can't see that any court will award it, and certainly not in the small claims track.

 

Back to my original point. Claims for charges are highly likely to be successful if conducted correctly, and if you needed to argue it in court there are many authorities and statutes you would rely on which relate directly to the issues of the banks charges.

 

Claims for CI are contentious, and the basis is flimsy. The risks are just too high IMHO.

 

This is just my opinion, and it has been for some time now. I know there arew other viewpoints, and I do respect them.

[Glenn UK]

We could go on like this for ages Gary.

 

You keep asserting that there is no comparison with the unlawfulness of charges and CI.

 

So Ill help you,

 

The banks charges are not unlawul until a court deems them so.

 

They havent.

 

The reasons are immaterial.

 

No court has ruled on CI.

 

The basic tenet for claiming CI has nothing to do with unjust enrichement.

 

There is no clear authoirty as you put it that the UTCCR would not allow a claimant to ask for the CI in return.

 

I dont know the case you quote it doesnt google, at least with the spelling as posted, however if its to do with unjust enrichment then it has no relevance to Bankfodders original post.

 

All in all Gary the issue is not whether you or any of the other mods belive it, the point is its being claimed successfully by many people along with their charges.

 

If the issue is so bad, then why hasnt BF posted a withdrawel of his original statement?

 

I wager he has a view knowing him.

 

Ultimately the Mods for whatever reason suddenly decided CI was not right, and have come out against it.

 

We all know the arugments both for and against, they have always been there even when MF made his original post suggesting this, but the fact remains that its being claimed and paid and has been for some time.

 

JMHO

 

GLenn

[GaryH]

Yes, we could go on and on like this for ages Glenn - just so long as you keep on widening the issues further and further after each post! You haven't answered any of my points but keep on repeating the same things over and over, which I've already responded to.

 

I'm not going to answer your last post specifically becouse I consider it to be patronising, which from you, is actually quite dissapointing to be honest. Plus I really don't feel there is anything I can add to my last post anyway.

 

All in all Gary the issue is not whether you or any of the other mods belive it......

 

.....Ultimately the Mods for whatever reason suddenly decided CI was not right, and have come out against it.

My opinions on CI are based upon my own judgement. I'm not posting as a "mod" - I had these opinions (as well you know) long before I even was one. There is no conspiracy, dispite what some like to think.

 

Whether you wish to continue to advocate CI or not is your business. I've always said, even on this thread, that I respect your opinion.

[TeamD]

Hmmm, still having problems getting my head around this and how it relates to me. As far as I can see, my dispute is regarding the level of CI, not the application of it. Quite simply, the bank has admitted mischarging me and has admitted that they are liable to pay back the money for these charges. They have also made interest payments upon them at the rate of 12% Gross, not 8%. Does this consitute payment of CI? If so, then they have admitted liability for CI on their mischarges and all we have to argue about is the CI rate. Is my logic flawed here?

[GaryH]

I think you are talking about overdraft interest.

 

Do you mean the amount in interest they have charged you on top of a penalty charge if it put you in overdraft - if so, yes, this is reclaimable. I've never disputed that. You need to calculate what proportion of the monthly overdraft interest levied is attributable to the charges - as opposed to the interest which was charged on your usual OD spending. Clearly the latter is not reclaimable.

 

What I am disputing is the validity of then charging the accounts contractual compounded rate on top of that, instead of the statutory 8%.

[TeamD]

I think you are talking about overdraft interest.

 

Do you mean the amount in interest they have charged you on top of a penalty charge if it put you in overdraft - if so, yes, this is reclaimable. I've never disputed that. You need to calculate what proportion of the monthly overdraft interest levied is attributable to the charges - as opposed to the interest which was charged on your usual OD spending. Clearly the latter is not reclaimable.

 

What I am disputing is the validity of then charging the accounts contractual compounded rate on top of that, instead of the statutory 8%.

 

I see where you are coming from, but I still believe that this would limit my ability to redress the situation to a level that was still unfair to me since were I still to be overdrawn when interest was debited then I would still be liable to pay interest on the interest charge at the banks inflated contractual rate, in addition to this, any credit balance tainted by these cascading mischarges would not be earning interest on a true balance.

 

Is there such a thing as an unfair implied contractual term? :-?

 

edited to add: As I've mentioned elsewhere, my case is somewhat different to others here as by the banks own admission the charges should never have been made and over 3 years worth of compounding charges (often where I had to pay to borrow my own money) has become rather a large figure.