First victory to Lloyds

[H H Hrvatski]

well why did he loose then?

 

Having looked through the judgment, it appears that the contention is simple - that the charges cannot be penalty charges simply because there has been no breach of contract to be penalised in the first place. It then follows that the charges are simply agreed fees for extra services which the bank provides to its customers. This is a very poor attempt at cloaking penalties; the "services" are provided without the customer's consent, and furthermore their use is not encouraged by the bank. The judge makes a clear distinction between the OFT credit card ruling, an area where contracts routinely contain conditions prohibiting exceeding limits, missing payments etc (thus making the charges automatically penalty charges rather than agreed fees etc) and this bank case, where there is nothing in the terms and conditions of the contract with the bank to say "You must not go overdrawn! You must not allow DDs to bounce!" etc. This is nonsense, for the simple reason that almost all correspondence from banks after a breach (or, sorry, after a "use of an extra service which the bank provides on your behalf for a fee without notifying you") - the famous £30 letter - contains some kind of request not to do it again, rather than a sign-off along the lines of "We hope you found this service useful, please keep bouncing DDs and going overdrawn if it helps you out!" or somesuch. I would contend that just that wording alone would be enough to drop the cloak and show that there was indeed an implied term in the contract stating that going overdrawn without authority was indeed a breach, and *not* simply a pre-agreed extension of the bank's services and one which they were within their rights to charge for.

 

The later part of the judgment is pure fantasy stuff - the judge refused to allow the claimant to use any evidence whatsoever that the banks were charging vastly more than it actually cost them to carry out these "services" on their customers' behalf, and instead began working using a model of the banks' profitability in general, relying on a frankly misguided notion that not only was it perfectly acceptable for banks to subsidise wealthy customers by charging poorer ones, but that this is apparently in fact the only way banks can make money at all, and that this is how and why they are able to provide all those call centres, cash machines etc. At one point, the judge actually lays out what he understands to be the way which banks can break even - to get a balance of customers who pay (willingly) for being graciously allowed the use of extra services like unauthorised overdrafts, and customers who don't want all those extras and just keep their accounts in credit. On this basis, the banks are free to charge precisely whatever they like, because the charges cannot be unreasonable since they're the only thing keeping a beneficial business afloat. This is an entirely absurd and wholly indefensible position and would quickly have fallen apart under closer scrutiny. I refer back to the letter I mention above; surely, if these services were no more than a lifeline of income for the bank rather than any kind of penalty, they would positively be encouraging customers to take up these services, rather than warning them not to keep issuing cheques etc. ALL of this would stop being an issue as soon as the banks release information regarding how much it actually costs to do this stuff, and how much of their income was derived from these charges as opposed to interest on capital held, investments etc. That would be admissible as evidence of the charges' reasonableness (or lack of) and render this entire line of argument redundant.

 

I find the judges' reasoning extremely flawed on both of those grounds and, while I've no idea what would happen during an appeal, I think those would be good lines of argument for anyone stuck in that situation to fire back should a similarly loopy judge start giving the questions they gave Kev.

[H H Hrvatski]

AAAAAAAGGGGHHHHH

 

 

Sorry...

People need to read the details of the news properly. I feel really sorry for Kev.

There were TWO claims judged in this case. The 1st 'Haughton' was NOT prepared.

The 2nd Kev WAS prepared and the judge called him a "model litigant'. I think the problems we need to address are further than making sure that we have the right paperwork in the right order. We need a rebuttle to the judges contention that the charges are not related to breach of contract and are proportionate.

 

Sorry for the shouting but the chinese whisper effect is driving me nuts.

 

I quite agree. The above are some suggested lines of rebuttal to the judge's arguments. Kev couldn't have been any better prepared in terms of his bundle and his homework, and it's really unfortunate that too many people are skim-reading the news report followed by the judgment and not distinguishing between the two claimants.

 

However (and this is in no way a dig at you Kev), he obviously wasn't completely prepared (and who would be?) for the grilling by the judge, because from reading the judgment it was his ready acceptance of the charges not being penalties for breach which set the judge off on this daffy train of thought. Kev was then backed into a bit of a corner, forced to try and argue about the charges being unreasonable rather than flat-out unlawful and the judge was having none of it, simply because there isn't any admissible hard evidence (other than common sense) that the charges ARE unreasonable.

 

Still, Kev did everything else right, including seeking proper help as soon as he got the judgment in draft and getting a proper response in. There was a failure to use the "that's utter [edit]" defence against the judge's claim that the only way banks stay in business is by charging some customers extra, but I don't think there's very much he or Tom Brennan could do to change a mistaken mind once it was made up, so it probably wouldn't have made any difference.

[H H Hrvatski]

Does this set the precedent we have all feared???

 

Nah. It's full of holes. Even if the judgment contained a cast-iron reason for the charges being legal after all, it wouldn't be binding on any other cases - this is pretty much the lowest possible rung of the civil justice ladder. This judgment can be no more than "persuasive authority" on future cases at the same level, meaning that the arguments laid out can be referred to - but they can also be rebutted and refuted. Which they would be.

 

I'm not a betting man, but I'd guess if Kev can avoid the bank's likely demand for security for costs by showing he has funds available to fight the case, then Kev's claim will be settled before it actually gets to the High Court, where a bank loss WOULD set a big fat precedent. There's always the chance that the bank might get another highly-sympathetic judge, but equally Kev would probably not be a litigant in person and would have a top brief to represent him and who wouldn't just accept the judge coming out with the kind of rubbish the DJ came out with in this case. The stakes for the bank are far, far too high - they didn't even defend this one intentionally, I'd reckon there's almost zero chance they'd risk millions of pounds defending the appeal.