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Judge warns 'unreasonable' banks

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Judge warns 'unreasonable' banks


The following is an adaptation of an article appearing in www.bbc.co.uk on 14th May, 2007.

High Court judge, David Mackie QC, has warned banks to stop behaving unreasonably when customers accuse them of levying unlawful overdraft charges. He said some banks were wasting the time of claimants and the courts by pretending they would defend claims when they had no intention of doing so. He added if banks continued to do this he might award damages against them.


In such cases banks have so far settled out of court, usually a few days before their case is due to be heard. Expressing some frustration at this situation, Judge Mackie said: "On the face of things each case raises serious issues which the court would permit to proceed to trial. "But this is fantasy because, at least for the moment, we all know that there will be no trial."

Brian Capon, of the British Bankers Association, defended the stance taken by banks saying they were confident their fees are legal. "They take the court process very seriously, but ultimately they would prefer to settle disputes with their customers outside the court process," he said. The consumers association Which? rejected this. "It seems that the banks are deliberately dragging their feet in the hope that their customers will either give up or accept part of the money they are owed," said a spokeswoman.

Unreasonable behaviour

Judge Mackie pointed out that in some cases bank customers had tried to claim damages for stress and inconvenience. Such claims have been unsuccessful so far, but he warned he would award damages in future if banks and their lawyers continued to:

fail to respond to some claimants letters

fail to negotiate for months and until a hearing date is set

demand extra information from the claimants, knowing they had no intention letting a court hear the matter

settle the case without telling the claimants they need not attend court

fail to show up in court

"Looked at in the real world where there will be no trial these steps, which place completely pointless work and some anxiety on litigants in person, constitute unreasonable behaviour," said Judge Mackie. "From now on we will generally be treating such conduct as unreasonable behaviour thus enabling any claimant who has been put to unnecessary work and inconvenience to be compensated for this."


Last month, Leeds Mercantile Court listed 77 cases in one day, all of which were settled out of court. Afterwards, Judge Roger Kaye QC said "it would be helpful if there was a decision taken at High Court level to clarify the situation nationwide".

In Bristol County Court a successful claimant was recently awarded £84.41 in costs as the judge ruled Lloyds TSB wasted the court's time because it had had no intention of defending the claim. The latest warning from Judge Mackie left the banks with what sounded like a final warning. "There may be a need for a more radical approach if the number of cases continues to grow," he said.

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