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One thing I forgot to mention in previous message is that, when sending their full and final offer they said that I alleged that the charges were a penalty ( I did nothing of the kind, I merely stated the standard line that charges must reflect true admin costs and could not be punitive) and that I had no put forward no evidence to support the allegation and therefore did not accept it.

What evidence do I need to back this claim or is quoting the 1999 Unfair Terms In Consumer Contracts Regulations sufficient? :roll:

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Try these:

Unfair Terms

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.

(5) Schedule 2 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair.

In this schedule it states the following as an unfair term in a contract:

Schedule 2 1 (e) requiring any consumer who fails to fulfill his obligation to pay a disproportionately high sum in compensation.

Also from the CAG Court Bundle

Relevant Case Law to Penalty Charges

In the case of Lord Elphinstone v. Monkland Iron and Coal Co [1886], Lord Watson stated that: "There is a presumption (but no more) that a charge is a penalty when a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage"

In the case ofWilson v. Love [1896], a tenant farmer agreed to pay an additional rent of £3 per ton by way of penalty for every ton of hay or straw that he sold off the premises during the last 12 months of the tenancy. The clause was regarded as a penalty because at the time hay was worth five shillings a ton more than straw.

In the case of Castaneda and Others v. Clydebank Engineering and Shipbuilding Co., Ltd. [1904] 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 oppose to a charge which represents a penalty.

In the case of Commissioner of Public Works v Hills [1906] AC 368, Lord Dunedin formulated the test for Penalty clauses as follows: "The general principle to be deduced …is …that the criterion of whether a sum -- be it called penalty or damages -- is truly liquidated damages, and as such not to be interfered with by the Court, or is truly a penalty which covers the damage if proved, but does not assess it, is to be found in whether the sum stipulated for can or can not be regarded as a 'genuine pre-estimate’ of the creditor's probable or possible interest in the due performance of the principal obligation”

In the case of Campbell Discount Co Ltd v Bridge [1962] AC 600, the House of Lords struck down as a penalty a clause in a hire purchase agreement requiring the hirer to pay compensation for premature termination. The objectionable feature of this clause was that it provided a sliding scale which operated in the wrong direction. The less the depreciation of the vehicle, the greater was the compensation payable.

In Philips v The Attorney General of Hong Kong [1993] 61 BLR 41 the Privy Council upheld the decision of the Hong Kong Court of Appeal that the liquidated and ascertained damages clause in a construction contract was valid and enforceable. Lord Woolf, delivering the judgment of the judicial committee of the Privy Council, cited with approval the above passage from Lord Dunedin's speech in Dunlop and emphasised that the test was to be made against the reasonable possible range of losses and that it was not enough to show that in some circumstances the possible loss may be less than the Liquidated Damages rate:

"Except possibly in the case of situations where one of the parties to the contract is able to dominate the other as to the choice of the terms of a contract, it will normally be insufficient to establish that a provision is objectionably penal to identify situations where the application of the provision could result in a larger sum being recovered by the injured party than his actual loss. Even in such situations so long as the sum payable in the event of non-compliance with the contract is not extravagant, having regard to the range of losses that it could reasonably be anticipated it would have to cover at the time that the contract was made, it can still be a genuine pre-estimate of the loss that would be suffered and so a perfectly valid liquidated damage provision. The use in argument of unlikely illustrations should therefore not assist a party to defeat a provision as to liquidated damages. As the Law Commission stated in Working Paper No 61 (page 30):

‘The fact that in certain circumstances a party to a contract might derive a benefit in excess of his loss does not ... outweigh the very definite practical advantages of the present rule upholding a genuine estimate, formed at the time the contract was made of the probable loss’.

A difficulty can arise where the range of possible loss is broad. Where it should be obvious that, in relation to part of the range, the liquidated damages are totally out of proportion to certain of the losses which may be incurred, the failure to make special provision for those losses may result in the 'liquidated damages' not being recoverable.

In the case of Murray v. Leisureplay (2004), Mr Murray was sacked by Leisureplay and he claimed three years' salary as per his contract of employment. The courts decided that this clause was a penalty clause and he was not entitled to this level of damages. Even though the decision was reverted on appeal, the appeal itself drew on and further reinforced the principles of penalty charges.

In the case of First Commercial Bank and Others v. the Owners of "Mandarin Container", "Kingdom Container" and "Liberty Container" (2004), the Hong Kong Admiralty court considered whether an uplift in the interest rate payable upon default under a ship mortgage agreement was unenforceable as a penalty provision or whether it was valid and enforceable as liquidated damages. In finding that the uplift was valid, the court examined the principles underlying the exercise of the court’s penalty jurisdiction and noted the modern tendency to respect the contract agreed between the parties, unless the liquidated damages provision could be characterised as unconscionable, oppressive or extravagant

In the case of Alfred McAlpine Capital Projects Limited v Tilebox Limited [2005], Mr Justice Jackson reconciled two apparent strands to the authorities. One strand was the test that there should be no great disproportion between the damages and the Liquidated Damages rate. The other strand was that the Liquidated Damages should be reasonable.

The important point was that the Liquidated Damages rate need not be right to be reasonable, but would be unreasonable if disproportionate to the likely level of loss.

There seem to be two strands in the authorities. In some cases judges consider whether there is an unconscionable or extravagant disproportion between the damages stipulated in the contract and the true amount of damages likely to be suffered. In other cases the courts consider whether the level of damages stipulated was reasonable. … I accept, that these two strands can be reconciled. In my view, a pre-estimate of damages does not have to be right in order to be reasonable. There must be a substantial discrepancy between the level of damages stipulated in the contract and the level of damages which is likely to be suffered before it can be said that the agreed pre-estimate is unreasonable.

Although many authorities use or echo the phrase "genuine pre-estimate", the test does not turn upon the genuineness or honesty of the party or parties who made the pre-estimate. The test is primarily an objective one, even though the court has some regard to the thought processes of the parties at the time of contracting.

Some night time reading for you :wink:

All advice is based on my experiences. I am NOT qualified and as such cannot be held responsible for any mistakes. If in doubt...get professional help.

If you like what i have said then make me a star!!

Some helpful links

I have been successful in many cases..here are links to some

Housing Act and deposits: http://www.consumeractiongroup.co.uk/forum/showthread.php?266260-Deposit-being-withheld.-Please-advise&highlight=

Against Natwest: http://www.consumeractiongroup.co.uk/forum/showthread.php?278646-N-west-v-Mrsfoot-s-Son.-***WON_ALL-CHARGES-REFUNDED***&highlight=

Against Swift Advances: http://www.consumeractiongroup.co.uk/forum/showthread.php?46576-Me-V-Swift&highlight=

Against B&Q: http://www.consumeractiongroup.co.uk/forum/showthread.php?172878-Me-vs-B-amp-Q&highlight=

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Thanks very much for that. Not sure what it all means and which part is relevant to me but I'm sure that once I've had a good look at it, it will all make sense!

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