Estoppel?!!

[clairemp]

Hi

 

Scuse the lengthy preamble.

 

My case against Clydesdale Bank operating as Yorkshire Bank ended up in court at the last minute. To be honest, I didn't expect them to even turn up but they sent an agent.

 

I had previously refused a partial settlement offer, stating explicitly what was currently owing including contractual rate of interest, and then received a letter (ie. you know 'in writing' from their chief solicitor) saying here you go, full and final settlement. This was the Thursday before a bank holiday when we were due in court on the following Wednesday.

 

Only the payment which went into my bank was partial. As soon as I realised the mistake, I sent them a recorded letter stating they had underpaid against what they'd promised, and got a letter back right before we were due saying it was a typo and they'd meant the amount on the payment, weren't going to pay the difference which was contractual rate of interest as they claimed this was double applying of interest.

 

There were two particular issues that came up in front of the judge.

 

1. He gave me leave to amend the particulars of claim based on their written compromise of claim, so I could amend the proceedings on the actual agreed figure and difference they'd reneged on. I am supposed to plead estoppel - not sure what this means, even how it's spelt. Any suggestions please? It has to be back by next Wednesday.

I'm also thinking of submitting that the bank usually settles: is this a good idea, do you think?

 

Secondly, and I will continue to scout the site for this, the judge wouldn't accept Clydesdale Bank's settlement as they weren't admitting liability. He is insisting that the case be heard if we end up back there following my amendments to particulars of claim because:

- of the Birmingham 15th May case; I need to argue based on the findings of the Lloyds Berwick judgement - that it is breach of contract and therefore an effective request by the customer (to be charged at a higher rate which doesn't reflect their true costs, I guess).

- he referenced the 2004 Corby article in the Guardian (anybody have the text please?) which apparently says the customer has breached the contract but signed a contract accepting those charges when the account was opened.

- he told me to get Yorkshire Bank's terms and conditions.

 

On the contractual rate of interest/difference in their payment and promise, I feel fairly secure - as long as I'm understanding estoppel correctly. The fact that one judge in Birmingham had a different reading and that judges might now quote this one case as proved against the claimant, that worries me more!

 

Any help and advice gratefully received.

 

Cheers and thanks

Claire

[libbyfromlondon]

the judge wouldn't accept Clydesdale Bank's settlement as they weren't admitting liability.

 

this is intersting, did the judge say anything more about why they had to admit liability?

 

- he referenced the 2004 Corby article in the Guardian (anybody have the text please?)

 

I think this will be Richard Colbey, a barrister who wrote an article about charges in the Guardian. Sorry I don't have the text.

[rockinrodders]

Something tells me that the bank will be settling quickly if the judge wants them to properly argue the charges if you turn up there again.....

[Gez]

Echo rockinrodders. Expect full settlement very soon, I'll bet my last rolo on it. No way are they going to risk having to reveal their costs & justify their charges. That said, get preparing just in case.

 

You are right to show the court that the bankers always settle, this will show how they are abusing the system. There is plenty of stuff around regarding the Berwick case.

[clairemp]

Thanks muchly.

Still don't know what estoppel is though!

 

The judge was mightily dischuffed that the bank hadn't turned up at all, especially as he'd had to come back to hear the case. His point was that the bank can't pick and choose which bits they argue: they either settle to the amount claimed - or an amount explicitly accepted by the claimant - or argue the full case.

 

The bank hadn't complied with any directions from the court; no papers had been filed following the defence and so they could only rely on rebuttal of my pleadings without any evidence to prove their rebuttal.

 

After my initial panic, it was pretty clear that the judge was directing as to which bits of the Birmingham Lloyds-Berwick I would need to focus on but that, as Clydesdale didn't turn up and sent an agent instead, I could now choose to amend particulars of claim and focus on their reneging on a written settlement. And given that they can only rebuttal my pleadings, as t'were, then their only argument is that it was a typo. Which was when the judge started to laugh openly...

 

Thanks for your help.

 

Ta

Claire

[clairemp]

Sorry, a PS thought:

The judge also said that, as they hadn't filed any evidence, all Clydesdale could do - in line with their current defence - was to say whether they had/hadn't been applying charges and that their EAR (contractual rate of interest) was not as was published on their website terms and conditions. Because that would be unjustly enriching. So, not even the breach of contract issue: they have to prove (based on no evidence) they didn't apply charges nor interest....

 

Yep, I think they will pay up but true to form, at the last possible minute so I still have to do all the hoop jumping. And Clydesdale, if you're reading this, expect a claim for time wastage costs to follow thereafter.

 

Cheers

Claire

[joe1969]

Hi Claire,

 

I found this definition of estoppel if its any use to you,

 

A legal restraint that stops or prevents a person from contradicting or reneging on his previous position or previous assertions or commitments.

 

Joe

[tifo]

this is all i could find after a few mins searching :

 

Don't be afraid of throwing down the gauntlet to banks

 

Richard Colbey argues that as asking nicely has failed, it's time we took a stand over high charges for 'unauthorised' overdrafts or late payments

 

Saturday September 25, 2004

The Guardian

 

Last month I wrote in Jobs & Money about the late payment charges made by most credit card companies. These typically involve the levying of around £25 on the account of someone who pays a day late, even if this is caused by the company's late dispatch of the bill. Such charges are unlikely to be enforced by the courts: penalty clauses are legally void unless they reflect the loss the party enforcing them has suffered.

 

This is hardly cutting edge law. None of the dozens of banks who issue UK cards, and who will lose out if people follow my advice not to pay them, has contacted Jobs & Money, or me, to take issue with what I wrote.

 

Over the years I have had a few of these penalties levied, and invariably when I have refused to pay I have been told that the charge would be "refunded" usually as "a good will gesture".

 

If banks thought this argument wrong, they would have taken a test case through the courts to establish their entitlement to the money.

 

Closely related to these penalties, as Bob Egerton a Cornish reader wrote to me to point out, are the charges most banks levy for unauthorised overdrafts.

 

A typical scenario is a person allowed a £500 facility, with an interest rate of 7%, which amounts to about 67p per week.

That person overdraws by £501 and it suddenly becomes unauthorised. The interest rate shoots up to 29% on the entire amount - about £3.98 for the week - and a charge of £25 is made, sometimes with a substantial amount for each day and each transaction on top.

 

The bank is at no greater risk of losing its money because of the extra £1. There is no significant extra administrative work, at most a computer generated letter.

 

In reality, of course, these charges are punishment for doing something unauthorised, and are no more legally sustainable than credit card penalties. On the other hand, the vast majority of people assume that when a bank makes a demand of them, they are obliged to pay.

 

Those who are not completely in control financially, and have to resort to unauthorised overdrafts, are particularly unlikely to assert their rights.

 

This culture of acquiescence makes billions for the banking industry, and should be tackled meaningfully by those who are supposed to represent consumers.

 

It was therefore disappointing to see the latest Which? report on bank charges. Using examples similar to the one above, the journal of the Consumers' Association points out how unfair most charges are, and calls on banks to change their practices.

 

However the, at best questionable, legality of the charges is not dealt with. Nor is legal advice given to how those facing such a charge should respond. A call to banks to give customers "a few days' grace" is as robust as it gets.

 

A profit driven industry is hardly going to surrender a substantial proportion of what Which? estimates as £4bn worth of fees annually just because it is asked nicely to do so.

 

The Consumers' Association has statutory powers to challenge unfair contract terms in the courts but rarely does.

It is not, in any case, clear that these charges are actually susceptible to challenge on that basis, as penalty clauses are governed by the case law rather than legislation.

 

It is a shame that the CA has not promised to back any member who refuses to pay penalty or unauthorised overdraft charges. Public calls for banks to behave decently have little impact and are soon forgotten.

 

Forcing them to either fight or surrender in thousands of individual cases, would make their worst abuses unworkable.

[tifo]

article the month before :

 

OFT targets credit card penalties

 

 

 

Most companies charge customers around £20 if they are late with a payment, but this may not be legally enforceable, says Richard Colbey

 

Saturday August 21, 2004

The Guardian

 

Should you be obliged to pay a penalty of £20 or more for being just a few days late in settling your monthly credit card bill?

 

Legally, the grounds for pursuing such payments are questionable, so it should come as no surprise that the Office of Fair Trading (OFT) now appears to be targeting the issue.

 

 

Credit card giant MBNA recently filed a company report in the USA explaining it may have to reduce its late payment charges in the UK.

 

 

 

 

The bank may even repay charges already levied, depending on the outcome of the OFT investigation. MBNA received the demand last month. The OFT confirmed that it has asked MBNA and others for information about credit card charges as part of a review it is conducting into the UK credit card industry, but added that its probe is not an indication that it has uncovered any evidence of wrongdoing. MBNA says it is currently responding to the OFT on the matter.

 

 

Late payment charges are common across nearly all credit card companies. The banks' computers generate a letter the day payment is due, send it out and add £20-£25 to the bill, on top of interest, for a process that it is likely costs a few pennies.

 

 

Some banks claim that the charge relates to actual costs. Others take the line that the charge is a deterrent to customers. That probably reflects the economic reality but amounts effectively to an admission that the charges are not legally enforceable.

 

 

A contractual term that requires a person in breach, such as a late paying card customer, to pay a predetermined sum is a penalty clause, unless that sum genuinely relates to the amount of damage caused by the breach.

This was established in 1915 after the fledgling Ford Motor Company required dealers to pay £250 should they sell its cars at less than the list price.

 

 

When Ford attempted to recover this sum from a garage that had done that, the Court of Appeal decided the sum was arbitrary, bore no relation to the loss and did not need to be paid.

 

 

Indeed, I incurred a late payment charge a few months ago when a bill from the Bank of Scotland arrived while I was on holiday. I wrote telling the bank it was an unenforceable penalty clause and that I had no intention of paying it. I received, as I believe any customer making such a protest would, a letter withdrawing the charge.

 

 

But it is wrong that people with a degree of confidence and legal knowledge escape charges that can, in the absence of effective regulation, be imposed on the people who can least afford to pay them.

 

 

If the OFT presses ahead with its enquiry into these charges, they may be possibly be abolished altogether or reduced to an amount, perhaps £5, that the banks can show they actually incur.

 

 

It will be interesting to observe how tough the OFT will be on this issue. Since the appointment of present director, John Vickers, it appears to have sharpened its teeth. It was quite cheering this week to hear the OFT's refusal to let auditors limit their liability, which The Institute of Chartered Accountants described as "blatantly wrong" and "the worst piece of work ever seen from the OFT".

 

 

The industry's main argument is that a cap on liability would make medium size accountancy firms more able to take on the work of auditing big companies and break the virtual monopoly the big four firms have on work for FTSE350 companies. Yet the fear of massive legal action affects the big firms as much as their smaller competitors.

 

 

More importantly, the public has a real interest in retaining the present unlimited liability. Auditors effectively arbitrate on whether or not a company's books should be passed. Unlike most arbitrators, though, they depend on the goodwill of the company they are making judgments on, for repeat business.

 

 

The most effective way of sorting out the problem would be to stop companies choosing their own auditors. There's not much support in the worlds of big business or accountancy for that one, so the present system - with a remote risk of ruination if really bad things are nodded through - is the only way auditors' eyes can be kept on the ball.

[clairemp]

Thanks muchly - you guys are chuffing fabulous!

 

Had been getting my knickers in a twist about estoppel and T&Cs and all the rest of it, but think I'm good to go now. The more I read it, the more I realised that the judge was not a happy bunny.

 

But I kinda am today now. Thanks for all your help.

 

Cheers

Claire

[caro]

Something that no-one seems to have mentioned here is CYNthesys. http://www.consumeractiongroup.co.uk/forum/yorkshire-bank-clydesdale-bank/78681-clydesdale-yorkshire-northern-system.html

Are you able to submit more evidence? Please email me [email protected]

[caro]

Claire, you have an email from BankFodder. Please respond urgently.

[clairemp]

Hi

 

I already submitted all the info about CYNthesys in my original evidence pack, along with the stuff to address either grounds for breach of contract or fee for a service still needing to be proportionate.

 

They made a full and final settlement offer and then underpaid, so want only to argue on the issue of contractual rate of interest which they say is the difference amount. The judge was clear that if they want to argue on that basis, he would hear the full case only, but seems to be willing to focus on their underpayment after promising full settlement in writing by allowing me to amend for estoppel.

 

If that makes sense. Worryingly it does to me!

 

Thanks and cheers

Claire

[caro]

So basically you are fighting on for contractual interest, although the judge will hear the whole case?

 

Have you been in touch with BankFodder and are you able to submit more evidence? You won't have had the full information for CYNtheSYS for your original bundle I believe.

[clairemp]

Hi

 

Yes, the lovely BankFodder kindly rang this morning to chat through it which was really great.

 

In essence, I'm not now fighting for contractual interest because the issue is now that they agreed to pay the full amount in writing and then only paid part of it. So I'm contending estoppel and their only counter argument is that it was a typo. If the judge agrees estoppel, then the rest of the case is unnecessary.

 

If estoppel is not agreed, then the judge will not let them argue only on the point of contractual rate of interest - they have to argue the full case based on no evidence because waddyaknow they never entered any. But the judge already said that if their current rates of interest show that they do in fact charge that rate of interest to customers, then that indeed is mutuality and reciprocity and they have to pay the higher interest rate. They would have to prove they never ever honestinjun charged anyone that rate... If though they do charge that rate and are trying to say it's unfair, then they have to answer the charge of unjust enrichment.

 

I think I had a pretty nice judge - fair too, I think.

 

But anyway, I had the CYNtheSYS stuff plus the papers from the MP session, because it came up the day I was about to submit my bundle and so I whacked it all in.

 

Thanks for your help. I'll keep you posted.

 

Cheers

Claire

[rockinrodders]

Just out of interest, which court were you at?

[Yoda]

Claire

 

Nothing constructive to add I'm afraid but just wanted to say good luck with this one. I'm watching with interest.

 

Yoda

[clairemp]

Thank you.

 

It was Halifax County Court, Judge Shin.

 

Cheers

Claire

[noomill060]

So you've had a Little Extra Help in Halifax?

[clairemp]

Groan...