me v hsbc

[southcaver]

hi there, i've just recieved a notice of transfer of proceedings to hull court. And a letter saying that an allocation questionnaire is to be dispensed with. my claim is for £2715. Is it up to me to make the next move or should i be expecting further letters?

[jeneil]

I believe an allocation fee may still be payable as your claim is over £1500. You could leave it a week for your court to receive the paperwork and then give them a ring to check.

[southcaver]

will they get in touch asking for this fee?

[jeneil]

I was reading one of the other threads the other day when someone had phoned their court to check about the fee and the girl on the phone said there was no fee payable until she double checked and then found there was, so I guess some peeps have got away without paying it! You will definitely receive correspondence from your local court when they get round to you and I am sure if they want the fee they will ask for it. They are pretty snowed under with these claims at the miunte so you could be in for a long wait. We are all waiting....but if you get bored you can read up on as much info on this site as possible and send nudge letters to DG the HSBC solicitors

[southcaver]

ok thanks jeneil, i guess i'll have to be patient (not my stongest point!)

[darkrage]

hi i would ring the clerk at the court and double check we wouldnt want your case to be thrown out on a small thing like the aq fee - i filed an n1 directly at court and got a letter giving me my allocation to track and that the judge had dispensed with the aq but not the fee so i had to pay.

 

i think it actually depends on the judge if you pay it or not so its best to check just to make sure if you have not had it in writing.

[southcaver]

ok, i rang them and they said i should just wait and they will notify me if the allocation fee is payable. Thanks all

[southcaver]

Right then, after hearing nothing since my last post i've just had a worrying letter from judge Besford at Hull court it says,

 

IT IS ORDERED THAT

 

The particulars of claim are struck out as disclosing no reasonable grounds for bringing a claim.

The Claimant shall by 16.00 on 13th August 2007 file and serve an amended particulars of claim setting out the basis of the claim and in particular providing the following information:

 

a. a statement setting out particulars of the breach of contract and any explanation [if such a breach is alleged]

The statement shall exhibit a copy of the relevant bank terms.

 

b. a schedule showing how the amount claimed has been calculated by reference to the individual item by description, amount and date.

 

c. In the event thet the Claimant is seeking to claim for charges that accrued more than six years prior to the issue of the claim, to identify such sums and to file and serve brief reasons why such charges are being sought.

 

d. In the event that the Claimant is seeking to claim reimbursemant in respect of interest charged on any overdrawn amount, the claimant is to identify such sums and set out in brief the reasons why such charges are being sought.

 

If the claimant fails to comply with the above, the claim will be struck out without further order.

The Defendant has leave to file an amended defence within 14 days of receipt of the amended particulars of claim, if so advised

Upon compliance with the above, the matter is allocated to the small claims.

The Defendant shall 28 days following compliance with the above, file and serve a response [in so far as it is not dealt within any amended defence], stating in respect of each item claimed:

a. Whether the sum charged was a charge made pursuant to a contractual condition and if so to exhibit a copy of the contractual document relied upon and particulars as to how it was calculated.

b. Whether such charge is accepted to be a penalty, or otherwise not recoverable and if not, why not.

c. If it is alleged that the charges are a genuine pre-estimate of the Defendants loss incurred, to file and serve all evidence to be relied upon at trial that such sum claim was a proper estimate of the loss and particulars of what the true cost of dealing with the matter was.

 

If any party fails to comply with the terms of this order, the court will at the directions hearing consider whether to strike out the claim or strike out the defence and enter judgement for the claimant.

The matter is listed for 3.00pm on 10 September 2007 Kingston upon Hull Combined Court Centre, Hull.

[southcaver]

:( so does this meen i've lost?

[jowalshy]

No you haven't lost at all. You have to put in a bit more paperwork thats all. If you post what you put in your POC's we can have a look at them and see what we can amend to satisfy your judge.

[southcaver]

Are poc's particulars of claim, all that i've sent is a list of the charges and the dates. That was to HSBC. I haven't sent any thing to the court.

[southcaver]

any help would be much much apreciated as i'm off to france for a week tommorow so i'd like to sort it tonight.

[jowalshy]

Yes POC's are the particulars of claim and yes you do need to send in a copy of your schedule of charges to the court and ask for it to be attached to your claim. Make sure that your spreadsheet agrees with your claim and put your claim ref on the top of it.

[southcaver]

thanks, and is there some kind of template for this part?

 

a. a statement setting out particulars of the breach of contract and any explanation [if such a breach is alleged]

The statement shall exhibit a copy of the relevant bank terms.

[jowalshy]

Here is a copy of a statement of evidence. In it is what I think you need.

 

But we really need to see what you put on your court claim for the POC's to see what you are missing if anything at all.

 

 

Claim Number:*******

In the ******* County Court

 

 

 

Between:

Your name

(Claimant)

and

 

Bank Plc

(Defendant)

 

_________________________ ______

STATEMENT OF EVIDENCE

_______________________

 

 

 

 

1. The Claimant submits that the charges levied to his bank account, as set out in the enclosed schedule, are, notwithstanding the defence of the defendant, penalty charges arising from and relating directly to breaches of contract, both explicit and implied, on the part of the claimant. As a contractual penalty, the charges are unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999, the Unfair Contracts (Terms) Act 1977, and the common law.

 

2. It is admitted that the Defendants charges were levied in accordance with the terms and conditions of the account in question. However, it is submitted that the Defendants charges are not related to or intended to represent any actual loss arising from a breach of contract, but instead unduly enrich the Defendant which, by virtue of the legislation cited in paragraph 10 above, exercises the contractual term in respect of such charges with a view to profit.

 

3. The Defendant avers that the charges levied are legitimate fixed price contractual services, unrelated to breaches of contract, which are therefore not required to be a pre-estimate of loss incurred on the part of the defendant. The Claimant further submits that this contention is merely an attempt to ‘cloak’, or disguise, their penalties in order to circumvent the common law and statutory prohibition of default penalty charges with view to a profit.

 

4. The Claimant believes the definition of a 'service' to be a provision of knowledge, skill or other transferable facility that benefits the consumer, and one that the consumer agrees is at a reasonable market rate commensurable with the service provided. The Claimant believes it to be inconceivable that the charges levied to his account by the defendant could be any form of ‘service’, rather than a penalty.

 

5. I understand the definition of 'breach of contract' to be the failure of a party, without legal excuse, to perform a contractually agreed obligation pursuant to any or all of the terms agreed within that contract. I have an overdraft with the defendant. This overdraft has a contractually agreed limit, which is an express term of the bank account contract between myself and the Defendant. When I exceeded this agreed overdraft limit, therefore breaching an express term of the contract between myself and the Defendant, I was consequentially penalised for each such breach by way of a charge of £**.

 

6. In the case of Dunlop Pneumatic Tyre Co v New Garage & Motor Co [1915] AC 79, Lord Dunedin stated that a clause is a penalty if it provides for;

 

"The essence of a penalty is a payment of money stipulated as in-terrorem of the offending part;”

I.e. if it is designed to scare or coerce or is used as a threat. It is submitted that the charges applied are not representative of any 'service' provided by the Defendant, but instead are punitive, and held "in-terrorem".

 

7. The Claimant further submits that the Defendant’s contention that the charges are now a legitimate service charge represents a contradiction to materials published by the bank previously. Here, add in details of any correspondence in which the bank referred to the charges as ‘penalties’, ‘defaults’ or ‘exist to cover costs’, etc. For example -In correspondence with Lloyds TSB’s ‘Customer Service Recovery’ department in July 2006, Martin Orton, who is manager of the department, stated this in a letter: “As you are aware, I am afraid that it is the case that any items that are returned incur a fee in order that we can recoup our costs”. This was in response to a direct and plain request to justify Lloyds TSB’s charges. Throughout the letter, no mention was ever made of the charges as being the cost of any sort of ‘service’.(If anyone wants a copy of this letter, drop me a PM with your address and I'll post it to you.)

 

8. Additionally, the [claimant believes there to be a high possibility that the] terms and conditions of [his / the claimants] account contract explicitly describe the charges as to be levied in instances of breaching those terms. This is true of the contracts of other customers of the defendant that the claimant is aware. However, the bank has failed to provide me with a copy of the account contract, despite repeated requests to do so, so unfortunately this cannot be proved. A right of subject access request for this document was submitted to the defendant under the Data Protection Act 1998, on 8th September 2006. The defendant has failed to comply. Here, if your account contract states the charges as ‘breaches’ use the text in black. The blue bit was true in my case and I’ve left it there as an example. If it applies to you, keep it in, if not, just take it out.

 

9. The Claimant refers to the statement from the Office of Fair Trading (April 2006), who conducted a thorough investigation into default charges levied by the British financial industry. While the report primarily focused on Credit card issuers, the OFT stated that the principle of their findings would also apply to Bank account charges. They ruled that default charges at the current level were unfair within their interpretation of the Unfair Terms in Consumer Contracts Regulations 1999. With regard to the ‘cloaking’ or disguising of penalties, the OFT said this;

 

“4.21 The analysis in this statement is in terms of explicit, transparent default fees. Attempts to restructure accounts in order to present events of default spuriously as additional services for which a charge may be made should be viewed as disguised penalties and equally open to challenge where grounds of unfairness exist. (For example, a charge for ‘agreeing’ or ‘allowing’ a customer to exceed a credit limit is no different from a customers default in exceeding a credit limit.) The UTCCR’s are concerned with the intentions and effects of terms, not just their mechanism”.

 

10. As submitted above, the Claimant believes the charges levied to his account to be disproportionate contractual penalties, arising from clear and demonstrable breaches of express terms of the account contract between itself and the Defendant. The Claimant vehemently refutes the Defences contention that they are legitimate contractual service charges.

 

11. However, and without prejudice to the above, in the event the charges were accepted by this honourable court as being a fee for a contractual service, the claimant submits that they are unreasonable under section 15 of the Supply of Goods and Services Act 1982.

 

12. Further, under the UTCCR:

 

"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."

 

Schedule 2 also includes such clauses (to define examples of unfair clauses) as:

 

"(i) irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract;

 

(j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;

 

(m) giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract."

 

The defendant is a multi-national corporation. The term regarding charges was inserted unilaterally in contract. The contract was pre and mass produced and I had no opportunity to negotiate the clause, or indeed any of the contract.

 

The cost of Lloyds charges have increased twice during the period in which my account was held, neither time was I given the opportunity to negotiate, or even notified of this increase. This means the bank has unilaterally altered the terms of my account contract to my detriment, and to their advantage.

 

13. Following on from the above, the claimant does not accept The Defendants contention that the charges are enforceable as a service charge. It is not disputed that the Defendant is entitled to recover its damages following my breaches of contract, and it is entitled to include a liquidated damages clause. I accept without reservation the banks right to recover its actual losses or a genuine pre-estimate thereof. A penalty however, is unenforceable.

 

14. The Claimant cites the case of Robinson v Harman [1848] 1 Exch 850 which states that a contractual party cannot profit from a breach and that the charge for a loss suffered from a breach of contract should be the amount necessary to put both parties in the same position before the breach occurred.

 

15. Lord Dunedin in the case of Dunlop Pneumatic Tyre Co v New Garage & Motor Co [1915] AC 79 set down a number of principles in definition of a penalty clause and how such clause may be ascertained from a liquidated damages clause. One of these principles being -

 

"The sum is a penalty if it is greater than the greatest loss which could have been suffered from the breach"

 

 

16. The Claimant will further rely on numerous recorded authorities dating throughout the 20th century up to the most recent case of Murray v Leisureplay [2005] EWCA Civ 963, all of which have upheld and reinforced the principles set down by Lord Dunedin defining contractual penalty clauses and the unenforceability thereof.

 

17. Further, under the Unfair Terms in Consumer Contracts Regulations 1999, schedule 2 (1) includes to define an example of an unfair clause as -

 

"(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;"

 

18. On numerous occasions, the Claimant has requested that the Defendant justify its charges by providing details of the costs incurred as a result of my contractual breaches. Each time those requests were rebutted or ignored.

 

19. In a recent study undertaken in Australia, (Nicole Rich, “Unfair fees: a report into penalty fees charged by Australian Banks”) it was estimated that the cost to an Australian Bank of a customers direct debit refusal was estimated to be in the region of 54 cents. By reviewing the charges against the above figure, the study estimated that banks could be charging between 64 to 92 times what it costs them to process a direct debit refusal. The study’s key findings stated that in its opinion the Australian Bank’s cheque and direct debit refusal fees were likely to be penalties at law.

 

20. The Defendant, or indeed any of the UK banks, has never published any information to support how their charges are calculated, or what their actual costs associated with such breaches are, or what revenue they derive from such charges.

 

21. For their recent BBC2 documentary “The Money Programme”, the BBC appointed a commission of former senior banking industry figures and business academics to attempt to ascertain the actual costs to the UK banks of processing a customer’s breach of contract. They concluded that the absolute maximum conceivable cost that could be incurred by a direct debit refusal or overdraft excess is £2.50, and of a returned cheque £4.50. They did state however, that the actual cost is likely to be much less than this. The commission also estimated that the UK banks collectively derive as much as £4.5billion in profit a year from their charging regimes.

 

22. It is submitted that the Defendants charges are applied by an automated and computer driven process. This process consists of a computer system ‘bouncing’ the direct debit, and sending out a computer generated letter. It is therefore impossible to envisage how the Defendant can incur costs of £** by carrying out this completely automated process. Note that the letter received notifying of a charge is identical in every instance, and if multiple breaches occurred on the same day, a separate letter will be sent in each instance.

 

23. Additionally, I asked the Defendant to provide evidence of any manual intervention that may have occurred in relation to my account, under a Data Protection Act 1998 right of subject access request. No such information was forthcoming.

 

24. On 22nd May 2006, the House of Commons passed an early day motion which welcomed the OFT's statement that default charges should be proportionate to the actual loss incurred. The house described such default charges as "exorbitant" and "excessive".

 

25. The Claimant also cites a radio interview in 2004 with Lloyds TSB’s former head of personal banking, Peter McNamara, in which he states bank charges are used to fund free banking for all personal customers as a whole.

 

26. As set out previously, it is submitted that The Defendant’s charges can not be considered to be a service charge. In arguing that they are, they also effectively admit that their charges make profits. The Defendant seemingly contends that their charges are not subject to any assessment of fairness whatsoever. This implies they can set these fees at whatever level they like without limit or regulation. Similarly, as set out above, the charges cannot be considered to be liquidated damages. They, by The Defendant's own admission, are not a pre-estimate of loss incurred as a result of the breach of contract. The charges are punitive, held “in-terrorem", and unduly and extravagantly enrich the Defendant. As such, they are a contractual penalties and unenforceable at law.

 

I, the Claimant, believe all facts stated to be true.

 

Signed, dated.

 

 

Documents attached in support of this statement

• Office of Fair Trading report, April 2006
  
• House of commons early day motion, May 2006
  
• Automated charge notification letter/s. Include a couple of examples. Preferably use ones where charges have been incurred over ridiculously small shortfalls and if possible, include 2 letters notifying of charges incurred on the same day
  
• Data Protection Act Subject Access Request for evidence of manual intervention

[southcaver]

THANKS! I also need A copy of the relevant bank terms which I don't have. Is this a problem?

[jowalshy]

I have just PM'd you.