Contractual Interest - Precedent - LOST

[dad]

Dear All,

 

Some sad news.

 

I have been pursuing a case against HBoS for contractual interest, the bank having paid out my charges.

 

The case was heard in the County Court on 1 Feb 2007. It was heard by His Honour Judge O'Brien. He held that that the court will only imply a term if it is necessary to give 'business efficacy' to a contract, not whether it would be fairer to have such at term.

I decided to appeal the decision. The Judge refused to give permission.

Because he was a circuit judge the case then went to the High Court. I was given permission to appeal by Mr Justice Langstaff because it was a matter of general importance.

The Appeal came before Mr Justice Underhill last week (8 June 2007) on the basis of what happens if the charges are unlawful penalties. While he agreed I had an arguable case, he rejected my appeal because the courts will only imply what it is necessary to do. He held that he could find no necessity for the term the I sought to imply, because he a customer has a right to recover the charges, any interest deducted and a right to claim statutory interest for the period he was deprived of the deductions, provided he brings proceedings to recover them.

He further decided that there may be an argument that to bring perfect justice compound interest should be paid. This was reviewed by the House of Lords in ‘President of India v La Pintada Compania Navigacion SA’ [1985] 1 AC 104. In this case the court held that in the general law there is no title to compound interest on debts

He did leave open the possiblility that a claim for compound interest could be made on the basis of 'custom and usage', but that I had provided no evidence of such usage.

Because this case was heard in the High Court it is now a precedent for other courts to follow.

[PKea]

Hi

Sorry about the lost case

 

Did you claim for the CI seperatly from your charges?

 

Paul

[dad]

PKea,

 

The claim was for both together, but as they paid the charges it continued on the interest point alone

[neilwoods]

Sorry to hear that.

 

It may, OTOH, provide an impetus to the banks to settle up before a case is initiated as it could save them a very consider sum of money if they just pay the unlawful fees.

[TANZARELLI]

dad, could you provide all of the judgement in text for us to get a better understanding of what was said please.

 

Tanz

[Gez]

This doesn't make any sense. How did you manage to get a high court ruling on CI without getting a ruling on the charges themselves?

I know that in your post you say that they paid the charges, I am just wondering how & why a high court made a ruling on only one issue of a claim.

[dad]

Tanz,

 

I am awaiting the approved judgement of the court which I will post once I receive it.

 

Gez

 

At the County court the judge ruled that because the Bank paid the charges there was no issue to decide and struck out that part of the claim.

 

I asked for permission for the High Court to make a declaration that the charges were unlawful, but the court refused to give permission as giving of a declaration is a discretion of the Court and the Judge in the County Court had exercised his discretion properly when refusing to hear my request for a declaration.

 

The case therefore proceeded on the basis of what was the law if the charges were unlawful.

[chezt]

PKea,

 

The claim was for both together, but as they paid the charges it continued on the interest point alone

 

Did you claim interest paid on the charges + CI?

 

I was just wondering what exactly they refunded as I know general opinion is that if you get a refund of charges + interest paid on them you should not continue to court for CI alone .... could you confirm if you got refund of any interest on your charges at all?

 

Thanks

[tifo]

so is the end of CI claims?

 

I've been offered charges + stat from Halifax through the Ombudsman and have refused as i requested CI at prelim letter. Should i now be worried?

[GaryH]

so is the end of CI claims?

I'm not sure about the Ombudsman, but you will certainly now not get CI from the courts - although to be honest it was always highly unlikely anyway.

 

There is now a High Court precedent against the awarding of contractual interest on the basis of contractual mutuality. The court ruled that a reciprical term cannot be implied.

 

The advice is to accept any offer of charges + 8%.

[tifo]

He did leave open the possibility that a claim for compound interest could be made on the basis of 'custom and usage', but that I had provided no evidence of such usage.

 

What about this part? If a claimant can prove 'custom and usage' then CI may be awarded.

 

Of course, the banks have not left our money lying around but have made more money from it and lent it out at higher interest rates.

[GaryH]

What about this part? If a claimant can prove 'custom and usage' then CI may be awarded.

If you wanted to find other routes then you are entering very complex and contentious legal territory, which to be honest I don't think this site could help you with. Even if you developed a credible argument and trained yourself to be well versed it then the chances of success are still low.

[dad]

Chezt

 

I claimed for:

 

a. The charges

b. Interest charged by the bank on the charges using Vamps calculation method.

c. Compound Interest on a & b.

 

The judge agreed that I was entitled to a & b and accepted Vamp's method (and was very scathing about the bank's calculation) and said I was entitled to 8% simple as per sect 69 of County Courts Act 1984 on both a & b.

 

I really tried to make the custom and usage argument as well, but just did not have enough evidence, despite quoting previous decisions of the courts and reports by the Law Commission.

 

The only way I could see of improving the evidence was to have witness statements from all of the people who have already received CI in settlement of their claims.

 

Personally, I think the judge got it wrong, but the reality is that I can not afford to risk the costs of trying to take this to the Court of Appeal. Unless anyone has a spare £100,000 to give me in the next week, I have reached the end of this route.

[noomill060]

"I claimed for:

 

a. The charges

b. Interest charged by the bank on the charges using Vamps calculation method.

c. Compound Interest on a & b.

 

The judge agreed that I was entitled to a & b and accepted Vamp's method (and was very scathing about the bank's calculation) and said I was entitled to 8% simple as per sect 69 of County Courts Act 1984 on both a & b."

 

 

This has always been the case.

 

The % rate of S.69 County Court interest has always been at the discretion of the Court.

 

You had your unlawful charges plus interest levied thereon at the contractual rate returned to you. Anything extra is up to the Court, with 8% as standard.

 

You can ask for this at the contractual rate. Doesnt mean you'll get it.

[noomill060]

In my claim against Morgan Stanley, I got S.69 interest awarded at contractual rate, (21.5% compounded) but this was a default judgement.

[bally35]

So compound or contarctual.

Which

Surely the 8% stat interest has already been compounded, as per Vamp spreadsheets.

[noomill060]

Small Claims guide says you can claim s.69 at 8% simple, unless the contracts specifies a different rate.

[voyager9]

theres a article i have found called "precedure for the resolution of consumer disputes with banking services" link is at bottom

 

its a good article and includes a explanation of customs and usage as well as implied terms

 

have a read although its brazilian a lot of it deals with uk banks may be usefull

 

especially as the terms and conditions of bank of scotland state

 

18.6 if we have:

asked you to pay any money you owe us on your account: or

received a court judgement for you to pay any money you owe us on your account;

 

then, for as long as your account is overdrawn, you will have to pay interest under condition 18.8 and any charges on your overdraft.

 

18.8 if your account is closed, we will work out how much interest you owe us for each day your account is overdrawn in the month in which the account was closed (including the day on which it is closed). you have to pay us this sum plus any interest owed under condition 18.5 which has not yet been applied to your account. you will also have to pay any overdraft and charges which you owe us.

 

 

i am just wondering dad did you have the terms and conditions with your case inorder to show these terms should either work both ways or should be included under custom and usage?

 

voyager9

 

http://www.ciroap.org/apcl/doc/resource/brazilian2.pdf

[steven4064]

There is now a High Court precedent against the awarding of contractual interest on the basis of contractual mutuality. The court ruled that a reciprical term cannot be implied.

 

Ok but what about this?

 

The arguement here is that CI can be claimed in the case of profit made from a fiduciary position. Does that not apply to these cases?

 

Steven

 

ps: link to details of Westdeutsche case referenced Westdeutsche v Islington BC

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[steven4064]

I claimed for:

 

a. The charges

b. Interest charged by the bank on the charges using Vamps calculation method.

c. Compound Interest on a & b.

 

The judge agreed that I was entitled to a & b and accepted Vamp's method (and was very scathing about the bank's calculation) and said I was entitled to 8% simple as per sect 69 of County Courts Act 1984 on both a & b.

 

 

But surely b) is (can be) CI anyway? Were you claiming CI on top of CI effectively?

 

Steven

 

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Any opinions are without prejudice & without liability.

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[GaryH]

Ok but what about this?

 

The arguement here is that CI can be claimed in the case of profit made from a fiduciary position. Does that not apply to these cases?

 

Steven

 

ps: link to details of Westdeutsche case referenced Westdeutsche v Islington BC

I think that is a credible argument and its one I've used in the past - in fact I discussed this briefly with dad by PM earlier and asked whether he'd used this angle.

 

The problem is always going to be establishing the existance of a trust - and this was confirmed in his response to my PM earlier.

 

Even if one could be established, and then you could demonstrate it had been breached (which isn't an easy task as you might think either), there is nothing to say the judge would grant you the contractual rate. You could propose it, yes, but it would be the courts discretion as to what rate is deemed to provide an equitable remedy under the circumstances.

[chezt]

Chezt

 

I claimed for:

 

a. The charges

b. Interest charged by the bank on the charges using Vamps calculation method.

c. Compound Interest on a & b.

 

The judge agreed that I was entitled to a & b and accepted Vamp's method (and was very scathing about the bank's calculation) and said I was entitled to 8% simple as per sect 69 of County Courts Act 1984 on both a & b.

Thanks for the reply ... So the bank only actually refunded the charges & no interest at all before court action? ie neither b or c?

 

If that is the case did he order the bank to pay b and also the 8% then?

[steven4064]

I know this may not be strictly relevant but I found these definitions in the FIDUCIARY SERVICES ACTS 2000 and 2005 (which is an IOM Act)

Definition of clients’ money

3. (1) Clients’ money is money of any currency which, in the course of carrying on fiduciary business, a fiduciary holds or receives within the meaning given in sub-paragraph (2), and may include money which a fiduciary holds or receives on behalf of a client company, or which forms, or is intended to form, part of the assets of a trust.

 

(2) A fiduciary holds or receives money if it enters, or expects to enter, into an agreement with a client or a client company to hold such moneys, and holds or receives (in the Island or elsewhere) in terms of that agreement any money which is not immediately due and payable to the fiduciary for its own account.

This seems to imply (in the IOM at least) the the holding of money belonging to another is considered a fiduciary responsibility and hence the depositing of money in a bank account would constitute a trust.

(Is there a corrsponding definition in any of the UK legislation or settled cases?)

 

As to the breaching of that trust, surely the fiduciary profiting from the trust to the detriment of the client would constitute such a breach.

 

Or am I being too simplistic?

 

Steven

 

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[GaryH]

I'm sure dad will correct me if I'm wrong, but my understanding is that Halifax paid the charges + OD interest + 8% s.69 interest and contested the 29.9% CI.

 

At least that is what they have done in all other CI claims until now.

[GaryH]

I know this may not be strictly relevant but I found these definitions in the FIDUCIARY SERVICES ACTS 2000 and 2005 (which is an IOM Act)

[/font]

This seems to imply (in the IOM at least) the the holding of money belonging to another is considered a fiduciary responsibility and hence the depositing of money in a bank account would constitute a trust.

(Is there a corrsponding definition in any of the UK legislation or settled cases?)

 

As to the breaching of that trust, surely the fiduciary profiting from the trust to the detriment of the client would constitute such a breach.

 

Or am I being too simplistic?

Perhaps. Or perhaps not, who knows. It certainly seems arguable IMHO.

 

Do you have a link to that?