walton v rbos

[JonCris]

Excellent PW

 

For future such claims if they argue limitation it might help, to prove concealment or even mistake, to ask the court to order the bank as part of full disclosure to disclose how (& when) they decided to increase their charges to the current levels

[livelylad]

Excellent Paul. :grin:

[alanfromderby]

Clearly you know what you are doing, and from what you say you have them on the back foot. It is certainly going to be interesting to see their Defence to the Limitation issues.

 

On the CPR issue, it is always worth talking to the court on the phone. If it is a complex issue ask to speak to the Court Manager. They are dealing with these things every day, and the county court is geared to helping individuals successfully navigate the complexities of the CPR.

[paulwlton]

Thanks Alan.

 

I agree, it will be very interesting to see their defence, i may also contact the court manager for further guidance.

[MARTIN3030]

Good work:D

[paulwlton]

Reading through posts in the RBOS forum people start to panic when they receive the banks defence, this includes a CPR request.

 

My reply was that i would supply further information if the court requested it, the defence brought this to the judges attention in court.

 

This is not intended as advice i'm merely stating the approach i took.

 

However i have allways had the intention of suppling further information, i supplied this in court.

 

I think everyone needs to be confident of their arguments, i think this just about covers the CPR request.

 

 

 

The defendants request for further information.

 

The Case under UK Contract Law.

 

The Facts.

 

These charges are NOT for a service as the Defence may claim, but are penalties.

Under UK contract law; the defendant was indeed entitled to make a charge for losses incurred from a breach of contract. This is not in dispute. Examples of breach of contract in this case are going over a set agreed overdraft limit, not having sufficient funds to pay a direct debit etc. These are explicit or implied breaches.

 

The law clearly states that a company cannot profit from a breach and 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. This means that Liquidated damages are charged.

 

This is backed up by case law – Robinson Vs Harman 1848.

 

The law says that the charge for loss or damage must be proportionate to the loss incurred.

 

Charges are Penalties – “In-Terrorem”

 

These charges levied on my account by the defendant are penalties. The law states that a clause is a penalty if it provides for “a payment of money stipulated as in-terrorem of the offending party”. I.e. it is designed to scare or coerce or it is used as a threat.

 

Lord Dunedin stated in the case of Dunlop Pneumatic Tyre Co v New Garage & Motor Co 1915:-

 

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

 

It is also worth noting that the defendant is a multi-national corporation. This term regarding charges was inserted unilaterally in the contract. I.e. I had no opportunity to negotiate the clause.

 

The Costs Incurred by the defendant.

 

The defendant does not publish costs associated with going overdrawn, although they have been requested for this information. Neither do they outline how the costs of these charges are set.

The banks operate a highly computerised, automated process when dealing with charges.

The process operates many thousands of times each day and millions each year so that the cost of it is spread over a huge number of transactions and shared equally between them.

There is no evidence of any personal involvement by a member of the defendant’s staff. An account is flagged as being over the limit/non payment of a direct debit etc and the computers sends a mail-merged (by computer) letter which is fulfilled by an automated mailing house and posted.

 

I would estimate this cost to be between £0.50-£1.00. There is no evidence of personal intervention. I received 3 individual letters from the defendant in 3 envelopes, detailing 3 separate charges on ONE day in Jan 1997. If a person was involved, there would be one letter detailing the charges in one envelope and one stamp. In this example, I was charged £90 (£30 per item)

 

Their is no data for UK banks but studies in the USA and Australia on this subject have estimated the real cost of sending a letter following no payment of a direct debit to be AUS $0.54 and US$0.50-$1.50.

 

It is worth noting that the defendant charged unauthorised overdraft interest on an account in breach of its limit which is almost 0.30%. Perhaps a good pre-estimate of the loss they incur (i.e. liquidated damages).

 

 

 

 

 

External View and Comments

 

Pressed by the House of Commons Select Committee 2005, sir Fred Goodwin chief executive of the defendant revealed that the charges are designed to offset their debt recovery losses. (It’s therefore not about my account but a charge to contribute to all customers debt).

 

Peter McNamara, who was Head of Personal Banking at Lloyds, said in a BBC Radio 4 interview in 2004 that charges are used to fund free banking for all personal customers.

 

Finally the Office of Fair Trading on April5, 2006 suggested that these penalty charges are unfair.

 

Service – The Defence’s Argument.

 

It is inconceivable how these charges are for a service. However in argument:

 

The Banks state that under Section 7 of the Unfair Terms in Consumer Contract Regulations 1999 (UTCCR99) that their prices do not have to be fair, that they are NOT subject to the scrutiny of a court.

 

This then implies they can set them at whatever level they like - £100 for going over your overdraft limit? £150.00 for not paying a direct debt. The Banks imply that their charges can be uncapped and unregulated.

 

However the Sale of Goods and Services Act 1982, sec 15.2 clearly states that the sum must be fair and reasonable. Is a 3000% mark up fair when the average mark up on the High Street is 100%?

 

This is an unfair term within the contract because it allows the defendant to charge any price they wish for a service - which is far in excess of the cost or value of the service.

 

Further under the UTCCR99, Sec 2 Par 1 states that

 

“A term that allows a party to unilaterally raise the price, or for a price to be determined on delivery is unfair.

And, Para. 8 sch. 2 (1) (e) states that

A term requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation is unfair.

 

Summary.

 

The charges made by the defendant are not for a service but is a penalty charge, used in-terrorum to frighten and coerce individuals not to breach their contract.

 

The charge made is not liquidated damages as it does not reflect the true cost of the breach incurred by the defendant]. They have not offered any evidence of how these costs are constructed or proof that for example; bouncing a direct debit costs them £30.00.

 

I estimate that the cost is less than £1.00.

 

UK contract Law states that the charge must be the amount needed to put both parties in the position they were before the breach happened.

 

Contrary to the defendant’s argument, there is both an explicit and implied breach of contract by myself by going over an agreed overdraft limit or not having sufficient funds in the bank to pay a direct debit. These charges are directly related to actual breaches in contract. They are not levied in any other situations that I am aware of.

est.

[caro]

This is excellent and could be of great use for anyone claiming their charges. It puts all the arguments across clearly and concisely.

[Glenn UK]

PW lots of good work and words in there, have you seen the competition commissioners report?

 

It have some more useful stuff in there about the banks, its based on northern irish banks but includes Halifax, Abbey not sure about RBOS but its still useful stuff.

 

Glenn

[paulwlton]

Have you got a link to it.

[alanfromderby]

http://www.consumeractiongroup.co.uk/forum/mercantile-court-cases-stays/announcement-center-important-document-all.html

[paulwlton]

Thanks Alan.

Some interesting facts especially 4.10. 67, i think i'll be studying the document in full and adding to my bundle for the full court hearing.

[Glenn UK]

PAul

 

I think 4.6 pages 18 onwards is also worth a read too.

 

Makes the statment several times that the charges cannot be justifed based on costs since banks dont know what their costs are.

 

HTH

 

Glenn

[paulwlton]

Ulster bank was taken over by the RBS in 2000, and 4.7 Anex 1 between 9 and 25 bodes well for my case.

[paulwlton]

The amended defence arrived this morning the following has been added.

 

1, The defendant does not admit and requires the claimant to prove the allegation that between 1995 and 1998, the Defendant debited certain charges to his bank account.

 

2,Without prejudice to the non-admission set out in the foregoing paragraph, if and to the extent that the claimant proves the allegation that the defendant debited charges to his bank account on dates between 1995 and 1998, any remedy in respect of the same, weather damages, restitution, is barred by the operation of the Limitation Act 1980 and/ or the doctrine of laches.

 

I'm not sure what to make of paragraph 1, surely bank statements showing the charges is conclusive proof that the bank debited them.

 

Paragraph 2, is just stating what the defence said in court.

 

The judge will either apply 32(1)(b) 32(1)© or s.5 of the Limitation Act.

 

The rest of the Defence is the standard banks defence, my reply to this will be short and sweet.

 

Directions from the court state a reply to the defence (if advised) must be made by the 4th December this to include a reply to the CPR request.

[livelylad]

1, The defendant does not admit and requires the claimant to prove the allegation that between 1995 and 1998, the Defendant debited certain charges to his bank account.

 

I'm not sure what to make of paragraph 1, surely bank statements showing the charges is conclusive proof that the bank debited them.

 

I agree what are they on about?

[Glenn UK]

Whats the doctrine of laches?

 

Re the added paragraphs, 1 is simply to force you to produce the statements where previously you would'nt have to since they hadn't disputed their existence i think.

 

As i recall the original just said you cant claim charges older than six years so they need to say this to make sure you have the evidence to support your claim.

 

JMHO

 

Glenn

[livelylad]

Whats the doctrine of laches?

 

Re the added paragraphs, 1 is simply to force you to produce the statements where previously you would have to since they hadn't disputed their existence i think.

 

As i recall the original just said you cant claim charges older than six years so they need to say this to make sure you have the evidence to support your claim.

 

JMHO

 

Glenn

 

Thanks Glenn.

[alanfromderby]

Just googled this:

 

LACHES, DOCTRINE OF - Based on the maxim that equity aids the vigilant and not those who procrastinate regarding their rights; Neglect to assert a right or claim that, together with lapse of time and other circumstances, prejudices an adverse party. Neglecting to do what should or could, have been done to assert a claim or right for an unreasonable and unjustified time causing disadvantage to another.

 

Laches is similar to 'statute of limitations' except is equitable rather than statutory and is a common affirmative defense raised in civil actions.

 

Laches is derived from the French 'lecher' and is nearly synonymous with negligence.

 

In general, when a party has been guilty of laches in enforcing his right by great delay and lapse of time, this circumstance will at common law prejudice and sometimes operate in bar of a remedy which is discretionary for the court to afford. In courts of equity delay will also generally be prejudicial.

 

But laches may be excused from ignorance of the party's rights; from the obscurity of the transaction; by the pendency of a suit, and; where the party labors under a legal disability, as insanity, infancy and the like.

[Glenn UK]

Alan

 

Thanks for that, i thought when no mention of it was made in the original post i was the only who didn't know what it meant.

 

So in other words we are at fault for not knowing or noticing the unlawfulness of the charges then?

 

Glenn

[alanfromderby]

It is a smokescreen. The key phrase for me is that it is something that may apply where the court has discretionary powers. In the case of section 32 of the LA, the court has to decide whether the limitation stands or falls depending on the evidence in front of them. I don't see any discretionary leeway.

[Glenn UK]

I think that the this isn't relevant, sec 32.1.b is reliant on their concealment.

 

By virtue of the fact they have concealed their acts, knowingly or not, this prevented the claimant from discovering the unlawfulness of the charges. No reasonable person would have discovered the unlawfulness under these circumstances. A reasonable person being like that bloke on the top of the no 59 clapham omnibus.

 

Sec 32.1.c relies of the fact that the claimant paid the charges in the mistaken belief they were lawful or that the defendant imposed the charges mistakenly believing them to be lawful.

 

So even if this applied it would only dispose of 32.1.b, and from my lay viewpoint i don't think it does.

 

JMHO

 

Glenn

[caro]

The delay in making the claim was not so much negligence as ignorance. You'll have to excuse my logic here, due to lack of legal knowledge, but could it be a case of ignorance of the law is no excuse? Or could it be argued that it was a commonly held belief that banks were within their rights to take exhorbitant charges, so it's a case of custom and practice. In that case could your ignorance of the facts be excused.

 

So much is open to interpretation.

[Guest bong]

Caro I think it will be ignorance of the fact that the charges exceeded the costs, as opposed to ignorance of the law which, as you say, would not be an excuse.

[caro]

Good point Bong. And what is also in question, is whether the fact of the charges exceeding the costs was deliberately concealed. If that could be proved we'd all be on to a winner.

[Guest bong]

I think the report of the Competition Commission goes a fair way towards proving that they knew of the discrepancy between charges and costs. I've made an attempt at proving the deliberate concealment at point 9 of my POC - if you're interested it's here http://www.consumeractiongroup.co.uk/forum/hsbc-bank/33005-bong-hsbc-contractual-interest-3.html#post364381

 

haven't had a response yet though, only submitted it to court on Monday.