walton v rbos

[paulwlton]

The hearing went as follows, the banks barrister arrived and we both sat down to discuss the procedure for the hearing.

The judge called us in and the barrister opened by saying "the claim the claimant has issued is regarding allegedly unfair bank charges your probably aware of this through media publicity," the judge looked up and gave a little smirk.

The hearing was basically a game of ping-png between the defence and judge my input was explaining why i was relying on section 32(1)(b) and 32(1)© till a recess was called.

The barrister and i made our way into one of the little rooms just outside the court room, we then had a lengthy discussion regarding the Limitation Act, this led to him leaving the room for ten minutes whilst he contacted the defendant.

 

When we eventually got back in court the defence tried to get the claim struck out stating the documents i was relying on had no statement of truth and couldn't be submitted as evidence, he then stated that my arguments were interesting and very complex issues concerning law, the judge made the barrister aware that i was a litigant in person and wasn't going to strike the claim out.

 

Both parties agreed to adjourn, the judge as instructed the bank to submit a full defence to section 32 giving the claimant 14 days to reply with a statement of truth.

The hearing date for this as been set for December 14th.

 

My only concern at the moment is procedure rules having the claim struck out for not following them correctly, i'm not sure if anyone has got this far with a time barred claim yet, but i would be greatefull for any input from a mod, i know there's a couple more members thinking of issuing claims where time barring is a factor, i would hold tight for the time being, what ever happens with my claim it can be seen has a learning curve.

[paulwlton]

Yes gong,

 

The document arguing my reliance of section 32(1)(b) and (1c) did not have the statement of truth on, yes the defence made it clear this was a complex case and needed 2 weeks to draft a defence.

I'm confident of the arguments within my claim, the CPR i'm not.

[paulwlton]

Thanks for that Livelylad.

[paulwlton]

No problem bong, the document was 4 pages long it related to the background of my claim why i was contesting the defences use of section 5 and why i was relying on section 32.

I've been in contact with a local solicitor this morning i explained all the details and made him aware of my concerns regarding CPR, his response gave me encouragement.

I will post these documents in due course.

[paulwlton]

No it was a document that i constructed after researching the subject and then applying items from different posts that were relevant to my claim.

I will post everthing in due course, but not at the moment, i need to see a result either way first.

[paulwlton]

I will post the defence when i receive it.

Amongst other things, this was submitted Monday.

 

1 I opened a Current account number 10017026 (“the Account”) with the Defendant in April 1995. The Account comprised a bank current account, an unsecured overdraft facility and a debit card. In March 1998 the unsecured overdraft was converted into a fixed term loan and the overdraft facility was withdrawn. Various charges for unpaid transactions and unauthorised overdraft positions were applied to the account totalling £1450 until it was transferred to the Defendant’s Credit Management Services department and defaulted on 16 July 1998. The Defendant sought and obtained a County Court Judgment for the outstanding loan and overdraft balances in October 1998 (case number MA828118). The court set payments to clear the debt at £38.00 per month.

 

2 The Claimant, as a lay person with no legal training or expertise, could not be expected to have the legal knowledge to question the validity and lawfulness of the charges that were applied to the account as shown in the spreadsheet filed with the original claim.

 

3 The Claimant learned that these charges were unlawful during April 2006, after media publicity was given to a legal claim regarding the legality of bank charges. This led to the Claimant making further investigation and seeking advice through the Consumer Action Group website, and other Internet based legal sources.

 

BASIS FOR MY CLAIM

 

4 I do not accept that the claim is time barred by virtue of Section 5 of the Limitation Act (1980) on two grounds.

 

5 Section 5 of the Limitation Act states that “an action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action expired”. However, rights under the contract do not become time barred if there is an acknowledgement or payment of a debt within the six year period. I contend that my payments of £38 per month starting in December 1998 and my continuing payments of the balance due under the Defendant’s County Court order constitute an acknowledgement of the debt. I contend that if I acknowledged the debt and the Defendant asserted its rights under the agreement, then any assertion of my rights under the agreement would not be time barred until six years after the last acknowledgement.

 

6 This argument may be illustrated by way of example. If, in July 2002, I had acknowledged a debt to the Defendant but it had not sought and obtained a County Court Judgment, the debt to the Defendant would not become time barred until July 2008. It would be possible for the Defendant to make a county Court claim at any point during this six year period. The Defendant’s assertion that this claim is time barred implies that it is possible that one party’s rights under an agreement may be time barred whereas those of the other party are not.

 

 

 

 

7 If the charges are time barred by virtue of section 5 of the Limitation Act (1980) then I contend that the defendant has concealed, and continues to conceal that the charges debited are unlawful. If this is not the case, and the defendant truly believes that these charges are lawful, then I contend that the defendant is mistaken. As I only became aware during April 2006 that the charges debited were unlawful, then section 32(1)(b), or section 32(1)©, of the Limitation Act 1980 should apply, and the charges debited are therefore within the primary limitation period.

 

8The Defendant is a major financial institution within a group of companies that have interests throughout the world. They operate as fiduciary to many thousands of customers in the UK, and employ large staffs which include experienced corporate lawyers and accountants.

 

9 At some point, the Defendant must have made a business decision to apply a charge to a customer account where a breach of contract took place, which was disproportionate to the banks actual losses for that breach. In making this decision, it would reasonably be expected that a company operating in such a position of high trust and fiduciary responsibility would have taken legal counsel when making such a decision.

 

10 The Claimant holds that if the Defendant did take legal counsel on this issue, then it has made a decision in the full knowledge that the said charges were unlawful, and that they have deliberately concealed this fact from their customers, and therefore section 32(1)(b) of the Limitation Act 1980 should apply.

 

11 The Claimant holds that if the Defendant did not take legal counsel on this issue, then they did not operate with the reasonable diligence that would be expected of an experienced fiduciary, and that their failure to seek such legal counsel at the time should have been declared when the bank did eventually seek such legal counsel, and that by not making such a declaration the Defendant has continued to show deliberate concealment and therefore section 32(1) (b) of the Limitation Act 1980 should apply.

 

12 The Claimant holds that if the Defendant did not take legal counsel on this issue, and are genuinely unaware that the said charges are unlawful, and that the court does not uphold the Claimant’s view that section 32(1) (b) of the Limitation Act 1980 should apply, then the Claimant holds that section 32(1) © of the said Act should apply.

13 In April 2006 the Office of Fair Trading published “Calculating Fair Default Charges in Credit Card Contracts” ( A statement of the OFT’s position, page 12). Paragraph 1.1 of the report states that whilst it deals with credit card contracts,

 

“The principles have wider implications for analogous standard default terms in other agreements including those for mortgages, current bank accounts and store cards”.

 

 

 

 

 

 

Paragraph 1.3 states:

 

“The statement sets out our view of the law which is in essence that default charge provisions are open to challenge on grounds of unfairness if they have the object of raising more in revenue than is reasonably expected to be necessary to recover certain limited administrative costs incurred by the credit card issuer”.

 

14 Based on discussions with the banks and information provided by them, the OFT determined a simple monetary threshold for intervention by the OFT on default charges under credit card contracts of £12 (OFT sets threshold for intervention, page 12). This threshold is significantly lower than the default charges levied by almost all credit card companies and it is therefore reasonable to conclude that the credit card companies were aware that these charges were intended to generate a profit over and above the cost of remedying contractual breaches by customers. Given that the credit card companies have consistently refused to provide a breakdown of their costs to demonstrate that their default charges are not punitive in nature I believe that they deliberately concealed the nature of these charges from their customers.

 

15 As the OFT has stated that the principles underlying its report on credit card default charges are analogous to standard default charges in bank current accounts, I contend that it is likely that the Defendant and other banks have concealed the punitive nature of current account default charges from me and other bank customers. I therefore further contend that Section 32(1)(b) of the Limitation Act (1980) applies and that my claim is therefore not time barred. In order to determine whether this view is correct it may be necessary for the Court to consider ordering standard disclosure. I am therefore seeking disclosure of this information as set out in paragraph 20 below.

 

16 If the true nature of the default charges applied to the Account by the Defendant were not deliberately concealed from me, I contend that the Defendant mistakenly set these charges with the view of generating a profit and 32(1)© of the Limitation Act should apply. I base this assertion on the principles set out in the OFT report and the Defendant’s failure to defend claims for the refund of default charges applied to bank accounts where the issue of time barring has not arisen, if the defendant did not mistakenly set the charges with the view of generating a profit, then I paid the charges in the mistaken belief that they were lawful, and I further contend section 32(1)© of the limitation act should apply.

 

17 Based on a survey undertaken by the Consumer Action Group, the Defendant has refunded charges totalling approximately £122,384 to 125 customers since January 2006. Over the same period UK banks have, according to the survey, refunded 3,230 customers, a total of £3.6m; all of these claims have been settled before a Court hearing has taken place. Since mid October I personally have received full settlement offers regarding charges, one after issuing a court claim and the second after threatening court action (attached page 15), I contend that this is because the Defendant and other banks are aware that their default charges are likely to be judged unlawful.

 

SUBMISSIONS TO THE COURT

 

18 I contend that this claim is not time barred by virtue of Section 5 of the Limitation Act (1980) for the reasons set out above.

 

19 If the Court does consider that the claim is time barred by virtue of Section 5 of the Limitation Act (1980), I ask the Court to consider the arguments set out above in respect of Sections 32(1) (b) and 32(1) © and allow this matter to proceed to the full hearing in which these arguments may be considered in detail.

 

20 Accordingly I would respectfully ask the court in this case, not withstanding allocation to the small claims track, order standard disclosure, I understand it is in the courts discretion to do so, this to specifically include a breakdown of the defendant’s losses due to contractual breaches compared to the costs incurred by the claimant as a result of the breaches.

[paulwlton]

Thanks Alan.

 

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

[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.

[paulwlton]

Have you got a link to it.

[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.

[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.

[paulwlton]

I've been looking through the CC report and their seems to be some good stuff on Ulster bank, i especially like the project Hanover bit.

 

It seems that Ulster restructed charges in line with their parent company the RBS stating this would be revenue neutral, however to date it's been revenue enhancing. This among other things could be very useful in court.

 

This is my reply to the CPR Part 18 request, hope i've included everthing, comments welcome.

 

Response to CPR Part 18 Request.

1. In your claim you state that the banks charges are a disproportionate penalty and therefore unenforceable as they are contrary to common law.

2. Please provide the following particulars in support of your claim:

2.1 Please specify the clause(s) pursuant to which the charges were applied?

The defendant applied charges to my account in respect of unpaid direct debits, unpaid standing orders, referral charge, unpaid item (cheque), card abuse (cheque),

2.2 Please specify weather the charges applied were due to a breach of contract by the claimant?

.

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

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.

2.3 Please identify in each case the particular breach of contract (by reference to appropriate term(s) of the contract) that the charge related to.

Referral Charge- Charges levied when the bank makes a payment which creates or extends an unauthorized overdraft.

Unauthorized Overdraft Charges- Transaction charges incurred when a customer goes into unauthorized overdraft.

Unpaid Charges- Charges for returning cheques unpaid, or declining to pay a standing order or direct debit, that if paid, would create or extend an unauthorized overdraft.

3. In your claim you state that the charges are: invalid under the unfair (contracts) Terms Act 1977 s.4 and Unfair Terms in Consumer Contracts Regulations 1999 Para. 8 and Sch.2(1)(e) and unreasonable within the meaning of the supply of goods and services Act 1982 s.15.

4. Please specify all of the facts relied on by the claimant in support of the contentions in paragraph 3 above, and in particular please identify the contractual provision(s)that the claimant alleges are invalid by reference to UCTA/the regulations.

A charge made by way of a penalty on a contractual party by another is void in Law as it unjustly enriches the other party - i.e.; the defendant is earning a profit for doing nothing

The Unfair (Contracts) Terms Act 1977 s.4, says a term in a contract that requires a person acting as a consumer to indemnify another party is void, unless the person seeking to rely on the clause can show that it is justified between the parties. It is unlikely that a Court would decide that a consumer is better placed to carry an indemnity for a multi £million organization that the defendant is, especially, as the contract was pre-drafted and the consumer has not been able to negotiate the terms individually.

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

This implies they can set them at whatever level they like - £100 for going over a overdraft limit? £150.00 for not paying a direct debt. The defendant would then 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.

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).

A reasonable and LAWFUL charge would be for actual losses the defendant incurrs when default charges are applied due to breaches,

Statement of Truth

The Claimant believes that the facts stated in this CPR Part 18 request are true.

Signed……………………..

DATED this 20th day of November 2006.

[paulwlton]

No bong not yet, any suggestions will be welcome.

[paulwlton]

Your input is exellent and i will take into account what you have said, my response doesn't need submitting for another 2 weeks so theirs plenty of time to get it right,

 

The problem is i have no access to the original contract.

[paulwlton]

I made a S.A.R request in August the bank responded 1 week later stating they have no information on the account. I then sent off a CCA request asking for a true signed copy of the original loan agreement, my postal order was returned.

 

Just returned from the local RBS bank with the current terms and conditions, and will be updating my response to the CPR request.

[paulwlton]

Thanks for that Glenn.

 

The sticking point now is the contractual provision. The request states, please identify the contractual provision(s) that the claimant alleges are invalid by referance to UCTA/the Regulations. I have explained in general terms but the request goes further and wants it related to the terms of the contract. i'll post an update to the request tommorow.

[paulwlton]

Hope this is ok need to work on the CC report.

 

 

Response to CPR Request

 

 

 

1. In your claim you state that the banks charges are a disproportionate penalty and therefore unenforceable as they are contrary to common law.

 

2. Please provide the following particulars in support of your claim:

 

2.1 Please specify 2.1 clause(s) pursuant to which the charges were applied?

 

The clauses pursuant

 

D.1.2 The overdraft limit should not be exceeded and we may refuse to pay a cheque (or allow any other payment or withdrawal) which could have that effect. If we do pay a cheque, (or allow any other payment or withdrawal) which results in the overdraft limit being exceeded, it will not mean that the overdraft limit has changed, which would have the same effect.

 

 

D.1.3 (b)carry out a payment instruction in any form [e.g. issue a cheque or make a card transaction on the account] which, either through exercise of our discretion to pay the item on presentation for payment or through payment being guaranteed to a third party, results in the account becoming overdrawn when no agreed overdraft limit is in place or which results in the overdraft limit being exceeded in either case, this will be treated as a variation to the contract [i.e. not revoking and replacing any earlier agreement] under which overdraft facilities are provided by us, either with our prior agreement or which arise through exercise of our discretion to pay items presented for payment being guaranteed to third parties.

 

 

D.1.7 We will confirm to you if we are to charge a fee for arranging an overdraft limit. If a fee is payable, we will debit it to the account on which we have made the overdraft available either on the date of the confirmation or shortly afterwards. You will also be responsible for paying any costs incurred by us in connection with the overdraft whether as a result of you breaking the terms of agreement or not. These costs will include (but not limited to) costs of taking and discharging any security; taking steps, including court action, to obtain payment; enforcing and/or preserving our rights under any security held for the overdraft facility; tracing you if you change address without notice and communicating with you if you break the terms of the overdraft arrangement. If such costs remain unpaid then we may debit them to the account on which we have made the overdraft available.

 

 

D.4.1 The account may not be overdrawn by you.

 

 

 

 

Section H

Highline/Cashline Card – conditions of use.

 

H. 3 You (and any additional cardholder) must not use the card if to do so would overdraw the account without our prior agreement, or would increase any borrowing on the account to more than we have agreed.

 

 

2.2 Please specify weather the charges applied were due to a breach of contract by the claimant?

 

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 explicitly stated in the contract and implicit in the way the account is run. These charges are directly related to actual breaches in contract. They are not levied in any other situations that I am aware of.

2.3 Please identify in each case the particular breach of contract (by reference to appropriate term(s) of the contract) that the charge related to.

 

Unarranged overdrafts

If you borrow more than your agreed overdraft limit you will be liable for a maintenance charge applied monthly, 16 days after the end of the charging period (or the next business day if this is a Saturday, Sunday or Bank Holiday). The charging period is normally in line with the date we send your statement to you.

 

Unarranged borrowing – paid referral

If we pay a debit drawn on your account which results in or increases an unarranged overdraft, a paid referral charge is incurred and will be payable on the 6th business day of the following month and the account will be debited on that date.

 

Unauthorized transaction fees - Unpaid items.

Payable when a cheque, standing order or direct debit is not paid due to there being insufficient funds available in your account.

 

Unauthorised transaction fees- card misuse

Payable when we are forced to pay an item which has been supported by cheque guarantee or maestro although there are insufficient funds available in the account.

 

When your account is overdrawn in excess of any agreed overdraft limit, a maintenance charge will also be applied.

 

3. In your claim you state that the charges are: invalid under the unfair (contracts) Terms Act 1977 s.4 and Unfair Terms in Consumer Contracts Regulations 1999 Para. 8 and Sch.2 (1) (e) and unreasonable within the meaning of the supply of goods and services Act 1982 s.15.

 

4. Please specify all of the facts relied on by the claimant in support of the contentions in paragraph 3 above, and in particular please identify the contractual provision(s)that the claimant alleges are invalid by reference to UCTA/the regulations.

 

 

 

 

 

D. 1.8 If you exceed the overdraft limit, charges will be payable as detailed in the promotional leaflet insert relating to the account. This insert can be obtained from any of our branches.

 

This says the bank can levy a charge detailed in the "promotional leaflet". If this clause has the effect of the customer paying more than the banks actual loss, then it would fail the test of reasonableness, as per section 4(1).

 

This is the relevant part:

 

Under section 4(1) of the Unfair Contract Terms Act 1977, it states that, “A person dealing as consumer cannot by reference to any contract term be made to indemnify another person (whether a party to the contract or not) in respect of liability that may be incurred by the other for negligence or breach of contract, except in so far as the contract term satisfies the requirement of reasonableness".

 

 

It is unlikely that a court would find this indemnity clause to be reasonable, given the strength of the bargaining position of the claimant, an individual consumer, in relation to the defendant, a multi £million organisation, and given that the contract terms were pre-drafted and not individually negotiated.

 

Further the defendant may state that the charges are a genuine pre- estimate of its liquidated losses and that this estimate need not exactly reflect the actual losses.

 

However, the losses should be reflective of the contract between the claimant and the defendant specifically and not the losses of a contract between any other parties and the defendant.

 

Where the contract has been in force between the two parties it would be reasonable for the pre-estimate to reflect very accurately the liquidated losses incurred when the claimant breached the terms of the contract between the defendant and claimant since there is evidence as to those losses.

 

 

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

This implies they can set them at whatever level they like - £100 for going over an overdraft limit? £150.00 for not paying a direct debt. The defendant would then 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.

Further Para.5.(1) states that

A contract term which has not been individually negotiated is unfair if it causes a significant imbalance in the parties' contractual rights and obligations, to the detriment of the consumer.

 

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).

A charge for the defendants actaul losses would be a reasonable charge or a genuine pre-estimate.

 

 

Statement of Truth

 

 

 

The Claimant believes that the facts stated in this CPR Part 18 request are true.

 

 

Signed……………………..

 

DATED this 20th day of November 2006.

[paulwlton]

All documents relied on have been sent into court and also forwarded to Cobbetts, they have the option of ammending the defence if they so wish.

 

An award for costs will be sought on an appeal, so a costs schedule must always be prepared and served by both sides before the appeal hearing.

Generally, an award for costs is not sought at the main hearing, so a costs schedule will not be served. Indeed, to do so, especially if the other side is not represented, may be frowned on by the district judge who may view the service of a costs schedule as tactics to intimidate the opposition, and against the spirit of the rules.

 

Tread a careful path, if a schedule is served on a litigant in person it should be supported by a carefully worded and non threatening letter.

 

This was taken from Patricia Pearls Practical guide to small claims book.

 

I just thought i'de make people aware of the tactics used by Cobbetts.

[paulwlton]

Just a quick update, the court gave the bank untill today to amend their defence, nothing through the post but junk mail.

[paulwlton]

The court have received nothing from cobbetts so i guess their defence is s5.LA only, it seems my response to the CPR 18 request was satisfactory.

and i have proved the charges were levied on the account since copy statements have been forwarded,

I can't honestly see the judge striking the claim out has he was the one urging the defence to have the next hearing has the final hearing.

 

The judge knows the charges are unlawful so does the defence it's all down to s32 v s5 LA,

[paulwlton]

Thanks for that livelylad, i think we are all in this together, but a word of warning, i don't want to give people the impression that this is a winner, far from it, the common law is still developing and is complex regarding s32, and it needs testing in court i don't think the banks are going to wright big cheques out to people just because they have included s32 in their POCs.I may be wrong though. Just my opinion.

[paulwlton]

I agree i think the banks are starting to feel the heat, but people have got to be aware that the type of claim we are making could end up in a higher court, if they proceed on this basis then good luck to them.

[paulwlton]

Quick update, a further schedule of costs has just arrived regarding Thursdays hearing £1,638,20. It basically says if it does go to the full hearing further costs will be incurred by the claimant.

[paulwlton]

I agree this could be seen as intimidation. I may make the judge aware of this Thursday.

 

 

The costs estimated above do not exceed the costs which the claimant is liable to pay in respect of the work which this estimate covers. The claimants solicitors reserve the right to apply to the court to vary the amount of anticipated costs claimed.

 

The amount calculated is for this schedule of costs only and is without prejudice to the claimants solicitors right to claim further costs and disbusements properly incurred should this matter proceed to a full detailed assessment.