Stays

[Mihail]

It looks like the banks have got a default defence to challenge our stay appeals at the upcoming hearings in various County Courts-see pasted skeleton argument below. I could be wrong, but it looks like a default to me.

My particular hearing's next Friday-12 October 10am.

Any advice/legal responses about/to this HSBC/default banks' before this date gratefully received.

Cheers

Mihail

HSBC BANK PLC

(TRADING AS FIRST DIRECT)

Defendant

 

 

 

____________________________________________________________

DEFENDANT’S SKELETON ARGUMENT

Hearing at 10am on 12 October 2007

____________________________________________________________

Background to this application

 

1. The Claimant claims against the Defendant in relation to bank charges which he alleges to be penalty charges. His claim was issued on 31 May 2007.

1. On 27 July 2007, the OFT commenced proceedings in the Commercial Court (‘the Test Case’) against the Defendant (and seven other financial institutions).1 These proceedings were commenced pursuant to an agreement dated 25 July 2007 (‘the Litigation Agreement’) between the OFT, the Banks and the FSA. Clause 1.6 of the Litigation Agreement provides:

“The OFT recognises the desirability of achieving a fair and orderly resolution of the relevant issues and will not object to any request or application for a stay of other court proceedings between the Banks and their customers concerning the Relevant Terms and/or Relevant Charges.”
 

1. The Claimant’s claim was stayed by Deputy District Judge Williams on 8 August 2007.

1. The Claimant now applies to lift the stay. The Defendant resists this application. For the reasons set out in this skeleton argument, the Defendant submits that the appropriate course is to continue the stay pending the resolution of the Test Case.

Why the stay should remain in place

 

1. There are a number of reasons why the stay should remain in place pending the determination of the Test Case:

1. The issues of principle raised by the present case have complex legal aspects, requiring the resolution of those issues against a complex factual backdrop that may differ in each case depending on the type of charge or term in issue, the relevant contractual terms, the Bank concerned, and the period of time during which the particular Claimant was charged. These matters simply cannot be resolved on a summary basis and are not appropriate for determination in the context of small claims.

1. In short, the stay facilitates the orderly resolution of these cases, in the interests of all parties and the efficient administration of justice. It is understood that Moore-Bick LJ’s view, as expressed in e-mails to the Designated Civil Judges, is that His Lordship would be surprised if stays were not granted in most cases.

The Proceedings and the Litigation Agreement

 

1. The context for the Test Case is set out in the recitals to the Litigation Agreement. In summary, many tens of thousands of complaints have been received by banks relating to charges levied for overdrawn current accounts. Many claims have been commenced in the County Courts. The Banks, in the light of the continued growth in these cases, have now entered into the Litigation Agreement with the OFT, which is aimed at ensuring an orderly, efficient and proportionate resolution of the issues raised by those claims, having regard also to the use of the Court’s resources.
1. The Litigation Agreement provides for there to be a trial in the Commercial Court of certain issues concerning the applicability of the Unfair Terms in Consumer Contracts Regulations 1999 to each Bank’s current account agreements and charges, if the Regulations apply whether it is a pre-condition of any finding of unfairness that they are first shown to be contrary to the requirement of good faith referred to in Regulation 5(1) and whether the terms or charges are capable of amounting to penalties (‘the Preliminary Issues’). Depending on the final determination of those issues, and the outcome of the OFT’s continuing investigation into certain underlying factual issues, the Banks intend that the substantive issues of fairness and penalty and any remedial consequences will later fall to be determined in the Test Case.
1. The legal questions identified in the paragraph above are difficult even in isolation. Those legal difficulties are compounded by the need for determinations as to the application of those principles to each of the relevant charges, terms and conditions, which have varied over time and which differ between each of the Banks.3 If relevant, the assessments, for example, of ‘fairness’ and the application of the law of penalties requires an evaluation not simply of abstract legal principles, but also complex factual issues of the kind identified above.
1. The hearing of the Preliminary Issues has been fixed for an 8-day trial starting on 14 January 2008, and will be preceded by detailed written submissions. The length of the hearing reflects the fact that the Proceedings raise issues that have the complex legal aspects identified. The preparation and hearing of the arguments will require extensive preparation by both parties, and considerable judicial time, which is neither possible nor proportionate for individual small claims hearings, particularly where the claimant is a litigant in person.
1. Maintaining the stay in the present case would not only assist in the swift resolution of the present case, but conversely pursuing the present proceedings would potentially undermine the Test Case, especially if the losing party were to appeal the Court’s decision. Moreover, any judgment in the present proceedings risks being appealed once the test case is finally determined in any event.

Timing

 

1. The key point is that, in all likelihood, the Claimant’s claim would not be resolved any faster as a result of lifting the stay. This means that the Claimant will be no better off as a result of lifting the stay. The proceedings in the Test Case are expedited and the hearing is listed for 14 January 2008. There is no realistic possibility that the Claimant’s claim would be resolved any sooner in the event that the stay is lifted (particularly once one takes into account the likelihood of any appeals). The Claimant, should his case succeed, will of course be protected by an interest award which further protects his position until the resolution of the Test Case. The FSA Directive of 27 July 2007 also requires the Defendant to ensure that resolution of the Test Case is achieved expeditiously (para 12(7)) and to apply relevant principles established by the Test Case in resolving claims such as that brought by the Claimant.

Advantage to the Claimant by awaiting the outcome of the Test Case

 

1. The Claimant’s claim involves complex legal arguments. It is by no means a straightforward claim (which is why the Test Case needs 8 days before a Commercial Court judge). There is an obvious benefit to the Claimant in awaiting the outcome of the Test Case. The OFT will be using skilled and specialised lawyers to present the best case on behalf of consumers. The Claimant will not be able to take advantage of similar legal resources. The Claimant will have a better prospect of succeeding on the legal arguments by relying upon the OFT’s submissions, rather than fighting his corner alone.

Specific points raised by the Claimant

 

1. The Claimant has submitted what is understood to be a pro forma letter containing various arguments. The Defendant responds as follows.
1. The Claimant alleges that a stay would be inconsistent with his right under Article 6 ECHR. This argument is devoid of merit as a matter of law; the ECHR jurisprudence both from Strasbourg and in the House of Lords makes clear that such stays are permissible, and that the complexity and importance of the present issues justifies such delays.
1. The other points raised in the letter do not take forward the position. It is noted that the Claimant does not rely upon any alleged specific financial hardship caused by the stay.
1. There is nothing about this case such as to take it out of the ordinary situation. It is submitted that the approach that has been commended by Moore-Bick LJ, the OFT and numerous County Courts should be adopted in this case. In any event, the Claimant’s position will be preserved during the Proceedings, and if ultimately successful the Claimant will be entitled to interest. As mentioned above, there would in any event be no realistic timing advantage to the Claimant by lifting the stay rather than awaiting the outcome of the Test Case.

Claimant’s request for injunctions

 

1. The Bank resists the alternative relief sought in the form of a variety of injunctions to be imposed as conditions of maintaining the stay. Two broad points are made at this stage:

Conclusion

 

1. Maintaining the stay in the present case is appropriate for all the reasons set out above. The Test Case provides a just, efficient and binding mechanism to resolve issues of principle that underlie the present case in a manner that could not occur if this case (and others like it) proceeded.

FRED HOBSON

3 Verulam Buildings

Gray’s Inn, London, WC1R 5NT

5 October 2007



1. The injunctive relief is inappropriate, and either unworkable or manifestly disproportionate for effect to be given to it. The Defendant’s systems simply cannot disapply future charges. Moreover, if the Defendant succeeds in the test case, it would suffer irreparable prejudice in being unable to recover such charges; whereas if the Claimant succeeds, such charges could be reclaimed. There is no merit in any other injunctive relief sought, which would cause substantial administrative difficulties so far as its systems are concerned.


1. The Defendant is already required under the Banking Code (at para 2) to ‘consider all cases of financial difficulty sympathetically and positively’. The Claimant should take the opportunity to approach the Defendant in correspondence to see what practical steps can be taken in order to give the Claimant as much protection as possible against future charges being levied against him. For example, his account could be transferred to a basic account which does not include overdraft facilities.


1. It is a common practice for County Courts to stay proceedings pending binding and authoritative resolution of an issue (or issues) of principle by a higher court: see, for example, Wilson v. Robertsons (London) Ltd [2002] EWCA 622, para 9 to 10 (per Chadwick LJ).2


1. Many other County Courts have taken the approach of staying equivalent cases in a context where a uniformity of approach across the country is desirable.


1. A stay is consistent with the approach of the FSA and the Financial Ombudsman Service, which has decided not to progress complaints about current account charges until the outcome of the test case is known.


1. The Test Case represents the most efficient and proportionate means to resolve those issues in an expeditious fashion.


1. Exactly these issues of principle will be resolved by the Test Case, including a hearing of Preliminary Issues fixed for eight days in January 2008. The Preliminary Issues could not be finally determined any more swiftly via the County Courts in light of the time required for appeals.

[Mihail]

Maybe but DG solicitors told me this afternoon that they will be turning up in court next Friday to defend my appeal.A new show of responsible behaviour for the courts rather than the time wasting tactics of before?

[Mihail]

Mi i have arguements for those............ but will pm youthem as I do not want DG having them in advance and having the opportunity to counter them befor eth hearing................ so jsut bear with me............

 

Ok Many thanks

[Mihail]

had you been allocated a court date prior to the oft thingon the 27th july mi??

 

A.G.E. The last notice I got from the County Court prior to the OFT notice was 19 June which said that the defendant had filed a defence and the Court requested an Allocation questionnaire from me to be filed on or before 6 July.

On 11 July I was then told by the Court's Listings section by telephone that the `judge 'was possibly to make an "unless order" ' which remained the state of play until 27 July.

M