Harsh Letter received from Kensington *Claim struck out in court*

[jamorgan]

Hi to all,

 

Here's my storey so far.

 

Had a mortgage with Kennsington (Now call them selves MAS)

had for 1 year slightly discounted then interest rates kept climbing in the first year and reached 9%.

Had to get out fast so got stung for £7240.00.

Sent letters off to complaints found in the libary and like other people on these threads I have recieved the foboff response and in short words tuff charges stand.

 

So I followed there complaints procedure and escalated the complaint to stage 2,

But had this back.

 

I belive that the recent press coverage concerning bank charges may have given you the impression that you have a valid claim. MAS6 of course is a mortgage lender not a bank,and your complaint does not concern bank charges but rather ERC you paid when you redeemed your mortgage account.

 

From your letters, I see that you do not fully explain precisley which aspects of the common law you consider have been infringed by MAS6 applying the ERC to your account. Furthermore you have mentioned in your letter "statute and recent consumer regulations" but are no more specific than this. If you issue court proceedings you will of course have to refer in your claim to the relevant Common Law principles and/or statutory provisions. Without this detail I am unable to understand the precise basis of your complaint and therefore perhaps you would assist me by providing this info to me now.

 

I must advise you that if you do not provide us with these details and do issue proceedings, our solicitors will draw this to the attention of the District Judge and invite the court to take your refusal into account when considering your liability for our solicitors' costs.

 

You do however make reference in your letter to bank charges being ltd to expenses actually incurred because of a customers breech. You therefore seem to be likening bank charges relating to customers breaches to the ERC, when in fact two are entirley different. You of course did not breach your mortgage agreement by redeeming your account. You were quite entitled to re-mortgage with another lender. The ERC is therefore not a charge to penalsie a defaulting borrower.

 

The ERC, which was a major term of the mortgage agreement clearly detailed to you, and which you specifically agreed to pay if the account was redeemed within a short time of the mortgage completing, was charged because the precise details of the mortgage product offered to you were,as you will know, based on repayments over a period of 30 years. As such, the proposed mortgae contract was based on the reciept of monthly payments long term after the time when you decided to redeem and the ERC was included in your mortgage agreement to ensurethat your martgae remained finaciially viable transaction for MAS6 in the event that you chose to redeem your mortgage within the first 5 years rather than contine the contract for the agreed 30 years. A mortgage is after all by it's very nature a long term finace agreemeny, not a short term loan and the long term funding arragements are a key consideration.

 

You also state in your letter that MAS6 was under an obligation to conduct itself "lawfully and in a manner that complies with uk law," the suggestion being that ther has been a breach of this obligation. This is a serious allegation. Again,without specific details of the basis upon wich you believe that there has been any unlawful conduct or breach of obligation by MAS6, nor specific reference to the relevant statutory provision(s) I am unable to comment on this point further.

 

In a letter to you of 21st July 06 my collegue referred you to the content of the mortgage offer and t&c which allow for ERC.All in all the details could not have been made any clearer at the time you were cinsidering yuour mortage.

In short the Erc is applied to an account for sound commercial resons and you agreed to pay it if you redeemed early.

 

I have looked into this matter and the complaint is misconceived. If you wish to start County Court proceedings you sould serve these upon our solicitors whose details can be supplied on request. The claim would be defended. You should consider carefully your liability for solicitors' costs before commencing your claim and on this basis I would recommend that you seek independant legal advice in this matter than run the risk of incurring further expense by way of solicitors and legal costs.

 

HELP! anyone please

Morgyx

[gizmo111]

You might want ot use the following as zootscoot has written it and put in all the legal bits that they are asking for.

ACCOUNT NUMBER: XXXX

 

Request for repayment of charges

 

Dear XXXX,

 

 

Our request

 

 

We are writing to ask you to refund the charges which you have levied from our account in respect of late payment fees to the sum of £XXX , the sum of £XXX representing the contractual rate of interest applied by yourselves in respect of the said charges (Please find enclosed schedule of charges detailing dates, amounts and interest) and xxx in respect of a redemption fee. We now understand that such fees are unlawful at Common Law, Statute and recent consumer Regulations.

 

In the case of Castaneda and Others v. Clydebank Engineering and Shipbuilding Co., Ltd. (1904) 12 SLT 498 the House of Lords held that a contractual party can only recover damages for actual or liquidated losses incurred from a breach of contract as oppose to a charge which represents a penalty. This law was confirmed and upheld in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79. A charge will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison to the greatest loss that could conceivably be proved to have followed from the breach. A penalty clause is void in its entirety and unenforceable. (You may want to add something here relevant to how the charge they levied could not amount to a genuine pre-estimate. This will obviously vary depending on the particular product and lender)

 

In addition your charges appear to represent an unfair term of contract which is contrary to the Unfair Terms in Consumer Contracts Regulations 1999 (SI. 1999/2083). Our account falls within the ambit of Regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 as we are consumers. Your charges constitute an unfair penalty under Schedule 2 of the said Regulations which provide an indicative and non-exhaustive list of terms which may be regarded as unfair. Under paragraph 1(e) of schedule 2 this specifically includes terms which have the object of requiring any consumer who fails his obligation to pay a disproportionately high sum in compensation. We would vigorously contend that this is the position regarding the fee of XXXX which you deemed fit to apply to our account.

 

 

Furthermore a fee levied requiring us to indemnify you against any commercial risk to yourself in offering us a reduced interest rate in order to attract our cutom is also contrary to s.4 Unlawful Contracts Terms Act 1977. We are confident that a court is likely to consider this clause to be unreasonable within s.11 of the said Act as a large commercial institution such as yourselves is in a far better placed position than us as consumers to bear the burden of the vassitudes of business.

 

 

I would like to bring your attention to the following statement by The Office of Fair Trading:

 

"A term in a mortgage agreement which requires the borrower to pay more for breaching the contract terms than actual costs and losses caused to the lender by the breach (or a genuine pre-estimate of that) is likely to be regarded as an unfair penalty and to be unenforceable both at common law and (in a consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations. A redemption charge may be regarded as a penalty even if it is expressd as the price for exercising a right rather than a consequence of breaking the agreement."

 

We believe that the charges you have levied of XXXXX for late payment, return of debit fees and early redemption far exceed any true cost to yourself as a result of our breach and any genuine pre-estimate you could conceivably reach. If you disagree, then will you please demonstrate this by letting me have a full breakdown of the costs to which you have been put to as a result of our breaches, in order to reassure us that your charges really do reflect your costs.

 

Your responsibilities

 

 

We would draw your attention to the terms of the contract which you agreed to at the time that we took out the loan. It is an implied term of that contract that you would conduct yourselves lawfully and in a manner which complies with UK law.

 

We are frankly shocked that you have operated our account in this way as we had always reposed confidence in your integrity and expertise. We consider that your repeated representations that your charges are fair and reasonable are deceptive and that they have deceived us into agreeing to pay them. Your concealment of the true nature of your charges has prevented us from asserting our rights until now.

 

 

Our targets to resolve this matter

 

We really hope that this matter can be resolved amicably and without the need for redress to the courts. Thus we are asking that you refund the charges which have unlawfully been levied on our account. Failure to refund all the money unlawfully taken from us will result in us taking further action. We will give you 14 days to reply accepting, unconditionally, our request in principle and letting us know a date by which we will receive payment. If you do not respond, or you do not respond positively, within this time period, we shall send you a letter before action giving you a further 14 days in which to reflect. We believe that these targets are more than sufficient for a large company such as yours with dedicated staff and departments.

 

After that, there will be no further communication from us and we shall issue a claim at the expiry of the second deadline. Thus take this letter as 28 days written notice of our intention to issue a court claim should you not comply with my request. I hope that you will enter into a sincere dialogue with me about this matter and I am writing this letter to you on the assumption that you will prefer to do this than merely respond with standard letters and leaflets.

 

Yours faithfully,

 

XXXX

 

 

Hope this helps

 

Best of luck

 

Zoot

 

 

[zootscoot]

Hi Jamorgan,

 

 

Perhaps something on the lines of this:

 

 

Dear xxxx

 

Thank you so much for your letter dated xxx regarding my request for the refund of the ERC which I paid on redeeming my mortgage. I found your letter most informative amusing and helpful. The particular part which was so very helpful was your advice to get some legal advice which I have complied with which is why I now find your letter amusing. I can now reply more fully to your request to outline the legal basis of my claim.

 

I am fully aware that you are not a bank but in fact a mortgage provider, however, why you believe that the type of defendant makes a difference is rather bazar; English law applies universally and I would be highly interested to hear of your supposed grounds of immunity.

 

 

The charge you have levied in the form of an early redemption fee (substitute any other name which your mortgage provider has used) represents a charge in relation to a breach of contract on my/our part in that I/we terminated the mortgage contract before the contractually agreed period of XX years.

 

This term of the contract was clearly stated in the written mortgage offer signed by myself (and XXX?). The terms of which were incorporated by reference into the mortgage deed which was not only signed by us but also witnessed. There is clearly no room for doubt that such a clause existed in the contract. Similarly, there is no question that we in fact redeemed the mortgage on the xx/xx/xxxx as evidenced by our final redemption statement. This date is clearly well before the contractually agreed date of xx/xx/xxxx and thus represents a clear breach of the contract.

 

As stated in your letter dated xxx

(ERC) was charged because the precise details of the mortgage product offered to you were,as you will know, based on repayments over a period of 30 years.

you clearly state that the reason for the ERC was for breach of this term.

 

Furthermore the fact that you may have contemplated us ending the contract early in no way prevents my/our actions from amounting to a breach. To draw an analogy from criminal law, the fact that a policeman contemplates that a particular known offender may offend again in the future does not make the offender's actions lawful when he does in fact offend.

 

In addition I would like to bring your attention to the following statement by The Office of Fair Trading:

 

"A term in a mortgage agreement which requires the borrower to pay more for breaching the contract terms than actual costs and losses caused to the lender by the breach (or a genuine pre-estimate of that) is likely to be regarded as an unfair penalty and to be unenforceable both at common law and (in a consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations. A redemption charge may be regarded as a penalty even if it is expressd as the price for exercising a right rather than a consequence of breaking the agreement."

 

Thus the only plausible analysis that can be applied is that you have contemplated my breach of contract and provided for this eventuality with your ERC. English contract law requires such a fee to be a genuine pre-estimate of your losses if it is to be lawful following the case of Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 A charge will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison to the greatest loss that could conceivably be proved to have followed from the breach. A penalty clause is void in its entirety and unenforceable. (You may want to add something here relevant to how the charge they levied could not amount to a genuine pre-estimate)

We believe that the charges you have levied of XXXXX for early redemption far exceed any true cost to yourself as a result of our breach and any genuine pre-estimate you could conceivably reach. If you disagree, then will you please demonstrate this by letting me have a full breakdown of the costs to which you have been put to as a result of our breaches, in order to reassure us that your charges really do reflect your costs.

In addition your charges appear to represent an unfair term of contract which is contrary to the Unfair Terms in Consumer Contracts Regulations 1999 (SI. 1999/2083). Our account falls within the ambit of Regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 as we are consumers. Your charges constitute an unfair penalty under Schedule 2 of the said Regulations which provide an indicative and non-exhaustive list of terms which may be regarded as unfair. Under paragraph 1(e) of schedule 2 this specifically includes terms which have the object of requiring any consumer who fails his obligation to pay a disproportionately high sum in compensation. We would vigorously contend that this is the position regarding the fee of XXXX which you deemed fit to apply to our account.

 

(If applicable) Furthermore a fee levied requiring us to indemnify you against any commercial risk to yourself in offering us a reduced interest rate in order to attract our custom is also contrary to s.4 Unfair Contracts Terms Act 1977. We are confident that a court is likely to consider this clause to be unreasonable within s.11 of the said Act as a large commercial institution such as yourselves is in a far better placed position than us as consumers to bear the burden of the vicissitudes of business.

 

As to your assertion that the fee was levied to reduce the impact to yourself of a long term financial commitment I would draw your attention to the fact that a the innocent party to a breach is under a legal duty to mitigate their loss. This would also make the ERC levied to indemnify a loss to yourself which is contrary to S.4 Unfair Contract Terms Act 1977 as outlined above. (You might need to add the bit above if you are not using the part about reduced interest).

 

The fact that I signed the mortgage offer containing the term relating to the ERC does not make this term enforceable. In all the cases regarding penalty clauses there is no dispute that the term was agreed to. However, a court finding of a penalty clause as oppose to a liquidated damages clause renders the clause unenforceable in its entirety even if it has in fact been agreed to.

 

 

I do hope this clears things up for you and answers your questions. I would like to take up your offer of supplying the detail of your solicitors and eagerly anticipate your defence. I realise I will be liable for your costs in the remote event that a court finding will go against me and I would like to draw your attention to the fact that you will be liable for my legal costs also in the likely event that I win. However, I would like to give you the opportunity to settle amicably without the need to take the time of the courts in accordance with my duty under the Overriding Objectives of the Civil Procedure Rules. This option will of course save yourselves the time, trouble and costs of defending the claim. If, however, you do not comply with my request I will issue proceedings on xx/xx/xx.

 

Yours faithfully

 

xxxx

 

Hope this helps

 

btw you do know the costs implications for claims over 5,000?

 

 

 

[jamorgan]

Thanks to you both, fab letters.

 

Will send letter off this morning and fax it, but how many days do you think I should give them to respond .

 

Cheers

 

Morgy

[zootscoot]

Depends on what your timescale has been so far. If you have done prelim & LBA and they have expired you might not want to give them any time as they are probably using the correspondence as delaying tactics in which case you may want to ammend the last part of the letter accordingly.

 

If the LBA has not expired stick to your original timescale.

 

Zoot

[ellielou]

Hi Morgy

 

I'm in that boat with you.

I've given them 2 chances to explain the ERC - 1st reply told me it was 6% of the outstanding amount, the 2nd told me it was a genuine pre-estimate of thier costs.

 

Neither letter showed me any firm calculations that they used in coming to thier 6% figure.

 

Now do I give 'em 1 more chance or risk it & register a claim?

 

I'm hoping someone on here will help.

 

Keep us informed of how you get on - you're not on your own

x

[jamorgan]

Hi Ellielou,

I have now sent off a third letter as above and have given them one last chance to send breakdown. If they have not replied by the 14th Sept I am going to issue a claim on line.

However not sure yet weather to claim £5k or the full £7k

I now I will be liable for there costs if I loose

Can I claim for £5k plus interest then go back around the loop for the remainder.

 

Any thoughts on this one guys!

 

Morgyx

[zootscoot]

Can I claim for £5k plus interest then go back around the loop for the remainder.

 

No. If the ERC is unlawful it is unenforceable in its entirety. Unfortunately there is no halfway house with ERCs and I can't really see any logical way in which you can split such a charge. Splitting of claims is also not looked upon favourably by the courts and you risk getting your second claim struck out for abuse of process.

 

So you do risk paying the other sides costs in the event that you lose. However, there are plus sides to fast track cases in that the bank is also liable for any of your costs and disclosure applies which the banks seem to want to avoid at all costs.

 

Hope this helps

 

Zoot

[CrispDust]

Yeah there are two sides to the fast track - its potentially a higher risk/cost if you loose BUT you are forcing their hand with the disclosure element, which they will want to avoid.

 

How on erth can they say that "the product was only financially viable in the long term", with interests rates of 9% after 1 year!

The charges are unlawful whether or not they are bank.

[jamorgan]

Hi all,

just a quick update if anyone's interested.

Just put claim in online to kennsington (Mas) tonight

Exciting stuff!

 

£7318.32 plus £658.50 (interest) plus £1.61 per day untill they pay up!

 

Keep you all posted

 

x

[zootscoot]

Best of luck

 

You're soooooooooo brave!

 

Don't forget to pm a mod the details to put in the litigation section. Claim no amount and date.

 

Zoot

[ukaviator]

Good luck Jamorgan. I have filed a claim for £5285 with Birmingham Midshires.

Will keep watching this post.

 

Ukaviator

[JULI99]

Can I Ask If The Mortgage Was In 2 Names Can You Split It So Bringing It Under The 5k Limit?

 

Just Sent My Prelim To Abbey

[sammyjammy]

Wow, that really is a harsh letter, similar probably to one I might get from IGroup if they ever bother to reply to me! Fantastic letter Zoot!

 

If It wasn't for this site a letter like that would put me right off (and porbably make me cry!!) but I feel so empowered, good luck with the claim!

 

Sam

[paulpb123]

The very best of luck to you Jamorgan - that was a pretty nasty, arrogant letter they sent you and would put most people off. Thankfully we have this fantastic site. You are not alone with this. I've just fired off a prelim for £9750 and I don't really care about what they've got to say unless its accompanied by a cheque for the full amount. Lets hope that soon ERCs are going to be as easy to reclaim as bank charges (thanks to some very brave people). Kind regards,

Paul

[paddym]

best of luck jamorgan keep us posted how your getting on!

[ukaviator]

Hi Julie99

 

No you can't split the ERC.It will go into fast track status if over £5000.

You can request with the court that it stays as a small claims as the fees if you lose would be a lot higher. The Mortgage companies have'nt gone to court yet over this,as full disclosure would have to be given.And they don't want that out in the open.

 

Check out SANDY VS GMAC RFC. .

 

Ukaviator

[jamorgan]

Thankyou, thankyou,

so much for all the support you guys

and good luck

x

[Tinkerbelle]

Good Luck

[ellielou]

Morgy

 

I'm soooooo excited for you. I've been 'uming' and 'ahing' whether to claim for my ERC from Kensington and basically haven't had the bottle to do it. :-|

 

I'll be watching - all the luck in the world with this. Who knows you might even give me the kick up the bum that I need to get my claim rolling.

 

GOOD LUCK

:) :)

[Les Gunn]

All the very best to you jamorgan - go kick ass!

[ellielou]

Hi Morgy

 

Any news to report as yet?

 

Ellielou x

[jamorgan]

Hi Guys,

 

Only a little something to add.

Recieved a letter from a Drydens lawers replying:

 

Please find enclosed a copy of the acknowledgement of service we lave lodged at Court. By our calculations the defence is required by 4pm on 20th October 2006

 

Also enclosed is our Notice of Acting

 

Yours faithfully

 

Drydens

 

They have then sent me a copy of the Acknowledgement of service and ticked the box they intend to defend all of this claim.

 

God help me!

 

keep you posted

Morgyx

[saraounia]

Stay strong. Focus on the fact that what they are doing is probably illegal and they will not want to be found out. Do expect them to throw everything at you until right at the last minute.

 

BUT, if you do have to go to court, the site has an excellent court buddy system and we would all contribute in writing a statement you could use in court.

 

Well done, just about to do some updates myself.

[ellielou]

Any updates Morgy?

 

I'm going to go for the MCOL tomorrow - fingers crossed.