Paul v Accord

[paulpb123]

I'm preparing my prelim for £9750 which Accord charged just for changing to a different mortgage - we're still with them but on a fixed rate. When it comes to issuing a claim do I need to split it? Or, in fact, can I split it? Advice welcome.

Paul

[gizmo111]

I'm preparing my prelim for £9750 which Accord charged just for changing to a different mortgage - we're still with them but on a fixed rate. When it comes to issuing a claim do I need to split it? Or, in fact, can I split it? Advice welcome.

Paul

 

No you cannot split it - if the ERC is unenforceable it is in it entirety. As it is such a big calim and they are your current providers I would think twice about claiming it at present. Ask zoot what her opinion is as she is excellent on mortgage co's

[paulpb123]

Good plan. Zoot, are you out there?

[zootscoot]

I certainly am!

 

You can not split ERCs. If they amount to a penalty which I'm sure 9K+ does, then it is unenforceable in its entirety. This puts your claim in to the fast track and you could (if it goes to court and you lose) be liable to pay their costs. There are plus points to fast track in that there are fuller disclosure rules which the banks are very keen to avoid and also they are liable to pay your costs if they lose. Several people have bitten the bullet and are currently pursuing fast track claims.

 

In relation to them being your current lenders, whilst they can not call in the mortgage solely because you have made a claim, you may need them to be sympathetic in the future. Although I'm guessing that with such a high ERC charge that they are subprime lenders. Subprime lenders generally lack sympathy in any event so you may decide its worth taking them on.

 

Also I note that its a fee for switching product as oppose to a pure ERC. There is a chance that they could argue that this is a charge for a service and this is untested as of yet. Thunderpuss and Lickthewallfatboy are currently pursuing these.

 

The best thing to do would be to have a good read through the threads and carefully consider before dciding if you wish to proceed. 9K is a lot of money for them to take off you (I'm sure you don't need me to tell you that!). However, given the risks involved you might want to see how the others turn out before proceeding.

 

Hope this helps

 

Zoot

[paulpb123]

Thank you Zoot, this is very good advice. I don't actually need them to be sympathetic in the future - we're on a fixed rate with no ERC now so they can call it in if they want and we can switch. It definately was an ERC, although we decided for convenience to take another of their mortgage 'products'. My feeling is that this is a goer but because it will be fast track I'm a little concerned about paying their costs if I lose. I think I'm going to send them a letter asking for a breakdown of their costs (or a pre-estimate) due to my early redemption, without any hint of further action. Let's see what they say.

[paulpb123]

Right, I've been considering this very carefully and reading as much as I can about ERCs. This is a lot of money by anyone's standards and I've decided to go for it. Here is the letter. Any improvements very welcome. Feel free to use.

 

Dear Sir/Madam

 

Account Number: xxxxxxxxx

 

I am writing to request a refund of the early redemption charge of £9750 which was debited to my account when I redeemed my mortgage on xx/xx/xx. I now understand that this charge is in all likelihood disproportionate to the costs that you actually incured. As such, this penalty is unlawful at Common Law, Statute and recent consumer regulations. Such disproportionate charges are considered to be unfair per se by the OFT who reported on 5th April 2006 and are therefore presumed to be unlawful in the absence of specific proof to the contrary.

 

If you believe that this charge is proportionate to the costs you have incured as a result of the early redemption of my mortgage, could you please demonstrate this by providing a full breakdown of those costs or a pre-estimate of your losses. Please note that I do not require an explanation as to why this charge was made; I require a breakdown of your costs in order to reassure me that the charge is justified.

 

I would like to bring to your attention 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 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 at Common Law and (in a consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations.

 

I will now give you 14 days to reply to me accepting, unconditionally, my request in principle and letting me know a date by which I will receive payment.

 

If you do not respond, or if you do not respond positively, within this time period, I shall send you a Letter Before Action giving you a further 14 days in which to reflect. I believe that these targets are more than sufficient for a large company such as yours with dedicated staff and departments.

 

I would like to settle this matter without the need for court action and I hope that you will enter into a sincere dialogue with me. However, if you do not respond by my second deadline, there will be no further communication from me and I shall issue a claim.

 

Yours faithfully,

 

 

paulpb123

 

Could one of the mods change the title of this thread to paul v Accord? Thanks.

[zootscoot]

Looks fine to me. I'll make a request to the mods.

 

Best of luck!

 

Zoot

[paulpb123]

Thank you Zoot. If I was a mortgage company I'd be very scared of you!

[paddym]

looks good paul best of luck my friend!

[paulpb123]

Thanks Paddy and very best of luck against prefered. This is what I sent in the end, thanks to Zoot and others. Anyone who wants to use it, feel free.

 

 

Request for repayment of early redemption charge

 

Dear Sir/Madam

 

Account Number: xxxxxxx

 

I am writing to request a refund of the early redemption charge of £9750 which was debited to my account when I redeemed my mortgage and changed to a different product on xx/xx/xx. I now understand that this charge is in all likelihood disproportionate to the costs that you actually incured. As such, this penalty is unlawful at Common Law, Statute and recent consumer regulations. Such disproportionate charges are considered to be unfair per se by the OFT who reported on 5th April 2006 and are therefore presumed to be unlawful in the absence of specific proof to the contrary.

 

If you believe that this charge is proportionate to the costs you have incured as a result of the early redemption of my mortgage, could you please demonstrate this by providing a full breakdown of those costs or a pre-estimate of your losses. Please note that I do not require an explanation as to why this charge was made; I am fully aware of the terms and conditions of my mortgage. What I require is a breakdown of your costs in order to reassure me that the charge is justified.

 

Having taken legal advice on this matter it is very clear, as you will no doubt be aware, that English contract law requires such charges to be a genuine pre-estimate of your losses. In the case of Castaneda and Others v Clydebank Engineering and Shipbuilding Co Ltd., (1902) 12 SLT 498 the House of Lords held that a contractual party can only recover damages for actual or liquidated losses incured from a breach of contract as opposed to a charge which represents a penalty. This was upheld in the case of Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79. In addition to this, your charge represents an unfair term of contract which is contrary to the Unfair Terms in Consumer Contracts Regulations 1999 (SL. 1999/2083). 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.

 

I would also like to bring to your attention 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 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 at Common Law and (in a consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations.

 

The fact that I signed the mortgage offer containing the term relating to the early redemption charge does not make this term enforceable, as I’m sure your legal department are fully aware.

 

I will now give you 14 days to reply to me accepting, unconditionally, my request in principle and letting me know a date by which I will receive payment.

 

If you do not respond, or if you do not respond positively, within this time period, I shall send you a Letter Before Action giving you a further 14 days in which to reflect. While I would like to settle this matter amicably and without the need for court action and the attendant publicity this will receive, you can take this letter as 28 days notice of my intention to issue a claim should you not comply with my request. I believe that these targets are more than sufficient for a large company such as yours with dedicated staff and departments.

 

Yours faithfully,

 

pb

[zootscoot]

Is this turning into a beat Zoot competition? Thats the second letter someone has come up with today! lol

 

Any one any ideas for prizes?

 

Best of luck

 

Zoot

[Les Gunn]

I can donate a free ERC as a prize zoot ???!

[paulpb123]

Alright, Zoot, we've probably got enough letters now LOL! My prize is going to be £9,750! And I think you deserve a medal!

[paulpb123]

Hi Folks, here is an update. Today I received a very long and self-important letter from one of their solicitors. Her basic arguments are as follows:

 

1) The ERC was part of the contract that we signed.

 

2) "An early repayment charge cannot legally be a penalty because early repayment is not a breach of contract on your part...You have simply redeemed your mortgage, which you are entitled to do, subject to the early payment charges being paid".

 

3) "For this reason I believe that any court proceedings claiming that the early repayment charges amounted to a penalty, either at common law or under UTCCR, would fail. I would refer you to the decision of the Court of Appeal in Campbell Discount Co Ltd v Bridge [1961] 1QB445 in this regard. This case decided that a repayment of a benefit under a contract is not the same as a payment on breach of a contract, which is where a penalty has been held to arise".

 

4) "The OFT statement dated 6th April 2006 to which you refer relates specifically to unfair credit card default charges and not early repayment charges. I accept the OFT did in that statement confirm that the same principles apply to other consumer contracts such as mortgages but this statement itself was restricted to default charges".

 

5) "Accord Mortgages considers the early repayment charges applicable to your mortgage to be a genuine pre-estimate of loss".

 

No attempt was made to provide a breakdown of the cost, which is what I asked for. they just seem toi be saying that the £9750 was a genuine pre-estimate of their losses. But unless they demonstrate this by showing me the figures, how will I know this? Also, what does anyone think of the argument that ERCs are not a penalty and do not constitute any breach of contract? I'm sending my LBA on 7th October unless someone here thinks that Accord might have a point. Any help greatly appreciated.

Paul

[paddym]

Paul i personally believe she is skirting round the issue however i would like you to get zoots advice on this before you go any further and for that matter advice from any other members who care to comment then way it all up that way youve covered all the angles !

[paulpb123]

Yes, thanks Paddy, other opinions welcome on this, especially if you're called Zoot!!

[zootscoot]

Hi Paul

 

Try this:

 

 

Dear xxxx

 

Thank you for your letter dated xxx regarding my request for the refund of the ERC which I paid on redeeming my mortgage.

 

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.

 

The fact I agreed to the clause at the time the contract was entered is completely irrelevant. In all the relevant case law there has been no argument that the relevant clause was in fact agreed to.Furthermore as a direct quote, the OFT statement was indeed made specifically in relation to mortgage statements.

 

I do thank you for drawing my attention to the Court of Appeal case of Campbell Discount Co Ltd v Bridge [1961] 1QB445, however, I would like to draw your attention to the House of Lords [1962] decision in that same case which reversed the decision of the Court of Appeal. I do hope you are aware of the need to keep up to date with such matters and are aware that House of Lords decisions overrule precedents set by the Court of Appeal.

 

For these reasons, and the fact that you have not provided me with the details of how you have estimated your 'liquidated damages', I believe that the ERC levied was in fact a penalty and I shall be isssuing proceedings against you forthwith should you not comply with my initial request. In the event that this does result in legal proceedings I will draw your letter to the attention of the courts to demonstrate that you have relied on an inaccurate account of the law in order to mislead me as to my legal position.

 

 

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

 

XXX

[ukaviator]

Hi Team

 

Guilty as charged. The usual trying to get out of giving you a run down of their true costs. Next stage is my advice. LBA them. But beware of the costs involved if it goes to the Moneyclaim route.

 

Ukaviator..

[paulpb123]

Crikey Zoot, that's one hell of a letter! Thank you. I'll be sending it on 7th as an LBA. Let's see what their 'clever' solicitor has to say about that! Yes, ukaviator, guilty as charged so its onwards and upwards and I'm aware of the issue of costs etc. Thanks,

Paul

[paddym]

Zoot once again you amaze me i actually was freightened myself reading it id love to see the solicitors face when she reads it excellent as always Zoot !

[tillers]

Zoot fantastic letter, you are doing an amazing job, and I am glad your are on our side !!

[Sue_de_Nimm]

What a cracking letter! Their solicitor wont know what hit them, & neither will Kensington Mortgages when I send it to them. Well done, Zoot! I am new here are you a lawyer? If not, how do you know this stuff??

[zootscoot]

Ahh thanks you're making me blush

 

Not a lawyer as such I am a lecturer of law

[Sue_de_Nimm]

Ah, thats how you do it! I am thrilled to bits at the thought of one of Kensingtons junior, 'sold their soul to the devil', lawyers reading your letters in utter horror wondering how the hell they are going to tell their client that, well, um, they have a point & it seems that thats the law. :D

I gave the last one I met a lecture on how they were ruining their career working for someone so unethical & how bad it would look on their CV.

And now your letters. I actually feel almost sorry for the poor lambs. Almost. Not £13k sorry though..... :D

So, thank you VERY much Zoot, & when (not if) I win this there will be a nice donation coming to the Consumer Action Group!

[paulpb123]

Zoots fantastic letter has gone off today as an LBA (see precious page if you need to send your mortgage company a rocket) so I'll be filing the claim on 22nd October. Zoot, I'm glad you're with us and not against us! I note that lickthewallfatboy has just posted a great success. This is a battle that we're starting to win!