Case Management Conference 13th Oct. 06

[zootscoot]

Hi Haydn,

 

You can argue that the interest should be paid from the date the charges were applied to the account as oppose to the date they were paid on the following basis:

 

Claims for unlawful bank charges are based on the law of restitution ie unjust enrichment. This is because we are not suing the banks for breach of contract but are relyingon our breach of contract to claim money which has been unlawfully taken from us. Whereas contract claims are based on compensating loss, unjust enrichment claims are valued on the benefit received by the defendant.

 

These claims are generally actions for money paid although not exclusively. Natwest's argument assumes that this is a pure money action in stating you cannot claim interest until you have actually paid. You can argue that they have received a valuable benefit before you have actually paid them ie the contractual right to enforce a debt. This contractual right from which they benefit carries with it the right to claim interest. Thus they are unjustly enriched by having the right to charge interest.

 

Hope this helps

 

Zoot

[zootscoot]

Law of restitution founded on unjust enrichment was first acknowledged by the House of Lords in the case of Lipkin Gorman v Karpnale.

 

The 'unjust' element has to comprise of a legal principle as oppose to be being simply unfair. Certain 'unjust factors' will trigger the right to restitution. These unjust factors include things such as total failure of consideration, a tort committed or duress. In the instance of unlawful bank charges the unjust factor could be mistake. Ie you made the payments in the mistaken belief that they were lawfully due. The authority for such claims rests on the case of Kleinwort Benson v Lincoln CC.

 

The relationship of bank and customer was also considered in Lipkin Gorman where it was held that the relationship was founded on contract. Ie when you pay money into the bank the money belongs to the bank and the bank has a contractual duty to pay the debt. Conversely when you go overdrawn the bank has a contractual right to enforce the debt. A contractual right to enforce a debt is known in law as a chose in action.

 

Hope this helps

 

Zoot

[zootscoot]

For the legal basis for compound interest check out the following case:

 

House of Lords - Westdeutsche Landesbank Girozentrale v. Islington London Borough Council

[zootscoot]

The basic jist is that you can claim compound interest if there exists a trust (not applicable in our claims) or if the claims are based in the law of restitution for unjust enrichment (applicable to our claims) where the defndant is a commercial lender.

 

The reasoning for imposing compound interest is that where the defendant is a commercial lender it can be assumed that they will relend your money and charge compound interest on it. Therefore if they were not obliged to pay compound interest they would be unjustly enriched by profiting from the use of your money.

 

On this basis I would say that you could claim the contractual rate compounded, but I don't think the courts would accept the unauthorised rate compounded as it is a big assumption to make that all of your money would be applied to fund unauthorised lending.

 

Hope this helps

 

Zoot

[zootscoot]

Depends on whether you put in your particulars of claim an alternative for s.8 interest. If you did the court is likely to fall back on the s.8 if not you could lose the interest altogether, but not the charges. Its always best to put in the alternative, as compound interest is an equitable remedy and therefore lies with the discretion of the judge. In other words it is always open for the judge to refuse it.

[zootscoot]

Equitable remedies are always discretionary even if you prove your case the judge does not have to grant it. It depends on whether the judge thinks that justice demands it. Its a reasonable assuption the banks will relend the money and will therefore profit from its unlawful activity, in which case the justice will be on stripping the defendant of that profit.

[zootscoot]

Hi Glenn,

 

I think it would be quite difficult making the unauthorised rate stick because the banks will argue that they are far more likely to relend it as a loan or mortgage with much lower rates of interest. The banks do not generally allow people to operate their accounts in unauthorised rate for any length of time.

 

Also as it is an equitable remedy the equitable maxims apply ' he who comes to equity must do equity' and the 'clean hands' principle. Which basically means to rely on an equitable remedy you must be seen to act fairly and reasonably in the conduct of your case. Don't forget we are already ondodgy ground here as we are relying on our own breach of contract to obtain a remedy. To go for unauthorised rate may be seen by the court as being too greedy and a step too far to do what is necessary in order to achieve justice.

 

Hope this helps

 

Zoot