Memnoch vs Lloyds TSB (inc. Contractual Interest)

[GaryH]

This is the problem Memnoch. Ultimately it seems that the contractual reciprocity principle is an untested one. I know that Zootscoot has researched it too and she has not been able to find anything solid to substantiate it either. Of course this does'nt mean that you could'nt be successful in argueing it to a judge, and as long as you feel confident of your arguement and are aware of the potential risks then go ahead and claim it. The unjust enrichment aspect is a good alternative arguement to which adds weight to it too, and I don't think one would prejudice the other.

 

Here's something I posted on Photoman's thread which you might find useful in helping you weigh up the pro's and cons - http://www.consumeractiongroup.co.uk/forum/lloyds-bank/54548-could-biggest-claim-site-6.html#post487756

[Memnoch]

Ok I am now having a a little trouble adding the interest that has been taken from my account. The O/Draft Interest.

 

As previously mentioned I have never had an O/Draft facitlity but when have been charged O/Draft excess fee then I have sometimes been charged interest on this too.

 

However the common way of adding this to the spreadsheet is to take the balance at the time the interest is taken out. Sometimes my account has been in credit when the interest has been taken out. This can only mean that the interest is for charges earlier in the month when my account has been overdrawn.

 

What does everybody suggest ? Do I just add the interest to the main charges column instead ?

[Memnoch]

Yay, got my first refusal letter thingy from the bank today.

 

Even though it was with reference to my old Prelim letter not the ammended one.

 

Sent off my new Prelim Letter on 28th Jan (to include Contractual Interest).

[Memnoch]

[Your Banks Address]

 

 

 

[Date]

 

 

[Your Address]

 

 

 

Dear Sirs

 

[Your Account Number/Details]

 

Due to recent media coverage on bank charges I am now aware that you, { Banks name} have been charging me, charges, that are contrary to the Unfair Terms in Consumer Contracts Regulations 1999. Schedule 2 (e) of the said regulations gives a non-complete list of terms, which may be regarded as unfair, such as a term that requires me as a consumer who fails in his obligation, to pay a disproportionately high sum in compensation.

 

Furthermore if you fail to comply with this letter, I request without further notice a breakdown and proof of all costs involved, in regards to your actual or liquidated losses involved in any breach of contract to which these charges relate with yourselves, and that these charges reflect your true costs In relation to the said charges, and are proportionate to the charges levied on my account as defined in Unfair Terms in Consumer Contracts Regulations 1999. Schedule 2 (e)

I also hereby request a detailed report of which clause in your terms and conditions each charge has been applied against.

 

On a separate note, I am of the view that your charges represent a penalty and are therefore irrecoverable at common law. In the Scottish 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. This is also the position in English law: Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79.

Your charges do not reflect any actual loss, instead they appear to represent a lucrative profit-making scheme. UK banks have recently given evidence to the House of Commons Treasury Committee on how bank charges are calculated: "The costs are going to pay for all the people we have who pursue debt, collect debt, speak to customers and chase payments. The way these charges are arrived at is by taking these total costs and making some assumptions about the volume that is going to come through to arrive at the individual charges" (2nd report, 25 January 2005, paragraph 50 - online here: http://www.parliament.the-stationery-office.co.uk/pa/cm200405/cmselect/cmtreasy/274/27405.htm).

Accordingly, the charges applied to my account are not a reasonable pre-estimate of the bank’s loss in relation to my account. Your charges would appear to represent a device to recover global losses (for example, loan defaulters, bad debt write off, including commercial lending in, and outwith, the UK).

I calculate that you have taken £XXXXX.

I enclose a schedule of the charges which I am claiming with this letter.

 

In addition, and as shown on the enclosed schedule of charges, I require that you pay me contractual interest on this amount at a rate of x%, totalling £xx,xxx.xx. This interest is claimed on the basis of consumer contract legislation, which provides that where a contract has not been individually negotiated, the party dealing with the consumer cannot insert advantageous terms into contracts where there is no comparable term in favour of the consumer. Therefore the contract term which permits the bank to charge interest on unauthorised transactions at the rate of 29.85% is deemed to be unfair, unless there is a mutual or reciprocal term permitting the customer to apply the same rate of interest on any unauthorised withdrawals from the customer's account by the bank. For the avoidance of any doubt, my agreement to the bank's terms and conditions does not constitute authorisation to the bank to apply penalty charges (and interest thereon) to my account, or to profit in an unlawful manner out of my account breaches, and these withdrawals are therefore considered to be unauthorised.

 

The total amount therefore to be refunded to me is £xx,xxx.xx as of today’s date and interest will continue to accrue daily at the contractual rate quoted of x%.

Please refund the charges back on to my account within the next 14 days. For the avoidance of doubt, if this is not done within 14 days, I will commence my claim in the courts without any further notice, and to seek an additional award for distress and inconvenience, together with legal expenses.

Yours Sincerely

 

 

 

 

Memnoch

 

Here is the LBA that I will be sending off tomorrow, any thoughts on the content ?

[Memnoch]

Bump - Anybody ?

[Memnoch]

Ok my Contractual Interest LBA was sent off on Monday 12th February so I will be looking into doing N1 Claim in person (not a fan of the MCOL as it has less space). Only problem is that I may need to go to Fast Track court rather than Small Claims because of the amount (7k total including the interest). Can anyone advise the procedure with regards to Fast Track and what I need to get together for a court bundle for this court (the only bundles I can find on here relate to Small Claims court).

 

In addition, I have read somewhere that with fast track court there is something called 'Disclosure'. Does this mean that I can ask for a breakdown of the banks costs in relation to charges and administration fee's and how they arrive at the fee they charge ?

[Movingon]

Court bundle is the same; and yes you are required to give "Full Disclosure" - which in your case means you need:

 

(a) A schedule listing each charge with date and description (from bank statements)

(b) The interest you are claiming back detailed with each charge as an amount and as a percentage per annum (refer the spreadsheets on the site)

© WHY you are claiming (What Laws, sections etc you are relying on)

(d) The fact that you believe that it is reasonable for the banks to recover their losses but without information from them detailing what those losses are, you are unable to arrive at a reasonable figure for what their charges should be; therefore you are claiming the whole amount back.

 

You may need more than this but don't send your disclosure until the Bank ask for it. Once they have asked all their questions reply to each one and construct your own request for "More Information" based upon the above and your answers to their questions.

[Memnoch]

With this in mind can I ask them to disclose what their actual losses are each time I have been charged. How much the admin fees are and anything else I can think of that the bank might not want me to know.

[rks99]

Great reading about contractual interest....

 

Now I wonder... When a customer agrees to the terms of borrowing there is the implication that the customer can TAKE money(agreed or not) BUT WILL give it back of his own accord or be pushed to.There is a legal understanding between both parties of this. But the banks' charges EDIT from the customer cannot be called 'borrowing' in that sense, as the customer never agreed to 'lend' any money to the bank, and they never intended to return the money they took, nor did the customer have a credit license to lend,etc.

 

I don't see how one can claim the charges are unlawful debits and at the same time say the bank has borrowed money and therefore we're going to charge them contractual interest?...

if you get my drift.

[Mad Nick]

rks99, have a read of this http://www.consumeractiongroup.co.uk/forum/mercantile-court-cases-stays/52143-directions-hearing-leeds-16.html and there's a Judge who appears to agree with you ! I know I do. Regards, Mad Nick

[rks99]

Hi Mad Nick,

 

I'm going to stick to 8%...don't really want to face a court; Thanks for showing the thread; can't wait for Barclays & NW to squeal and pay up; at LBA stage but already prepared n1,aq,etc.

[Movingon]

With this in mind can I ask them to disclose what their actual losses are each time I have been charged. How much the admin fees are and anything else I can think of that the bank might not want me to know.

 

Yes, you can ask them for the following:

 

If it is the defendant's contention that the charges are genuine losses incurred on a case-by-case basis, then they should disclose detailed figures supporting that contention, for each occasion upon which the claimant has been charged.

 

If it is the defendant's case that these figures are a genuine pre-estimate of loss, then they should disclose detailed figures showing how these estimates were arrived at, and evidence to support their ongoing accuracy which would include costings for each of a sample of occasions upon which the claimant was charged.

 

Obviously this can be couched in far more flowery, court-form-ish language; but you get the idea.

[Memnoch]

I dont think I need to flower that up any, looks perfectly fine to me.

[Memnoch]

OK, responce to LBA received today here is the letter.

 

Mr Memnoch

Blah Blah Street

Telford

Shropshire

 

Dear Mr Memnoch

 

Thank you for getting in touch with us again. I am sorry you are unhappy about your bank charges.

 

We've already explained that we believe it is fair to charge you for extra services you u've requested, as long as you know about the charges in advance. When you did'nt have enough in your account to cover a payment you'd asked us to make, we had to agree to make it by setting up or increasing your overdraft, or tell you we couldn't agree it. We feel it's only fair to charge for our services in considering and implimenting this.

 

Its easy to keep a running check on how much is in your account. You can get an up-to-date balance at any of our cash machines, over the phone, on line and by weekly text to your mobile.

 

If you know a payment is going to take you over the limit we've agreed, you're welcome to see if we can raise it - and we can usually give you an answer straight away. Again we can do this for you by phone, on line or at any of our branches. There's no charge at all for this.

 

Generally we don't agree to adjust any of these charges, but I can tell you that on this occasion we are prepared to reduce the charges by repaying you £750. Please note that we do not refund interest. You may have read that we and other banks are discussing overdraft charges with the Office of Fair Trading. Meanwhile we do consider each customer's position individually, and we are making you this offer as a gesture of goodwill because we might face that cost in dealing with your complaint if you took it any further.

 

I need to let you know that this does not mean we have any legal obligation to do so. This sum will be credited to your account in the next few days.

 

As I've explained, these charges are avoidable and we would strongly urge you to keep within the limit you've agreed with us or ask us now to see if we could increase it for you.

 

You've mentioned the new guidlines from the Office of Fair Trading on credit card default charges. We don't agree with the OFT's thinking on this and we're still talking it through with them. But the important point is that the guidlines are about 'default' charges that people pay when they break an agreement with us. The fees we charge for dealing with your request to go over yor agreed overdraft limit are not default charges because you haven't broken your agreement. They are our prices for the service we provide in these situations.

 

This letter is tha bank's final response, which means that if you remain dissatisfied you may refer your complaint to the Financial Ombudsman Service. If you decide to pursue your complaint through the Financial Ombudsman Service you must do so within 6 months from the date of this letter. I have enclosed their leaflet that outlines how to contact them.

 

Well there you have it, the nice people at Lloyds TSB dont think the default charges are default charges but they want to give me £750. that awfully nice of them.

 

Anyhow this letter was sent by Julie Bruce at Customer Service Recovery centre in Andover.

 

Now where did that template letter rejecting offer go ?

[Movingon]

LOL don't reject that would be seen as unreasonable. Accept it as part settlement of your claim. Confirm that you did not request any additional services and you challenge them to produce documentary evidence that you did. Advise them that your claim will proceed as before minus their £750 on day 15.

 

LOL! @ them...

[Memnoch]

Ok here is the POC for my N1 form:

 

1. The Claimant has a bank account, number 12345678 (“the Account”), maintained at the Defendant’s Newtown Branch (11-22-33)

 

2. The Account is governed by the Defendant’s Personal Banking Terms and Conditions (“the contract”)

 

3. During the period in which the Account has been operating the Defendant has debited numerous charges to the Account in respect of purported breaches of contract on the part of the Claimant and also charged overdraft interest on the charges once applied.

 

4. The Claimant understands that the Defendant contends that the charges were debited in accordance with the terms of the contract between itself and the Claimant.

 

5. A schedule of the charges is attached to these particulars of claim (Appendix 1).

 

6. The Claimant will rely on the Competition Commission’s report entitled “Northern Irish Personal Banking,” published on 20th October, 2006, as evidence that the Defendant is aware that the income derived from its default charges is calculated to generate material profits and is not merely a means of recouping losses incurred in relation to Account defaults.

 

7. The Claimant will further rely on the Office of Fair Trading’s (“the OFT”) statement of 5th April 2006 concerning default charges in credit card contracts, as the OFT’s recommendations regarding standard default terms in credit card contracts have wider implications, as regards bank current Account agreements.

 

8. The Claimant thus contends that:

a) The charges debited to the Account:

i) are punitive in nature;

ii) are not a genuine pre-estimate of cost incurred by the Defendant;

iii) exceed any alleged actual loss to the Defendant in respect of any breaches of contract

on the part of the Claimant;

iv) are not intended to represent or relate to any alleged actual loss, but instead unduly enrich the Defendant which exercises the contractual term in respect of such charges with a view to profit.

b) Further to 8.a), the charges debited to the Account are penalties rather than liquidated damages. A charge is 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.

The law regarding penalty clauses is well established and clear. If the defendant should dispute this claim, the claimant will be relying on, inter alia, judgments made in the cases of:

Dunlop Pneumatic Tyre Co. v. New Garages and Motor Co. 1915

Ford Motor Co. v. Armstrong 1915

Bridge v. Campbell 1962

Murray v. Leisureplay 2004

c) The contractual provision that permits the Defendant to levy such charges is unenforceable by virtue of the Unfair Contract Terms in Consumer Contracts Regulations (1999), the Unfair Contract Terms Act 1977 and the common law.

d) In the alternative to 8.a), b) and c), if the Court finds that the charges are not a penalty, then the Claimant contends that they are unreasonable within the meaning of s.15 Supply of Goods and Services Act 1982

 

9. Contractual Interest

a) The claimant claims compound interest on the charges and overdraft interest applied thereon to the claimant’s account (“the principal claim”), at the annual rate of 29.85%. This is the rate currently applied by the defendant to the claimant’s unauthorised use or borrowing of the defendant’s monies, as provided for in the contract.

The claimant’s case for claiming this rate is based in equity, and a legal requirement for fairness and balance.

The claimant deems the defendant’s principal indebtedness to the claimant to be unauthorised, since it is comprised of charges that are unconscionable, remain unsubstantiated, and amount to unenforceable penalties at law. If the defendant avers that its charges are fair, reasonable and therefore enforceable, its remedy will be to defend the claim by providing evidence of its actual losses or pre-estimate of costs in relation to the claimant’s account breaches. Since the defendant has been invited to do so prior to the issue of court proceedings, and has refused, and since the claimant is aware that the defendant has failed to defend any other similar claim, choosing to settle before the trial dates, the claimant deems the defendant’s charges to the claimant’s account to be indefensible, unenforceable at law, and unauthorised, since it was clearly not in the claimant’s contemplation when entering into the contract, that the claimant would authorise the defendant to apply penalty charges and interest thereon to the claimant’s account, or to profit in an unlawful manner from the claimant’s account breaches.

For the contract to confer advantageous terms (i.e. entitlement to compensation) on one party (the defendant) where there is no comparable term in favour of the other party (the claimant) is to create an imbalance in the parties’ rights and is contrary to the requirements of Regulation 5 (1) of the Unfair Terms In Consumer Contracts Regulations 1999 (“UTCCR”).

Regulation 5 (1) of the UTCCR states as follows:

Unfair Terms

5. – (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.”

Therefore, to satisfy the requirement of fairness, within the definition given by the UTCCR, the contract would have to provide a mutual or reciprocal term permitting the customer to apply the same rate of interest on any unauthorised withdrawals from the customer’s account by the bank (the defendant). The interest claimed is therefore deemed to provide an equitable remedy.

b) In the alternative to 9 (a), should the court deem that the claim does not merit the application of the defendant’s unauthorised lending rate, the claimant claims compound interest at the defendant’s authorised borrowing rate of 18.3% per annum, based in the premise that the court finds that the defendant’s withdrawals from the claimant’s account were authorised.

c) In the alternative to 9 (a) and (b), if the court is unable to agree that the claimant is entitled to either of the two contractual rates of interest, on the grounds stated, the claimant avers that the defendant would be unjustly enriched if the claimant’s entitlement was limited to the statutory rate of interest in that the defendant has had use of the sums and would have used these sums to re-lend at commercially compounded rates. On these grounds the claimant seeks restitution of the compounded contractual interest at the defendant’s authorised borrowing rate of 18.3% per annum.

d) In the alternative to 9 (a), (b) and ©, if the court finds that the claimant is not entitled to contractual interest, the claimant claims interest under section 69 of the County Courts Act 1984.

e) Schedules showing interest calculated at the rates quoted at 9 (a), (b & c) and (d) are attached to these particulars of claim, numbered 1, 2, 3 & 4.

 

10. Accordingly, the claimant claims:

a) The return of £919.76 taken by the defendant in charges and interest applied on the charges between 25/02/2000 and 02/01/2007.

b) Court fees

c) Costs allowed by the court

d) As particularised at 9 (a), contractual interest at an annual rate of 29.85% compounded daily from the date of each transaction to 04/03/2007, of £2,116.47.

e) Further contractual interest at 29.85% compounded daily from 04/03/2007 up to the date of judgement or earlier payment. As the interest is compounding and the claimant is unable to predict when the claim will be heard or settled, the claimant is unable to specify a static daily interest figure, but will provide an updated settlement figure in respect of the interest at any hearing, or if and when the defendant requests an earlier settlement. An approximate amount, for guidance purposes only, is currently £0.67 per day, however as noted herein, this figure is liable to increase over time.

f) In the alternative to 10 (d) and (e), and as particularised at 9 (b) or ©, contractual interest at an annual rate of 18.3% compounded daily from the date of each transaction to 04/03/2007 of £1,025.29.

g) Further contractual interest at 18.3% compounded daily from 04/03/2007 up to the date of judgement or earlier payment. As the interest is compounding and the claimant is unable to predict when the claim will be heard or settled, the claimant is unable to specify a static daily interest figure, but will provide an updated settlement figure in respect of the interest at any hearing. An approximate amount, for guidance purposes only, is currently £0.43 per day, however as noted herein, this figure is liable to increase over time.

h) In the alternative to 10 (d) (e) (f) and (g), and as particularised at 9 (d), interest under section 69 of the County Courts Act 1984 at the rate of 8% a year, from 25/02/2000 to 04/03/2007 of £311.35 and also interest at the same rate up to the date of judgement or earlier payment at a daily rate of £0.20.

 

What does everyone think ?

[innocent]

Amazing

 

I will add the relevant bits to mine "me thinks"

 

 

(What type of lloyds current account are you claiming against?? I have seen claims against lloyds for 29.85% but on their website it appears to state 29.8% and 18.7% for Classic accounts anyway

 

See innocent vs lloyds tsb

 

Well done

 

Innocent

[Movingon]

I'm confused why you are holding back on amounts and dates here in the forum; that's the very information needed to give you meaningful advice. By all means hold back identifying info like account numbers etc... but amounts?!

[Memnoch]

Oh, I thought it would be best to hold back everything. Will edit it later when I get home from work.

[Memnoch]

Ok have slightly updated my POC, is there anything anyone can think that I may have left out ?

[GaryH]

Good job. Just a couple of thing's that personally I'd change if they were mine;

 

You don't necessarily need to include these bits;

6. The Claimant will rely on the Competition Commission’s report entitled “Northern Irish Personal Banking,” published on 20th October, 2006, as evidence that the Defendant is aware that the income derived from its default charges is calculated to generate material profits and is not merely a means of recouping losses incurred in relation to Account defaults.

 

7. The Claimant will further rely on the Office of Fair Trading’s (“the OFT”) statement of 5th April 2006 concerning default charges in credit card contracts, as the OFT’s recommendations regarding standard default terms in credit card contracts have wider implications, as regards bank current Account agreements.

Your POC should be a concise statement of the factual basis of your claim, and state the legal principles on which you will rely. Para's 6. & 7. is supporting evidence which you'd disclose at a later date. No harm in leaving it in if you really wanted to though, I'm probably being picky.

 

No need to quote the UTCCR reg in full either;

5. – (1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.”

Just cite it by its reference.

 

Also, bearing in mind that Lloyds defend on the basis that their charges are contractual services which are'nt required to be a pre-estimate of loss, I included this in my POC;

1.6 The Claimant will vehemently refute any contention that the charges made by the Defendant are contractual service charges which are as such not required to be a pre-estimate of loss incurred on the part of the Defendant. The Claimant believes such contention would be an attempt by the Defendant to 'cloak' its penalties, in order that it circumvent the statutory and common law provisions which prohibit contractual penalty charges with view to profit.

 

1.7 Without prejudice to paragraph 1.6 above, in the event that the Defendant’s charges were accepted as a fee for a contractual service, they are unreasonable under The Supply of Goods and Services Act 1982 section 15.

[innocent]

Hi

 

Particularly impressed with your extra comments Gary... very useful info about their "usual" defence.....

 

Looking forward to your 'finale' memnoch....

I was particularly impressed with your original I changed my proposed POC...

 

I would be impressed if both of you would "browse" my POC within

 

innocent vs lloyds tsb current (contractual)

thread 8)

 

(and for someone who is quite familar with this site, with 3 successful claims why can't I still link back to my thread? How do I do this??)

 

Rgds

 

Innocent

[Memnoch]

Thanks for the help Gary, have deleted the unnecessary parts and added part 1.6 and 1.7 to my POC.

[Memnoch]

Ok today is now seven days after my Rejection of Settlement letter that I sent after they credited my account with £750.00 a copy of the offer is on this thread.

 

Due to this I have decided to send the following letter tomorrow:

 

Monday, 5th March 2007

 

 

Lloyds TSB Bank Plc

Customer Service recovery Centre

Charlton Place

ANDOVER

Hampshire

SP10 1RE

 

Re: Account number 12345678

 

Further to my Letter Dated 26th February 2007.

 

Dear Julie BRUCE

 

Further to my letter dated 26th February 2007 (sent recorded delivery on same date) a copy of which is enclosed.

 

In my letter I clearly point out that I would accept the £750.00 credited to my account as a part settlement only, and that I would to continue to pursue the remainder of the claim, including commencing legal action if my claim was not repaid in full by the deadline stipulated in my original ‘Letter Before Action’. A deadline which I reasonably chose to extend by 7 full days to offer you time to respond to my letter.

 

I also stated in my letter that I would require a response to this agreement within 7 days from my letter (I feel 7 days ample time to deal with such matters as you are a professional organisation with specialist departments and solicitors to enable you to deal with such matters). Stipulating that if I received no such response in the alloted time, then my only option would be to decline your offer as part settlement. I also gave you full authority to remove the funds that you placed into my account.

 

As at todays date (5th March 2007) I have received no response from you with regards to this letter, so without prejudice, I ask that you remove these funds from my account at the earliest opportunity.

 

Ok, being the worlds worst letter writer (nowhere near half as good as Mindzai) could everyone who is a bit better with letters etc. take a look and offer advice.

 

Thanks.

[GuidoT]

There is no reason to send this letter. Just commence proceedings.

 

It will not make any difference and in any event it is highly unlikely Lloyds will read the letter, let alone properly respond to it.

 

If you are so adamant that you do not want it, then you can go to Lloyds withdraw the funds from your account in cash and then give the money straight back over the counter, get a receipt though. Personally I would not do this though.

 

It is normal in litigation for parties to make and pay part offers as the matter progresses. You could be seen as awkward for not accepting a sum.