PSM V Abbey PLC

[glad]

Well done for fighting your corner- sounds like Abbeys legal rep didn't have too good a time!!

I hope you get the phone call offering to settle soon.

Glad:)

[Clippy]

Well done! I really hope that your judge has found a light through all of the gloom. It sounds as if your husband is right on the button. Have you thought about hiring him out for court cases?

[Clippy]

Have sharpened the lever-arch file and am ready for them if they do. Apart from the template objections to a stay, one of my main objections to the stay will be the fact that the solicitor representing the Abbey will have attended court without the means to defend the case in the event that the judge refuses the stay application, thus demonstrating the contempt with which the Abbey holds its customers and the judicial system. I will state that I would have been happier to accept the stay if the Abbey had complied with directions and had sent me their bundle. There non-compliance in my case and the majority of cases of this kind does not fill me with confidence that the Abbey will actual go through with the test case and will use it as another delaying tactic. Thanks for the support and I will post the outcome as soon as possible after the case.

 

 

I am very interested to know what you wrote with regard to the above. I haven't done my letter objecting to a stay yet, like you I want to go armed with copies incase they apply. My court date is 7th Sept and I would love to go armed with something similar. Hope this isn't too cheeky:oops:

[psm]

all i can say is watch this space, the brains behind this site are pawing over this one. does the abbey defence you received contain the

paragraph "The Claimant has overdrawn or exceeded authorised overdraft limits on the Account on a number of separate ocasions, full details of which will be provided on disclosure. Therefore by virtue of the Conditions referred to in paragraph 3 above such overdrawing was unauthorised and in breach of contract and the Claimant became liable to pay fees to the Defendant in accordance with its Tariff of Charges applicable at the relevant time. In accordance with the Conditions, such fees were debited to the Account" if so then read the sticky posted by GaryH at 17.55 today.

[Clippy]

Word for word PSM! I will have a look at the sticky, Thanks so much x

[ICY]

i have that in my defence, posted on the sticky, does this make any difference to the stays?

[psm]

Hard to say yet, I am no expert. But the judge was prepared to hear the part of my claim that related to the breach of contract and penalty charge (Overview, Para 9/10 in the CAG Witness Statement reproduced below) but stayed the part relating to UTCCR (Para 11) as para 9/10 were based on fact whereas para 11 was more complex and could be better dealt with in the OFT test case. It was apparent that the Judge had read the court bundle because she refered to the contention that the estimated loss incurred by the defendant in relation to my breaches of contract were in the region of between 0.25p a £1.50 (para ## of witness statement)

The defence solicitor was totally unprepared for this as she was only sent to apply for a stay. My husband was caught on the back foot, but thought that if the judge was prepared to hear the case the CAG legal team would be very intertested, so he proposed an adjournment of this part of the case to allow the defence to prepare. The judge agreed and made the following order: (not exactly word for word coz i couldn't write quick enough)

 

1. the claimants claim in so far as it is based on the assertion that the charges levied amount to a penalty charge be adjourned for 28 days for the defence to come up with full disclosure

2. The defendant should send to the claimant and the court all documents and witness statements it seeks to rely on in persuance of this order.

3. If the defendant contends that the cost of each transaction excedes £5 it must include in its documents and witness statements evidence of how the actual costs are calculated. Failure to comply will result in the defence being struck out.

 

Extracts from witness Statement: (paragraph numbering might vary from CAG original)

 

Overview

 

9. It is submitted that the charges levied to my bank account, as set out in the enclosed schedule, exhibit SPM03, are default penalty charges arising from breaches of the contract between myself and the Defendant. The Defendant confirms in paragraph 8 of its defence that the charges are indeed payable upon breach of contract.

 

10.It is admitted that the charges were levied in accordance with the terms and conditions of the account in question. However, it is submitted that the charges are not related to or intended to represent any actual loss caused by the breach of contract, but instead unduly enrich the Defendant, thus the charges are penalties, which by virtue of the legislation and provisions cited in paragraph 9 above, exercises the contractual term in respect of such charges with a view to profit.

The true cost to Abbey Plc of a default event

 

19. I estimate the loss incurred by the defendant in respect of each of my contractual breaches to be in the region of a minimum of £0.25 to a maximum of £1.50 per each single event of default. I am unable to provide a more accurate figure at this time, due to the fact that the Defendant, and indeed all of the UK banks, remains highly secretive regarding the mechanisms of their systems and the costs associated in the charging process and of the events of default leading to a charge being made

Extracts from Abbey defence

6. The Claimant has overdrawn or exceeded authorised overdraft limits on the Account on a number of separate occasions, full details of which will be provided on disclosure. Therefore by virtue of the Conditions referred to in paragraph 3 above such overdrawing was unauthorised and in breach of contract and the Claimant became liable to pay fees to the Defendant in accordance with its Tariff of Charges applicable at the relevant time. ln accordance with the Conditions, such fees were debited to the Account.

 

8. The Claimant's contention that the said fees are unenforceable and/or are ''penalty charges'' is denied. The fees reflect and are proportionate to the Defendant's administrative expenses incurred due to the Claimant's breach of contract and are a genuine pre-estimate of the damage suffered by the Defendant

So we are left with half the claim stayed and half adjourned for 28 days.

Whether an appeal can be based on this remains to be seen, but I sincerley hope it can

[psm]

Thinking abiout it now, I wish I had taken an extra bundle into court just so I could have seen the look on the defence solicitors face when I offered it to her so she could procede.

[psm]

I have completed the N244 form as follows, is this ok to go in as is on Monday?

With regard to the N244 -

 

Top left hand box:

 

1. Tick c), without a hearing

5. District or Deputy District

6. Defendant

 

 

Have left the rest blank

 

Part A:

 

I ***** (the claimant)

 

(that....) allows an amendment to particulars of claim in respect of total claim value

 

(because....) he defendant has continued to debit the claimant's account with the disputed charges resulting in the amount being significantly higher than it was at the date of issue..

 

Part B:

 

tick 'evidance in part C' box

 

Part C

 

I respectfully request that the court allows an amendment to my particulars of claim in respect of an increase of the claim value only. The increase in the amount claimed relates to disputed charges the defendant has debited from the claimant's account between 6th March 2007 and 17th August 2007

Please find attached to this application my proposed new particulars of claim, amended to represent the increase of the claim value, as well as an amended schedule of the amount claimed in respect of penalty charges levied by the defendant.

[psm]

Apologies for keep harping on about yesterday but I have had time to think and digest the events of the day and I think that I have a more concise take on the significant aspects, although I did enjoy the squirming and groveling bit by the defence solicitor. So bear with me, and if I have got it wrong can someone please correct me.

 

 

The main argument the Abbey have for applying for a stay is that the issues in the case are complex and that the Claimant would be better served to allow these arguments to dealt with by greater legal minds in the OFT test case.

The Judge agreed with the defence to a point, with regard to the legal complexity of the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCR") argument.

However, as I understand it the Judge, and GaryH to his eternal credit, spotted that the Abbey, in their defence at paragraph 6 & 8, accepted that the claimant was in Breach of Contract and as such the argument were very straightforward.

1. Did the charges levied by the Defendant reflect the actual loss caused by the Breach of Contract or as the Defendant put it “genuine pre-estimate of the damage suffered by the Defendant”

2. Is the actual loss incurred by the Defendant in respect of each Breach of Contract between £0.25 and £1.50 as proposed by the claimant in the Witness Statement.

No great legal argument just good old plain facts.

The Judge said that she was prepared to allow this part of the claim to be heard and adjourned the case for 28 days as the Defence were not in a position to proceede.

Unfortunately this scenario of relates to cases where the Abbey have used the defence that admits to the claimants breach of contract.

Extracts from a section of Abbey’s Defence

6. The Claimant has overdrawn or exceeded authorised overdraft limits on the Account on a number of separate occasions, full details of which will be provided on disclosure. Therefore by virtue of the Conditions referred to in paragraph 3 above such overdrawing was unauthorised and in breach of contract and the Claimant became liable to pay fees to the Defendant in accordance with its Tariff of Charges applicable at the relevant time. ln accordance with the Conditions, such fees were debited to the Account.

 

8. The Claimant's contention that the said fees are unenforceable and/or are ''penalty charges'' is denied. The fees reflect and are proportionate to the Defendant's administrative expenses incurred due to the Claimant's breach of contract and are a genuine pre-estimate of the damage suffered by the Defendant.

Extracts from CAG template Witness Statement (numbering may vary)

9. It is submitted that the charges levied to my bank account, as set out in the enclosed schedule, exhibit SPM03, are default penalty charges arising from breaches of the contract between myself and the Defendant. The Defendant confirms in paragraph 8 of its defence that the charges are indeed payable upon breach of contract.

10.It is admitted that the charges were levied in accordance with the terms and conditions of the account in question. However, it is submitted that the charges are not related to or intended to represent any actual loss caused by the breach of contract, but instead unduly enrich the Defendant, thus the charges are penalties, which by virtue of the legislation and provisions cited in paragraph 9 above, exercises the contractual term in respect of such charges with a view to profit.

 

11. As a contractual penalty, it is submitted that the charges are unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCR"), exhibit SPM09, and numerous long-settled principles of the common law.

Penalty

 

14. It is not disputed that the Defendant is entitled to recover its damages following my breaches of contract, and it is entitled to include a liquidated damages clause. I accept without reservation the banks right to recover its actual losses resulting from each breach of contract or otherwise a true and genuine pre-estimate thereof. However, it is long settled that a clause which provides for a payment of money which is excessive, unconscionable and not proportionate or related to the loss incurred as a result of the breach is a penalty and thus unenforceable.

 

15. 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 opposed to a charge which represents a penalty.

16.Lord Dunedin in the case of Dunlop Pneumatic Tyre Co v New Garage & Motor Co [1915] AC 79 [exhibit SPM06] set down a number of principles in definition of a penalty clause. Two of these principles being;

"It will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greater loss that could conceivably be proved to have followed from the breach"

The true cost to Abbey Plc of a default event

 

19. I estimate the loss incurred by the defendant in respect of each of my contractual breaches to be in the region of a minimum of £0.25 to a maximum of £1.50 per each single event of default. I am unable to provide a more accurate figure at this time, due to the fact that the Defendant, and indeed all of the UK banks, remains highly secretive regarding the mechanisms of their systems and the costs associated in the charging process and of the events of default leading to a charge being made.

I hope this is of use somehow.

[Guest amethystdragon]

This is gold dust PSM - both our defences from the Abbey are exactly the same - I'm subscribing to this thread immediately especially as I've got 14 days to produce one of our bundles - this could be significant indeed

[TUTTSI]

Gosh PSM, you really have summed this up extremely well. My own court case with Abbey is in November, so all the info regarding your case is very usefull not just for me but for all others waiting for a court date and it is fantastic to have this infomation & knowledge at hand.

 

By the way which court was it!

Thanks

DS

[psm]

Thank You. Woolwich CC.

 

I must admit that the standard letter from the Abbey regarding them applying for a stay had the desired effect and totally threw me, all I could think of was how to object to the stay application, I neglected the actual case and it had an effect on the preparedness when the judge suggested that we proceede with the case, luckily I had finished my bundle and dispatched it before the letter had arrived or it could have affected how i prepared that.

Unfortunately it is a lottery out there as to which judges will be bothered to look at cases on an individual basis and which will use the test case as a means of clearing a backlog in their courts by arbitrarily granting stays. You could argue that not all aspects of the claim are complex and as such could be dealt with at County Court level, while agreeing to accept a stay on the more complex legal arguements in your claim that could best be dealt with through the OFT test case. A lot of it depends on what is contained in the defence Abbey have used in your case.

[psm]

Thanks Amethystdragon as they say every little helps. All I would say is be careful when you prepare your Witness Statement. You need to use the template that relates to the "breach of contract" defence put up by Shabbey, I know this might sound obvious but there are a few different witness statements around and it is an easy mistake to make. And if you are approached by the Defence solicitor in the court lobby and they ask you if you are going to object to the stay let them know you intend to challenge on the "breach of contract" aspect of the Abbey defence and you intend to ask for that to be heard as it is a simple case of fact and not complex legal arguement see if that sends then scurrying for the phone. There is no guarantee that the judge will have been studious as mine. You might even get a settlement offer before you have to go in court.

[Clippy]

QUick question PSM What is the difference between a witness statement and a statement of evidence?

[psm]

This is the witness statement I used in my bundle. I am no expert so I cannot tell you, however as far as i can tell the witness statement actually sets out your case in full' almost like a script. sort of a cross between case summary and statement of evidence. I found it easier to use and helped me get a grasp on the case. this one was supplied by GaryH but I had to adjust it to fit with the circumstances of my case. I think the judge found it useful as it saved time ploughing through the bundle, and all sections and supporting material is cross referenced for ease of reading. Hopefully some banana will be able to give you chapter and verse on the differences.

Witness statement to go in your bundle;

 

 

 

1st Witness Statement of [you]

Exhibit ***1

[date]

 

 

 

In the XXXXXXX County Court

Claim Number: *******

 

Between:

XXXXXXXXXX

(Claimant)

-And-

 

ABBEY BANK PLC

(Defendant)

_________________________

1st WITNESS STATEMENT OF

XXXXXXXX

_________________________

 

1. I, the Claimant, am a litigant in person in this case.

 

2. I make this Witness Statement in support of my claim against the Defendant for the refund of penalty charges levied to my bank account by the Defendant bank.

 

3. I make this Witness Statement from information and facts within my own knowledge and which I believe to be true.

 

4. On [date] I wrote to the Defendant, setting out the nature of my complaint and requesting that the Defendant either justify the legitimacy and legal status of its charges or alternatively refund them.

 

5. Upon unsatisfactory response from the Defendant, [date] I again wrote to the Defendant requesting a refund of said charges and advising I would file a claim should I not receive a satisfactory response.

 

6. Upon no response of my complaint, on [date] I filed a claim online at Northampton County Court for the return of the charges levied by the Defendant, as particularised and detailed in the Particulars of Claim.

 

7. The Defendant acknowledged service of the claim on [date].

 

8. The Defendant filed its defence on [date].

 

Overview

 

 

9. It is submitted that the charges levied to my bank account, as set out in the enclosed schedule, are, notwithstanding the defence of the defendant, default penalty charges arising from breaches of the contract between myself and the Defendant. The Defendant confirms in paragraph 9 of its defence that the charges are indeed payable upon breach of contract.

 

 

10. It is admitted that the charges were levied in accordance with the terms and conditions of the account in question. However, it is submitted that the charges are not related to or intended to represent any actual loss caused by the breach of contract, but instead unduly enrich the Defendant, thus the charges are penalties, which by virtue of the legislation and provisions cited in paragraph 9 above, exercises the contractual term in respect of such charges with a view to profit.

 

11. As a contractual penalty, it is submitted that the charges are unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCR") and numerous long-settled principles of the common law.

 

Penalty

 

 

12.It is not disputed that the Defendant is entitled to recover its damages following my breaches of contract, and it is entitled to include a liquidated damages clause. I accept without reservation the banks right to recover its actual losses resulting from each breach of contract or otherwise a true and genuine pre-estimate thereof. However, it is long settled that a clause which provides for a payment of money which is excessive, unconscionable and not proportionate or related to the loss incurred as a result of the breach is a penalty and thus unenforceable.

 

13. 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 opposed to a charge which represents a penalty.

 

14.Lord Dunedin in the case of Dunlop Pneumatic Tyre Co v New Garage & Motor Co [1915] AC 79[ [exhibit ***] set down a number of principles in definition of a penalty clause. Two of these principles being;

 

 

"It will be held to be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greater loss that could conceivably be proved to have followed from the breach"

 

and;

 

"The essence of a penalty is a payment of money stipulated as in-terrorem of the offending part; the essence of liquidated damages is a genuine covenanted pre-estimate of damage"

 

15. I will further rely on numerous recorded authorities dating throughout the 20th century to the most recent case of Murray v Leisureplay [2005] EWCA Civ 963, all of which have upheld and reinforced the principles set down by Lord Dunedin defining contractual penalty clauses and the unenforceability thereof. See the “Relevant Case Law Summary” contained within the court bundle [exhibit ****].

 

16. Whether the Defendant’s charges amount to a penalty is therefore a question of fact – specifically how the level of charge paid by the claimant compares with the actual loss suffered by the Defendant as a result of each breach. On numerous occasions, I have requested that the Defendant justify its charges by providing details of the costs incurred as a result of my contractual breaches. Each time those requests were rebutted or ignored.

 

The true cost to Abbey Plc of a default event

 

17. I estimate the loss incurred by the defendant in respect of each of my contractual breaches to be in the region of a minimum of £0.25 to a maximum of £1.50 per each single event of default. I am unable to provide a more accurate figure at this time, due to the fact that the Defendant, and indeed all of the UK banks, remains highly secretive regarding the mechanisms of their systems and the costs associated in the charging process and of the events of default leading to a charge being made.

 

18. I am aware of in excess of 200 claims similar or identical in nature to the present case which have been brought against the Defendant bank in the last 18 months. In a significant number of these cases disclosure orders have been made obliging the defendant to substantiate its contention from paragraph 9 of its template defence that;

 

“The fees reflect and are proportionate to the Defendant's administrative expenses incurred due to the Claimant's breach of contract and are a genuine pre-estimate of the damage suffered by the Defendant.”

 

I understand that each and every time that such an order has been made, or indeed any other directions order, it has been breached by the Defendant who chooses instead to settle each and every claim without liability, typically shortly in advance of the scheduled hearing.

 

19. It is submitted that if the Defendant’s contention were to hold, it would be easily within the Defendant’s capability to halt the current flood of litigation being brought against it simply by disclosing details of its costs, thereby substantiating its contention that the charges are proportionate to its loss incurred as a result of the breach of contract from which they arise. I believe that is in the interest of the parties in the present case, the court, and of the wider public interest, for the Defendant to do so.

 

20. In view of the proceeding paragraphs, a preliminary request for information and clarification under CPR Part 18 was submitted to the Defendant on [date], relating specifically and directly to paragraph 9 of the defence, requesting information in respect of the "administrative expenses" referred to in the defence and how such expense is incurred - I.e whether manually or by a specific automated system or otherwise. A copy of the request is contained in the court bundle as [exhibit ***]. Upon the compliance of the Defendant I would then have been in a position to conduct further research and present to the court within submissions an accurate figure based upon the nature of the specific systems employed by the Defendant to process events of default. Regretfully, the Defenant chose to completely ignore the request.

 

Therefore, my estimate of £0.25 - £1.50 is based upon the following;

21. My assessment of the costs of the charging process

Prior to the commencement of these proceedings, I asked the Defendant to provide evidence of any manual intervention that may have occurred in relation to my account, under a Subject Access Request pursuant to s.7 of the Data Protection Act 1998. No records of any manual intervention or involvement whatsoever could be provided. My Subject Access request letter and Abbey’s response letter are attached in support of this statement as exhibit **3.

 

Therefore, It is submitted that the Defendant’s charges are applied by a completely automated and computer driven process. This process consists of a computer system;

 

a) sending a computer generated letter if a customer exceeds authorised overdraft limit (even if by only a few pence) to advise the customer of the breach and resultant charges, or

b)returning a dishonoured cheque plus notice to the customer, or

c) ‘bouncing’ a direct debit or standing order.

 

The costs of Data processing are nominal. Following some research into these processes and their costs I was able to obtain a list of prices from The Data Processing Company UK (www.dataprocessing.co.uk), which confirm that such costs can be reasonably measured in pence rather than pounds. Please find this list attached in support of this statement as exhibit ***.

 

It is therefore impossible to envisage how the Defendant can incur costs of £35 by carrying out a completely automated process. Note that the letter received notifying of a charge is identical in every instance, and if multiple breaches occurred on the same day, a separate letter will be sent in each instance, in separate envelopes. Two samples of these letters are attached to this statement as exhibit ***.

 

 

22. CYNthesys Disclosures

 

 

Disclosures were recently made to the BBC and subsequently to Andrew George MP and journalists at a meeting at the House Commons revealing that the Clydesdale, Yorkshire and Northern Banks operated a structured, detailed and auditable system for costing, tracking and refining their costs of conducting various operations within the bank including the processing of default events of delinquent accounts. The system, which was apparently introduced in 2002 was called CYNthesys- Clydesdale Yorkshire Northern the system.

 

A Yorkshire Bank informant who is a former high level employee at the bank stated on television and in an affidavit that even assuming the highest level of manual intervention any single process of default would never cost more than £2.00 and that this cost is calculated and traceable using CYNthesys.

 

It is submitted that it is inconceivable that such a system with the same or similar mechanisms, characteristics and costs is not also employed by Abbey Plc, the Defendant in the present case. Basic business principles and marketplace competition dictate that if such a system is in existence, available and operated by an organisation, that its competitors in the marketplace will also seek to employ a system which is equally efficient and cost effective or perhaps even more so. Abbey Plc is is far larger institution than the CYN banks, therefore econimies of scale would suggest that in fact the cost to it would in fact be less.

 

Further, note the end charge to the customer of the CYNthesys banks (for example Yorkshire Bank) is almost identical to those of Abbey Plc.

 

Abbey charges tariff

• Unauthorised overdraft fee - £30

• Bounced direct debit/cheque/standing order - £35

Taken from “Tariff of charges” at Abbey

 

Yorkshire Bank charges tariff

• Debit card abuse fee - £35

• Bounced direct debit/cheque/standing order - £35

Taken from “Table of charges” at Welcome to Yorkshire Bank

 

 

23. The Competition Commission

 

Northern Ireland Competition Commission report from October 2006 revealed that figures contributed by eight banks, including the Defendant, Abbey Plc, showed that around 12% of the banks annual revenue is generated by "overdraft charges". The report clearly demonstrates that the banks make significant profits from their penalty charges and that they know about it, depend upon it and that they calculate for it. It is submitted that this report is clear 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 specific events of default.

 

Some relevant parts of the report are reproduced as follows;

 

Appendix 4.6

Policies on setting unauthorised overdraft charges

 

" 9. The answers were consistent across all the banks that responded, that unauthorized overdraft charges were set in the same way as other fees and charges. Thus banks tended to look across all their products and all their charges and sought to ensure their products were competitive with their rivals. This would be assessed through price comparisons, and also by monitoring account recruitment and retention. In the main, the clearers paid particular attention to the other clearers. The non-clearers set their pricing UK-wide and so particularly monitored the UK wide banks and the banks based in Great Britain. However, that said, there were clear examples of banks concluding that it would be profitable to raise charges above competitors (eg see paragraphs 20 and 22 in Annex 1).

 

12. Most of the banks made reference to monitoring of their costs, and sought to recover cost increases through their charges. However, as such costs tended to arise across a range of bank activities there was no direct feed through from particular cost increases to particular charges, but would be spread across the charging structure with regard to competition on these charges.

 

13. None of the banks told us that their charges were determined mainly by estimates of costs.

 

17. [] states “as is always the case the biggest impact in terms of service income price increases lies in penal charges such as unpaids and referral items, and I have had little option but to concentrate on these in an attempt to achieve the [] targeted increase in income". []

 

24. Some inference on unauthorized overdraft charges can be seen in the banks’ moves to fee-free accounts, as analysed in Appendix 4.8. As covered previously, Ulster’s proposals for fee-free banking rebalanced to an extent the loss of fee-income from transactions with an increase in unauthorized overdraft charges. BoI had developed proposals for a similar fee-free account where income loss would be approximately offset by increased unauthorized overdraft charges.

 

25. Charges are a significant source of revenue for the banks on PCAs. [] said that increased unauthorized overdraft fees were part of the strategic imperative to turn the PCA into a profitable business over time. The charges were significantly less than a number of its competitors. "

 

Appendix 4.6 of the report titled “Unauthorized Overdraft charges” is attached in support of this statement as exhibit ***.

 

24. Australian Default Fees report

In a study undertaken in Australia, (Nicole Rich, “Unfair fees: a report into penalty fees charged by Australian Banks”) it was estimated that the cost to an Australian Bank of a customers direct debit refusal was estimated to be in the region of 54 cents. By reviewing the charges to the customer against the actual cost to the bank, the study estimated that banks could be charging between 64 to 92 times what it costs them to process a direct debit refusal. The study’s key findings stated that the Australian Bank’s cheque and direct debit refusal fees were likely to be penalties at law. The reports summary is attached in support of this statement as exhibit ***7. The penalty charging regimes of the Australian banks as well as the automated systems employed to process default events are similar to those of the UK banks, and the laws relating to contractual penalty clauses are also similar to those in the UK.

 

25. BBC Commission Report

For the recent BBC2 documentary "The Money Programme", the BBC appointed a commission of former senior banking industry figures and business academics to attempt to ascertain the actual costs to the UK banks of processing a customer's breach of contract. They concluded that the absolute maximum conceivable cost that could be incurred by a direct debit refusal or overdraft excess is £2.50, and of a returned cheque £4.50. They did state however, that the actual cost is likely to be much less than this. The commission also estimated that the UK banks collectively derive as much as £4.5billion in profit a year from their charging regimes. The commissions conclusion is attached in support of this statement as exhibit ***8.

 

26. It is thus submitted that the charge is an unconscionable penalty as it is extravagant, unrelated to and greatly exceeds any loss that the Defendant could ever have expected to have incurred as a result of the Claimant’s breach, and seeks to deter the Claimant from breaching the contract.

 

Unfair Terms in Consumer Contracts Regulations 1999

 

27. Under the UTCCR, schedule 2 (1) includes to define an example of an unfair clause as -

 

"(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation"

 

As submitted in the proceeding paragraphs, the Defendant's charges greatly exceed and are disproportionate to the loss incurred as a result of the claimant's breach of contract. It is thus submitted that clause ** of the account agreement amounts to an unfair term under schedule 2 (1)(e).

 

28. Further under the UTCCR:

 

"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.

 

(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.

 

(3) Notwithstanding that a specific term or certain aspects of it in a contract has been individually negotiated, these Regulations shall apply to the rest of a contract if an overall assessment of it indicates that it is a pre-formulated standard contract.

 

(4) It shall be for any seller or supplier who claims that a term was individually negotiated to show that it was.”

 

Schedule 2 also includes such clauses (to define examples of unfair clauses) as:

 

(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation

 

(i) irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract;

 

(j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;

 

(m) giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract."

 

29. The defendant is a powerful multi-national corporation. The term regarding charges was inserted unilaterally in contract. The contract was pre and mass produced and I had no opportunity to negotiate the clause, or indeed any part of the contract.

 

30. The cost of the Defendant's charges have increased substantially and indiscriminantly during the period in which my account has been in operation, neither time was I given the opportunity to negotiate, or even notified of this increase. This means the bank, a powerful financial institution, has unilaterally altered the terms of my account contract to my significant detriment, and to their advantage.

 

31. It is submitted that the account contract is within the ambit of the Regulation 5 as it was not individually negotiated. The requirement of good faith was described by Lord Bingham in Director General of Fair Trading v First National Bank[2001] UKHL 52 as:

 

"Good faith in this context is not an artificial or technical concept... It looks to good standards of commercial morality and practice. It lays down a composite test, covering both the making and the substance of the contract, and must be applied bearing clearly in mind the objective which the regulations are designed to promote. Fair dealing requires that a supplier should not, whether deliberately or unconsciously, take advantage of the consumer's necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position"

 

32. The Claimant submits that the charging regime operated by the Defendant by charging those who can least afford it to subsidise free banking of other customers takes advantage of the Claimant’s necessity indigence and weak bargaining power. The objectives which the Regulations are designed to promote include the protection of Consumers from commercial entities.

 

33. The Defendant may assert that the charges are within the requirement of good faith as they were in the published terms and conditions and the Claimant was aware of them. However, this is a purely procedural argument and according to Lord Steyn in Director General of Fair Trading v First National Bank:

 

"Any purely procedural or even predominantly procedural interpretation of the requirement of good faith must be rejected."

 

34. I thus assert that the substance of the clause is of paramount importance in looking at the requirement of good faith also the way it was packaged so as to deceive the consumer into believing it was a legitimate charge to compensate loss.

 

Summary

 

35. As set out above, the Defendant’s charges can in no way be considered to be liquidated damages. They are not a pre-estimate of, or in any way related to, the Defendant’s loss incurred as a result of the breach of contract. The charges are punitive and held "in-terrorem" - I.e. the clause is designed to deter the claimant from breaching the contract. The charges imposed are disproportionate, excessive, exorbitant and extravagant in comparison to the greatest loss which could have occurred as a result of the breach, and they unduly and substantially enrich the Defendant. As such, they are contractual penalties and unenforceable at law.

 

36. Accordingly, the claimant seeks judgement in respect of;

 

a) Charges in the sum of £**** (as particularised in the Particulars of claim).

 

b) interest at the rate of 8% per annum under County Courts Act 1984 s.69 in the sum of £** until [date], and further the daily rate of £** thereafter (as particularised in the Particulars of Claim);

 

c) Issue fee of £**

 

d) Allocation fee of £**

 

e) Any further costs allowed by the court

 

37. Statement of truth

 

I, the claimant, believe the facts stated within this Witness Statement to be true, and submit it as Exhibit ***1 comprising of ** pages.

 

Signed:

 

Dated:

I hope this is useful.

[Clippy]

Many many thanks PSM. I did manage to find a thread relating to Witness statements after I sent you the last message. I don;t know why I couldn' find it before. Quite confusing on the link to the witness statement as it looks the same as the case summary. My head is overflowing now!! Will get on and read through your statement again. thanks again big time.clipx

[GaryH]

Here you go, its in the templates library along with links to everything you need in your bundle -

 

http://www.consumeractiongroup.co.uk/forum/bank-templates-library/103771-abbey-court-bundle-witness.html

 

Use that, rather than any other documents such as SoE or case summary.

[psm]

Thank you GaryH, have you managed to look at most post regarding the change of POC, is it worded correctly or should I change it?

[GaryH]

Yes, its fine. I've added a little bit on the end, in red;

I have completed the N244 form as follows, is this ok to go in as is on Monday?

 

With regard to the N244 -

 

Top left hand box:

 

1. Tick c), without a hearing

 

5. District or Deputy District

6. Defendant

 

 

Have left the rest blank

 

Part A:

 

I ***** (the claimant)

 

(that....) allows an amendment to particulars of claim in respect of total claim value

 

(because....) he defendant has continued to debit the claimant's account with the disputed charges resulting in the amount being significantly higher than it was at the date of issue..

 

Part B:

 

tick 'evidance in part C' box

 

 

Part C

 

I respectfully request that the court allows an amendment to my particulars of claim in respect of an increase of the claim value only. The increase in the amount claimed relates to disputed charges the defendant has debited from the claimant's account between 6th March 2007 and 17th August 2007

Please find attached to this application my proposed new particulars of claim, amended to represent the increase of the claim value, as well as an amended schedule of the amount claimed in respect of penalty charges levied by the defendant.

 

For the avoidance of doubt, this proposed amendment is to the claim value only and introduces no additional issues to this claim. The increase in value represents extra charges of the same type already claimed which have been levied since the date of issue.

[psm]

Thank you very much. That will go in on Monday.

[Clippy]

Forgot to thank you GH for the information you sent here. Thanks.

[Lady E]

psm - Thank you so much for your brilliant advice on your thread. My case is due to be heard on thursday and I am very nervous. The court have told me that I am to turn up and the Judge will be able to tell me if the case has been stayed or not. Thank you so much for the detailed advice re breach of contract , indeed that was the same defence they sent out to me (and thousands of others). I will be spending tomorrow morning and Wednesday preparing my objection to the stay and do final revision on the gist of my arguments. I have to say I am very very scared.

[psm]

Thank you. I thought that it might be useful for people to know what happened I felt that things were slipping into doom and gloom and we needed a lift. I was very very nervous throughout the hearing and alot of what weas said went over my head a stuck to the wall. However the judge was very kind and did most of the work. Don't be intimidated by the Abbey solicitor before the case, if one attends. They will ask you if you are going to object to a stay, it is up to you if you tell them that you are and what your objections will be. I doubt if it will make much difference if you tell him/her as they will only get there about 15 mins before the off. Good luck fot Thursday hope it goes well, as long as you are well prepared you have nothing to worry about.

[mattyb13]

Hi psm,

 

I have been looking at your thread alot lately as I have a court date on Thursday.

 

I have decided to included an extra paragraph or 2 in my argument against a stay.(the last post)

 

MattvAbbey

 

Here is the link to my thread, if you dont mind having a quick look and tell me what you think to the bit I have added about the defence.

 

Good luck with your claim.

 

Matt