Contractual Interest - Precedent - LOST

[voyager9]

hi anyone got any comments on post 44 just to sort my own head out lol

[bluewater babe]

Sorry to interupt, just subscribing!

 

bb

[steven4064]

Hi bb

 

You know you can subscribe by clicking on "thread tools" in the blue bar at the top of the thread. But, welcome.

 

[bluewater babe]

No, i didn't . Thank you.

 

I was just about to take my N1 to the court for 3.5k inc ci re First Direct, so I'm VERY interested in how this conversation goes!!

 

Thanks again,

 

bb.

[monkey_uk]

Hi, can anyone give advide on this please (post 42 of this thread): http://www.consumeractiongroup.co.uk/forum/halifax-bank-bank-scotland/97691-contractual-interest-precedent-lost-3.html#post913964 ?

[steven4064]

Hi monkey_uk

 

From what Gary_H has posted I think it is clear that you shouldn't claim CI on the basis of mutuality in the contract - the judge in dad's case ruled that out.

 

However, it is also clear that he 'gave permission' to claim charges + interest you paid on the charges (at whatever rate that was) + 8% on the lot. That comes out at less than the 28.9% you are currently claiming but it effctively has a High Court precedent behind it.

 

What is less clear at the moment is whether you can claim CI on some other basis and that is what the discussion on this thread is (currently) about.

 

Summary of where we are in the discussion (IMHO)

 

Assuming the bank is a fiduciary (ie in a position of trust) which Glen UK thinks is the case, and I think is the case sometimes

 

There is case law that says:

 

a) a fiduciary must not make unauthorised profit from their fiduciary position

b) CI can be claimed whan a fiduciary has abused their position of trust

 

So, with the above assumption, we can then argue

 

The banks make a profitbecause their charges do not reflect their liquidated losses (this goes hand in hand with the unlawfulness arguement- -one implies the other)

AND

The profit is unauthorised

THEREFORE

The profit arises from a misuse of the bank's fiduciary position

THEREFORE

we can claim CI

 

To be able to use this arguement we need to do 2 things:

 

1. Show definitely that the bansk are in a fiduciary position (at least in the cases of interest to us)

2. Confirm the applicability of the case law

 

[Gez]

Its going to be a long debate about whether the bank is a fiduciary or not, but certainly worth exploring.

There is still the unjust enrichment argument. If as Steven says, you don't claim on the basis of M&R, but instead on the basis of unjust enrichment, would this precedent apply?

Claiming CI on the basis of unjust enrichment, plus an argument that you have been denied the opportunity to use & invest funds unlawfully seized (an argument I used in 5 claims I have won/settled with CI), perhaps it could go ahead because the basis of the claim is not the same as this precedent setting case.

The last option is to go for damages, but we'll have to wait until Tom Brennan's case is concluded before we'll know if/how that can be done.

[steven4064]

If as Steven says, you don't claim on the basis of M&R, but instead on the basis of unjust enrichment, would this precedent apply?

I think not which is why I want to explore this alternative. There is another advantage which I want to explore but not go in to ATM. (said he mysteriously!!)

 

Steven

 

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Any opinions are without prejudice & without liability.

Almost everything I know concerning the law I learned from this site

[steven4064]

hi anyone got any comments on post 44 just to sort my own head out lol

Sorry voyager, this was in danger of getting forgotten.

 

I think the simple answer is that the banks have no right in law to compound interest on a debt but have a right by virtue of their contract with you. You have no right in law to, say, tea. But you have a right to it by virtue of the informal contract you enter into with Tescos to provide you with it.

 

Steven

 

If this post is helpful, please click the scales

Any opinions are without prejudice & without liability.

Almost everything I know concerning the law I learned from this site

[GaryH]

There is still the unjust enrichment argument. If as Steven says, you don't claim on the basis of M&R, but instead on the basis of unjust enrichment, would this precedent apply?

I agree with Steven, I think not either. The judgement (from what we can gather so far) was quite specific in that it ruled only on the point that a reciprical term could not be implied on the basis of mutuality of contract. I'm 99% sure that this is the case, although clearly we'd need to see the judgement to be certain.

 

IMHO this was not a massive surprise anyway - courts are apparently well known to be very reluctant to imply terms into contracts and there are strict criteria upon which they will do so (business efficacy, etc).

 

I personally think that it would be easy enough to distiguish the precedent set by dads case from a claim for compound interest based on, say, unjust enrichment - but that angle still relies on the existance and breach of a fiduciary relationship. Its well established that compound interest isn't available at common law or statute (see Westdeutsche) - it is available only in equity where money has been obtained by a fraud or misapplied by someone in a fiduciary position.

 

My opinion, pretty much as it was before, is that CI is in the most part a step too far. Although I think there are valid arguments, they are complex and 99% of people who will claim it either can't or usually won't take the time and effort to learn them properly.

 

The law commission have recommended a change in the law to allow compound interest, so until that happens (if it does) then I think we'll just have to make do with plain old simple 8%.

[steven4064]

courts are apparently well known to be very reluctant to imply terms into contracts and there are strict criteria upon which they will do so (business efficacy, etc).

Gary

 

I would like to discuss this in a slightly differnt context. Rather than take this thread off topic, I've start ed another thread: http://www.consumeractiongroup.co.uk/forum/general/98652-bank-t-cs-you.html#post918877

 

Steven

 

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[Josie8]

Gary

 

I would like to discuss this in a slightly differnt context. Rather than take this thread off topic, I'm going to start another thread.

 

Steven

 

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Any opinions are without prejudice & without liability.

Almost everything I know concerning the law I learned from this site

 

I'm interested in your approach to this issue..................

[steven4064]

Its going to be a long debate about whether the bank is a fiduciary or not, but certainly worth exploring.

 

OK Gez, so what are the arguemnts for and against the bank being a feduciary?

 

ps Josie, see my previous post (now edited)

 

Steven

 

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Any opinions are without prejudice & without liability.

Almost everything I know concerning the law I learned from this site

[TANZARELLI]

OK Gez, so what are the arguemnts for and against the bank being a feduciary?

 

ps Josie, see my previous post (now edited)

 

Steven

 

If this post is helpful, please click the scales

 

Any opinions are without prejudice & without liability.

Almost everything I know concerning the law I learned from this site

 

In Barclays Bankv. Quincecare Ltd the Court of Appeal set out the following principles: that the relationship between a bank and its customer in relation to the drawing and payment of cheques against the customer’s account balance was that of principal and agent and as an agent the bank owed a fiduciary duty to the customer and prima facie was also bound to exercise reasonable care and skill in carrying out the instructions of its principal, the customer.

 

 

In WestminsterBankLtdvHilton (1926) 43 TLR 124, 126 Lord Atkinson explained the relationship in this way: "It is well established that the normal relation between a banker and his customer is that of debtor and creditor, but it is equally well established that quoad the drawing and payment of the customer's cheques as against money of the customer's in the banker's hands the relation is that of principal and agent. The cheque is an order of the principal's addressed to the agent to pay out of the principal's money in the agent's hands the amount of the cheque to the payee thereof."

 

 

 

 

House of Lords Limited v Gulliver [1967] 2 AC 134n at 144G-145A

"The rule of equity which insists on those, who by the use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides; or upon such questions or considerations as whether the profit would or should otherwise have gone to the plaintiff, or whether the profiteer was under a duty to obtain the source of the profit for the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff, or whether the plaintiff has in fact been damaged or benefited by his action. The liability arises from the mere fact of a profit having, in the stated circumstances been made."

[Falkirk1298]

Presumably the "unjust enrichment" point gains extra legs if a test case ever does in fact find that the present charging regime is unlawful?

[TANZARELLI]

Presumably the "unjust enrichment" point gains extra legs if a test case ever does in fact find that the present charging regime is unlawful?

 

IMHO yep

[Gez]

I agree.

I suspect that the banker could employ a tactic of paying back just the charges & force you to push the claim solely to get the interest, which, as in the above case, carries a risk, although hopefully by arguing from these angles you stand a better chance.

Perhaps the way to deal with this might be to close the account for which you are claiming so that they can't force any money into it.

[steven4064]

I looks to me that given the cases Tanz quotes plus the ones I quptd earlier, that we have a case provided we can argue the the judgements regarding the paying of cheques in Barclays Bankv. Quincecare Ltd and Westminster Bank Ltd v Hilton apply equally to other form of payment (DD and SO, etc) which I think we can

 

Steven

 

If this post is helpful, please click the scales

 

Any opinions are without prejudice & without liability.

Almost everything I know concerning the law I learned from this site

[TANZARELLI]

I agree.

I suspect that the banker could employ a tactic of paying back just the charges & force you to push the claim solely to get the interest, which, as in the above case, carries a risk, although hopefully by arguing from these angles you stand a better chance.

Perhaps the way to deal with this might be to close the account for which you are claiming so that they can't force any money into it.

 

This is exaclty what I have done with my Barclays account, that way they will have to send me a cheque which can be sent back ripped two.

[TANZARELLI]

I looks to me that given the cases Tanz quotes plus the ones I quptd earlier, that we have a case provided we can argue the the judgements regarding the paying of cheques in Barclays Bankv. Quincecare Ltd and Westminster Bank Ltd v Hilton apply equally to other form of payment (DD and SO, etc) which I think we can.

DD or SO's are the modern day version of cheques IMHO so this could be argues quite easilly.

Tanz

 

[GaryH]

Just to add something else into the mix here which may or may not be relevant.

 

In claiming compound interest on the basis discussed above we seeking to establish a breach of trust thereby invoking equities juristiction to grant compound interest as a remedy.

 

Two of the maxims (or principles) of equity are;

 

- One who seeks equity must do equity

- One who comes into equity must come with clean hands

 

I think its important to remember here that the very cause of action in our claims is a result of OUR breaches of contract.

 

Is being awarded 100% of the charges imposed as a result of our breach then interest at an unathorised rate of 29.whatever% truely equitable?

 

I think perhaps not.

[tifo]

- One who seeks equity must do equity

- One who comes into equity must come with clean hands

 

I think its important to remember here that the very cause of action in our claims is a result of OUR breaches of contract.

 

Is being awarded 100% of the charges imposed as a result of our breach then interest at an unathorised rate of 29.whatever% truely equitable?

 

I think perhaps not.

 

I also don't think it is fair on the bank just because of the charges, but is fair as restitution for 'collateral damage' they then did by taking the money from you.

 

Consider that a lot of people who have paid these charges (like myself) have done so because they may have had a financial problem at that time. What did the bank do to help? FA.

 

Some people would have been on benefits, low incomes etc and having to pay 100's out every month does not help and makes other matters worse. For example, bank takes £100 so i have £100 less to pay my bills, maybe the gas bill was late so they charged me as well, maybe i couldn't pay for the kids school meals that week, maybe my mortgage was late so my credit score suffers and they also charge me a fee, etc etc .....

 

It is for this other damage that i think charging the maximum you can from the same banks who screwed you over is fair, fair and fair. Plus you only get the one chance so make the most of it.

[bluewater babe]

I don't want to interupt this thread too much, but a lot of people who know about CI will be reading this thread, so i have a quesion to ask those in the know.

 

I have sent 3 letters to FD the last being an LBA all asking for CI on the basis of M&R i told them i was filing my N1 last week, but haven't had the chance yet - now i know it was fate! They have sent 2 offers but neither cover the charges let alone the interest they've charged me for borrowing this amount.

 

Do i now need to start the process again from the beginning stating I'm claiming CI on the basis of unjust enrichment, or should i wait at least another week to see how the conversation pans out?

 

OR should i go ahead with the M&R arguement and hope i don't make it to court? - which i think is much more of an uncalulated risk.

 

I'm so close to filing my N1 (to stick with MY timescale) but need some advice.

 

Thanks,

 

bbx.

[GaryH]

There is no point whatsoever in claiming CI on the basis of M&R. They'll just pay the charges + 8% then you'll have to drop the rest anyway.

 

Only claim it on the basis discussed above if your prepared to fully research and understand whats needed to put forward a credible argument. You need to read some cases and get a good understanding of them before you even think about it IMHO - Westdeutsche for starters;

 

Westdeutsche v Islington BC

 

Full judgement is here -

 

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

[bluewater babe]

That's exactly what I thought, but needed to see it in black & white.

 

Now do i have to write my letters to FD again?

 

Thanks Gary

 

bbx