OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

[Centium5000]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

But we have discovered they're not penalties disguised as services, rather services disguised as penalties.

Don't you feel rather misled?

[charitynjw]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Lets see

I go to park my car in an 'unauthorised' place - someone comes out of the building..........

Him - "You can't park here, mate"
Me - "Oh, sorry" (& go to drive off)
Him - "Hang on, you owe me forty quid!"
Me - "Why?"
Him - "For making the decision of whether you can park there or not, & it's always not"
Me - "F
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Swear filter to the rescue!

[Centium5000]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

That..is..brilliant!!! :whoo:
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Or how about...

I ask the car park attendant to park my car but there's only an 'unauthorised' place left:

Scenario 1

Me: "Did you park the car?"
Him (scowling): "Yes sir, but there was only an unauthorised place left. It cost you £40"
Me: "Harumph! Well, marginally better than leaving it on the road I guess"
Him (still scowling): "And you owe me £20 for parking the car sir"
Me: "What?? That's ridiculous! I hope you argued with the guy who charged me the £40?"
Him (face darker still): "Of course not sir, I'm the car park attendant. I had to charge you the £40, it's says so on the board".
Me: "But.. but I trusted you with my car! I relied on you! I had confidence in you, you've parked the car for me before and this never happened! And why are you scowling so, it's me who should be upset??"
Him (shaking his head): "You really shouldn't have asked me to park the car sir, this would never have happened."
Me: "I didn't know there was only an unauthorised place! I won't pay you!"
Him (smiling): "Your wallet was in the car sir, I took the £60 you owed..."

Scenario 2

Same as before, attendant decides not to park car 'unauthorised, parks on kerb, car is towed but he took the £60 just in time...

Not as funny as yours cnjw, but that's probably because it's has a chilling familiarity...

Shudder!

[askl]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Cluching at straws - maybe, but back to the subject of;
NatWest's charges 01 - 03 declared as capable of being penalties by Andrew Smith in Jan '09.
Supreme Court's decision didn't include RBS and NatWest, therefore presumably Andrew Smith conclusion stands and if Andrew Smith thought they were penalties, so would a typical customer?

[natweststaffmember]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Justice Smith said that they were not incapable of being penal rather than they were penal.

[askl]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Then they are capable of being penalties.

What is then needed to establish that they were penalties ... is it that the charge exceeded the cost to the bank, or what?

[witch1]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Early Day Motion

EDM 283

BANK PENALTY CHARGES
30.11.2009


Cable, Vincent
That this House notes the judgement of the Supreme Court that banks and building societies were legally entitled to charge penalty fees for unauthorised overdrafts; further notes that the Supreme Court conclusion was not a judgement on the fairness of such charges; condemns the disproportionate penalty charges levied on customers by banks and building societies; welcomes the Office of Fair Trading's assessment that such charges are unfair; urges the Office of Fair Trading to continue to pursue this issue using the other powers available to it; calls on the British Bankers' Association to amend the Banking Code to make explicit the industry's principles on service charges; further calls on the Government to review existing pricing structures; and further calls on banks and building societies to voluntarily refund unfair and disproportionate penalty charges.masbeagle

[askl]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

I'm trying to understand why before this case, we as a nation commonly referred to and thought of default charges as "penalty charges".

I read in Nattie's thread in CAG that the NatWest charge increased in the 90s. http://www.consumeractiongroup.co.uk...ges-guide.html

In July 1990 the charge was £12 to cover the cost of administering returned cheques. This seemed almost believable.

By July 2000 the charge increased from £12 to £27.5 ("As dealing with unpaid cheques means extra administrative work, I have charged a fee of £27.50 to your account to cover these costs") and in 2000 it increased again to £38.
Yet admin costs came down - especially with computerisation. So we no longer believed that this was the admin cost but a punitive charge.......

[Centium5000]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Precisely. So either:

1. There was misrepresentation on the part of the banks that they were charging penalties as opposed to contracting to provide services, or
2. The bank were aware of our 'mistake' in thinking these were penalties but didn't correct this as it was to their benefit. Or,
3. The bank thought they were penalty charges, realised they could argue they were services and lied to the court about their intentions.

In any case, we were acting on a false, however reasonable assumption that these were related to costs rather than a service charge and therefore it wasn't part of the consideration in exchange for the contracted 'package'.

Id aver we can't then be held to pay for these 'services' under contract.

[EXC]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Then they are capable of being penalties.

What is then needed to establish that they were penalties ... is it that the charge exceeded the cost to the bank, or what?

A penalty under common is a charge made to cover the cost to the supplier (in fact a 'genuine pre-estimate of the cost) in the event that the customer breaches the terms of the contract and no more.

In his declaration on penalties Justice Smith ruled that - apart from Nat West's 2001 T&Cs - the charges were not capable of being penalties in law as no breach of contract occurs and the charges were for 'events' that were provided for in the contract.

The current status of the Nat West 2001 contract charges is that they ''are not incapable'' of being penalties.

So if you were to seek a refund of the charges using the penalty argument a court would need to establish:

a) If a breach of contract occurred in order to establish that the associated charge is a penalty charge.

b) That the amount of the penalty charge exceeded a genuine pre-estimate of the cost to the supplier of administering the breach.

[askl]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

High Court Judgment - Bank charges - 21 January 2009

"I consider first the NatWest 2001 conditions. The Relevant Term is the words that I have underlined in the following provision, which is included against the side-note "Using your Card": "You must only use your Card in accordance with these Conditions of Use and any operating instructions including the User Guide which we or our agents give you at any time. Such instructions form part of the contract between you and the Bank … You must not use your Card to go overdrawn on your Account unless we have previously agreed this with you. If you do go overdrawn without our agreement, you will be liable to pay interest for each day you are overdrawn on the total amount of the unauthorised borrowing together with our normal account charges. Full details of the interest and charges can be obtained from any branch of the Bank or from the reverse of your Account statement …"

The breach of contract is presumably occurs when you go overdrawn with your card.

[charitynjw]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Another bit of grist to the mill?

Misrepresentation Act 1967
1967 c.7
An Act to amend the law relating to innocent misrepresentations and to amend sections 11 and 35 of the Sale of Goods Act 1893.
[22nd March 1967]

1. Removal of certain bars to rescission for innocent misrepresentation. Where a person has entered into a contract after a misrepresentation has been made to him, and—
(a)
the misrepresentation has become a term of the contract; or
(b)
the contract has been performed;
or both, then, if otherwise he would be entitled to rescind the contract without alleging fraud, he shall be so entitled, subject to the provisions of this Act, notwithstanding the matters mentioned in paragraphs (a) and (b) of this section.
2. Damages for misrepresentation. — (1) Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made the facts represented were true.
(2) Where a person has entered into a contract after a misrepresentation has been made to him otherwise than fraudulently, and he would be entitled, by reason of the misrepresentation, to rescind the contract, then, if it is claimed, in any proceedings arising out of the contract, that the contract ought to be or has been rescinded, the court or arbitrator may declare the contract subsisting and award damages in lieu of rescission, if of opinion that it would be equitable to do so, having regard to the nature of the misrepresentation and the loss that would be caused by it if the contract were upheld, as well as to the loss that rescission would cause to the other party.
(3) Damages may be awarded against a person under subsection (2) of this section whether or not he is liable to damages under subsection (1) thereof, but where he is so liable any award under the said subsection (2) shall be taken into account in assessing his liability under the said subsection (1).

[F13. Avoidance of provision excluding liability for misrepresentation. If a contract contains a term which would exclude or restrict—
(a)
any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or
(b)
any remedy available to another party to the contract by reason of such a misrepresentation,
that term shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated in section 11(1) of the M1Unfair Contract Terms Act 1977; and it is for those claiming that the term satisfies that requirement to show that it does.]

[charitynjw]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

>Cento - post # 603


(Him (face darker still): "Of course not sir, I'm the car park attendant. I had to charge you the £40, it's says so on the board".
Me: What board?
Him: The board over there - 2 miles down the road, hidden behind the bushes!)

The only cold comfort I can take from your excellent analogy is; if there was 60 quid in the wallet, it wasn't my wallet!!

cnjw :cry:

[natweststaffmember]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

Another throw it into the mix kinda question. Does the OFT v. the Banks actually help Business claimants under UCTA 1977?

[charitynjw]

Re: OFT v Banks Judgment 25th November 2009 - 9.45am- Supreme Court - Test case

The Act renders terms excluding or limiting liability ineffective or subject to reasonableness, depending on the nature of the obligation purported to be excluded and whether the party purporting to exclude or limit business liability, acting against a consumer.
It is normally used in conjunction with the Unfair Terms in Consumer Contracts Regulations 1999 (Statutory Instrument 1999 No. 2083),[1] as well as the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982.



Definition of consumer and business

Business. s 1(3), The Act only applies to "liability for breach of obligations or duties arising (a) from things done or to be done by a person in the course of a business (whether his own business or another's); or (b) from the occupation of premises used for business purposes of the occupier". s14, Includes any government department.
Consumer. s 12[2], A party deals as a consumer if
s12(1)(a), He is not in the course of a business and does not hold himself to do so.[3]
s12(1)(b), the other party is in the course of a business.
s12(1)(c), In Sale of Goods contract, the goods are of a type "ordinarily supplied for private use or consumption" (s12(1A), this subsection does not apply to individuals)
s12(2), A party is not a consumer if dealing at an auction where he has the opportunity to attend in person or is not a natural person buying auction.
s12(3), Burden is upon the party purported to be acting in the course of a business to show that either he is not in the course of a business or that the other party is otherwise not a consumer

[edit]Definition of reasonableness

Section 11 provides some guidance but most development has been in common law
Schedule 2 gives guidelines specifically to ss 6(3), 7(3), 7(4).
Common Law
Stewart Gill Ltd v Horatio Myer & Co Ltd[4] provides that reasonableness is assessed at the time of contract; and that the burden of proof is upon the party purporting to have excluded liability.
Levison v Patent Steam Carpet Cleaning Co Ltd[5] provides that clarity and preciseness will raise the reasonableness of a term; and vice versa. See also Stag Line Ltd v Tyne Ship Repair Group Ltd[6] as to small print (literally; size-wise).
Smith v Eric S Bush[7]. Lord Griffith provides 4 points that may be considered... (see application in St Albans City and District Council v International Computers Ltd.[8]).
Equality of Bargaining Powers.
How practical was it to obtain independent legal advice regarding the term?
How difficult is the task being for which liability is being excluded?
What are the practical consequences of ruling that a term is unreasonable?
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References

^ as amended by the Unfair Terms in Consumer Contracts (Amendment) Regulations 2001 (Statutory Instrument 2001 No. 1186) which merely further defined a 'Financial Service Authority'
^ As amended by the Sale and Supply of Goods to Consumers Regulations 2002
^ Holding himself is important as an otherwise consumer may attempt to act in the guise of a business for tax benefits or to shop at wholesale stores
^ [1992] 2 All ER 257
^ [1977] 3 WLR 90
^ [1984] 2 Lloyd's Rep 211
^ [1990] 1 AC 831
^ (1996) The Times 14th August