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

[Amethyst]

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

lol save you a job

The Sumption quotes - can you put up the Lords responses to it and the relevant part of the judgment as it does later make clear that this was not considered an issue and no misrepresentation had taken place in the context in which they were studying the terms.

[EXC]

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

lol save you a job

The Sumption quotes - can you put up the Lords responses to it and the relevant part of the judgment as it does later make clear that this was not considered an issue and no misrepresentation had taken place in the context in which they were studying the terms.

I assume you mean the Crow quotes. There was no response from the Lords to what Crow said above but his reference to the point Lord Phillips was making is, I think, this:


LORD PHILLIPS: That example illustrates a point, which is you can have a clause which has precisely the same effect and you can describe it as a damages clause for default or as the price of exercising an option.

MR CROW: Absolutely.

LORD PHILLIPS: In reality, it will be precisely the same animal. Ergo, I was looking back at the discussion at first instance on whether these were penalty clauses, it seemed to turn on the question whether at common law it is only a penalty if you have to pay it as liquidated damages for breach.

MR CROW: Yes.

LORD PHILLIPS: Query whether the common law is delimited in that way and you can get around the common law by simply describing a penalty for breach as the cost of exercising an option.


The relevant part of the (Smith) judgment - paragraphs 62 & 63 in full:


Moreover, until recently all of the Banks included in their documentation statements indicating that unarranged overdrafts on current accounts are not permitted (and indeed Nationwide still does so). It does not necessarily follow that if a customer gave a payment instruction that would cause his account to be overdrawn, he would be in breach of his contract with the bank, but the OFT argues that this indicates the true nature of a current account, how the Banks regard overdrawing in this way and how they encourage customers to look upon unarranged overdrafts. I again confine myself to two examples of such statements (although not all the Banks included such assertive language in their documents). Barclays said in its standard terms and conditions of May 2002 (which were used until replaced by the current terms in February 2007), “You must keep your account(s) in credit unless we agree an overdraft with you”. In its standard terms and conditions of January 2007 Abbey included this clause:

“An unauthorised overdraft occurs if without our agreement you overdraw your Account or exceed the limit of an overdraft which we have agreed. If you overdraw your Account when we have not given you an overdraft you are in breach of these Conditions and must immediately pay sufficient money into your Account to put it into credit, taking account of any interest and charges you will have incurred. Similarly, if you exceed the limit of an overdraft which we have given you, you must immediately pay sufficient money into your Account to bring yourself within your overdraft limit.”

The OFT also submits that the Banks make no active attempts to publicise unarranged overdrafts or to deploy them in marketing activities as a facility available to customers with current accounts. I accept that this is generally the position, but it is not invariably so: for example (although admittedly this statement is rather more emphatic than some others), Abbey has a leaflet available in its branches called, “The Abbey Bank Account – the facts”, which includes this under the heading “The account that’s fair”:

“If you find yourself spending a bit more than you thought and accidentally go over your Advance Overdraft limit, we guarantee to give you an Instant Overdraft of up to £50 (Service Fees will be payable). This also applies if you don’t have an Advance Overdraft.”

[PocketTheDifference]

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

Oh Well at least they won somthing using our money...

Royal Bank of Scotland has been fined £28.6m by the Office of Fair Trading (OFT) after breaking competition law. The fine was reduced from £33.6m to reflect RBS's admission and agreement to co-operate over the breaches, the OFT said in a statement.
The OFT began its probe after a tip-off from Barclays Bank that RBS had passed it confidential information about the pricing of loans.
RBS broke the rules between October 2007 and February or March 2008.
The OFT found that individuals in RBS's Professional Practices Coverage Team gave counterparts at Barclays details of the pricing of loans to large professional services firms, such as solicitors, accountancy, and property companies.
Barclays used the information to set its own prices, but escaped a fine because it reported the matter to the OFT.
Under OFT rules, Barclays' tip-off to the OFT means it will get immunity from prosecution. The OFT said that provided Barclays continues to co-operate it "is not expected to pay a fine in this case".
__________________

[Amethyst]

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

Just as a reminder to people to make SURE their claims are PERSONAL not generic.


Justice Andrew Smith

“the Directive and the 1999 Regulations are concerned with the fairness of the individual contract between the seller or supplier and a particular consumer and are not directly concerned with whether seller or supplier treats fairly consumers as a body” ([2008] EWHC 875; [2008] 2 All E.R. (Comm) 625 at [415]).



Mindy Chen-Wishart

On this point, the judge's observation (at [415]) is absolutely critical:

“The Directive and the 1999 Regulations are concerned with the fairness of the individual contract between the seller or supplier and a particular consumer and are not directly concerned with whether seller or supplier treats fairly consumers as a body.”

Good faith and significant imbalance “ to the detriment of the consumer” under reg.5(1) must be judged on the micro-level of the individual; fairness at the macro-level, in the sense that banks may not be over-profiting overall, is strictly irrelevant.

[Amethyst]

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

Was just reading something about Lloyds - do we have a transcript of submissions from Lloyds and the OFT on 9 December 2008 ?

However, because at the relevant time the contracts between Lloyds TSB and its customers were not incorporated in written form, I am not at present persuaded that I should make a declaration in general terms on the assumption that the contracts between the Bank and its current account customers provided that the Bank was entitled to levy all the charges set out in the Bank’s leaflets. Moreover, before making a declaration in these circumstances I should wish to hear submissions about the decision of Mr Justice Morgan in The Office of Fair Trading v Foxtons Limited, [2008] EWHC 1662 (Ch), which was decided after the hearing before me. I shall therefore invite further submissions from the OFT and Lloyds TSB.

I gave a judgment on 8 October 2008 (my “October judgment”), [2008] EWHC 2325 (Comm). In that judgment I invited further submissions to assist me to decide whether to make declarations in relation to (i) Abbey’s May 2005 conditions, (ii) Relevant Terms of Lloyds TSB, and (iii) Relevant Terms of RBSG. I heard further submissions on 9 December 2008.

In the judgment it does sound like they were just written submissions but it does state he HEARD further submissions...

Lloyds TSB
9. As I explained in my April judgment (at para 240) Lloyds TSB differed from the other Banks in that before November 2007 it did not have full written terms for its current account services. It seeks declaratory relief about terms in leaflets that set out “Terms and Conditions” issued for current account customers who had a bank card governing use of the card. They were what I have called the “Lloyds TSB 2007 card conditions” and the conditions in earlier versions of the leaflet. (In this judgment, for the sake of simplicity I refer only to the Lloyds TSB 2007 card conditions.)

10. As I explained in my October judgment, as in the case of Abbey, my concern about making the declaration sought by Lloyds TSB was not that the Lloyds TSB 2007 card conditions were capable of being penal if all the provisions set out in the leaflet were incorporated into the contracts that Lloyds TSB had with its current account customers (or with those customers who had a bank card). It seemed to me that because Lloyds TSB did not have full written terms, particular consideration needed to be given to Lloyds TSB’s contracts with its customers before any declaration was made, and in particular that I should not exercise my discretion to make any declaration that might appear to determine whether the Lloyds TSB 2007 card conditions were incorporated into contracts. After the hearing in July 2008, Mr. Justice Morgan gave his judgment in The Office of Fair Trading v Foxtons Limited, [2008] EWHC 1662 (Ch), which had some relevance to this. He identified difficulties inherent in the court granting relief upon what Lord Steyn described in the First National case ([2002] 1 AC 481 at para 33) as “pre-emptive or collective” challenges under the 1999 Regulations, and comparable questions might arise here. I therefore invited further argument.

11. I have been assisted by further written submissions from Mr. Bankim Thanki QC on behalf of Lloyds TSB and from Mr. Jonathan Crow QC representing the OFT. They persuade me that, given the nature of this litigation and the purpose to provide guidance that might assist the disposal of claims made by individual customers against the Banks, I should make a declaration in terms that make it clear that it does not prejudice the position of any individual customer who wishes to raise an additional question as to the terms incorporated into his contract with Lloyds TSB. As Mr. Thanki recognised, the determination of a question of this kind would require what he called “a fact-sensitive and customer-specific enquiry”. This in itself is not a reason to refuse a declaration: see the judgment in the Foxtons Limited case (loc cit) at para 64. Indeed, the customers of other Banks who generally had written terms with their current account customers might properly raise a question of incorporation of terms in relation to the particular circumstances of their case. In the end it is a question of degree: Lloyds TSB customers might have more scope to raise a question of this kind. But I have concluded that I should nevertheless give Lloyds TSB declaratory relief.

12. The precise terms of the order have been discussed between the parties, and it appears likely that they will now be agreed without difficulty. I am content to adopt the form of order that I understand from a note that I have received since the hearing both Lloyds TSB and the OFT suggest would be satisfactory, using language of this kind:
“The declaration set out in paragraph [ ] of this order applies to the terms which make provision for the charges identified above to the extent that any contract between Lloyds TSB and a personal current account customer included the terms and conditions contained in the documents below or any of them (as applicable from time to time). ”

OFT V Foxtons para 64

Clause 2.14.4 does not suffer the same fate as clause 2.14.3, in my view. I think that the error would not, by itself, render an otherwise plainly worded and intelligible clause one which was not intelligible (or plainly worded). It is not every mistake in expression that is going to have that quality. The consumer protection purposes of Regulation 6(2) (and Regulation 7, which also has a requirement for plain and intelligible language) does not require an absolute and pedantic rigour. That error seems to me to be one which will be obvious to the consumer, which does not, by itself, lead to a failure to fulfil the plain intelligible language requirement

[EXC]

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

Just as a reminder to people to make SURE their claims are PERSONAL not generic.


Justice Andrew Smith

“the Directive and the 1999 Regulations are concerned with the fairness of the individual contract between the seller or supplier and a particular consumer and are not directly concerned with whether seller or supplier treats fairly consumers as a body” ([2008] EWHC 875; [2008] 2 All E.R. (Comm) 625 at [415]).



Mindy Chen-Wishart

On this point, the judge's observation (at [415]) is absolutely critical:

“The Directive and the 1999 Regulations are concerned with the fairness of the individual contract between the seller or supplier and a particular consumer and are not directly concerned with whether seller or supplier treats fairly consumers as a body.”

Good faith and significant imbalance “ to the detriment of the consumer” under reg.5(1) must be judged on the micro-level of the individual; fairness at the macro-level, in the sense that banks may not be over-profiting overall, is strictly irrelevant.

Yes and this was put to bed during the HoLs hearing:

MR SUMPTION:
''As I understand it, this is now substantially common ground, my learned friend having confirmed shortly before the short adjournment that the directive is concerned with imbalance within a contract as between the parties to that contract, and not with, so to speak, the structure of an industry or a bank's clientele en bloc.''


And this is where I think Mike Dailly has got it completely wrong, as demonstrated when he appeared on BBC Moneybox:

DAILLY: ''Yes. I mean I think the way a Regulation 5 challenge is going to develop is that what you’ve got is a charging structure which requires 12 million customers in the UK to cross-subsidise 42 million other customers, so that they will effectively have their banking costs paid for by a minority of customers. Now when you entered into your banking contract, I think it’s fair to say, Paul, the banks did not explain to people that this is what charges we’re actually paying for. And of course Money Box listeners will be well aware that over the years the banks have been very evasive about what bank charges are about, and I think we’ve got a situation now where there’s quite clearly an imbalance. And the fact that the banks never explained to customers that they would be paying for everyone else’s services is quite important, I think.''

[EXC]

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

Was just reading something about Lloyds - do we have a transcript of submissions from Lloyds and the OFT on 9 December 2008 ?



In the judgment it does sound like they were just written submissions but it does state he HEARD further submissions...

It couldn't have been the HoLs hearing as the final day was the 5th December.

[Dougal16T]

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

Good morning everyone

......sorry to 'but' in however it was the 5th December 2009.

Best wishes to all

Dougal

[EXC]

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

Good morning everyone

......sorry to 'but' in however it was the 5th December 2009.

Best wishes to all

Dougal

You're right.

I do have the transcript of a CMC held on 21 Jan 09 which makes a reference to a ''hearing'' on 9th December - presumably in 2008.

[EXC]

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

Yes the declaration hearing of 21 Jan 09 - below - make several references to submissions made at hearing on 9 December, the transcripts of which we don't seem to have.

Shall I see if I can get hold of them Ame?

[Amethyst]

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

I thought the submissions may help with the case against Lloyds for having no terms and conditions and thus no term allowing them to vary the terms of the account (and thus the charges/charging structures). The declarations and judgments by the Judges are very clear that it is open to challenge.

[EXC]

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

I'll try but I do vaguely remember during either the first instance hearing or CMC that J Smith said something about the possibility of holding a ''discreate'' hearing, not open to the public, and this could have been it. So if it is the transcripts won't be available.

[EXC]

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

Someone (don't know who) put in this FoIA request to the OFT about the test case and beyond. Most of the information requested was already available on the OFT site but it does disclose that the bank's court fees in making the HoLs/Supreme Court appeal were a mere £570 - which compared to the tens of billions they stood to lose must represent the best 570 sobs anyone has ever spent.

Also, love the way the OFT refer to Bob Egerton as 'Bank Buster'.

http://www.oft.gov.uk/shared_oft/fre...1_May_2010.pdf

[Shazzaw]

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

Hi all,

Just one question - are the chances of reclaiming bank charges now at an end or is there any hope still left?

I'm assuming the latter but it would be nice to know just so some finalisation can be put on this.

And again many thanks to all those whose advice I have sought and I know have put so much effort into the campaign.

shazza

[EXC]

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

There's always hope but I think that's all we've got now. If I had to put money on it I'd say it's now at an end.