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EXC
Day 11
EXC
Day 11
Brian Doctor spent most of today finishing off his submission on the subjects of good faith, PIL and penalties. The good news is that he had by far his best day in terms of performance and delivery. He was in a different class than anytime last week. I’m not too sure where he went at the weekend but I want to go there. He was relaxed, concise and looked well prepared. Go Doc!
Finishing off on good faith from Thursday he said that the wording of Justice Smith’s declaration on good faith would have ’’far reaching effects on County Court litigation’’. He said that regulation 61 - assessment of good faith of terms - should take in to account subsequent amendments to T&Cs if they effect the assessment of fairness and also that the regulations could apply to pre 1994 contracts if contracts are subsequently amended.
He referred to a quote from Rabinowitz that ‘’foreign commentary (on the case) is unreal and in cloud cuckoo land’’. Doctor said that this comes from places ‘’where good faith is an everyday concept’’. Then quoting from Lord Bingham in the First National Bank case Doctor said that it is not just the literal terms used in contracts that should be assessed but ‘’their likely effect’’. The judge went even further, ‘’it’s more than that’’.
Next on the agenda was plain intelligible language. Apparently the ‘clarification’ document that has been bouncing between the OFT and the banks since the start of the case has been finalised and doctor handed copies out to the banks and the judge.
He said that the OFT’s skeleton on PIL may have been overstated. ‘’Just because something is not in PIL doesn’t mean it’s unfair’’ and that ‘’PIL and fairness need to be considered separately’’.
He gave an example of how PIL doesn’t work: If you order from a supplier and the T&Cs state that the price will be decided on delivery of the goods, then it’s not in plain intelligible language even though the meaning of the contract is understandable.
Doctor said that there was uncertainty in the order in which the banks processed payments. The judge reminded him that the T&Cs stated that the order of payments was discretionary but Doctor said that in banking law practice, several payments processed on the same day should begin with the smallest payment first.
Referring to the OFT’s ready reckoner of charges he said that Abbey could repeat charges indefinitely even though the bank had pleaded this would not happen in practice, so he questioned that the terms did not make this clear. There was also uncertainty in the enforcement of charges and he made reference to the many times that T&Cs stated ‘there MAY be a charge.
He said that many of the banks accepted that they may lead to uncertainties. But the bank’s claims that contracts are too complicated to be in PIL and would require ‘’a complicated payments manual’’ are self inflicted.
He pointed out the bank's enviable position of being able to deduct charges from accounts rather than having to invoice them like the rest of industry made the charges more difficult to query and that the banks ‘’don’t benefit from the discipline of enquiries’’.
Their was a discussion with the judge about Doctor’s views on some terms that Doctor considered didn’t amount to a term. The judge said that the OFT’s POCs defined them as terms and as such they can’t be exempted ‘’if the OFT don’t consider them as terms.’’
On penalties he started by saying the context in which are ruled ‘’is important to the County Courts as penalties arise in all claims’’.
On the bank’s argument that the regulations ousted common law, he said ‘’the argument cannot succeed as the directive is the minimum. There is nothing in the regulations that says it supersedes common law. There is no reason why they can’t run hand in hand’’. The judge seemed to agree and said ‘’I’ll be asking Milligan how this displacement occurs’’.
Another discussion began about the exclusion of historical terms and conditions in the penalties argument. Doctor asked the judge to reconsider historical T&Cs and the judge indicated that he may do this ‘’as a supplementary judgement’’.
Doctor said that phrases like Barclays' ‘’you must not…’’ and that a guaranteed cheques ‘’must not exceed the funds available’’ clearly suggested a breech of contract. He jokingly said ‘I don’t want to pick on Barclays but they’re all much the same’’ and the judge laughed.
Justice Smith asked Doctor an interesting and possibly revealing question: From the consumers point of view, if the OFT’s argument on penalties is upheld, would it be better for the OFT to consider penalties under common law or UTCCR? Doctor, who looked as though Christmas might have come early, said that he’d get back to the judge once he’d consulted the OFT.
He finished off on disguised penalties making an analogy of a video rental which is a pound a day for the first 7 days and then £50 for the eighth day.
RBS QC Laurence Robinowitz began his reply shortly before the hearing ended. Interestingly, he ended by informing the court that the FSA had issued their document on PIL which the judge had asked the FSA to do. As a financial services regulator, what on earth are the FSA doing by going through the defendants to announce it?
It was good to see Bob Egerton and Budgie at the hearing. Both Bob and Budgie enjoy nothing more than taking banks to court.. Budgie told me more than a few times ‘’I love it’’.
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