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EXC
EXC
Day 12
Rabinowitz kicked off by replying to the OFT’s ‘’narrow interpretation’ of the concept of ‘service’ in which the regulation 62b talks about goods and services supplied in exchange for a price. He said that ‘service’ should be understood in a wider context as in the European meaning. He relied on a European Court of Justice case which although dealt with what tax category a restaurant would fall in - service or goods - the judgement suggested that all preparatory acts like laying the table would be included in the overall price of the meal and just like bank charges the various services make up the charge.
‘’Banks go through a great deal when presented with a payment’’ and he went through the various stages. All payment instructions were processed and then considered. When a payment is made while in debit, the payment is ‘granted’. All this, he said, ‘’involves substantial and expensive technology, infrastructure and human involvement’’. But the judge said that ‘’the expense is irrelevant’’.
Rabinowitz continued that when a payment instruction is received when in debit the instruction becomes ‘’a purported instruction or request’’. The judge asked him ‘’is that formulation what you explain to your customers?’’, Rabinowitz said that ‘’it is what the contract implies’’. The judged asked, if in the event of a non paid item, notification letters were issued and if so were they part of the service.
Rabinowitz said that not all banks sent them but for those who did it formed part of the service. The judge asked Rabinowitz if RBS sent the letters and somewhat surprisingly, the lead RBS QC, who is understood to be charging in excess of £10000 a day, didn’t know.
He accepted that services must be in exchange for a price. The judge questioned if this was a departure from his ‘price for an overall package’ argument but Rabinowitz said it was ‘’an alternative argument’’ and that the OFT did not offer an explanation as to what the charges were for. ‘’People don’t pay charges for nothing’’. The judge asked him if he agreed with the OFT’s view that the regulations require charges to be clearly identified.
‘’No’’ Rabinowitz said.
Before finishing Rabinowitz agreed what OFT’s Chief Executive John Fingleton said about the possibility of the change to the way banking is structured. ’’I don’t know if you saw him on the Money Programme?’’ The judge replied ‘’ I did but so what?’’. Rabinowitz warned of the end of the free banking while in credit model.
Just before he sat down Rabinowitz through a spanner in the works. He referred to Brian Doctor’s submission yesterday that the issues of good will and PIL should apply to T&Cs going back to 1994 and even before. He said the banks were under the impression these issues would be based on current T&Cs alone and that if the OFT had it’s way, the banks would need more time to respond. He said the backdrop to this is the ‘’enormous implications it could have to people up and down the country in County Court litigation.’’ The judge asked Rabinowitz to ‘’caucus’’ the banks on there views but that ultimately it was a decision for the judge.
The banks reply to the OFT on PIL was the responsibility of HBOS QC, the unfortunately named Robin Dicker. He said that under English law, banks are not obliged to provide information as to how a contract works in practice. He said that current account T&Cs ‘’are simple arms length contracts’’. But Justice Smith said ‘’I’ve got to realistically consider that if you go to open a bank account it’s counter intuitive to think you sit and read the T&Cs while the bank manager taps his fingers’’. Dicker reminded the judge that the Banking Code allowed for a cooling off period.
All though he’s not yet finished, the rest of his PIL reply was quite tedious going with interpretations of case law judgements and the preparatory documents of European directives and UK regulations.
Before they adjourned for the day, Milligan hit the judge with a bombshell. He wanted the judge to ‘give an indication’ as to his recommendation to County Courts by the end of the hearing. He was effectively asking Justice Smith to make his recommendation before he had even considered his judgement on the hearing. Milligan explained that the duration of many of the current stays end immediately after the hearing finishes. The judge conceded he hadn’t realised this but cast some doubt as to if this could be achieved but has yet to make a decision.
The judge is very keen to conclude the hearing this week and the following schedule has been agreed by both parties: Dicker will have an hour or so to finish on PIL in the morning and then Milligan will give the banks reply on penalties. The rest of the banks will give their replies to the OFT’s reply before Brian Doctor finishes by giving his reply to the banks replies. Got it?
The hearing won’t sit on Thursday due to Doctor being in court on another case and as Justice Smith has another court appearance at 11.00 on Friday the hearing must finish by 10.45 and will start at 8am. Although he hasn’t given any indication when a judgement will be reached the judge suggested that when the judgement is handed down they should schedule in a case management conference. Milligan asked the judge for at least 7 days between the written summary of the judgement being provided and the handing down and CMC but the judge said that due to the possibility of a leak, 7 days would be ‘’pushing it’’
So it looks like the hearing could be finished before lunchtime on Friday but I can’t help thinking that with so much yet to cover and at least 2 major issues still outstanding, it’s going to be a bit tight to say the least.
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