Re: OFT WIN
You are basically correct Froggy.
Halliday lost the argument to be awarded the banks rate of interest by virtue of an implied mutual or reciprocal term. The Judge decided that no such term could be implied. It is also not 100% clear from the judgment what he did actually get but he certainly got his charges back plus some form of interest as HBOS complicated the overall situation by making various goodwill payments through the course of his claim.
More recent claims for Compound interest are therefore not relying on this argument as they would be doomed to failure. There are other arguments and case law ( Sempra + others ) that may be utilised but I guess that this thread is not the place to be discussing such matters.
Besides I will get bashed by Ame....LOL
For info
No implied term for compound interest on refund of bank charges
From 1979 to 2006 Mr Halliday had a current account with HBOS ("the Bank"). From time to time
the Bank debited this account with charges of various kinds, for example charges for exceeding his
arranged overdraft limit. Mr Halliday contended that these charges were unlawful and issued a
claim against the Bank in Bury St Edmunds County Court.
Having taken a commercial view of the case, and without any admission of liability, the Bank paid
Mr Halliday an amount of money to satisfy his claim in full. That amount included money not only in
respect of the charges levied but also in respect of interest charged to Mr Halliday when his account
was overdrawn. The sum also included interest, at a simple rate of 8%, on the charges and interest.
The Bank acknowledged that this amount was higher than a court might have awarded but wished
to avoid any argument on the issue.
The Bank then successfully applied to strike out Mr Halliday's claim on the basis that there were no
outstanding issues for the court to deal with. Mr Halliday was however given leave to appeal on the
question of whether he was entitled to compound interest on the sums which had been deducted
from his account and at a rate of 28.8%, being the rate which the Bank was entitled to charge on
unauthorized withdrawals.
On his appeal, Mr Halliday argued that if he was not entitled to the same rate of interest as the
Bank then his contract with the Bank would be unfair under the Unfair Terms in Consumer
Contracts Regulations and the Bank would not be complying with the principles of "fair dealing" as
set out in the Banking Code and the FSA Handbook. He also argued that a term should be implied
into his contract with the Bank that he was entitled to the same rate of interest as the Bank as a
matter of law on the basis of the principle of "reciprocity" and in line with custom and usage of
banker/customer contracts. He further argued that there was a policy argument for implying such a
term, as customers on the edge of their credit limit would face higher interest rates when they
sought to borrow money to make good deductions made by banks.
The judge dismissed Mr Halliday's appeal. While courts may imply terms into banker/customer
relationships this will be on the basis of necessity and/or usage or custom, not fairness. Even when
a term is implied by law there still needs to be some "necessity" for such an implication, some "gap"
to be filled in the contractual relations between the parties. There was no "gap" here as Mr Halliday
had been repaid with compound interest and also had the right to claim statutory interest at 8%
from the court, as would any other claimant. If the law was to be criticized it would be a general
criticism of a claimant's entitlement to interest not something that could be remedied by implication
of a term. Further it was difficult to see how it could be right to impose on a bank a rate of interest
which the claimant had argued was punitive as against himself.
Originally posted by Froggy
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Halliday lost the argument to be awarded the banks rate of interest by virtue of an implied mutual or reciprocal term. The Judge decided that no such term could be implied. It is also not 100% clear from the judgment what he did actually get but he certainly got his charges back plus some form of interest as HBOS complicated the overall situation by making various goodwill payments through the course of his claim.
More recent claims for Compound interest are therefore not relying on this argument as they would be doomed to failure. There are other arguments and case law ( Sempra + others ) that may be utilised but I guess that this thread is not the place to be discussing such matters.
Besides I will get bashed by Ame....LOL
For info
No implied term for compound interest on refund of bank charges
From 1979 to 2006 Mr Halliday had a current account with HBOS ("the Bank"). From time to time
the Bank debited this account with charges of various kinds, for example charges for exceeding his
arranged overdraft limit. Mr Halliday contended that these charges were unlawful and issued a
claim against the Bank in Bury St Edmunds County Court.
Having taken a commercial view of the case, and without any admission of liability, the Bank paid
Mr Halliday an amount of money to satisfy his claim in full. That amount included money not only in
respect of the charges levied but also in respect of interest charged to Mr Halliday when his account
was overdrawn. The sum also included interest, at a simple rate of 8%, on the charges and interest.
The Bank acknowledged that this amount was higher than a court might have awarded but wished
to avoid any argument on the issue.
The Bank then successfully applied to strike out Mr Halliday's claim on the basis that there were no
outstanding issues for the court to deal with. Mr Halliday was however given leave to appeal on the
question of whether he was entitled to compound interest on the sums which had been deducted
from his account and at a rate of 28.8%, being the rate which the Bank was entitled to charge on
unauthorized withdrawals.
On his appeal, Mr Halliday argued that if he was not entitled to the same rate of interest as the
Bank then his contract with the Bank would be unfair under the Unfair Terms in Consumer
Contracts Regulations and the Bank would not be complying with the principles of "fair dealing" as
set out in the Banking Code and the FSA Handbook. He also argued that a term should be implied
into his contract with the Bank that he was entitled to the same rate of interest as the Bank as a
matter of law on the basis of the principle of "reciprocity" and in line with custom and usage of
banker/customer contracts. He further argued that there was a policy argument for implying such a
term, as customers on the edge of their credit limit would face higher interest rates when they
sought to borrow money to make good deductions made by banks.
The judge dismissed Mr Halliday's appeal. While courts may imply terms into banker/customer
relationships this will be on the basis of necessity and/or usage or custom, not fairness. Even when
a term is implied by law there still needs to be some "necessity" for such an implication, some "gap"
to be filled in the contractual relations between the parties. There was no "gap" here as Mr Halliday
had been repaid with compound interest and also had the right to claim statutory interest at 8%
from the court, as would any other claimant. If the law was to be criticized it would be a general
criticism of a claimant's entitlement to interest not something that could be remedied by implication
of a term. Further it was difficult to see how it could be right to impose on a bank a rate of interest
which the claimant had argued was punitive as against himself.
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