Tweet
Hi everybody,
I am probably now in a real minority as I started a claim for unfair charges in late '06 which is still in progress.
Having been treated so terribly by the Bank in 2000-2001 which nearly led to bankruptcy (in fact the bank recommended it would you believe!) I was of course compelled to try and reclaim the charges - amounting to over £14000 at the time.
Since the OFT test case the bank has tried to strike out the claim but I have tried hard to defend this by collecting various snippets of information and reading up on contract law applicable at that point in time and submitting a defence against the strike out.
The result of this is that the case has just been moved from my local county court to the larger local city court and I have been asked to exchange skeleton arguments.
I have changed tack in light of the OFT and I now focus my legal argument on the fairness of contract rather than the charges levied as you can see from the defence against strike out below.
CLAIMANT’S RESPONSE TO
DEFENDANT’S APPLICATION & STRIKE OUT JUDGEMENT
_______________________
Application & Judgement
The Defendant has made an application for the Claim to be struck out and that Summary Judgment be entered for the Defendant on the grounds that the Claimant has no reasonable grounds of success. The Claimant has been actively seeking an out of court settlement, response to which has been prolonged and has finally been rejected by the Defendant. During this time a strike out notice has been received from the Court.
The Background
1. In the recent case of The Office of Fair Trading (Respondents) v Abbey National plc & Others [2009] UKSC 6, the Supreme Court was extremely careful to say that their Lordships’ judgment did not “close the door on the OFT’s investigations and may well not resolve the myriad cases that are currently stayed in which customers have challenged [Bank Charges].” (para.61 of the Supreme Court judgment)
2. What is more, their Lordships also confirmed that a number of challenges could still be brought under Regulation 6(2)(b) of the Unfair Terms in Consumer Contracts Regulations, and Lord Phillips held (at Para 60-64) that a legal challenge could, in fact, still be brought under Regulation 6(2)(b) when he confirmed the point that was raised by Andrew Smith J at Paragraph 400 of his judgment in the Commercial Court:
“Moreover, the basis of the whole package argument is that the Relevant Charges are not the price or remuneration for services but part of the price or remuneration for services. An assessment of the fairness of the Relevant Charges does not involve an assessment of the level or adequacy or appropriateness of the overall price or remuneration for the package of services supplied by the Bank, and an assessment of the fairness of the Relevant Charges as against those services, apart from being entirely beside the point, would not intrude upon the essential bargain between the parties that the Directive and the 1999 Regulations intend should be protected from assessment. The whole package argument does not engage the policy of the Directive and the 1999 Regulations for exempting the fairness of the Relevant Terms from assessment. Indeed, I am far from convinced that an assessment of part of the price or remuneration (or at least for less than what is manifestly the predominant part of the price or remuneration) for goods or services would ever be covered by Regulation 6(2)(b), but since this is not an argument advanced by the OFT, I say no more about that.”
3. The Supreme Court also referred to regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 ( Para 8 ) , which states:
“A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.”
4. The current account contract was not individually negotiated, because the Defendant imposes its own standard terms and conditions on its customers and is not prepared to agree or to permit any individually agreed variations to the supplier/customer relationship.
5. The lack of competition amongst High Street banks has been the focus of concern by the Government and the OFT, and was even highlighted by Lady Hale in her judgment in the recent OFT litigation against 8 UK banks. Indeed, Lady Hale even suggested that the lack of competition was the cause of the present bank charges problems. (Para.93 of the Supreme Court judgment)
6. There is a significant imbalance in the parties' rights and obligations and this is to the detriment of the customer. This can be seen at least in the following ways:-
a. The bank reserves itself the right to vary terms and conditions as it sees fit.
b. These variations are imposed without discussion with the customer.
c. The customer has no choice other than to accept the imposition of new or varied terms or else to accept the contract as terminated.
d. The bank not only varies the banking contract because of business necessity such as to reflect an increased level of inflation or an increased bank base rate – but also to restructure a banking product or to raise interest rates beyond what is needed to maintain the status quo. Such variations are to the prejudice of the customer.
e. It is submitted that such accumulated variations over a period of time add up to substantially a banking relationship which is wholly different to that which existed at the time the original contract was made and wholly different to expectations of either party (bank/customer) at the time the original contract was made.
f. There exists no independent regulator of the banking system to protect the customer’s rights.
g. The banking operation is without exception computer controlled. The rules applied to the Customer by the bank’s computerised system vary without notification to the customer.
7. There is lack of mutuality in the bank/customer relationship. There is no reciprocity so that the customer is not permitted to impose any contractual variations on the bank.
8. The current account contract allows the bank to impose charges at a high rate in the event that the customer makes some error in the management of his account. The bank will not accept any similar liability in the event that it makes a similar error in the management of the customer’s account.
9. The bank reserves to itself a right to terminate the banking relationship at any time for any reason. There is no requirement of ‘reasonable cause’ and the peremptory exercise of this contractual right is a frequent cause of future financial problems for many bank customers. Many banks in fact terminated Consumer accounts because they exercised their right to bring legal proceedings.
10. The bank reserves itself the right to terminate any overdraft facility and to require repayment within a time schedule of its own choosing. There is no requirement of ‘reasonable cause’ and the peremptory exercise of this contractual right is a frequent cause of grave financial problems for many bank customers.
11. It is submitted that the points listed above are all highly symptomatic of a want of good faith by the banks in the form and in the application of their standard form contract.
12. Until the recent OFT litigation, the banks had failed to be transparent about their charges in that they had denied that cross-subsidy took place at all and had even attempted to suggest that their charges represented value for money by claiming that that the charges were informed by the administrative costs of dealing with insufficient funds situations.
13. It is submitted that this deceptive information was calculated to deny their customers a chance to judge whether they really were receiving value for money in respect of the charges they were being forced to pay. The information was not given to their customer in good faith and was calculated to make them act to their own detriment.
14. There are further legal arguments to the said charges that can be brought under the Consumer Credit Act 1974, section 82 (1), Variation of Agreements which states the following:
(1) Where, under a power contained in a regulated agreement, the creditor or owner varies the agreement, the variation shall not take effect before notice of it is given to the debtor or hirer in the prescribed manner
15. The Claimant will show that the terms and conditions relating to the current account operated by the Defendant abruptly and significantly changed (to the severe detriment of the Claimant) without notifying the Claimant of this change.
16. Assessment of fairness by the OFT, although the Supreme Court decision has prevented the OFT from applying any finding of unfairness for the purposes of the Unfair Terms in Consumer Contracts Regs 1999, such a finding will be highly probative of a breach of the banks’ obligations under the FSA Regs and therefore their implied duty to act fairly under the banking contract.
17. In the event that the OFT has now decided to discontinue with the legal challenge into the fairness of bank charges, then the court’s attention is respectfully drawn to the recent decision in Pannon GSM Zrt. v Erzsébet Sustikné Győrfi (ECJ Case C-243/08) were it was held that national's court of its own motion must determine whether the contract before it contains unfair terms.
18. The OFT action and their subsequent decision to discontinue the legal challenge into the fairness of bank charges was out of the Claimant’s control. The independent OFT activities have affected the Claimant’s position and the court’s attention is respectfully drawn to this fact. This should not prejudice the Claimant from continuing due legal process and amendment of particulars of claim in light of the above.
19. Strike Out
20. By CPR r.3.4 the court has the power to order the whole or any part of a statement of case to be struck out. This power can be resorted to on an application by a party. It can also be used by the court of its own initiative with (and sometimes without) the involvement of the ‘innocent’ party. Rule 3.4(2) of the CPR provides:
The court may strike out a statement of case if it appears to the court:
a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
b) that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or
c) that there has been a failure to comply with a rule, practice direction or court order.
21. Procedure where an application is made by one of the parties
22. At least where a Defendant makes such an application in accordance with PD 23 para 2.7, the rule is that any application to strike out should be made as soon as it becomes apparent that it is desirable to make it. Applications to strike out should usually be made in the period of acknowledgment of service and filing of allocation questionnaires (PD 26, para 5.3(1), and see also PD 3 para 5.1.
23. General Test
24. Under the old rules it was well settled that the jurisdiction to strike out was to be used sparingly. The reason was - and this has not changed - that the exercise of the jurisdiction deprives a party of his right to a trial, and of its right to strengthen its case through the process of disclosure and other court procedures such as requests for further information. Further, it has always been true that the examination and cross-examination of witnesses often change the complexion of a case. It was accordingly accepted that the striking out rule was limited to plain and obvious cases where there was no point in having a trial. The principles from W & H Trade Marks (Jersey) Ltd v W and H Trade Marks (Jersey) Ltd [1986] AC 368 the leading case under the old rules was approved in Three Rivers District Council v Bank of England (No) 3 [2003] AC 1 a t [96]-[97].
25. Sanctions
26. Rule 3.4(2)(c) provides that the court may strike out a statement of case if it appears there has been a failure to comply with a rule, practice direction or court order. Striking out the whole of a party’s statement of case ought to be reserved for the most serious, or repeated breaches or defaults (see UCB Corporate Services Ltd v Halifax (SW) Ltd [1999] CPLR 691, CA). Unless there is a serious default or breach the court should be prepared to impose a sanction which ‘fits the crime’.
27. Courts imposing sanctions such as stays and striking out have to pay attention to the fact that they may be depriving the Claimant access to the court, which has particular importance under Art 6 of the European Convention of Human Rights (Woodhouse v Consignia plc [2002] 1 WLR 2558.). Proportionality is also an important factor (Powell v Boladz LTL 22/9/03.).
28. Effect of strike out
29. Where the party is the Claimant and the order provides for striking out the whole of the Claim, the Defendant may seek an award for costs by filing a request.
30. Recent Correspondance
31. From the time of the Defendant’s application the Claimant has been acting to resolve the case by way of Out of Court Settlement as detailed in the attached letters.
32. The Defendant has responded slowly, requiring further prompting by the Claimant as shown and culminating in a refusal to accept the Claimant’s request. This has led to an unintended delay in responding to the Defendant’s Application.
33. Submissions
34. It is submitted that in deciding whether to grant the Defendant’s application, the court should systematically consider each of the factors listed above, and then weigh up the various factors in deciding whether granting the application would accord with the overriding objective.
35. In respect of these factors, it is submitted on behalf of the Claimant that it is in the interest of the administration of justice to refuse application for summary judgment.
36. In addition, the court will be aware that it needs to do justice between the parties in light of the overriding objective and the court is reminded that the Claimant is litigant in person.
37. It is submitted that striking out the Claimant’s claim and granting the Defendant’s application is a draconian sanction, which is not compatible with the overriding objective or with Article 6 of the European Convention of Human Rights on the facts of this case.
38. In so far as this can be said to be a developing area of law, striking out should be refused in accordance with the principles set out in Brooks v Commissioner of Police for the Metropolis [2005] 1 WLR 1495.
39. Finally, the Claimant believes this to be an extremely good Claim on its merits. The Claimant believes that they possess strong evidence to support this claim, which in turn is underpinned by several elements of applicable law - contrary to CPR 24.2 & 3.4.
40. Conclusion
41. It is respectfully submitted that the Strike Out Judgement be set aside and that the Claimant be allowed 4 weeks to submit amendments to the particulars of claim. After which the Defendant be granted the standard times to submit an acknowledgement and defence.
I am reading the opinion of Anthony Scrivener QC and hope that I can apply further and more lucid arguments but I would also appreciate any comments.
One last point - I split the claim into 5 cases so that each was under the £5K limit - our local county court thought this was quite a good idea (rather than an abuse of CPR). Currently with interest the total is £26K ish (which of course means nothing unless won).
I don't believe the above is frivolous and I am determined to fight (unless this is widely regarded as a lost cause).
Any help/advice appreciated.
Thanks.
T
I am probably now in a real minority as I started a claim for unfair charges in late '06 which is still in progress.
Having been treated so terribly by the Bank in 2000-2001 which nearly led to bankruptcy (in fact the bank recommended it would you believe!) I was of course compelled to try and reclaim the charges - amounting to over £14000 at the time.
Since the OFT test case the bank has tried to strike out the claim but I have tried hard to defend this by collecting various snippets of information and reading up on contract law applicable at that point in time and submitting a defence against the strike out.
The result of this is that the case has just been moved from my local county court to the larger local city court and I have been asked to exchange skeleton arguments.
I have changed tack in light of the OFT and I now focus my legal argument on the fairness of contract rather than the charges levied as you can see from the defence against strike out below.
CLAIMANT’S RESPONSE TO
DEFENDANT’S APPLICATION & STRIKE OUT JUDGEMENT
_______________________
Application & Judgement
The Defendant has made an application for the Claim to be struck out and that Summary Judgment be entered for the Defendant on the grounds that the Claimant has no reasonable grounds of success. The Claimant has been actively seeking an out of court settlement, response to which has been prolonged and has finally been rejected by the Defendant. During this time a strike out notice has been received from the Court.
The Background
1. In the recent case of The Office of Fair Trading (Respondents) v Abbey National plc & Others [2009] UKSC 6, the Supreme Court was extremely careful to say that their Lordships’ judgment did not “close the door on the OFT’s investigations and may well not resolve the myriad cases that are currently stayed in which customers have challenged [Bank Charges].” (para.61 of the Supreme Court judgment)
2. What is more, their Lordships also confirmed that a number of challenges could still be brought under Regulation 6(2)(b) of the Unfair Terms in Consumer Contracts Regulations, and Lord Phillips held (at Para 60-64) that a legal challenge could, in fact, still be brought under Regulation 6(2)(b) when he confirmed the point that was raised by Andrew Smith J at Paragraph 400 of his judgment in the Commercial Court:
“Moreover, the basis of the whole package argument is that the Relevant Charges are not the price or remuneration for services but part of the price or remuneration for services. An assessment of the fairness of the Relevant Charges does not involve an assessment of the level or adequacy or appropriateness of the overall price or remuneration for the package of services supplied by the Bank, and an assessment of the fairness of the Relevant Charges as against those services, apart from being entirely beside the point, would not intrude upon the essential bargain between the parties that the Directive and the 1999 Regulations intend should be protected from assessment. The whole package argument does not engage the policy of the Directive and the 1999 Regulations for exempting the fairness of the Relevant Terms from assessment. Indeed, I am far from convinced that an assessment of part of the price or remuneration (or at least for less than what is manifestly the predominant part of the price or remuneration) for goods or services would ever be covered by Regulation 6(2)(b), but since this is not an argument advanced by the OFT, I say no more about that.”
3. The Supreme Court also referred to regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 ( Para 8 ) , which states:
“A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.”
4. The current account contract was not individually negotiated, because the Defendant imposes its own standard terms and conditions on its customers and is not prepared to agree or to permit any individually agreed variations to the supplier/customer relationship.
5. The lack of competition amongst High Street banks has been the focus of concern by the Government and the OFT, and was even highlighted by Lady Hale in her judgment in the recent OFT litigation against 8 UK banks. Indeed, Lady Hale even suggested that the lack of competition was the cause of the present bank charges problems. (Para.93 of the Supreme Court judgment)
6. There is a significant imbalance in the parties' rights and obligations and this is to the detriment of the customer. This can be seen at least in the following ways:-
a. The bank reserves itself the right to vary terms and conditions as it sees fit.
b. These variations are imposed without discussion with the customer.
c. The customer has no choice other than to accept the imposition of new or varied terms or else to accept the contract as terminated.
d. The bank not only varies the banking contract because of business necessity such as to reflect an increased level of inflation or an increased bank base rate – but also to restructure a banking product or to raise interest rates beyond what is needed to maintain the status quo. Such variations are to the prejudice of the customer.
e. It is submitted that such accumulated variations over a period of time add up to substantially a banking relationship which is wholly different to that which existed at the time the original contract was made and wholly different to expectations of either party (bank/customer) at the time the original contract was made.
f. There exists no independent regulator of the banking system to protect the customer’s rights.
g. The banking operation is without exception computer controlled. The rules applied to the Customer by the bank’s computerised system vary without notification to the customer.
7. There is lack of mutuality in the bank/customer relationship. There is no reciprocity so that the customer is not permitted to impose any contractual variations on the bank.
8. The current account contract allows the bank to impose charges at a high rate in the event that the customer makes some error in the management of his account. The bank will not accept any similar liability in the event that it makes a similar error in the management of the customer’s account.
9. The bank reserves to itself a right to terminate the banking relationship at any time for any reason. There is no requirement of ‘reasonable cause’ and the peremptory exercise of this contractual right is a frequent cause of future financial problems for many bank customers. Many banks in fact terminated Consumer accounts because they exercised their right to bring legal proceedings.
10. The bank reserves itself the right to terminate any overdraft facility and to require repayment within a time schedule of its own choosing. There is no requirement of ‘reasonable cause’ and the peremptory exercise of this contractual right is a frequent cause of grave financial problems for many bank customers.
11. It is submitted that the points listed above are all highly symptomatic of a want of good faith by the banks in the form and in the application of their standard form contract.
12. Until the recent OFT litigation, the banks had failed to be transparent about their charges in that they had denied that cross-subsidy took place at all and had even attempted to suggest that their charges represented value for money by claiming that that the charges were informed by the administrative costs of dealing with insufficient funds situations.
13. It is submitted that this deceptive information was calculated to deny their customers a chance to judge whether they really were receiving value for money in respect of the charges they were being forced to pay. The information was not given to their customer in good faith and was calculated to make them act to their own detriment.
14. There are further legal arguments to the said charges that can be brought under the Consumer Credit Act 1974, section 82 (1), Variation of Agreements which states the following:
(1) Where, under a power contained in a regulated agreement, the creditor or owner varies the agreement, the variation shall not take effect before notice of it is given to the debtor or hirer in the prescribed manner
15. The Claimant will show that the terms and conditions relating to the current account operated by the Defendant abruptly and significantly changed (to the severe detriment of the Claimant) without notifying the Claimant of this change.
16. Assessment of fairness by the OFT, although the Supreme Court decision has prevented the OFT from applying any finding of unfairness for the purposes of the Unfair Terms in Consumer Contracts Regs 1999, such a finding will be highly probative of a breach of the banks’ obligations under the FSA Regs and therefore their implied duty to act fairly under the banking contract.
17. In the event that the OFT has now decided to discontinue with the legal challenge into the fairness of bank charges, then the court’s attention is respectfully drawn to the recent decision in Pannon GSM Zrt. v Erzsébet Sustikné Győrfi (ECJ Case C-243/08) were it was held that national's court of its own motion must determine whether the contract before it contains unfair terms.
18. The OFT action and their subsequent decision to discontinue the legal challenge into the fairness of bank charges was out of the Claimant’s control. The independent OFT activities have affected the Claimant’s position and the court’s attention is respectfully drawn to this fact. This should not prejudice the Claimant from continuing due legal process and amendment of particulars of claim in light of the above.
19. Strike Out
20. By CPR r.3.4 the court has the power to order the whole or any part of a statement of case to be struck out. This power can be resorted to on an application by a party. It can also be used by the court of its own initiative with (and sometimes without) the involvement of the ‘innocent’ party. Rule 3.4(2) of the CPR provides:
The court may strike out a statement of case if it appears to the court:
a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
b) that the statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or
c) that there has been a failure to comply with a rule, practice direction or court order.
21. Procedure where an application is made by one of the parties
22. At least where a Defendant makes such an application in accordance with PD 23 para 2.7, the rule is that any application to strike out should be made as soon as it becomes apparent that it is desirable to make it. Applications to strike out should usually be made in the period of acknowledgment of service and filing of allocation questionnaires (PD 26, para 5.3(1), and see also PD 3 para 5.1.
23. General Test
24. Under the old rules it was well settled that the jurisdiction to strike out was to be used sparingly. The reason was - and this has not changed - that the exercise of the jurisdiction deprives a party of his right to a trial, and of its right to strengthen its case through the process of disclosure and other court procedures such as requests for further information. Further, it has always been true that the examination and cross-examination of witnesses often change the complexion of a case. It was accordingly accepted that the striking out rule was limited to plain and obvious cases where there was no point in having a trial. The principles from W & H Trade Marks (Jersey) Ltd v W and H Trade Marks (Jersey) Ltd [1986] AC 368 the leading case under the old rules was approved in Three Rivers District Council v Bank of England (No) 3 [2003] AC 1 a t [96]-[97].
25. Sanctions
26. Rule 3.4(2)(c) provides that the court may strike out a statement of case if it appears there has been a failure to comply with a rule, practice direction or court order. Striking out the whole of a party’s statement of case ought to be reserved for the most serious, or repeated breaches or defaults (see UCB Corporate Services Ltd v Halifax (SW) Ltd [1999] CPLR 691, CA). Unless there is a serious default or breach the court should be prepared to impose a sanction which ‘fits the crime’.
27. Courts imposing sanctions such as stays and striking out have to pay attention to the fact that they may be depriving the Claimant access to the court, which has particular importance under Art 6 of the European Convention of Human Rights (Woodhouse v Consignia plc [2002] 1 WLR 2558.). Proportionality is also an important factor (Powell v Boladz LTL 22/9/03.).
28. Effect of strike out
29. Where the party is the Claimant and the order provides for striking out the whole of the Claim, the Defendant may seek an award for costs by filing a request.
30. Recent Correspondance
31. From the time of the Defendant’s application the Claimant has been acting to resolve the case by way of Out of Court Settlement as detailed in the attached letters.
32. The Defendant has responded slowly, requiring further prompting by the Claimant as shown and culminating in a refusal to accept the Claimant’s request. This has led to an unintended delay in responding to the Defendant’s Application.
33. Submissions
34. It is submitted that in deciding whether to grant the Defendant’s application, the court should systematically consider each of the factors listed above, and then weigh up the various factors in deciding whether granting the application would accord with the overriding objective.
35. In respect of these factors, it is submitted on behalf of the Claimant that it is in the interest of the administration of justice to refuse application for summary judgment.
36. In addition, the court will be aware that it needs to do justice between the parties in light of the overriding objective and the court is reminded that the Claimant is litigant in person.
37. It is submitted that striking out the Claimant’s claim and granting the Defendant’s application is a draconian sanction, which is not compatible with the overriding objective or with Article 6 of the European Convention of Human Rights on the facts of this case.
38. In so far as this can be said to be a developing area of law, striking out should be refused in accordance with the principles set out in Brooks v Commissioner of Police for the Metropolis [2005] 1 WLR 1495.
39. Finally, the Claimant believes this to be an extremely good Claim on its merits. The Claimant believes that they possess strong evidence to support this claim, which in turn is underpinned by several elements of applicable law - contrary to CPR 24.2 & 3.4.
40. Conclusion
41. It is respectfully submitted that the Strike Out Judgement be set aside and that the Claimant be allowed 4 weeks to submit amendments to the particulars of claim. After which the Defendant be granted the standard times to submit an acknowledgement and defence.
I am reading the opinion of Anthony Scrivener QC and hope that I can apply further and more lucid arguments but I would also appreciate any comments.
One last point - I split the claim into 5 cases so that each was under the £5K limit - our local county court thought this was quite a good idea (rather than an abuse of CPR). Currently with interest the total is £26K ish (which of course means nothing unless won).
I don't believe the above is frivolous and I am determined to fight (unless this is widely regarded as a lost cause).
Any help/advice appreciated.
Thanks.
T
Comment