Judge Cooke Mr Berwick

AndyLGR

mistermind wrote: »

The entire trial turned into a search whether Lloyds T&C contained an explicit clause forbidding going overdrawn. Cooke and Berwick never found such a clause in court or even at night by Justice Cooke surfing the web, the charge was ruled as, not from breach of contract but from a bank service fee.

If now armed with T&C, I suggest a claimant will find it easier to prove from wording and action de facto, that charges for straightforward bouncing of cheque and D/Ds were pure penalties unencumbered with anybenefit or favour rendered to the customer. Such punitive charges would therefore qualify for the Dunlop v Garage precedent, i.e. these charge must cover cost only, no bank profit allowed.

Pardon me for being a bit thick, but I take from the 2nd paragraph quoted above that you are saying that the charges levied are disproportionate because the customer actually gains no benefit anyway.

For instance, if I turned up in court with these t & c's from my Nationwide Flexaccount overdraft dated 2000. How would it be argued that these are actually disguised penalties and not service charges?:

If you go overdrawn without agreement or exceed your agreed overdraft limit we may not be able to meet the payments of cheques, DD’s, SO’s and bill payments from your account.

You may also incur the charges detailed below. These are levied to help Nationwide cover the costs of dealing with unpaid items, increased paperwork, telling customers about the charges and covering the higher risks associated with customers being overdrawn without our agreement.

Unauthorised od fee £10
Unpaid items due to insufficient cleared funds £25

My main question is, and this one I started in another thread, what should Mr Berwick have said in court? Clearly saying that he didn't think they were penalties was a mistake.

mistermind

Andy,

Kevin went into court with T&C evidence, not expecting either Lloyds barrister or a debate with the judge. He was ambushed unprepared and ad-libbed on his feet. I believe he now accepts he should not have said he did NOT breach the contract thus opening the door to a "service charge" characterisation. Kevin tried to reclaimed both variants of charges -- with cheque bounce and without bounce, not sure what your situation is.

Your bank's repeated use of the word "may" causes semantic difficulties. From their T&C nobody knows what their true intentions are, and whatever they did in the end you could not have relied on it. Lets say they kept it simple in spite of what they say, that in the event they bounced every time you could not meet the cheque/DD. As they never ever did you a favour I suggest they never performed a service, so could never lay claim to collecting a (profit-permitted) service charge. They could say they expended £valuable manager time to consider honouring these cheques, but decided not to. I would suggest in court that thinking about an action does not constitute a service. You did not derive any benefit nor enjoy a result. As Mandy Rice-Davies put it, "They would say that, wouldn't they."

HOWEVER,
if they did honour a bad cheque, and you preferred it that way (because you never said before or after the event "Never pay my bad cheques, how dare you!") then their barrister in court could suggest the bank performed a de facto service worthy of a service charge. Had you been desperate to meet this cheque so as not to lose face, you could have gone into the high street cheque-cashing shops and wrote a GUARANTEED cheque at 12-15% interest per month. Such money-lending shops incurred very low risk, much lower risk than your bank who potentially could have lost the entire sum as future bad debt. In that sense then the bank helped you out.

If the bank settles your claim without quibble, fair enough. But if the bank spotted such an ambiguous reclaim situation, and at the last minute executes another Berwick-Rudd style ambush in court, then I myself cannot think of a good retort to their claim in court for a "service fee" instead of a "penalty charge". I am not sure if a claim for one penalty charge is dismissed, whether the other straightforward reclaims will also be dismissed in one job lot.

Just my humble opinion, without legal training. If anyone else can suggest a good retort to their barrister, then I shall think again.

AlexisV

If you go overdrawn without agreement or exceed your agreed overdraft limit we may not be able to meet the payments of cheques, DD’s, SO’s and bill payments from your account.

You may also incur the charges detailed below. These are levied to help Nationwide cover the costs of dealing with unpaid items, increased paperwork, telling customers about the charges and covering the higher risks associated with customers being overdrawn without our agreement.

Isn't this an admission that they are charges (definition: to impose or ask for a fee) and not services? And you disagree that they do indeed cover the cost of dealing with unpaid items.

You've agreed to a contract that admits you will incur charges (fair enough) and these cover the costs of increased paperwork, informing you of the charges, covering higher risk etc. However, you do not agree that they do cover these costs and they are in excess and want to see evidence that they actually proportionate.

What is proportionate?

Alan_Cross_2

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Hi

Today a letter arrived from Lloyds TSB solicitors.

“The bank will be defending these proceedings on the following grounds :

1. The fees that you are seeking are properly incorporated into your contract with the bank; and

2. By making payments (whether by cheque, debit card or by any other means) from your account where you have insufficient funds to cover them, you are making a request to the bank for an increased overdraft, which the Bank may meet or decline. If it meets your request you must pay the necessary charges. The issue of penalties only arises as a matter of law, where there has been a breach of contract, and there is no breach of contract here.

Looking ahead, a situation which gives rise to dispute is not one the bank wishes to continue. In view of this you are requested, please, to make contact within the next 14 days with your local branch manager to review your account. A review may be useful to consider whether your current banking arrangements are the most appropriate for your needs.

We await confirmation from the bank that this action has been taken.”

My friend, has an overdraft of £5000 and is claiming back bank charges imposed by Lloyds TSB of £5000 + and following advice has opened another account.

Deadline for reply to the judge in Birmingham is 7th June.

Advice and support on this will be most welcome.

Best wishes

nickmack

Alan_Cross wrote: »

Today a letter arrived from Lloyds TSB solicitors.

No suprise LTSB are now using the 'service' defence. Do you have the Terms and Conditions for the account during the charging period?

The account review, sounds like they are considering closing the account/withdrawing facilities. As a parachute account has already been set up, this shouldn't be a big issue.

mistermind

The lloyds letter referred to above was also received by a CAG member yesterday. The word proportionate did not arise anywhere in Berwick v Lloyds.

Scenario 1: If a judge is satisfied that T&C and bank response indicated a Breach of Contract, resulting in a Penalty Charge, then Dunlop v Garage 1910 precedent becomes applicable -- this charge had to be at cost price, not proportionate to cost price.

Scenario 2: Finding no breached clause (no contract T&C presented) Judge Cooke accepted this was a service charge. Kevin was then left with the final claim that Supply of Goods and Services Act 1982 required the charge to be at a "reasonable price", i.e. profit for service was ok, but within reason. Kevin did not present any convincing proof of unreasonableness. He agreed the Lloyds price was more or less the same for all banks in the UK, i.e. he could not have done better elsewhere, that it was the market price, the only price. At this Judge Cooke considered both criteria not proven, case dismissed. I have posted 2 grounds for alleging unreasonableness before, no-one took any notice.

AndyLGR

mistermind wrote: »

Andy,

Kevin went into court with T&C evidence, not expecting either Lloyds barrister or a debate with the judge. He was ambushed unprepared and ad-libbed on his feet. I believe he now accepts he should not have said he did NOT breach the contract thus opening the door to a "service charge" characterisation. Kevin tried to reclaimed both variants of charges -- with cheque bounce and without bounce, not sure what your situation is.

Not sure what you mean by with bounce or without bounce, but my charges are when they bounced a cheque, standing order or a direct debit and then charged me as well. I don't have a cheque guarantee card.

So basically if we are questioned then we should say that we did breach a contract, but then it comes to the judge deciding whether they are penalties disguised a service charges?

Thanks for the help.

mistermind

Charges are levied in both situations, often the same amount:

(1) bad cheque bounced (with no benefit/service to the customer),
(2) bad cheque honoured (arguably with benefit/service to the customer).

In situation (1) the claimant can argue from the consequences (and from T&C wording), that he derived no benefit, no commercial service from the bank, so cannot possibly entertain a service charge. The bank may say they spent time and IT bouncing, but that is something they can recoup from a penalty charge AT COST, as in Dunlop v Garage 1910.

I have really exhausted all my ideas and have nothing further to post. Readers are urged to seek other opinion.