MSE News: O2 to hike its prices by 2.7% - can you leave your contract penalty-free?

V_For_Verminator

ChilliP2012 wrote: »

Things like this are always a gamble, but as I have said, I believe the 'Material Detriment' argument of this is wide open for interpretation. With issues like this and depending on how long left you have on your contract, it will more than likely be settled without the need of going to court. Not always the case, but more often than not, is often the case.

You really need to look at a few things, especially the merits of your case against O2. I believe I have a strong case against them. Whilst they have said that they notified everyone of their 'RPI' increase by email, I have not received such a notification and the onus is on O2 here to prove, beyond all reasonable doubt, that they sent it and I received it.

There is also enough in this thread and all over the interwebs regarding UTCCRs & 'Material Detriment'. When O2 decided to raise their prices, they would of factored churn into the equation as well as possible complaints to themselves, the ombudsmen and possible litigation.

In my case, I would have to pay £234 to cancel my contract. A complaint to the ombudsmen has cost them £300. Possible litigation could involve further expense which would put O2 at a further loss (legal fees, costs etc...). So there are a lot of things to take into equation here, but look at the merits of your own case and make a decision based on that.

I have room for doubt.

We could all play the material detriment card because as you say that is very much open to interpretation. As far as I am concerned, if you're putting my prices up in line with RPI you are making changes for which I have to pay for and therefore it is - additionally you are ultimately paying more for your handset too.

The difficulty I have here is that as a business customer, my prices haven't gone up for calls etc. Just the monthly cost.

I think that would leave my case with significant room for doubt.

ChilliP2012

V_For_Verminator wrote: »

I have room for doubt.

We could all play the material detriment card because as you say that is very much open to interpretation. As far as I am concerned, if you're putting my prices up in line with RPI you are making changes for which I have to pay for and therefore it is - additionally you are ultimately paying more for your handset too.

The difficulty I have here is that as a business customer, my prices haven't gone up for calls etc. Just the monthly cost.

I think that would leave my case with significant room for doubt.

That's not strictly true. Prices have gone up for calls, more so for out of bundle calls, which again causes 'Material Detriment'. Also, the use of premium and local rate numbers all of which are outside the contract bundle. The price increase for these is a little over 14%. Example, if you've ever made a call that isn't included in your minutes (0870,0845) or sent a picture message that isn't covered by your bundle. Then you are getting a 2.7% baserate rise + a further 14.3% rise on those calls and messages. This is above the 10% material detriment guideline that O2 & other service providers use to determine if a customer is of 'Material Detriment'.

Remember what Ofcom have stated? An increase to the subscription price at the Communication Provider’s discretion, i.e. changing it to a price the consumer might not otherwise have chosen to pay over other offers on the market is, or is likely to be, materially detrimental. This is an important constraint on providers’ ability to increase prices unexpectedly.

The 'RPI' increase is also wrong and I would happily challenge O2 in court stating so. CPI is used to measure inflation and it is wrong for companies to use a method to calculate price rises in line with inflation when the government doesn't use 'RPI' to measure inflation.

ChilliP2012

They've just filed a full defence. Details of which I will post shortly, once I've edited out all my personal stuff. Off to court we go.

ChilliP2012

IN THE NORTHAMPTON (CCBC) COUNTY COURT Claim No: AXXXXXXX
B E T W E E N:-

MR XXXXXX XXXXXX
Claimant

-and-

TELEFONICA UK LIMITED
Defendant

DEFENCE

Introduction
1. It is noted that the Claimant lives in Glasgow yet brings this claim before an English court. The Claimant is put to strict proof that he has complied with all rules of service outside of the jurisdiction.

2. The Claimant entered into a contract with the Defendant on 21st November 2012. He entered to a contract for a minimum term of 24 months. Under the terms of that contract the Claimant paid the Defendant sums of money on monthly basis in exchange for a mobile telephone and use of the Defendant’s mobile network services.

Strike out
3. The Claimant states that he claims ‘the immediate cancellation of [his]...contract’. He then lists numerous reasons why he wishes his contract to be cancelled.

4. The Defendant in fact terminated the Claimant’s contract on 11th February 2014 following the Claimant’s failure to pay the Defendant sums owed under the contract. As such, the Claimant’s claim should be struck out because he seeks a remedy that cannot be granted.

5. Further, the Claimant’s claim for damages is nonsensical. He states that: ‘the total costs claimed include the cost of the remainder of my contract, fees and compensation’. It is noted that:
a. The Claimant can never be entitled to ‘the cost of the remainder of his contract’ because the Claimant has not paid any sums to the Defendant in respect of the remainder of his contract;

b. The Claimant’s claim for ‘fees’ is entirely unsubstantiated and unclear; and

c. The Claimant’s claim for ‘compensation’ is similarly unsubstantiated and unclear. The sum of £50.00 is a wholly arbitrary sum to which he is not entitled on the small claims track, where costs relating to litigation are not recoverable.

6. The Defendant avers that the Claimant’s claim should be struck out forthwith for disclosing no proper cause of action. In the alternative, the Defendant seeks an order that unless the Claimant serve further and better Particulars within 14 days of the date of any Order, his claim be struck out.

7. Whilst not stated on the face of the Claim Form, the Defendant assumes that this claim is in fact brought by the Claimant in order to attempt to escape the application of termination fees for early cancellation of his contract. If this is in fact the case, the Claimant is required to properly set out his case as it is not for the Defendant to plead to matters that are not currently in issue and the Defendant does not do so.

The substantive Defence
8. As stated in paragraph 4 above, the Claimant’s contract has been terminated. As such, he has no cause of action and his claim for a declaration from the court that the contract is terminated must fail.

9. In the alternative, the Defendant denies that the Claimant was not informed that there might be future price increases when he entered into the contract with the Defendant in 2012. Clause 5.2 of the contract states:
“We may increase or decrease our Charges from time to time. If we increase our Charges (apart from for Additional Services), we'll let you know at least 30 days before the Charges are due to go up and you'll have the rights explained in paragraphs 5.3 and 5.4. We won't increase your Monthly Subscription Charges more than once in any 12 month period”

10. The Claimant was informed that in March 2014 the Defendant would be increasing its charges by 2.7%. He was informed by text message of this increase on or around 22nd January 2014.

11. The Defendant notes with some concern the Claimant’s pleading that ‘AT NO TIME’ was he informed of any RPI increases. This is wholly incorrect. On 26th January 2014 the Claimant sent an email to the Defendant explicitly referring to the price rise. In the circumstances, the Claimant is invited to explain why he has signed the Claim Form with a statement of truth when his Particulars of Claim contains material inaccuracies.

12. As regards the Claimant’s reference to the OFCOM General Conditions (9.6). It is averred that the same did not come into force until 23rd January 2014 and as such the Condition upon which the Claimant relies does not apply to the contract between the parties. Legislation and, by extension, conditions from a regulatory body, do not apply retrospectively unless retrospective application is specifically provided for within the body of the legislation and/or conditions.

13. Further and in the alternative, the OFCOM General Condition 9.6 upon which the Claimant relies relates solely to the ‘core subscription price’ of the contract between the parties. The Claimant complains of a detriment in respect of ‘out-of-bundle texts and calls…as well as international call costs’. These items do not form a part of the ‘core subscription price’ and as such the Claimant’s complaint must fail.

14. The Claimant seeks a declaration in respect of ‘any defaults’ placed on his credit record. The Defendant denies that any such declaration should be granted, for the following reasons:

-Removed a & b due to personal details.

c. On 11th February 2014 the Defendant terminated the contract between the parties pursuant to clause 8.1(a) of the contract between the parties.

d. On 11th February 2014, the Claimant was charged termination fees. Pursuant to clause 8.3 of the contract between the parties, where a contract is terminated during the minimum period of the contract (specified as the length of the contract agreed between the parties) the Defendant applies fees equaling the monthly subscription charges due for the remainder of the contract.

e. The termination fees were properly charged in circumstances where the price increase referred to in paragraph 10 above was in line with the retail prices index (‘RPI’).

f. Clause 5.3 states:
You can end this Agreement without having to pay the Monthly Subscription Charges up to the end of any Minimum Period you have left, if:
(a) we increase your Monthly Subscription Charges by more than the Retail Price Index (RPI) annual inflation rate at the date we notify you of the applicable price increase.
The Claimant did not increase the charges by more than the RPI. The Claimant therefore remains liable for the termination charges.

15. Further and in the alternative, even if the termination fees were wrongly charged, which is denied, the Claimant has still not paid the sums referred to above at paragraph 13(a) and (b) above in any event. Any defaults have therefore properly been added to his credit record.

16. The Defendant repeats paragraph 5 above in respect of the damages claimed by the Claimant.

GARETH SHIRES

Dated this day of 2014

Statement of Truth
The Defendant believes that the facts stated in this Defence are true.
I am duly authorised by the Defendant to sign this Defence.

Signed……………………………………………………………….
Position or office held……………………………………………….

Legal Department
Telefonica UK Limited
260 Bath Road
Slough
Berkshire
SL1 4DX


COPY TO:
THE DISTRICT JUDGE
AND TO:
THE CLAIMANT


IN THE NORTHAMPTON (CCBC) COUNTY COURT
Claim No: A3XXXXXX
B E T W E E N:-

MR XXXXXX XXXXXX
Claimant

-and-

TELEFONICA UK LIMITED
Defendant

Be interested to hear RC's thoughts.

V_For_Verminator

Some extremely condescending bluster in there.

ChilliP2012

V_For_Verminator wrote: »

Some extremely condescending bluster in there.

I'm glad I'm not the only one who thought that as that was my first impression when I read the attachment in the email they sent me this afternoon.

First and foremost, it looks like they are trying to contest the jurisdiction of the court as I live in Glasgow. However, as they have a Head Office in England & Wales and I am (at this stage anyway pre 18th September 2014) a UK resident, then the jurisdiction of the court is correct. I specifically checked this with MCOL (posted about it too, earlier in the thread) before proceeding with the claim.

They are also trying to make it look like I am claiming because I can't be bothered to pay my bill. I can clearly state that is NOT the case. I have 2 other contracts with 3 and I am always paying them on time, every month. Whilst I told O2 that they were in fact in breach of contract and that the rises do cause me 'Material Detriment' I am not paying my bill until such time that the issue was resolved and if this included small claims, then so be it. They deemed it necessary to cancel my contract and involve a DCA, which is against their procedure as they should of put the account on hold whilst it is being disputed. I know this as I worked there.

I am in the process of picking it apart, but as I stated, I would be interested to see what RC has to say and I'm not letting some wee bam pot, make me out to be the bad guy by discrediting me and my claim. I intend to pursue although in the mean time I have offered O2 the chance to mediate. It's O2 that's the bad guy, by clearly exploiting 2 loopholes and exploiting it's customers.

/Rant off lol :T

V_For_Verminator

No, it isn't just you. Some of the wording in there is arrogant, condescending and really disrespectful actually. I hope you clean their clock.

JasonLVC

ChilliP2012 wrote: »

I am in the process of picking it apart, but as I stated, I would be interested to see what RC has to say and I'm not letting some wee bam pot, make me out to be the bad guy by discrediting me and my claim.

You do realise that as the defendant, the defendant has to counter act your claims? Would you like being told you are wrong?

So, o2 has to take each of your arguments and present an alternative argument, there are always two sides to a story. So they are not being disrespectful, they simply believe that you are wrong and they are right.

You are asking for the right to terminate your contract but according to o2 you have already terminated your contract? You are stating you did not know about the price rises and O2 have proof they emailed you?

Why did you terminate your contract?

It doesn't change any of the fundamentals at play here and the key battle ground remains para. 12 & 13 which relate to RPI/OFCOM and my view is to focus on that and not get bogged down with the other stuff which can be easily batted off by you either attacking their statements or simply just noting you are not a legal expert and so should be given some leeway if the nature of your application is not entirely precise in terms of protocol.

ChilliP2012

JasonLVC wrote: »

You do realise that as the defendant, the defendant has to counter act your claims? Would you like being told you are wrong?

So, o2 has to take each of your arguments and present an alternative argument, there are always two sides to a story. So they are not being disrespectful, they simply believe that you are wrong and they are right.

Agreed

JasonLVC wrote: »

You are asking for the right to terminate your contract but according to o2 you have already terminated your contract? You are stating you did not know about the price rises and O2 have proof they emailed you?

Whilst this has been dragging on I have refused to pay them as I believe they are in the breach of contract for not notifying me of their price increase. As such they cancelled my contract and involved a DCA. In hindsight probably a stupid thing to do, but for me it's the principle.

O2 also seem to be contradicting themselves. The legal team state that they informed me by text. However, every copy of emails I have had with O2, stated they notified me by email. Finally, I will be asking O2 to prove to the court beyond all reasonable doubt that they notified me of the increases and that I received them.

JasonLVC wrote: »

Why did you terminate your contract?

As above

JasonLVC wrote: »

It doesn't change any of the fundamentals at play here and the key battle ground remains para. 12 & 13 which relate to RPI/OFCOM and my view is to focus on that and not get bogged down with the other stuff which can be easily batted off by you either attacking their statements or simply just noting you are not a legal expert and so should be given some leeway if the nature of your application is not entirely precise in terms of protocol.

Which is what I was looking at in the wee small hours of the morning. I think initially it was shock that O2 intended to fully defend, I assumed they would settle. So never count your chickens and it's true what they say about assumptions.

I think I could of handled this a bit better in all fairness. However, I still intend to counter claim and I still intend to win. I have an email from Ofcom which gives their definition of 'Material Detriment' and not O2's and also O2 are wrong in saying that GC 9.6 came into force this January. It didn't so that's not entirely honest from O2. Plenty to go over and thanks very much for your comments. They've put a little more fire in my belly.

nsabournemouth

ChilliP2012 wrote: »

Be interested to hear RC's thoughts.

A few bits to get you going.


The defendant has actually increased the costs of the service to me by 2.7%, that is actual and substantial and falls under the Article 20(2) of the Universal Services Directive (“USD”) (Directive 2002/22/EC, as amended by Directive 2009/136/EC)31 which requires that:


“Member states shall ensure that subscribers have a right to withdraw from their contract without penalty upon notice of modification to the contractual conditions proposed by the undertakings providing electronic communications networks and/or services. Subscribers shall be given adequate notice, not shorter than one month, of any such modification, and shall be informed at the same time of their right to withdraw, without penalty, from their contract if they do not accept the new conditions.”


The Ofcom publication “ Price rises in fixed term contracts - Decision to issue Guidance on General Condition 9.6”, Published in October 2013. Ofcom defined “Likely to be of Material Detriment as follows:

Paragraph 6.22
“In particular, we consider guidance is needed as to price rises which we are likely to regard as materially detrimental (or likely to be materially detrimental) and invoking the requirements of GC9.6. Such price rises are likely to include any increase to core subscription prices.”

Ofcom have announced that this will only apply to contracts entered into on or after 23rd January,all Ofcom have actually done is clarify a definition. They have not changed the words of GC 9.6. As they have only clarified a definition then the definition must apply to all contracts as it cannot be a legally correct position that two contracts subject to the same regulation with exactly the same wording (GC 9.6) can have two different meanings. Further Ofcom GC 9.6 supports the USD implementation as the term "likely to be of material detriment" was introduced because:

"Our intention was to reflect our general duties and principles of good administration and proportionality in particular. We sought, in light of these, not to rule out contract variations altogether. For example, those beneficial to, or having a neutral impact on, a subscriber.” (from Ofcom publication “ Price rises in fixed term contracts - Decision to issue Guidance on General Condition 9.6”, Published in October 2013”

As Ofcom's (and OFTEL before them) reasoning for introducing the term was to protect me - the consumer - from changes which are not to my benefit or at the very least are neutral then a price rise of any kind is clearly neither to by benefit, nor neutral, and are therefore likely to be of Material Detriment.