OFT v Bank Court Case updates

Nathan_Spleen

The author kindly requests that If you would like to re-post this account of the test case elsewhere, please ask me first.




Reproduced with the kind permission of Legalbeagles.info



Day 14 final day

Justice Andrew Smith began by addressing the documents left on his desk by the various parties and in particular one by the FSA.

Although he didn’t reveal the contents of it, the document appeared to relate to the decision by the judge not to take historical terms and conditions into account during the hearing. The judge took great exception to the FSA’s view this was because the court didn’t have enough time to include anything other than current T&Cs.

The judge reminded the FSA that he had indeed offered to make time available but the issue was simply ‘’unmanageable’’ to consider and that historical T&Cs were not part of the preliminary issues. He said, referring to the FSA, ‘’it is unfortunate that this has been distorted’’ and ‘’frankly I don’t think it should be put in any public document’’. The FSA’s legal representative stood up and meekly offered an apology for her ‘’misunderstanding’’.

Mr Vos for Nationwide began his reply saying that the charges and interest were in exchange for both a package of services and ‘’obviously and naturally the price for an overdraft’’. He said that Nationwide’s view that their contracts change when a customer goes from credit to debit ‘’had not been responded to by the OFT’’. He countered the OFT’s contention that contracts should be judged in the view of a typical consumer by saying that there were 2 types of typical consumer, ‘’a credit consumer and a debit consumer’’. The judge suggested that for a customer who regularly goes in to debit before pay day, changing his contract monthly ‘’may be pushing it too far’’ when they ‘’just crossed the debit line’’.

On the subject of the order in which same day payments are processed Vos said that many incoming payments were ‘’outside the banks control’’. He said that the bank have complete discretion as to the order payments processed and the judge asked him what he thought of Brian Doctor’s argument that banking law procedure indicated that the smallest payment should be processed first. Vos conceded ‘’there is some authority on that.’’

Vos claimed that the OFT had accepted that payment instructions were not deemed requests but the judge said that ‘’when one charge triggers another, we move closer in to the world of deeming’’. All Vos could say was ‘’I don’t make any comment on that’’.

The judge asked him if the order of payments were ‘’too complicated to state in the contract?’’ Vos said he’d prefer to use ‘’too confusing’’ but Nationwide’s contracts did give some clear guidance. ‘’Yes but not within a day’’ said the judge.

Brian Doctor covered much of the same ground as before. He spoke on the ‘seven uncertaities’ and the judge seemed to disagree with several of his points.

Doctor said that some of the banks T&Cs were contradictory in saying that the balance of the account would be taken judged at the time when payment instructions were considered but that expected incoming payments ‘may’ be taken into account and making it difficult for the customer to know what balance was being considered. He quoted Nationwide’s contract that stated internal transfers made before 5pm would be credited to the account but made no mention of external credits but the judge said that if no obligation was in the contract, what actually happens is irrelevant.

At 10.30 sharp the judge thanked everyone and got up to leave for the last time. But before he could straighten his back the bank’s QCs piled in with questions about his judgement. Robin Dicker popped the big question of when the judge expected to reach his judgement., ‘’I have no idea at all’’ the judge said.

Malek then said that as the case had attracted such interest, how would the judge manage the risk of a breech of confidentiality between giving his written summary and handing down his judgement and said that even body language could give the game away. Justice Smith said he understood the potential seriousness of a leak and would be considering restricting his summary to 2 counsel per party but Brian Doctor protested at the imbalance of 16 members of the defence versus 2 of the OFT and the judge said he would consider it. Earlier Thanki had asked the judge for more time between his written summary and the judgement so the banks could prepare for the inevitable deluge of calls on the status of claims.

The judge suggested that in consideration of his judgement, it may be that additional information and clarification could be required from both parties and rather than doing this in writing it may be sensible to hold a ‘’discrete hearing’’.

The banks also wanted to know about how his decision on the current terms and conditions would effect historical T&Cs which were largely the subject of current litigation. Justice Smith said that at this stage there was ‘’every indication that my findings on current T&Cs would translate to many historical contracts in very short order, possibly within a month’’. This meant that the principles he reaches on current T&Cs could be applied to most historical T&Cs by the county courts and presumably this would necessitate the amending particulars of claim and defences that are currently stayed.

The Seven Deadly Sins of The Eight Deadly Sinners

These are the 7 issues on plain intelligible language that the OFT has with the banks.

1. The qualifying of ’available funds’.
2. The qualifying time of ‘available funds’.
3. The order in which payments are processed.
4. The constitution of a ’deemed request’.
5. Uncertainties of the outcome of a ‘deemed request’.
6. The uncertainty of the scope of the relevant charges.
7. The uncertainty of the enforcement of the relevant charges.

It was notable that the banks somehow managed to grasp the concept of plain intelligible language during the course of the hearing on the very issues of PI L itself - even though this didn’t seem to apply to their terms and conditions. For the first few days it was ‘the seven deadly sins’, midway through the case it changed to ‘the seven ambiguities’ and at the end of the hearing it was referred to as ‘the seven uncertainties’ which is what the OFT called it in the first place.

It was also interesting to note the different terms each bank used for ‘unauthorised overdraft’. Depending on the bank it was ‘unplanned overdraft’, ‘instant overdraft’, ‘unarranged overdraft’ or simply good old fashioned ‘unauthorised overdraft’ which became the standard term used by all the banks, the OFT and the judge during the hearing. Though I can’t help thinking that the term ‘unauthorised’ doesn’t sit too comfortably with the banks pleadings that their charges are for the consideration and inevitable authorisation for an overdraft that is then classified as ‘unauthorised’.<!-- / message --><!-- sig --><!-- / message --><!-- sig -->

Nathan_Spleen

The full court transcripts of the hearing will be available on the Legal Beagles site shortly.

http://legalbeagles.info/forums/index.php

natweststaffmember

The OFT test case transcripts are now on Legal beagles site for all the days. Its a fascinating insite into the OFT test case and to the comments and thoughts of Justice Smith. It is a long read though so clear you diary if you want to read it.

Nathan_Spleen

The OFT have announced that they do not expect Judgement to be handed down before the end of July.

HAVEFAITH

Nathan_Spleen wrote: »

The OFT have announced that they do not expect Judgement to be handed down before the end of July.

Many thanks for posting that ... being looking for the latest. Wondered if there's a website posting any update etc?

HAVEFAITH

HAVEFAITH wrote: »

Many thanks for posting that ... being looking for the latest. Wondered if there's a website posting any update etc?

http://www.oft.gov.uk/advice_and_resources/resource_base/market-studies/personal/personal-test-case/personal2

Nathan_Spleen

These are the 2 relevant extracts from the test case that deal with the current stayed cases: (please note that these transcripts are copyrighted and not to be re-published elsewhere)





MR THANKI: Our primary position is what your Lordship should be looking to do is see whether your Lordship is willing to make declarations or not on the basis of the pleaded issues.

MR JUSTICE ANDREW SMITH: But, you see, how then do I deal with -- at the end of this case, this first instance case, a question will arise as to whether I or anyone else should say anything to the designated civil judges and others as to whether the proceedings which are by and large on hold, if not formally stayed, should proceed or not.

MR THANKI: That may, of course, be subject to any appeals.

MR JUSTICE ANDREW SMITH: No, no, no. That's why I say at the end of this case, the first instance, there will be -- at the moment, as I understand it, the DCJs have been encouraged to hold back the county court cases pending the first instance decision. Now, of course, it may be, indeed in all probability it might well be that's to be extended, but if my decision in a sense because of the adversarial process ducks a significant point in the county courts, then it may be that at the very least the designated civil judges must be made aware of that and then when the individual decisions in the individual cases are considered, they will bear that in mind and say this test case or OFT case is not going to deal with this point. Let them go ahead. That's the concern.

MR THANKI: Yes.

MR JUSTICE ANDREW SMITH: That's why, taking on board Mr Rabinowitz's concern in the autumn that the tail should not wag the dog, one cannot avoid the test case aspect of it.

MR THANKI: Yes. Of course, the pleadings in the county courts which your Lordship has probably seen

MR JUSTICE ANDREW SMITH: No, I have not.

MR THANKI: They do not raise any of these points. They are very narrowly focused in relation to penalties and UTCCR questions of unfairness rather than plain and intelligible language and so on.

MR JUSTICE ANDREW SMITH: I see.

MR THANKI: Obviously your Lordship will take your own course. I think what I am saying is that the primary focus should be on the adversarial process here, and if your Lordship makes points which Mr Doctor is willing to pursue and we have time to deal with them, then fine.

MR JUSTICE ANDREW SMITH: I think the difference between the position you are adopting and what I have heard from other banks so far is that you go on to say, "And as far as the declarations are concerned, you should confine yourself to the adversarial issues rather than ask the banks to refine the declarations they seek". Thus far others have recognised that the declarations must be refined so as to reflect the argued issues.

MR THANKI: Yes.

MR JUSTICE ANDREW SMITH: Do you differ on that?

MR THANKI: I don't differ on that, no.

MR JUSTICE ANDREW SMITH: Right.

MR THANKI: Our very real concern finally, my Lord, is not just the stays in the county court but also the FSA waiver. We would have a very big concern about booting off historic terms into the distance. Our concern is to have as much dealt with as possible while we are all here.

MR JUSTICE ANDREW SMITH: I understand that as a principle, yes.




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MR THANKI: Also in relation to guidance to the county courts, now that your Lordship has had the paper from the banks as to the outstanding issues, I would as your Lordship to consider whether any further guidance can be given in relation to the county courts on the active case management that your Lordship envisages will be likely after the handing down of the judgment. As your Lordship was told, some of the stays are expiring, and I think there are also applications in the pipeline to lift stays, so that is something the banks will be having to with daily on a pretty active basis from now on.

MR JUSTICE ANDREW SMITH: What are you inviting me to say additional to what I said when Mr Milligan raised the time matter at the start of his reply submissions?

MR THANKI: Really that your Lordship has in mind active case management in relation to the historic position, no more than that. That would be of very great assistance to the banks in dealing with the county court situation.

MR JUSTICE ANDREW SMITH: I have already said that the reason I felt it appropriate to deal with the current terms at this stage, and not deal with the historic terms, is because there is every indication that to some extent my findings will translate readily to a significant proportion of the historic terms, and that, while nothing is certain, might well lead to decisions on the historic terms being made in very short order, within a month one would certainly hope. I can't go so far as to say that necessarily they will translate to all the historic terms, and one will have to take stock as to what the residue is, how significant they are, and the residue is in terms of number of accounts and customers involved, and the management of the residue can only be considered at that stage.

MR THANKI: Absolutely.

MR JUSTICE ANDREW SMITH: It might even be that if the residue is very small, or a particularly unusual account, one would say that that would best be dealt with in the county court in light of the guidance. But even in cases I would hope that my judgment will, subject to appeal, provide the guidance.

MR THANKI: I am very much obliged.