Default Charges in agreements & contracts

[transformer999]

Is there any rules, regulations, case laws stating that default charges must be incoporated in the agreement.

I know that the CCA has its own guidelines and set of rules...but I am trying to find out if the lender/creditor must include what the cost would be if the borrower breached the agreement.

Must there be a term or condition showing this information please...just because it is unregulated.....would that mean that this information would not have to be included in the agreement?

any help will be great...

happy xmas & happy new year to all xx

[Never-In-Doubt]

Re: Default Charges in agreements & contracts

The UTCCR seems the most likely source?

Try this - yes it's credit cards but may lead you to unregulated versions?

---> Unfair contract terms guidance - The Office of Fair Trading

[transformer999]

Re: Default Charges in agreements & contracts

Thanks Niddy..I have read that and there are a lot of powerful tools in their to use...but require a lot of applying each unfair term that are contained in the agreement.

I was specifically looking for is it a legal duty for the creditor to put information in the agreement about default charges etc etc and not just write that costs will apply if payment is late. The link above covers all of what I am looking for but I would have to use that as an unfair relationship defence.

If I use the contract law it would be much easier and more simpler..so I say...thanks will keep searching.

[transformer999]

Re: Default Charges in agreements & contracts

I have been searching high and low to find any information about charges and defaults in agreements..I have several different opinions...some say they must be included in the agreement/contract some say they could be notified after the agreement is made.

I know that the CCA rules are much more stricter and they must be included in the agreement. But what about under contract or common law.

Yes the UTTCR say they must/should be and if they are not then this could be an unfair relationship...but I am trying to find out if it must be legal and any case law on this matter.

When someone signs an agreement/contract surely they must know that if they default or go into arrears they must pay x amount...and that x amount should be clearly shown in the agreement/contract...no?

OK the UTCCR say if it is missing that this could be looked at as unfair or even hidden or misleading term that the borrower/customer did not know what they would face in the event of default or late payment....and the creditor/lender could apply whatever charge or penalty they wanted. Yes that would be subjected to investigation if those charges were unfair but before I go down that long road...I was hoping to find something a bit closer to home.

This would be an incomplete agreement as important information has been left out...and unconsiouable bargain I was reading but then again what do I know about this stuff...that is why I am looking high and low to find and would appreciate any input from you lovely people on this and any suggestions.

HAPPY NEW TO ALL FOR TOMORROW..............

[transformer999]

Re: Default Charges in agreements & contracts

I have been reading this and highlighted in bold what I think applies to me...

• A contract isn’t frustrated just because it’s become more difficult or expensive to perform. That’s a risk that you take when you enter into a contract. We’re looking for some sort of physical impossibility.
• The supervening event must be beyond the control of both parties.
• The event must be unforeseeable by both parties. (in my case I was the one who was unforeseeable of what I would have to pay on default, the lender knew exactly what I would have to pay..misleading...)
  

The legal effects of frustration

• • At common law: the contract is automatically brought to an end at the time of the frustrating event.

• • The relevant statute is the Law Reform (Frustrated Contracts) Act 1943. It only applies where there’s no express provision in the contract for what happens if it’s frustrated. The key provisions are:

I am not looking for a loophole out of this but just need to get some good strong points of attack....and will continue to look...

[transformer999]

Re: Default Charges in agreements & contracts

Right been reading the OFT311 Unfair terms...

Group 14(b): Formality requirements

14.2.6 The more severe the penalty, the more clear and prominent must be the
information about how to avoid it.

As I see it charging £35 a letter and a phone is quite severe....and no information is given in my agreement...and no prominence or warning either to this....it just says that the borrower will pay the lender costs and all other charges if the goof up and not pay on time...

18.1.4 Where a precise amount cannot be stated, it should be clear how it will be set. It may in some circumstances be enough merely to say that it will be reasonable, but only where it is fairly obvious what would normally be thought a reasonable sum – for example, where there are identifiable and verifiable costs that have to be covered, but which should not be

No information how it be set out either in my agreement

[transformer999]

Re: Default Charges in agreements & contracts

18.2.7 Indemnities against risk. Terms under which the supplier must be
'indemnified' for costs which could arise through no fault of the consumer's
are open to comparable objections, particularly where the supplier could
himself be at fault. The word 'indemnify' itself is legal jargon which, if
understood at all, is liable to be taken as a threat to pass on legal and other
costs incurred without regard to reasonableness. Clearer and fairer wording
to replace legal jargon of this kind is illustrated in Group 19(b) of Annexe A.


Yes I have that word "indemnity" used severall times in my agreement which I know the OFT have declared that word void....

19.5 The underlying purpose of Regulation 7 also explains why the OFT does not
restrict its objections to obviously obscure jargon. Relatively straightforward
technicalities, such as references to 'indemnity' (see paragraph 18.2.7) and
'statutory rights' (see paragraph 1.5), can have onerous implications of
which consumers are likely to be unaware.

[transformer999]

Re: Default Charges in agreements & contracts

I was reading this story about this guy who submitted a claim against unfair charges and found some very good information on there. He has quoted some case laws which I hope will be useful to my case. I have to read it in more detail and try and pick out what parts apply to me...and hope it will be helpful to others too.

WARNING!!!!!!!! Its is long...nevertheless a good read:

A summary of my claim
I first submitted a letter to Lloyds asking them to repay the charges within 14 days (not the first time I had complained about them though). They refused, and so I submitted a claim using Money Claim Online (http://www.moneyclaim.gov.uk).
Lloyds acknowledged service and lodged a defence. This basically said that the charges were for services agreed in advance.
I then received an Allocation Questionnaire, and I returned this to the Court asking them to hear the case in the small claims. I also asked for an order as to directions to be made and attached a draft.
This order was granted. It required that I submit a number of documents within 28 days of the date of the order, and that Lloyds submit in return a response to my documents 28 days thereafter.
I complied with my part, sending over a statement of evidence and copies of all the documents. Lloyds did not respond.
I therefore filed an Application Notice to strike out their claim pursuant to CPR Rule 3.4(2)(c) and enter summary judgment against Lloyds pursuant to CPR Rule 3.5(1)-(5). This was granted by General Form of Judgment or Order on 31st May 2007 and Lloyds were given until 16th June 2007 to pay up. I will keep you posted.
The arguments in my statement of evidence are, I think, very strong. I hope that these prove useful to you if you decide to claim against your bank. There are a few more papers to come (the claim filed and defence) which I will post soon.
Letter sent to Lloyds TSB Bank
Dear Sir or Madam
I am writing to request that you repay all the default charges that have been applied to my account. I do not believe these charges reflect the true cost to Lloyds TSB of going into unauthorised overdraft, dealing with unpaid standing order/direct debit or loan payments, and the charges are therefore in breach of the Unfair Terms in Consumer Contracts Regulations. I have written to you about the matter previously and the response I received was unsatisfactory. I am therefore giving you notice that unless I receive a refund of these charges within 14 days, I will claim the full amount together with interest up to the date of judgment and court fees in the proceedings through the County Court.
I have calculated the charges as follows…(etc) Total £4,226.13
I have used the average monthly charge of £48.89 to calculate an estimated charge for the period 30 January 2001 to 30 June 2002. As I believe I have been unlawfully deprived of the money I have calculated interest at the statutory rate, the amount the court will award.
I therefore ask that you repay me the full amount of £4,226.13. I have attached a full schedule of the charges and interest, together with calculations for the estimated period with this document. I am prepared to offset part of the balance against my current overdraft with Lloyds TSB.
I look forward to a full response to this letter within 14 days.
Response received from Lloyds (coming soon)
Denying charges are unfair – saying that they are agreed in advance and were payment for services - refusing to cancel the charges.
Claim Form (coming soon)
Defence Filed By Lloyds (coming soon)
Order as to directions - applied for and granted on my Allocation Questionnaire
Order granted
On 28 February 2007
the papers in this claim were considered by District Judge Booth who allocated the Claim to the Small Claims Track to be heard at Mansfield County Court, Beech House, 58 Commercial Gate, Mansfield, Notts NG18 1EU
On Wednesday 18 July 2007 at 2.00pm
with a time estimate of one hour
The following directions shall apply to this claim:
1) The claimant shall within 28 days of service of this order send to the Defendant and to the Court:
a) A schedule setting out each charge repayment of which is sought, showing the date, amount and reason given (if any) for that charge being made;
b) Copies of any statement or other document relied upon as showing that each and every charge has been made;
c) A statement of evidence of all matters relied upon as tending to show that the charges are irrecoverable as penalties or otherwise.
d) Copies of decided cases and other legal materials to be relied upon.
If the Claimant fails to comply with this order, the claim will be struck out without further order.
2) The Defendant shall within 28 days thereafter file and serve a response to the Claimant's schedule, stating in respect of each item claimed:
a) Pursuant to what contractual provision such charge was made, producing a copy of the contractual document relied upon;
b) Whether such charge is accepted to be a penalty, and if not, why not;
c) If such charge is alleged to be a pre estimate of the Defendant's loss incurred by the Claimant's actions (whether or not such action is to be treated as a breach of contract between the parties), all facts and matters intended to be relied upon as showing that such is a proper estimate of such loss, and all evidence to be adduced at trial as to what the true cost of dealing with the matter was.
d) any witness statements
e) copies of decided cases and other legal materials to be relied upon.
If the Defendant fails to comply with this order, the Defence will be struck out without further order.
3) The original documents shall be brought to the hearing
4) The court must be informed immediately if the case is settled by agreement before the hearing date
Documents sent to the Court and to Lloyds' solicitors in accordance with the Order of 28th February:
EX1 Statement of evidence of Jennifer Wiss
EX2 Schedule of charges
EX3 Copies of statements showing bank charges
EX4 Office of Fair Trading's report on ‘Calculating Fair Default Charges in Credit Card Contracts' (April 2006)
EX5 Unfair Terms in Consumer Contracts Regulations 1999
EX6 Copies of cases:
Dunlop Pneumatic Tyre Company Limited v New Garage and Motor Company Limited (1915) AC 79 HL
Lordsvale Finance plc v Bank of Zambia (1996) QB 752
Bridge v Campbell Discount Co Ltd (1962) AC 600
Murray v Leisureplay plc (2005) All ER (D) 428 (Jul)
Hadley v Baxendale (1854) 9 Exch 341
EX7 Schedule of Interest Charges
EX1 Statement of Evidence
EX1

IN THE MANSFIELD COUNTY COURT

Claim Number

(Claimant)

Lloyds TSB Bank Plc

(Defendant)

Statement of Evidence of Jennifer Wiss

I, of [ ] state as follows:
I have held an account (Sort Code [ ] and Account Number [ ] ) with the Defendant Lloyds TSB Bank plc for at least 10 years.
The Defendant from 10/01/01 to date has applied various charges to my account, described by the Defendant as follows:

• overdraft usage fees
• unpaid cheque fees
• unpaid standing order fees
• unpaid direct debit fees
• overdraft excess fees
• unpaid personal loan fees

A schedule of those charges is attached (marked EX2), which totals £3,531.50. Copies of the documents provided by the Defendant with details of these charges are also provided (marked EX3).
The Defendant's charges are a disproportionate penalty and are therefore irrecoverable at common law. The Defendant's charges are also contrary to the Unfair Terms in Consumer Contracts Regulations 1999. The legal principles that establish this are set out below. I have quoted the Office of Fair Trading's Report on “Calculating fair default charges in credit card contracts” (April 2006) extensively, which relates to Credit Card charges but which considers the same principles that apply to this case, and a copy of this document is therefore attached for ease of reference (marked EX4).
Unfair Terms in Consumer Contracts Regulations 1999 (“the Regulations”)
A copy of the Regulations are attached (marked EX5).
An unfair standard term in a consumer contract is not binding on the consumer. The terms in the contract between myself and the Defendant are standard terms in accordance with the definition at Regulation 5(2) as they have not been individually negotiated, they have been drafted in advance and I therefore was not able to influence the substance of the terms.
Under Section 5(1) of the Regulations:
“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.”
The requirement of 'good faith' noted at Section 5(1) of the Regulations reflects the principle of fair and open dealing with consumers. It does not simply mean that terms must not be used deceitfully; it means that terms should be drafted in a way that respects consumers' legitimate interests. In assessing fairness it is necessary to consider not only how a term is used, but how it could be used. The test of fairness also takes account of the circumstances surrounding the conclusion of the contract and the effect of the other terms in the contract.
Schedule 2 of the Regulations illustrates possible respects in which a term may be unfair to the consumer by means of a 'grey list' of possible kinds of unfairness. Of particular relevance to default charges is Paragraph 1(e) of Schedule 2, specifying that terms may be unfair that require “any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation”. The charges levied against my account meet this description and are therefore unfair.
The Defendant has sought to argue in their defence that the charges levied are in respect of services rendered, and were both agreed from the outset and openly disclosed to me (if this were accepted, and it is not, then the charges would be unfair under Section 15 of the Supply of Goods and Services Act 1982 which states that “where, under a contract for the supply of a service, the consideration for the service is not determined by the contract, left to be determined in a manner agreed by the contract or determined by the course of dealing between the parties, there is an implied term that the party contracting with the supplier will pay a reasonable charge” and “what is a reasonable charge is a question of fact”). However, this assertion implies that the charges are core terms, which they are not. 'Core terms' relate to the definition of the main subject matter of the contract or to the adequacy of the price or remuneration as against the services supplied in exchange. They are subject to the Regulations, but are outside the scope of the test of fairness by virtue of Regulation 6(2) which states that:
In so far as it is in plain intelligible language, the assessment of fairness of a term shall not relate:-
(a) to the definition of the main subject matter of the contract, or
(b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange.
The default charges have arisen from the fact that I have exceeded my agreed overdraft limit or failed to pay or honour payments. I did not enter into a contract with the Defendant expecting to incur such charges and the default charges levied are not the substance of the bargain but are simply an incidental charge that is applied if some of the main obligations of the contract are not complied with. This reasoning is consistent with the Office of Fair Trading's opinion in its April 2006 Report. As the charges levied are not core terms, they are subject to the general test of fairness under the Regulations.
It is submitted that an unfair default charge would be one that enabled the issuer to recover more than the damages which would be awarded at common law in the event that a consumer was individually sued for breach of contract.
In comparison, a fair charge would:

• reflect a reasonable pre-estimate of the net limited additional administrative costs which occur as a result of the specific breaches of contract and which can be identified with reasonable precision
• reflect a fair attribution of those costs between defaulting customers (English Hop Growers v Dering [1928] 2 KB 174, CA)
• be based on a genuine estimate of the total numbers of expected instances of default in the relevant period, and
• treat costs other than those net limited additional administrative costs as a general overhead of the lending business and disregard them for them purpose of calculating a default fee.

It is accepted that there will be a reasonable degree of rounding in the level of the default charge calculated in accordance with these principles.
The principles stated denote that a default charge should take into account a lender's expected ability to mitigate the loss it suffers as a result of default.
To show the charges levied are fair, the Defendant must demonstrate that a genuine pre-estimate of their actual loss incurred by each breach of contract did take place before levying the costs, and that these losses were of the type and amount that would ordinarily be recoverable if the Defendant were to take action against me for breach of contract. This relates to principles that have been established at common law.
Common Law
There are several cases that establish that charging consumers penalties for failing to meet their contractual obligations is not permitted by law. These are as follows:
Dunlop Pneumatic Tyre Company Limited v. New Garage and Motor Company Limited [1915] A.C. 79 HL (attached - EX6)
From the case:
The essence of a penalty is a payment of money stipulated as in terrorem of the offending party; the essence of liquidated damages is a genuine covenanted pre-estimate of damage (Clydebank Engineering and Shipbuilding Co. v. Don Jose Ramos Yzquierdo y Castaneda [1905] A. C. 6).
The question whether a sum stipulated is penalty or liquidated damages is a question of construction to be decided upon the terms and inherent circumstances of each particular contract, judged of as at the time of the making of the contract, not as at the time of the breach (Public Works Commissioner v. Hills [1906] A. C. 368; Webster v. Bosanquet [1912] A. C. 394).
To assist this task of construction various tests have been suggested, which if applicable to the case under consideration may prove helpful, or even conclusive. Such are:
(a) It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach (Illustration given by Lord Halsbury in Clydebank Case [1905] A. C. 6).
(b) It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid (Kemble v. Farren 6 Bing. 141). This though one of the most ancient instances is truly a corollary to the last test. Whether it had its historical origin in the doctrine of the common law that when A. promised to pay B. a sum of money on a certain day and did not do so, B. could only recover the sum with, in certain cases, interest, but could never recover further damages for non-timeous payment, or whether it was a survival of the time when equity reformed unconscionable bargains merely because they were unconscionable, - a subject which much exercised Jessel M.R. in Wallis v. Smith 21 Ch. D. 243) - is probably more interesting than material.

(c) There is a presumption (but no more) that it is penalty when "a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage" (Lord Watson in Lord Elphinstone v. Monkland Iron and Coal Co. 11 App. Cas. 332).
Lordsvale Finance Plc v Bank of Zambia [1996] Q.B. 752 (attached - EX6)
From the case:
The speeches in Dunlop Pneumatic Tyre Co. Ltd. v. New Garage and Motor Co. Ltd. [1915] A.C. 79 show that whether a provision is to be treated as a penalty is a matter of construction to be resolved by asking whether at the time the contract was entered into the predominant contractual function of the provision was to deter a party from breaking the contract or to compensate the innocent party for breach. That the contractual function is deterrent rather than compensatory can be deduced by comparing the amount that would be payable on breach with the loss that might be sustained if breach occurred. Thus the presumption of penalty arises where "a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage ." which is a citation of the speech of Lord Watson in Lord Elphinstone v. Monkland Iron and Coal Co. Ltd. (1886) 11 App.Cas. 332, 342.

Bridge v Campbell Discount Co Ltd [1962] A.C. 600 (attached - EX6)

Case summary:
The hirer of a car under a hire-purchase agreement with a finance company, having made an initial payment equal to £105, paid one monthly instalment on the total hire-purchase price of £482 10s., and then informed the company in writing that he could not keep up the payments and returned the car to them.
Clause 6 of the agreement provided that: "The hirer may at any time terminate the hiring by giving notice of termination in writing to the owners, and thereupon the provisions of clause 9 shall apply." Clause 9 provided that, if the agreement was for any reason terminated before the vehicle became the hirer's property, the hirer "shall forthwith . pay to the owners . by way of agreed compensation for depreciation of the vehicle such further sums as may be necessary to make the rentals paid and payable equal to two-thirds of the hire-purchase price." Under this clause the company claimed £206 3s. 4d.:-
Held, on the basis that the hirer did not exercise his option under clause 6 but was in breach of his obligations, that the amount alleged due under clause 9 was not a genuine pre-estimate of damages, but a penalty (post, pp. 614, 615, 624, 629, 632); that the owner could not therefore rely on claw 9; and that the case should accordingly be remitted to the court of first instance to determine the amount of damages, if any, which the company had suffered.

Murray v Leisureplay plc [2005] All ER (D) 428 (Jul) (attached - EX6)

Case summary:
The claimant was engaged under a contract of service with the defendant. Non-binding heads of agreement were entered into for the acquisition of one of the claimant's own companies, BPIM, and the parties agreed that a due diligence report was a necessary pre-condition of that acquisition. A final agreement could not be reached on that acquisition and the claimant's contract was terminated on less than one years' notice. He brought proceedings, seeking to recover, inter alia, damages pursuant to cl 17.1 of his contract, which provided for liquidated damages to be paid in the event of the wrongful termination of the contract, in the sum of one year's gross salary, unless heads of agreement relating to the acquisition of a financial institution had been executed, whereupon he was entitled to three years' salary. The judge held, inter alia, that cl 17.1 was a penalty and, therefore, unenforceable, and rejected the defendant's claim to recover the professional fees and costs of an additional director for the acquisition of BPIM. Both parties appealed.
The issues that were subject of the appeal were whether the clause in the agreement providing for the payment of a year's gross salary in the event of termination of the claimant's employment without one year's notice was unenforceable as a penalty; whether under s 322 of the Companies Act 1985 the defendant could recover from the claimant the costs which it had incurred in an arrangement to acquire a company from the claimant made in breach of s 320 of the Act; and if the claimant was liable for those costs, whether the court should grant him relief under s 727 of the Act.
The court ruled:
(1) It had not been shown that the parties could not reasonably have come to the view that cl 17 was a genuine pre-estimate of damage or that it was not otherwise justifiable.
(2) Loss or damage within s 322(3)(b) did not include loss or damage which resulted indirectly from the arrangement or transaction in question. In the instant case, the costs of obtaining a due diligence report was a direct result of the arrangement for acquiring BPIM since the parties had agreed that a satisfactory due diligence report was a necessary pre-condition of that acquisition. However, the costs of hiring an additional director had not been foreshadowed by the acquisition agreement and so could not be recovered under s 322(3)(b). It could, however, have been possible to recover them in an action for breach of fiduciary duty.
(3) The court was not well placed to make findings of fact as to whether any relief should be given under s 727 and in those circumstances, that issue would be remitted back to the trial judge.
-----------------------------
The above cases show that extortionate penalties imposed against consumers for failing to meet obligations are unfair and contrary to the law.
In assessing the fairness of the charges and in particular whether they amount to a disproportionately high sum under Paragraph 1(e) of Schedule 2 of the Regulations, the amount of money stated as being payable on breach must be compared with the damages which would be awarded at common law in the event that a consumer was individually sued for breach of contract.
As such it is therefore necessary to have regard both to the principles of causation of loss and remoteness in considering default charge terms.
Under common law the innocent party to a contract is not provided with a complete indemnity for all loss that in fact results from a particular breach - however improbable, however unpredictable.
In terms of remoteness, damages for breach of contract are traditionally divided into 'general damages' and 'special damages'. 'General damages' are those damages foreseeable as flowing naturally and probably from the breach of contract in the ordinary course of events. 'Special damages' are damages foreseeable in the particular circumstances of the case because of special matters known to both parties at the time of making the contract. These are the two types of damages referred to in Hadley v Baxendale (1854) 9 Exch. 341 (attached - EX6).
It is submitted that there were no obvious general damages that could flow naturally from exceeding a agreement to loan money (such as an overdraft in this case).
So far as a failure to pay or a failure to honour payment are concerned, in general a party to a contract who fails to pay an amount of money due to the other side is not usually liable to pay any damages to the creditor except such interest as may be payable by statute or agreement. The presumption is that in the ordinary course of things a person does not suffer any other loss by reason of the late payment of money.
Under lending contracts with consumers, interest is payable at the agreed rate in respect of any outstanding amounts, where the balance detailed in the consumer's statement is not paid in full by the due date, including any amounts not paid by the due date. The enclosed schedule shows that the Defendant charged me interest to the total of £526.53 during the period for which charges were levied on my account (Attached - EX7).
In so far as it is claimed that any other losses are suffered, the ordinary rules of damages would apply, but this is against the background that interest is payable by the consumer to compensate the lender for the detention of their money. The Office of Fair Trading also are of the opinion that a company would not have any claim for 'general damages'.
Whether a company might be able to claim 'special damages' for a default would depend on the company being able to prove that:

• the consumer was aware at the time of contracting that, if he committed a breach of this nature, the company would suffer losses by incurring such costs
• such specific costs could constitute 'damages' claimable by the company in the event of breach, and
• the consumer understood and contracted on the basis that he would be liable for such costs as damages.

On this basis there is some scope for a company to argue that a consumer might be aware that if he defaults, the lender will incur certain additional administrative costs of notifying him of his breach and of advising him as to why and how to remedy the breach, particularly if the matter had been explained in the contract and previously drawn to the consumer's attention in clear and unambiguous terms.
Notification to the consumer of his default, and, possibly, subsequent communication between the consumer and the company on the topic, can serve the interests of the consumer as well as the lender. On that basis, it might be possible to argue that it would not be unfair for the consumer who has defaulted to bear some part of the common costs of those communications. It might also be arguable that it is reasonable that those who default rather than consumers generally should be responsible for these limited additional administrative costs. Clearly though, the charges imposed by the Defendant do not reflect the actual additional administrative costs incurred to them by my breach of contract – the Defendant has been invited to show otherwise but has declined.
So far as common law is concerned, any post-contract rationalisation of default charges would not be a genuine pre-estimate and would not therefore save the term to which it relates from being considered a penalty. In the absence of evidence that a genuine pre-estimate of the loss incurred to the Defendant had been conducted in relation to the charges levied, and evidence to show that the pre-estimation of costs has been limited to the type of costs which would be legitimately claimable as damages against the individual consumer if the lender were to sue him individually for breach of contract, the charges must be considered an unfair penalty under the Regulations as a term which has the object or effect of requiring a consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation.
Other legislation
I would also like the Court to consider that because of the arbitrary nature of blanket bank charges, meaning that all customers are charged the same regardless of the sum involved, the charges are unlawful under Section 4 of the Unfair Contract Terms Act 1977 which states:
(1) A person dealing as consumer cannot by reference to any contract term be made to indemnify another person (whether a party to the contract or not) in respect of liability that may be incurred by the other for negligence or breach of contract, except in so far as the contract term satisfies the requirement of reasonableness.
(2) This section applies whether the liability in question—
(a) is directly that of the person to be indemnified or is incurred by him vicariously;
(b) is to the person dealing as consumer or to someone else.
I have asked the Defendant to refund the charges or offer proof that a genuine pre-estimate of the loss incurred to the Defendant was conducted in relation to the charges contained in the contract (a post justification of the charges as explained would not be a genuine pre-estimate and would not therefore save the term of the contract that it relates to), and the Defendant has declined to do so.
I therefore claim the sum of £3,531.50 being the sum unlawfully debited by the Defendant, together with the Court fees incurred to date of £220, and interest under Section 69 of the County Courts Act 1984 at the rate of 8% p/a from 10/01/01 up to the date of payment (currently £556.30 – see attached EX2). I have deducted from my original claim the charges referred to as 'Account Charge' (totalling £379) as I have since discovered that these relate to services provided with the 'Select' type account such as breakdown cover and mobile phone insurance.
STATEMENT OF TRUTH
This witness statement was made and signed at [ ] on 7 April 2007 by me,
I believe that the facts stated in this witness statement are true.

Application Notice made on 16th May 2007
I, the claimant, intend to apply for an order that the Defence submitted by the Defendant be struck out without further order and summary judgment be entered against the Defendant because the Defendant has not complied with the provisions of the Order made in the Mansfield County Court by District Judge Booth dated 28th February 2007 and the Claimant requests that the Court strike out the defence submitted by the Defendant pursuant to CPR Rule 3.4(2)(c) and further, enter summary judgment against the Defendant pursuant to CPR Rule 3.5(1)-(5). I wish to rely on evidence in Part C in support of my application.
PART C
I wish to rely on the following evidence in support of this application:
In accordance with the provisions of the Order dated 28-01-2007 made by District Judge Booth in the Mansfield County Court, the Claimant sent to the Defendant by Special Delivery on 10-04-2007, the documents listed in Section 1(a), (b), (c) and (d) of that Order including a schedule of charges, copies of statements, a statement of evidence and copies of decided cases and other legal materials to be relied upon.
A copy was also sent to the Court on the same date by Special Delivery.
The Order required the Defendant to file and serve a response to the Claimant's schedule within 28 days thereafter, per Sections 2(a), (b), (c) and (d).
Taking that the Claimant's documentation was served on the 12-04-2007 (2 days after posting) the Defendant's response should have been with the Claimant and the Court by 10-05-2007.
The Defendant has not provided any response and has therefore failed to comply with the entire provisions of the Order.
The Claimant requires that the Court strike out the defence submitted by the Defendant pursuant to CPR Rule 3.4(2)(c) and further, enter summary judgment without trial against the Defendant pursuant to CPR Rule 3.5(1)-(5) which provides that the right to enter judgment arises where (a) the Court makes an order which includes a term that the statement of case of a party should be struck out if the party does not comply with an Order; and (b) the party against whom the Order was made does not comply with it.
The Claimant has served a copy of this notice on the Defendant by Special Delivery.
Date: 31st May 2007 – General Form of Judgment or Order
Before District Judge Wall sitting at Mansfield County Court, Beech House, 58 Commercial Gate, Mansfield Nottingham NG18 1EU, it is ordered that:

1. The Defence is struck out.
2. There be judgment for the Claimant for a sum of £3,520 plus court fee of £130 plus interest to 10 January 2007 of £706.00 and interest for 11 January 2007 to judgment of £98.56, total payable £4444.56 to be paid by 4pm on the 15 June 2007.
3. The hearing listed for 18 July 2007 be vacated.

Date 18 May 2007.

[transformer999]

Re: Default Charges in agreements & contracts

Does anyone know if we can use
Supreme Court of New South Wales - Court of Appeal



in UK? maybe Paul will know...

[pompeyfaith]

Re: Default Charges in agreements & contracts

Does anyone know if we can use
Supreme Court of New South Wales - Court of Appeal



in UK? maybe Paul will know...

That is in Australia so nope

Notice the .au on the end of web address

http://www.lawlink.nsw.gov.au/sc

[transformer999]

Re: Default Charges in agreements & contracts

Thanks PF so we cannot use Austrailian case law in UK?

[pompeyfaith]

Re: Default Charges in agreements & contracts

Are you referring to the case law posted above ?

[transformer999]

Re: Default Charges in agreements & contracts

No this one..

Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41 (20 March 2006)

[pompeyfaith]

Re: Default Charges in agreements & contracts

Oh right I would send a PM to Paul in that case as he is your man.

Regards

[transformer999]

Re: Default Charges in agreements & contracts

Thanks PF will wait to see what he says...

ta very much