ECX's Test Case Day 14 Diary - FINAL DAY.
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’.