Bank charges update: remit from small claims to the ordinary court

One of the current strategies of UK banks in Scotland is to ask the court to remit cases from the small claims procedure (where expenses are capped) to ordinary cause procedure (where expenses are potentially unlimited).  Remit between different court procedures, or to a senior court, can be granted where there are difficult questions of law, or exceptionally complicated factual issues. 

From the consumer's point of view having a claim removed from the small claims system means either instructing a solicitor in the hope of obtaining civil legal aid, or dropping the claim unless you were prepared to risk court expenses several times the value of your claim in the event of failure. Legal aid is not straight-forward either, one has to pass all of the qualifying hurdles, and for those on a modest to good income, you may have to pay a financial contribution to the legal aid board in excess of the value of your claim; and if you win, it is not necessarily straight-forward that you won't have 'contra' expenses, or be required to pay some of your award back to the legal aid board. Things can get complicated with expenses.

The practical result of remit will be that some consumers will drop their claims as it becomes uneconomical or financially imprudent to pursue a case.  If that happens, access to justice will have been thwarted.  This raises fundamental questions about the proportionality of our justice system in relation to expenses, and whether bank charge claimants of modest means have the right to a 'fair hearing' before our courts, as guaranteed by Article 6(1) of the European Convention on Human Rights.

In the case of Walls v. Santander UK plc, counsel for the defender sought remit from small claims to the ordinary cause. Govan Law Centre opposed this application on behalf of the pursuer.  After lengthy submissions, Sheriff Cubie at Glasgow Sheriff Court made 'avizandum' (which means he will reflect upon the issues and provide a written judgment). Sheriff Cubie's Opinion is expected later this month. GLC will provide a further update in due course.

Bank charges update from GLC

GLC has received lots of e-mails and messages from citizens across the UK asking for an update on our bank charges cases.  In Scotland, the banks have deployed the strategy of applying to the court to 'remit' cases from the small claims system to the ordinary court procedure on the grounds of complexity.  This can be a powerful tactic in practice.  The Royal Bank of Scotland used the remit rules to thwart a claim for negligence last year.  Once a case leaves the small claims procedure in Scotland the protection against court expenses flies off, and the claimant would be exposed to unlimited expenses in the event of failure.

In the case of Sharp v. Bank of Scotland, the defender applied to remit the case to the ordinary court procedure.  As our client is eligible for civil legal aid this was not a problem (legal aid is not available for small claims in Scotland, but it is for ordinary cause actions). However, we may oppose this in other cases where appropriate, and will disseminate this knowledge if successful.  Accordingly, the case of Sharp will proceed to an Options Hearing next month, and it is likely a 'debate' (a court hearing on all of the legal arguments) will take place shortly thereafter.  This is necessary because the banks defence to a s.140A Consumer Credit Act (CCA) claim is to argue that the banking contract was not a regulated credit agreement.  The banks are also arguing that claims cannot go back before 6 April 2007.

Accordingly, if we can persuade the court that these lines of defence are irrelevant and wrong in law, this would leave claims to be determined on the facts as regards the unfair relationship test and the level of unfairness and consumer detriment.  Of course, in many cases the level of unfairness is severe.  Because cases depend so much on their own facts under the CCA - whether in terms of the transitional arrangements or the unfair relationship test - there may be little point in cases being sisted or stayed. Each case is different, and under the CCA each case is looked at specifically between the parties, the contract between them and the consequences of the charges on that customer. 

GLC will post further updates, but we are unable to make too much detail public at this stage as cases are live, and we cannot prejudice the prospects of our clients.