# The Key Point in the High Court case behind the redress scheme



## Brendan Burgess (20 Aug 2015)

It's worth reminding ourselves of what Justice Hogan said in the High Court case as I think it has relevance for people who might be appealing. 


*The Thomas appeal*
41. Turning next to the appeal by Mr. Thomas and Ms. Thomas, it will be seen that their case is different from the Foleys and the Lavery-Whelans in that they were, in fact, charged a redemption fee. The complaint was nevertheless upheld on essentially two distinct grounds:

1. That the contents of the applicable special condition (special condition 7) was not sufficiently clear so as to advise Mr. and Ms. Thomas "of the fact that the right to a tracker rate may be lost if the fixed term is broken" and that the agreement lacked clarity as a result.

ii. That when the Mr. and Ms. Thomas contacted ILP "for advice regarding interest rates", the Bank "should have specifically discussed the loss of the tracker rate" with them and there is no evidence that it did so.

*The construction of the special condition*
42. So far as special condition 7 is concerned, I cannot disagree with the Ombudsman's finding that the clause lacks sufficient clarity on the key question of whether a break in the fixed rate would affect the entitlement of the borrower to revert to the tracker rate. In fact, special condition 7 says nothing which would alert even a prudent borrower to the fact that he or she would not be entitled to a tracker mortgage at the end of the otherwise fixed period if the previously agreed rate had been broken. It is true that special condition 7's commitment to the tracker rate is prefaced by the words "on expiry of the fixed rate period." The Bank contend that these words ("...on expiry ...") necessarily mean- or perhaps imply- that the commitment subsists only for so long as the borrower does not switch during that period, because otherwise the fixed rate period would not have "expired".

43. This, undoubtedly, is a sophisticated and clever argument which, for example, had it been advanced in an undergraduate law examination would have attracted high praise from the examiners as an original demonstration of legal craft and skill. But this type of argument should really have no place in the construction of financial documents involving retail customers, even if- as the Bank contends, but the Healys deny- the customers are to be regarded as experienced investors and even if (as here) they had access to independent legal advice. Given the huge implications for the customer, if a key clause of this kind is to bear this sophisticated construction, it behoves the Bank to spell this out in plain language for the benefit of all customers, and not simply those who have either an amateur or professional interest in the niceties of the law relating to the construction of contracts who might otherwise be able to glean this vital piece of information unaided. Or, at all events, the Ombudsman is entitled so to think.


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## Brendan Burgess (20 Aug 2015)

_The Bank contend that these words ("...on expiry ...") necessarily mean- or perhaps imply- that the commitment subsists only for so long as the borrower does not switch during that period, because otherwise the fixed rate period would not have "expired".

43. ... this type of argument should really have no place in the construction of financial documents involving retail customers,_

So if someone broke out of their fixed rate early, can they argue that their fixed term expired at that date? 

If this argument succeeds, it would mean that those people who did not have a price-promise in their contract would get the tracker rate appropriate to the date they broke out and not the date that the contract would have expired naturally.


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## AAM_User (20 Aug 2015)

Brendan Burgess said:


> If this argument succeeds, it would mean that those people who did not have a price-promise in their contract would get the tracker rate appropriate to the date they broke out and not the date that the contract would have expired naturally.



Is there any chance they would be worse off ?


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## Joannmct (20 Aug 2015)

How strong is this argument?any legal minds know?


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## Brendan Burgess (20 Aug 2015)

AAM_User said:


> Is there any chance they would be worse off ?



I don't think so. The tracker rates increased over time, so the early your fixed rate period expired, the lower your rate. 

Brendan


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## tom bonass (20 Aug 2015)

It's probably only a matter of time before someone takes a case on this issue and fingers crossed it's not too long coming. If you think about it logically- if you were on a fixed rate you could only break out of it with your bank's agreement (sometimes paying a fee/sometimes not) .It doesn't make sense now for them to be referring to the time when the fixed rate 'would have' come to an end . Surely,  the period of fixed interest ended when they allowed you to exit from it. Just my 2 cents and but I am definitely not an expert.


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## L John (20 Aug 2015)

If that point is proved then it would also mean increased redress and compensation for everyone as the over payments would have started from the date of the agreed break as opposed to them starting from the date it was due to expire


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## Brendan Burgess (20 Aug 2015)

I don't know if there is a legal definition of "expire" but here is the Oxford English Dictionary 

*Definition of expire in English:*
* verb*
authorization, or agreement) come to the end of the period of validity: _his driving licence expired_
More example sentences Synonyms
1.1(Of a period of time) come to an end: _the three-year period has expired
_
I have no idea if breaking out early is deemed expiry. 

"it behoves the Bank to spell this out in plain language for the benefit of all customers, and not simply those who have either an amateur or professional interest in the niceties of the law" 

Brendan


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