Contra proferentem mortgage conditions

by Mark Alexander

15:13 PM, 9th October 2013
About 7 years ago

Contra proferentem mortgage conditions

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Contra proferentem mortgage conditions

Unless you are a qualified contracts lawyer who has also studied Latin you will probably not have a clue as to how contra proferentem mortgage conditions affect you. I have spent the last two weeks getting my head around it as it was a key point in the barristers opinion for the Bank of Ireland Tracker Mortgage Class Action which has stalled due to all funds raised for that campaign having been exhausted. Therefore, for the benefit of everybody with a tracker mortgage who may be affected by a hike in their tracker mortgage margin at some point, and in particular to those affected by the decisions of West Bromwich Mortgage Company and the Bank of Ireland I offer this laymans interpretation and my thoughts on how we should progress.

Very simply, the contra proferentum law is created to enable judges to decide which conditions apply if contractual conditions are in conflict. In other words, if the contract has two or more conditions and they don’t all say the same thing one of the conditions will apply and the others will not.

The relevance of this is that West Bromwich and Bank of Ireland have conditions in their mortgage documentation and some conditions contradict others.

The law goes on to say that the judges interpretation of what the contract means will be the condition(s) which are in favour of the person to whom the contract was presented. To put it another way, if your mortgage conditions were presented by West Bromwich or Bank of Ireland the judge will rule against them because they wrote the contract and the most favourable of the conditions will be applied to you. 🙂

There are, of course, several more legal arguments our lawyers could throw at the enemy, however, in my opinion the contra preferentem argument is without any shadow of doubt our best shot

Other legal arguments will only suit some of our Class Action Group. For example, there appears to be no legal definitions of a sophisticated landlord but West Bromwich think it is anybody with more than three properties. Let’s say we win that battle and the Court decides it’s six – anybody with seven or more isn’t going be too happy are they? I will be one of them! Also, what good would that do for those affected by Bank of Ireland or by any other lender who tries this on? Remember, Bank of Ireland has a different criteria and is not using the sophisticated borrower argument. Other lenders will no doubt make up their own excuses too. What we need is a win which will affect ALL mortgage lenders.

Many people are arguing that they didn’t receive the Mortgage Conditions from their lenders. Well sorry folks, maybe you did, maybe you didn’t, but I can assure you that you signed a piece of paper before your mortgage completed to say that you did. The Mortgage Deed I signed for my West Bromwich mortgage states “By signing this Mortgage you confirm the terms of the Standard Conditions of Offer, the Special Conditions and the Mortgage Conditions”.

There are many more arguments which I could play devils advocate with which have been raised on our forums. With a bit of thought I reckon I could win most of the arguments and I’m not even a qualified solicitor. I am, however, in the same boat as you so please don’t shoot the messenger. I’m also affected by these increases and I’m doing everything I can to make sure we win this fight. In my case that’s been 18 hour working days for the last three weeks and a lot more time on the Bank of Ireland case since it reared its ugly head earlier this year.

That’s why I would like Justin and the barrister to lead with what I believe is our best shot – contra proferentem mortgage conditions.

If we ask our lawyers to look into every legal argument we have presented on our forums we will run out of money before we get to first base. What I would prefer is that we fight the one universal truth which is that our mortgage terms are contra proferentem. If we lose and we still have some money left there’s nothing to stop us appealing on other grounds as well.

For the above reasons, do you agree that we should ask our legal advisers to focus on contra proferentem mortgage conditions?

There are lots of other things we can do as a group to be a thorn in the side of these lenders in the meantime. For example, I love the PR campaigns and lobbying we are sharing ideas on. We must continue to win the hearts and minds of the media and every centre of influence we can think of. I also applaud the tactics being used to make these lenders lives a misery, for example the Subject Access Requests. Perhaps the most important thing we can do whilst we wait for the legal bods to advise us is to spread the word. We need to get every borrower we can find with a tracker mortgage to sign up. There are also plenty of other landlord groups who can help us to do this and it’s in all of our interests to put as much pressure on them as possible to get involved and spread the word amongst their members.

Contra proferentum mortgage conditions as I see it

I owned a substantial number of buy to let properties at the time of my mortgage application and still do. The chances of me proving that I was not a sophisticated landlord are very slim but I do have an argument to suggest that property investment was not my line of business at the time I took the mortgage. All of my properties were professionally managed in order to allow me to focus on my career as a commercial finance broker. I did not consider myself to be a professional investor at the time I took out this mortgage, the purpose of investing into a property portfolio was to provide for my retirement. I don’t want Justin or the barrister to push that angle though, I think it’s a waste of money as everybody’s situation will be very different.

Neither my mortgage broker nor my solicitor were aware of the rights of West Bromwich Mortgage Company to increase the premium they charge on my tracker mortgage rate. I did read the Mortgage Conditions brochure at the time  and at the time I sincerely believed that section 5 of the Mortgage Conditions was not applicable. Note that I am also a qualified mortgage adviser and IFA. I believed that section 5 of the mortgage conditions booklet was only relevant to mortgages written on the building society’s standard variable rates, which do not track the Bank of England base rate. This was supported by the marketing materials being used by the West Bromwich to promote their tracker mortgages. Also, there was no mention of such a vital clause in either their KFI document or their offer letter. Clearly my solicitor was mislead too. I suspect everybody who was affected by the Bank of Ireland rate hike would also say the same thing.Contra proferentem mortgage conditions

So having established that I read the booklet and I signed to agree to all of their terms, including those in their Mortgage Condition booklet, what makes me believe West Bromwich are still in the wrong?

  1. Their website said, and to this day still continues to say “Tracker mortgages give you the certainty of knowing that the rate you pay will move in line with Bank Base Rates.”
  2. My offer letters states “After 30th June 2010 your loan reverts to a variable rate which is the same as the Bank of England Base Rate, currently 5%, with a premium of 1.99%, until the term end”

Logic tells me the above are in conflict with Section 5 of the Mortgage Conditions booklet which I signed and received. On the basis that West Bromwich produced the booklet, their website, and the Mortgage Deed I believe there is a clear case of conflicting conditions and ambiguity, hence the conditions they are relying upon are contra proferentem. On that basis, a judge MUST rule against West Bromwich as they are the originators of the documentation. It’s not like we are asking for the mortgages to be written off, all we want is the terms and conditions we believed we had signed up for.

We MUST win a Court Case before even more lenders follow suit.


Joe Bloggs

0:54 AM, 12th October 2013
About 7 years ago

Reply to the comment left by "Seething Landlord" at "11/10/2013 - 19:05":

the UFCTA is very wide ranging. it even applies to tenancy agreements. see:
'A standard term is 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'– Regulation 5(1). Unfair terms are not enforceable against the consumer.'
we have signed up for a tracker, but lenders can change the margin to some unspecified amount for business reasons! this sums up the above OFT quote in a nutshell!

Seething Landlord

1:45 AM, 12th October 2013
About 7 years ago

Reply to the comment left by "Joe Bloggs" at "12/10/2013 - 00:54":

You are quoting from the Unfair Terms in Consumer Contracts Regulations 1999 - one issue is whether BTL mortgagors are consumers within the meaning of the regs. but complaints to the FCA would be the first step. I'm sure this has been discussed on the main thread "West Brom Building Society to increase BTL tracker margins". It would be great if the FCA were to mount a challenge.

Helen Landlord

8:52 AM, 12th October 2013
About 7 years ago

Reply to the comment left by "Seething Landlord" at "12/10/2013 - 01:45":

I wonder if WBBS were given the legal advice that if they only go for landlords with 3 or more properties then they would not fall into the OFT rules and this would prevent the FCA from making a challenge? I'm sure the criteria of 3 or more properties they are using is based on specific legal advice - Not that this definitely means they would win - it can come down to probabilities.

Joe Bloggs

8:54 AM, 12th October 2013
About 7 years ago

i thought that too but cant see it in marks initial post. perhaps mark can comment on why the legals feel CP rule is a better prospect than UFCTA?


9:26 AM, 12th October 2013
About 7 years ago

BoI mortgages have been to OFT, FCA, & FOS read the BoI forum.

Seething Landlord

11:23 AM, 12th October 2013
About 7 years ago

Reply to the comment left by "Helen Landlord" at "12/10/2013 - 08:52":

You may well be right about why they have used the "3 or more" criterion but whether they are correct is one of the side issues - see para 6 of Mark's post that started this thread.

Gary Nock

13:05 PM, 12th October 2013
About 7 years ago

Reply to the comment left by "ian " at "12/10/2013 - 09:26":

Ian I was not aware the FOS had ruled on any of the BOI cases including my own. This is why we have to be careful on which argunents we run in either County Court or the High Court. If FOS finds for us then BOI has to pay compensation. If it finds against then it may well compromise any sort of court action, although it would not be binding. If we go to Court before we know the FOS decision then we could be spending money backing the wrong horse.

Seething Landlord

1:41 AM, 13th October 2013
About 7 years ago

Reply to the comment left by "Gary Nock" at "12/10/2013 - 13:05":

This is part of Mark's post on page 89 of the BOI thread: "We believe the FCA’s response is a whitewash. They have simply used the BoI response to our case as a reason not to pursue it. They have not obtained their own independent advice so the FCA is not acting as an independent arbitrator. The BoI response is a note from their barrister who they asked to find ways round our argument. It is not an independent review of the actions of BOI. The FCA has not given us a chance to respond to the BOI arguments. They have simply taken their version and gone with it. Much of their arguments are shaky to say the least."

David S

0:43 AM, 12th December 2013
About 7 years ago

I have just joined the class action and sent all relative material to Justin as I feel this is a case of injustice & greed on behalf of WB.
As Mark said we went in to this game as a way to subside a reasonable pension,not to help subsides bankers.
At the moment my time is very limited due to being 24/7 caring for my terminally ill wife but we are 100 percent be hind this action.

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