Property118 Members vs West Bromwich Mortgage Company

by Mark Alexander

10:25 AM, 3rd March 2014
About 5 years ago

Property118 Members vs West Bromwich Mortgage Company

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Property118 Members vs West Bromwich Mortgage Company

UPDATE – 31st March 2014

Since publishing this article our campaign has raised over £450,000 and legal action has now commenced. The official closing date for borrowers to be represented in this action was 28th March 2014. However, it may still be possible to be included in the representative action by paying additional fees to cover administration and Court fees to be added to the list of represented claimants. For further details please Contact Carla Morris-Papps at Cotswold Barristers – telephone 01242 639 454 or email carla@cotswoldbarristers.co.uk

West Brom Tracker Mortgages

Property118 Members vs West Bromwich Mortgage Company

Property118 Members vs West Bromwich Mortgage Company

Borrowers representing 84 mortgage accounts affected by the West Bromwich Mortgage Company 1.9% rake hike to their tracker rate mortgage margins attended a secret meeting of paid up campaign members on 27th February 2014. At that meeting it was confirmed that 420 affected mortgages are currently represented by the campaign group.

Property118 had previously created a secure forum for paid up members of the group to discuss various legal strategies, one of which was a proposal to West Brom to consider arbitration as an alternative to Court action. Each member had paid £240 for each affected mortgage plus a contribution to a campaign marketing campaign.

Arbitration was proposed for tactical legal reasons which were explained by the groups advisers, some details of which must remain confidential for legal reasons.

This would have been significantly quicker and cheaper for all concerned and had massive upsides to West Brom in that the outcome would be confidential. In other words, if West Brom had lost the case, nobody would have “officially” known about it other than those who had already paid to be a member of the campaign group. This would have meant the worst case scenario for West Brom would be losing no more than 10% of their reported £19 million of additional annual profits from this rate hike.

West Brom refused!

This refusal now plays very nicely into our hands for litigation purposes as it will be frowned upon by the Courts, especially if we lose our case and end up having to pay costs associated with the David and Goliath battle. 😉

The attendees of the meeting voted unanimously to proceed immediately with litigation on the basis proposed by (Mark Smith – Barrister-At-Law) as explained below. Thanks were offered to Justin Selig and his team at The Law Department for his sterling work to date in helping us get to this position. Without their help our campaign may never have got this far.

Litigation will commence during the week of 31st March 2014 with the service of Court Papers. This provides a final opportunity for any remaining affected borrowers to commit to the action by Friday 28th March.

We already have more than double the necessary funds on account to pay our own legal team. Mark Smith has agreed to represent borrowers for a fixed fee of £120 + VAT per affected mortgage subject to there being at least 250 borrowers committed. Further details in his Terms of Business and Instruction letter which can be downloaded by completing the form at the bottom of this page.

Existing campaign members are also reminded that they MUST complete and return the instruction form  to Mark Smith to act for them and the required additional funds by 28th March 2014.

The deadline for submission of instructions has now expired, sorry.

Costs Funding

The primary concern of existing members that had to be overcome was their potentially unlimited liability to the West Brom’s legal costs in the event of losing the case and the “open cheque book” often associated with legal cases. It was agreed that all fears could be overcome by creating a fund to be held in a BARCO escrow account (BARCO is the Bar Council – the regulators of Barristers). This account will provide evidence to the Courts that we have sufficient funds on account to settle the other sides costs in the event of losing the case and having an adverse costs order awarded against the group.

The first step of the legal action will be a costs hearing, as part of a “Case Management Conference”. This is where both sides must submit their costs budgets for the case to the judge and where the judge decides upon reasonableness. If either side fails to do this then the maximum they can claim for costs against the other side is the Court fee, i.e. £175! It is extremely rare for judges to award costs in excess of the agreed costs budget.

Our estimate is that based on the number of affected mortgages being represented, and the possibility of more people now wishing to be represented at this stage, the BARCO account could contain as much as double the other sides costs budget. This is why we are so confident about costs not exceeding the amount of funds that will be held in escrow. In the extremely unlikely event of the groups funds being insufficient to meet a potential costs order the group would have an opportunity to withdraw their case and settle the other sides costs to date.

If/when we win, the contents of the BARCO account will be rolled over to deal with all of the costs associated with the inevitable appeal case and if/when that is won the funds will be returned to members. If we lose, the contents of the escrow account will be used to pay costs awarded to West Brom and the balance of funds will be returned pro-rata to members.

The case will be fought on the basis of a representative action. This means that the ruling of the Courts will only apply to those borrowers who have paid to be represented in the case. There will be no free rides!

We fully appreciate that some affected borrowers will not be able to raise the necessary funds in time to be part of this action so there is a Plan B. Affected borrowers who are not represented may have another opportunity to make claims in a few years time. In the meantime they will continue to pay the higher rate and will probably be expected to forfeit any refund of overpayments in return for a no-win-no-fee arrangement. This could be a far more expensive option, hence the reason why so many affected borrowers are so keen to be part of the imminent legal action.

The legal strategy and process we are undertaking will be a very simple one. There will be no witnesses called so there will be no surprise twists such as those often seen on TV where a new witness or new evidence appears at the last minute. On this basis, we anticipate the case, including any appeal, to be concluded before Christmas.

We will only be asking the Courts to rule on two things:-

1) Based on the documentation produced by West Brom, do they have the right to increase the tracker margin?

2) Based on the documentation produced by West Brom, do they have the right to call in loans within 28 days without the borrower being in default?

There has been lots of discussion about whether West Brom did or did not provide all of the documentation they are now relying upon. This is not relevant to our case.

There has also been much discussion about Unfair Terms in Consumer Contract Regulations; again this is not relevant to our case.

It has been questioned whether in fact the mortgages issued by West Brom were indeed trackers, this cannot be denied by West Brom as this is the basis they report them to the rating standards agencies – see this link

The agreed level of funds to be deposited into the BARCO account is £1,144 per affected mortgage being represented. For example, somebody wishing to have 10 affected mortgages represented will need to deposit a further £11,440 into the BARCO account. Existing members will receive a refund of unused funds which they paid into the client account of The Law Department. New members will need to pay an additional premium of £356 per mortgage to the Property118 marketing fund to equalise the financial contributions and efforts of the forerunners of the group.

Therefore, the net payment per affected mortgage for members will be:

  • For existing members who have already instructed The Law Department £994 (assuming a refund of £150 per affected mortgage from The Law Department)
  • For new members the total cost per mortgage to be represented will be £1,500

We have created a simple set of instructions explaining how much you need to pay and who you need to pay it to here >>> http://www.property118.com/simplified-payment-instructions-join-west-brom-action/

Remember, if/when we win you will get more than this amount back when you also factor in 100% of the extra 1.9% interest you have been paying which will also be refunded. The worst case scenario is that you will get none of this money back if we lose. If you can live with that you should proceed.

The reason we have chosen this strategy as opposed to buying ATE insurance is that it costs us much less if we win. We are in this to win this. The above strategy means that we all know what we stand to lose and can proceed with our eyes wide open, confident that our liabilities are limited.

If the balance of the BARCO account associated with this action is less than £250,000 by close of business on Friday 28th March 2014 the legal action case will be aborted, funds will be returned to members within 14 days and that will be the end of the line for this campaign for myself and Property118 – at least for 12 months or more anyway. If necessary we will then take another look at Plan B.

UPDATE – 31st March 2014

Since publishing this article our campaign has raised over £450,000 and legal action has now commenced. The official closing date for borrowers to be represented in this action was 28th March 2014. However, it may still be possible to be included in the representative action by paying additional fees to cover administration and Court fees to be added to the list of represented claimants. For further details please Contact Carla Morris-Papps at Cotswold Barristers – telephone 01242 639 454 or email carla@cotswoldbarristers.co.uk



Comments

Mark Alexander

10:45 AM, 3rd March 2014
About 5 years ago

Please re-tweet

Onslow Clough

11:10 AM, 3rd March 2014
About 5 years ago

We are incredibly proud to be part of this campaign against the West Bromwich Building Society, which thinks it can use it's power and muscle to crush private individuals. There is a principle at stake here, and we are in the process of transferring £3000 for our three affected mortgages, knowing that our fantastic barrister, who we had the privilege of meeting on Thursday, will do all he can to uphold our rights, and fight for us tooth and nail. Come on everyone who is in doubt...LET'S FIGHT! We would not be committing this amount of money unless we were convinced that WE CAN WIN. Don't hesitate - let's make the West Bromwich regret they ever tried to mess with us!

David Lawrenson

11:11 AM, 3rd March 2014
About 5 years ago

I'll be tweeting and blogging about this and requesting fence sitters join up.

David Lawrenson
http://www.LettingFocus.com/blogs

Ed Atkinson

11:21 AM, 3rd March 2014
About 5 years ago

Well done all, you've been busy ! As a supporter without a W Brom mortgage myself, I'm so pleased W Brom declined arbitration. In fact it's just as well that I didn't know you had offered. It sounds like you made a brilliant tactical move and it came off.

I did not 100% understand the sentence "Affected borrowers who are not represented will have the right to make claims in a few years time." I guess "on the back of a Court win" is implied.

I take it that the £1,144 per mortgage is the estimate to exceed W Brom costs for both the case and the appeal. Is that correct?

Well done Mark A, Mark S and all.

ashley nissim

13:14 PM, 3rd March 2014
About 5 years ago

I was at the meeting last week and it was great to see that the whole room was speaking with a united voice.

The biggest worry that everyone had was that costs would not spiral out of control. The course of action that Mark has recommended at the start of this thread really knocks that on the head.

The guys running this campaign really understood where the members were coming from. They have demonstrated that time & time again. It is amazing that they have got us to this point & it is up to us to back them now & instruct Mark Smith.

We can only succeed if we all pull in the same direction, so I've downloaded my Instructions to Mark Smith & will get my cheque out asap.

Ju Stacey

13:36 PM, 3rd March 2014
About 5 years ago

I've downloaded the forms and am ready to get the info together to send off for my 2 mortgages.
One question - I'm representing 3 others with our joint mortgages. Do I need all 4 signatures, or is just mine OK. I don't want to delay sending my stuff in as I'm ready to go, but if I need all signatures, there'll be a bit of chasing around.
I'm quite excited that this is going forward now.
Thanks for all the hard work everyone's done.

Ian Burton

13:48 PM, 3rd March 2014
About 5 years ago

I Concur with all the above sentiments my 6 BTL's will cost but I urge anyone on the fence.

Come off the fence join us for the fight. It'l cost less in the long run if we win.

Thanks also to the Man from Nowhere for answering Andrew's question to me I was away for the weekend it goes to show that we are all looking out for one and other.

We had an excellent meeting so again I urge everyone come and join us at least it'l be fun!

Mike L

13:52 PM, 3rd March 2014
About 5 years ago

This really is a no-brainer. I always thought it would cost much much more than this to see justice done, especially if you consider we'll all get of our contributions back when we win (and that's on top of the refunded interest payments!!!). Well done to all so far, brilliant tactics! My contribution and and instruction letter in the post now!

Onslow Clough

14:37 PM, 3rd March 2014
About 5 years ago

Busy contacting every newspaper/financial magazine/consumer group that I can think of.. it's amazing how much sympathy there is out there for us. Let's see if West Bromwich like this new wave of adverse publicity! Get on board and start spreading the word! We are out to beat them.

Robert Hayes

15:26 PM, 3rd March 2014
About 5 years ago

My instruction form and cheque has just gone in the post (just the one mortgage for me)

I appreciate that £1144 per mortgage will be a significant amount of money for most people, but it represents just over 3 months of increased payments for me and is totally dwarfed by the extra I’ll be forced to pay the West Brom over the term of my mortgage if we don’t take them to court (£46,000 if you’re interested)

The cost covers a clear and robust strategy that takes us all the way to the case’s conclusion, including the likely appeal - I think it represents exceptional value for money (and you might get it back!!!)

If you've already paid up to be a member of the group, this has to be what you wanted to achieve - This payment is actually going to make it happen

If you’re not a paid up member, I genuinely believe you only have a short amount of time to get on board and reap the economies of scale that this group will give you.

It’s been repeated to death that if you’re not in, you can’t benefit from the ruling of the representative action – If you try to bring your own action later, you won’t have the support of the numbers in the initial group, and your costs will be far, far more

As has been said, “it’s a no brainer”

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