Property118 Members vs West Bromwich Mortgage Company

Property118 Members vs West Bromwich Mortgage Company

10:25 AM, 3rd March 2014, About 8 years ago

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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

by Mark Alexander

7:35 AM, 11th March 2014, About 8 years ago

Reply to the comment left by "Marshall " at "10/03/2014 - 23:17":

That's an excellent piece of work and great news too Marshall, well done 🙂

Will your MP also be applying for a 90 minute debate?

Would he be interested in stealing some limelight by helping us with a Press Conference?
.

by Denise G

7:36 AM, 11th March 2014, About 8 years ago

our cheque cleared to Cotswold's account yesterday

by Marshie Cyrus

9:30 AM, 11th March 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "11/03/2014 - 07:35":

I got the impression that Mr Gibb would join a debate if he was able to at the time but may not call for one. I am aware that he is busy trying to find a resolution to a serious coastal erosion issue nearby.
I have emailed him nicely asking both of your questions. He is very quick at responding so I'll let you know when I get a reply.

by Mark Alexander

9:59 AM, 11th March 2014, About 8 years ago

Good morning all

Yet again, there has been no post delivered to Cotswold Barristers this morning.

Their Chamber Director (Carla Morris-Papps) has investigated this and it appears to be due to the main sorting office in Gloucester closing down - see >>> http://m.bbc.co.uk/news/uk-england-26485363

We don't consider there is any reason to panic although it is frustrating that post could be delayed by a few days. Ideally we will see a steady growth in the campaign fund but it now looks likely that we will see a massive spike in the number of instructions received in the next few days.

We are NOT currently looking to change any procedures. If necessary we will simply extend the deadline by a few days but as the deadline is still 18 days away hopefully the postal system in the Cotswolds should be back to normal well before then.
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by Sandra W

10:30 AM, 11th March 2014, About 8 years ago

I've posted my instructions and cheque for one mortgage this morning, so hopefully it will be in Carla's bumper post bag delivery tomorrow.

by Mark Alexander

16:01 PM, 11th March 2014, About 8 years ago

Cotswold Barristers have just had a small delivery of post so it would appear that the disruption caused by the closer of the Gloucester Sorting Office is being resolved - PHEW!!!

Hopefully more delayed post will arrive tomorrow but in the meantime I am pleased to report that the escrow account fund is now up to £76,647 representing 67 mortgages.

MORE GOOD NEWS!

Both myself and Mark Smith have spoken to Nicole Blackmore at The Telegraph today and she will be giving us more publicity this coming Saturday. Return the compliment, buy the Newspaper, show your friends and take it to your next Landlords association meeting 🙂

Meanwhile, we have written today to over 1,000 people who completed our original Expression of Interest form to alert them of the 28th March deadline.

We are also sending a further reminder email to everybody who funded phase one of this campaign. If you have already committed to phase two of the campaign please excuse the reminder. It was so much easier just to send it to the entire group rather than to pick out those who have already sent their instructions to Cotswold Barristers.
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by Onslow Clough

16:43 PM, 11th March 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "11/03/2014 - 16:01":

Hi Mark, We have also been speaking to Nicole Blackmore at the Telegraph and hopefully our situation is going to be highlighted in a case study in the article to be published on Saturday.

This is an incredibly positive development and hopefully the key goals of Property 118 will be discussed. This could potentially generate a huge amount of new interest.

To raise £76,000 in a mere 10 days is unbelievable and hopefully it will prove to anyone who is undecided that as a group we mean business, what we have achieved so far is incredible.

Anyone who is unsure pleased bear in mind, we have had legal advice and we have been told we have a very strong case. The funds are already in place to fight this in court. All we need is a fund to cover West Brom legal costs IF we lose. Remember we get these costs back when we win.

by Marie B

17:16 PM, 11th March 2014, About 8 years ago

Hi Mark, sorry have been offline for a while due to family illness so trying to keep up with this while all that is going on in background. I just want to check next steps as we had paid initial £240 per mortgage. Do we now need to ask for this to be returned from Justin's group? And now we need to make separate payments to Mark smiths legal group? Is this £1144 per mortgage and do we have to resend all our paper work again to mark smiths team? Thanks

by Mark Alexander

17:29 PM, 11th March 2014, About 8 years ago

Reply to the comment left by "Marie B" at "11/03/2014 - 17:16":

Hi Marie

Welcome back!

It's all explained here >>> http://www.property118.com/simplified-payment-instructions-join-west-brom-action/
.

by Onslow Clough

19:02 PM, 11th March 2014, About 8 years ago

I have heard from good source that as a result of West Brom's actions and the fact they appear to be getting away with it some more big name lenders have approached the Finacial Conduct Authority with a view to following similar policy.

If ever their was a time to get on board to fight this, now is that time.

We have to win this case... I am convinced we can win this case, but we need more people to join us.

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