Property118 Members vs West Bromwich Mortgage Company

Property118 Members vs West Bromwich Mortgage Company

10:25 AM, 3rd March 2014, About 10 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


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Comments

nigel grunberg

13:55 PM, 27th March 2014, About 10 years ago

please allow stragglers until cob Monday 31st March - one extra working day - not unreasonable and that may allow £30k+ more in BARCO. fair to do this now as we are close to the current deadline (and it may allow me to win the sweepstake).

M Jones

13:59 PM, 27th March 2014, About 10 years ago

Reply to the comment left by "nigel grunberg" at "27/03/2014 - 13:55":

I disagree - a deadline is a deadline, a law is a law and a contract is a contract! The strength of this campaign has come from decisive action, we must send out a message - what we say is what we mean.

Anthony Wilson

14:03 PM, 27th March 2014, About 10 years ago

This being an open forum it seems one of the questions dominating some people's thoughts is what if we win..

do or should all the non- contributers enjoy the benefit of the success?

This is a question that I asked myself before I chose to back the campaign with ten mortgage contributions. (I and my wife have eleven in total). As a solicitor I did think it would not be unrealistic for me to await the outcome of any collective proceedings and keep my powder dry for a personal tilt at WBMC myself or even issue proceedings independently to make sure that proceedings were actually taken. Also I took the view that I could have easily watched from the sidelines and piggy backed on the back of a successful result for 118.for a potentially free ride.

Ultimately i decided that that was neither a fair or a sensible option.

I concluded ;-

1 On balance if I participated then the collective action may have more chance of success on the basis of the greater number of participators the better.

2 I was very impressed with the work which Mark Alexander had done to co -ordinate the interests of borrowers through this forum and outside and felt it would have been criminal to allow that work to go to waste.

3 I felt that given the momentum Mark had achieved we could ultimately benefit thousands of borrowers across the country generally by potentially preventing any lender from trying this sort of stunt ever again.

4 The David v Goliath sentiment we all feel became a highly motivating factor .. to strike one back for the underdog.

5 The time that is invested on our behalf by both Marks cannot be under-estimated,.this is not something i could ever have achieved alone.

6 My financial risk is limited.,. that is not something i could ever have achieved alone.

Yes it is possible that non- participators could piggy back on our anticipated success.. it is logical that if/ once we win and not appealed.. the West Brom may wish to revise its terms for all the BTL borrowers voluntarily to avoid any further claims. Indeed it may be required to do so by the FCA. .but it may not.. the West Brom may be thinking that it will hold out against as many people as possible for as long as possible on the basis that they will sell or re-finance. West Brom has therefore achieved its objective by other means by reducing its liabilities under these mortgages.

The reason I signed up with 10 not 11 is that I am selling one property and had hoped to exchange last week.. in the event it fell through.

In the event that the property does sell I will have to pay the redemption amount at the higher rate.... but.... I still have six years as I see it to pursue West Brom for the extra money they took from me on that mortgage once we win the case.. it may be that Mark Smith as a separate matter will be in a position to pursue the West Brom for any monies not recovered due to property sales or -refinancing since 1st December 2013 by any buy to let borrower.

I do not resent anyone for not participating but I am very proud to stand up and be counted and i am determined to do everything within my power to support this challenge.

Tony Wilson

Richard Kent

14:19 PM, 27th March 2014, About 10 years ago

Reply to the comment left by "Annette Stone" at "27/03/2014 - 13:24":

Hi Annette,

I know your intentions are good 🙂 and you are at the forefront of this campaign.

In fact you and Richard Adams epitomise the positive actions everyone should be taking in this campaign.

But for the record, I'm happy to live in a world where I can and might be offended at what other people say, as by definition it means other people are allowed to express their views 🙂

Richard Adams

14:22 PM, 27th March 2014, About 10 years ago

Reply to the comment left by "Annette Stone" at "27/03/2014 - 13:24":

366 mortgages are now happily "unified" having joined the fight for what is right. Not only will this Band of Brothers benefit from victory but borrowers with other lenders as well since they can sleep easy about having a rate hike stunt pulled on them down the line. What could be better right now than the situation we find ourselves in? And a few more are still trickling in undeterred by "naughty" words.

OK a few hundred more affected borrowers would be nice but we have exhaustively speculated as to why more have not joined. Some have fair reasons and some have not. End of story. What's the problem? Answer, there isn't one.

ian

14:38 PM, 27th March 2014, About 10 years ago

I'm out the sweepstake at 352, never been in a sweepstake before where losing is better than winning.

Dean

14:46 PM, 27th March 2014, About 10 years ago

Reply to the comment left by "Deceived by West Brom " at "27/03/2014 - 13:59":

Rather than a deadline we could limit it to the number of mortgages instead.

Off the top of my head for no apparent reason maybe say 399 then we close the book ?

😉

Mark Landlord

14:47 PM, 27th March 2014, About 10 years ago

Amazing !

£418k & 366 mortgages.

How close can we get to the half mil by tomorrow ?

Ed Atkinson

14:51 PM, 27th March 2014, About 10 years ago

SWEEPSTAKE UPDATE
Amazing progress - I'd say that only the top third of entries now have any hope winning. Only the most optimistic are still in it! Also note the campaign currently has 5.5% of the 6700 affected mortgages.
269 Mr Onslow
279 Denise
300 Mrs Onslow
331 Sandra
335 Scotty
345 Chrisbusy
350 Mark A
352 Ian
362 Auntie
368 Nicolas
371 Ed
375 Bob
399 Dean <------- lowest with a hope left?
417 Terry
423 Ian B
425 Marshall
437 Deceived
500 Nigel

(Graph scales are the unchanged: bottom from 19th March to 28th. The vertical from 200 to 500 mortgages with lines every 50. Click on the graph and it will show a bit bigger)

M Jones

18:25 PM, 27th March 2014, About 10 years ago

Reply to the comment left by "Dean " at "27/03/2014 - 14:46":

Or maybe just settle for half a million £ in the BARCO - now how many mortgages would that be... hmmm oh yes 437 I believe.

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