Office of Fair Trading v Abbey National Plc & Ors

Office of Fair Trading v Abbey National Plc & Ors

The court held that certain terms in Abbey's May 2005 conditions, Lloyds TSB's 2007 card conditions, and RBSG's NatWest 2004 conditions, RBS 2005 conditions, and NatWest July 2003 leaflet are not capable of being penalty clauses at common law, except for the NatWest 2001 conditions, which remain potentially penal. The court exercised its discretion to grant or refuse declaratory relief based on the contractual context and the utility of such declarations.

Parties
Claimant: The Office of Fair Trading; Defendant: Abbey National PLC; Defendant: Barclays Bank PLC; Defendant: Clydesdale Bank PLC; Defendant: HBOS PLC; Defendant: HSBC Bank PLC; Defendant: Lloyds TSB Bank PLC; Defendant: Nationwide Building Society; Defendant: The Royal Bank of Scotland Group PLC
Jurisdiction
England and Wales
Judgment Date
21 January 2009
Procedural Posture
Commercial Court Claim / Post Trial Judgment on Declaratory Relief
Outcome
Declaratory relief granted in part; references to Abbey's May 2005 conditions struck out from OFT's pleading; declarations granted for Lloyds TSB and RBSG as specified.
Legal Topics
Penalty Clauses, Declaratory Relief, Bank Account Terms, Consumer Protection
Contract Law Banking Law Penalty Clauses Declaratory Relief Bank Account Terms Consumer Protection

Case Brief

Summary, issues, holding and outcome

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Parties

The Office of Fair Trading

Claimant

Abbey National PLC

Defendant

Barclays Bank PLC

Defendant

Clydesdale Bank PLC

Defendant

HBOS PLC

Defendant

HSBC Bank PLC

Defendant

Lloyds TSB Bank PLC

Defendant

Nationwide Building Society

Defendant

The Royal Bank of Scotland Group PLC

Defendant

Procedural Posture

Commercial Court Claim / Post Trial Judgment on Declaratory Relief

Legal Issues

  1. 1 Whether certain bank account terms are capable of being penalty clauses at common law
  2. 2 Whether declaratory relief should be granted regarding the status of specific terms in bank documents

Ratio Decidendi

The court held that certain terms in Abbey's May 2005 conditions, Lloyds TSB's 2007 card conditions, and RBSG's NatWest 2004 conditions, RBS 2005 conditions, and NatWest July 2003 leaflet are not capable of being penalty clauses at common law, except for the NatWest 2001 conditions, which remain potentially penal. The court exercised its discretion to grant or refuse declaratory relief based on the contractual context and the utility of such declarations.

Court Disposition

Declaratory relief granted in part; references to Abbey's May 2005 conditions struck out from OFT's pleading; declarations granted for Lloyds TSB and RBSG as specified.

Orders

  • Strike out references to Abbey's May 2005 conditions from Annex G2 to OFT’s Defence to Counterclaim.
  • Grant Lloyds TSB declaratory relief as agreed between parties.