Hundreds of mortgage borrowers are to have nearly three years' worth of unlawfully charged overpayments refunded following a ruling by the Court of Appeal in London on 8thJune, after a 2 ½ year legal battle fought by Cheltenham's Cotswold Barristers.
In September 2013 the West Bromwich Mortgage Company (a subsidiary of the West Bromwich Building Society) increased the rate payable on their tracker rate buy-to-let mortgages by 1.99%, despite there being no change in the base rate. This meant that the repayments charged nearly doubled. The mortgages were sold as giving borrowers the security of knowing that the rate would only move when the base rate changed, but the lender attempted to utilise general rights to increase the rates contained in a separate document.
Many of those affected voiced their displeasure on the landlords' forum at property118.com, and following a fund-raising campaign Cotswold Barristers were unanimously elected as their legal representatives at a meeting in London in November 2013. The case was launched using the 'direct access' route, where no solicitor intermediary was used to engage the barristers, and is noteworthy as being the largest-ever case brought by this route.
The initial attempt to reverse these increases was rejected by the Commercial Court in January 2015, but the Court of Appeal gave permission for an appeal. The three judges in the Appeal Court, presided over by Sir Brian Leveson, unanimously overturned the initial judgement, and ruled that the West Bromwich could not impose the charges, nor could they require the loans to be repaid before the end of the term unless the borrower was in default.
Mark Smith, head of Chambers at Cotswold Barristers, led the legal action.
'I am very happy with the outcome, and happy for the many members of the campaign who have never lost faith in the case' he said. 'Several other lenders have tried the same sort of tactic, and we will now be reviewing those cases in the light of this judgement'.