Court decisions that vindicate borrowers against abusive behaviour by banks are now rare. The main reason is of course the financial difficulty for debtors to go to court to claim financial compensation, while the delay in issuing a decision also plays a deterrent role.
This case, which will be analysed below, started with a claim filed by the borrower in 2017 with the first instance decision rejecting his claim. The borrower appealed to the Court of Appeal and the Court of Appeal in 2022 vindicated him. The judgment below raises several issues worthy of comment. The first is the duration of a final judgment. The claim was filed in 2017 and ultimately the claimant was vindicated in 2022. The other is the small amount of monetary damages awarded by the court for such abusive conduct by the bank and the third and most important is the bank's conduct itself which is similar in many other cases and leads the borrowers, if not to financial ruin, at least to languishing and distress.
In 2010, the applicant borrower entered into a loan agreement with the bank in order to cover the costs of installing a photovoltaic system. At the same time as concluding the above agreement, he created a pledge to secure it, assigning the claims he had against PPC SA under the electricity supply contract. Since 2012, he has been forced to negotiate with the bank's appointed officials in order to amend the terms of the contract in order to obtain a reduction in the instalment of the loan servicing and, at the same time, an extension of the repayment period.
To this end, he consented to the granting of a security interest in a property owned by him in Salamina, where the photovoltaic system had been installed. For six months he waited for the implementation of the modification of the loan conditions and when the bank finally replied that it was not satisfied with the property in question, he resubmitted his request, offering another property owned by him. The bank then sent him a letter of formal notice inviting him to settle his debts, but there were no such debts, as he was in default. While the negotiations for the signing of an additional deed of amendment to the contract were in progress, repeated telephone calls were made at different times of the day by different representatives of the defendant in order to inform him of debt adjustment programmes, to which his mother, in addition to the borrower, was also the recipient.
Finally, following a series of letters and visits to various branches of the bank, a year later, the plaintiff consented before the Court to the registration of a mortgage on his property, without having been properly informed of the new terms of repayment of his debt. The bank then urged him to sign an additional deed committing him to the amount of the debt up to that point in time, but without his being able to check the correctness of the amount, and that additional deed did not provide for a starting and ending date for the contractual relationship, nor did it provide for an interest rate for repayment.
The borrower responded to the above behaviour of the bank by addressing the Independent Authority «Consumer Advocate», submitting in 2014 a request to be informed in writing about all the more specific modified terms of his loan agreement. Following a number of letters from the Consumer Ombudsman to the bank, the latter sent a newer extrajudicial letter stating that it would terminate the loan and take legal action against him. The bank made illegal charges totalling approximately EUR 1,500 and now specifically charged the service account of the disputed loan product in 2013 with «OTHER EXPENSES OF OTHER LOAN PRODUCTS», in 2014 with «OVERHEAD EXPENSES», with «OVERHEAD EXPENSES» and with interest on arrears for the period of the negotiations between them.
The aforementioned conduct of the bank, as well as the constant telephone harassment by its agents towards the borrower and his mother throughout the period of his attempt to resolve the dispute between them amicably, insulted his honour and dignity and caused him mental suffering. By the aforementioned unconventional, unlawful and culpable conduct, the bank caused him pecuniary damage. On the basis of the foregoing background, claiming that the bank was liable in contract and tort, he applied to the court for compensation for the pecuniary loss suffered by him, amounting to EUR 1 500, and for financial compensation for the non-material damage suffered by him.
A form of violation is the bank's failure to fulfil its obligations to assess the client's interests, to inform, advise and warn the client. In addition, the Consumer Protection Act has included specific provisions requiring the «supplier» - and the banks - to provide the average «consumer» - and the retail investor - with the correct, necessary and appropriate information so that the latter can make an informed and correct decision on the actual intended transaction. In other words, not to be misled by deciding to undertake a transaction which he would not otherwise have decided to undertake. These obligations of the «supplier» are set out in articles of the law, which refer to «prohibitions on unfair commercial practices».
The sanction provided for by law in the event of a breach of this obligation by the «supplier» consists mainly of compensation for the consumer. Therefore, the above conditions, on which civil liability for damages in tort is based, are no different from those laid down in the law on consumer protection, which governs, inter alia, cases of liability for the provision of banking services, where the bank's counterparty is a consumer, that is to say, any natural or legal person for whom the goods or services offered on the market are intended or who makes use of such goods or services in so far as he is the ultimate recipient of them.
The transactional relationship created between a bank and a customer gives rise to both general and specific obligations, which are based on a specific relationship. This is mainly for the following reasons: (a) the bank is a professional and a connoisseur of the money market, with a wide range of information in the financial sector, and because of its position, it may have an obligation to make its client aware of certain information or to provide him with advice; (b) the bank's conduct often determines even the financial situation of its client; (c) the relationship between the bank and the client is confidential and therefore particularly sensitive, since the bank knows a great deal about the client's personal circumstances; (d) the bank's relationship with the client is of a confidential and therefore highly sensitive nature. This position of the banks imposes on them an obligation of smooth and good faith cooperation with their customers; and (e) the bank normally has greater financial power than its customer.
It follows from the above that the bank's position is much more advantageous than that of its customers, which justifies the creation of an increased obligation to protect the interests of its customers, which is tailored to the specific circumstances of each case. This is because a specialised relationship of trust is created between the bank and the customer, but also, in part, of dependence on the customer, since, as stated above, the bank has specialised knowledge of market conditions and a wide range of information. This general obligation gives rise, on the one hand, to a more specific obligation on the part of the bank not to unilaterally pursue its own interests and to the fact that its provision of services in the broad sense must be proportionate to the consideration requested by its client and, on the other hand, to a more specific obligation to provide information and advice, depending on the specific circumstances and the level of knowledge of its client.
Thus, the bank has a duty when it is evident that the particular customer does not understand the risks of the intended transaction or when the bank knows certain facts that, if the customer had known, the bank would have known. would probably not have entered into the transaction. The same applies with regard to the bank's obligation to provide advice if the customer requests it and the bank accepts it. In view of the relationship of special trust which characterises every banking contract and which has as its general content the belief, first and foremost on the part of the bank's customer, that the bank will do whatever is necessary to serve and protect his financial interests, but also on the part of the bank itself that its customer will behave towards it with honesty and a willingness to make every effort to fulfil the obligations it undertakes, the application of the principles of good faith takes on a particularly broad scope and intensity in the context of the These principles require both the negotiating and the contracting parties to behave in a manner consistent with the specific nature of the parties' mutual trust.
At the negotiation stage, the relationship of trust, as a result of the application of good faith and commercial morals, is certainly related to the general obligations of information and protection. The first is to provide information and clarification on the content of the intended contract in order to safeguard contractual freedom, i.e. to ensure that the other party's will is not influenced by ignorance when the contract is concluded and its content is formulated. The second concerns the adoption of measures to protect the absolute legal rights and property of the other party. At the contractual commitment stage, the fiduciary relationship imposes on the bank the general «obligations» to exercise extreme care in serving its counterparty and, in the event of a conflict of interest, to take the interests of its client exclusively into account. The latter must also, for its part, demonstrate particularly honest behaviour and diligence. Any breach of these obligations shall entail the liability of the offender. A particular breach of the principles of good faith may also be the exploitation of the bank's superior position vis-à-vis its customer, in particular by using methods which do not correspond to the honesty and sincerity of the transactions, resulting in the negotiation of contractual terms in its favour which unduly disturb the balance to the detriment of the customer, taking into account, of course, the nature of the goods and services covered by the contract in question.
On the basis of these legal considerations and with the background where the illegal and abusive behaviour of the bank is summarized, the court ruled that the bank should pay the borrower an amount of 3,500 euros, i.e. the 1,500 euros it illegally charged him and 2,000 euros for moral damages.
By Anastasia Miliou
ANASTASIA CHR. APPLE
I'M GOING TO BE A LAWYER.
Ave. 403 Mesogeion Avenue, Agia Paraskevi, Agia Paraskevi
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e-mail: natmil@otenet.gr
www.legalaction.gr, fb: Anastasia Miliou
Author of the article:
Attorney at Law & Attorney-at-Law & Attorney-at-Law
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Tel. 6945-028153, 213-0338950
e-mail: natmil@otenet.gr, info@legalaction.gr
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