Biraja Pada Bhattacharya v Oaksix Holdings Ltd
| Jurisdiction | England & Wales |
| Judge | Elizabeth Jones |
| Judgment Date | 26 May 2021 |
| Neutral Citation | [2021] EWHC 1326 (Ch) |
| Date | 26 May 2021 |
| Docket Number | Appeal no: CH-2020-000138 |
| Court | Chancery Division |
[2021] EWHC 1326 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
ON APPEAL FROM THE BUSINESS LIST (ChD)
FINANCIAL SERVICES AND REGULATORY SUBLIST
FS-2019-000012
CHANCERY APPEALS
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Elizabeth Jones Q.C.
sitting as a Deputy Judge of the High Court
Appeal no: CH-2020-000138
Tom Shepherd (instructed by Ingram Winter Green LLP) for the Appellants
Stewart Chirnside (instructed by Gowling WLG (UK) LLP) for the Respondent
Hearing dates: 21 April 2021
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to BAILII. The date and time for hand-down is deemed to be 26/5/2021 at 10.30am.
Elizabeth Jones Q.C.:
This appeal from a judgment of Deputy Master Linwood given on 15 May 2020 raises an important point as to the limitation of actions under sections 26 and 28 of the Financial Services and Markets Act 2000 (“ FSMA”).
The Appellants issued proceedings against the Respondent on 8 August 2019. After service of the Reply, the Respondent issued an application seeking to strike out certain claims and/or seeking summary judgment against the Appellants in respect of those same claims.
The factual background was agreed by the parties for the purpose of the application. The Deputy Master's judgment sets out the facts and the initial procedural history as follows, referring to the Respondent as “OHL”:
“ 7. In December 2011 the claimants applied for a loan from OHL. On or about 6 February 2012, OHL offered the claimants a nine-month bridging loan of £4,830,000 secured by a first legal charge over their property (which I will call “the Property”), which the claimants agreed to on 17 February 2012. This was the first loan agreement which provided that OHL could deduct, on completion: (1) £477,711 representing nine months' interest; (2) an arrangement fee of £61,245 from which OHL would pay £20,415 to the claimants' broker; and (3) an administration fee of £595 plus, the claimants say but the defendant disputes, legal fees of £4030. For the purpose of this hearing, the defendant accepts that those legal fees are part of the monies paid by the claimants to the defendant. Completion took place on 28 February 2012. Repayment was due on 28 November 2012.
8. On or before 28 November 2012, the claimants and OHL agreed to amend the terms of the first loan agreement to extend the availability period by six months to 28 May 2013. The terms of this first extension agreement were subsequently recorded in an amendment agreement between the parties dated 25 March 2013.
9. Under the first extension agreement, the claimants agreed: (1) to repay the sum of £1,250,000, thereby reducing the principal amount outstanding on the first loan agreement to £2,833,000; and (2) to pay the following amounts in respect of additional interest and fees: (i) £220,974 representing an upfront payment in respect of a further six months' interest on the outstanding balance of, as I have said, £2,833,000; (ii) a one per cent extension fee of £28,333; (iii) an extension arrangement fee of £5000, and (iv) an administration fee of £895. On or about 28 November 2012, the claimants repaid the principal sum of £1,250,000 and paid the amounts I have explained above in respect of the additional interest and fees as agreed under the first extension agreement.
10. On 28 May 2013, the first extension agreement came to an end and the loan was due for repayment. However, the parties agreed to extend the term of the first loan agreement for a further two months until 28 July 2013 in return for the claimants making additional interest payments of £36,829 per month during that second extension agreement. The claimants subsequently made additional interest payments of that amount from 7 June 2013 to 10 July 2013 respectively.
11. In July 2013, the claimants applied for a new loan from OHL to refinance their existing loan. OHL sent an undated written offer to the claimants for a new six-month loan in the sum of £3,118,000 to be secured by a first new legal charge over the property, subsequently accepted by the claimants on or about 27 August 2013. Under the second loan agreement, the following amounts were to be deducted from the loan amount on completion: (1) £243,204 representing six months' interest; (2) an arrangement fee of £31,180; (3) an administration fee of £895; (4) a broker fee of £2500; and (5) legal fees of £3360. On or about 27 August 2013, OHL advanced the sum of £3,118,000 to the claimants, which was used to finance the amounts outstanding on the first loan agreement.
12. On 27 September 2013 the claimants obtained a new loan from a third-party lender, Fern Trading Ltd. They used this to repay the amounts due to OHL under the second loan agreement.
13. On 8 August 2019, the claimants issued these proceedings against Omni Capital Partners Ltd. That was an error and an application was made by the claimants to correct the name of the defendant to OHL, which was consented to by the defendants approved by me at the outset of this hearing.
14. In the particulars of claim, the claimants seek:
(1) declarations the first and second loan agreements were unenforceable under s. 26(1) of FSMA because they were regulated mortgage contracts and OHL was not an authorised person under s. 19 of FSMA; and
(2) repayment of the interest and fees paid to OHL under both the first and second loan agreements. The total amount claimed by the claimants in the particulars of claim is £986,512, which is split between £867,149 in respect of the first loan agreement and £119,363 in respect of the second loan agreement.
15. OHL served its defence and counterclaim on 14 February 2020 in particular pleading the claimant's claim for repayment of the amounts paid by them under the first loan agreement was statute barred, plus, neither loan agreement was a regulated mortgage contract as at all relevant times the claimants occupied or intended to occupy less than 40 per cent of the property.
16. The claimants in their reply and defence to counterclaim pleaded as to limitation at para. 3(2):
“The claimants' claim is for a declaration that the loan agreements were regulated and that the defendant was unauthorised and was in contravention of the general prohibition in s. 19 of FSMA and so the consequences of s. 26 and s. 28 are automatically engaged and the loan agreements were and are unenforceable against the claimants.”
The application by the Respondent was issued on 16 March 2020, and sought to strike out the Appellants' claim insofar as it related to the recovery of monies paid by the Appellants to the Respondent prior to 9 August 2013 and/or sought summary judgment pursuant to CPR24.2 in respect of the claim to recover the same sums.
By an order dated 15 May 2020 the Deputy Master struck out the claim for repayment of sums paid prior to 9 August 2013 under the first loan agreement of 17 February 2013 (“the First Loan Agreement”) and also struck out the claim for a declaration that the First Loan Agreement was unenforceable. The Deputy Master also gave summary judgment for the Respondent in respect of the same claims. Permission to appeal was then sought by the Appellants on 2 June 2020 and permission was given by Adam Johnson J on 24 November 2020. The proceedings were stayed by the Deputy Master's order of 15 May 2020 pending the hearing of any appeal. It is therefore the case that although the proceedings were issued in August 2019, they have progressed very little and no directions have yet been given for trial.
Although there were 9 grounds of appeal, they raised the following issues:
6.1. whether the Deputy Master had been wrong to grant summary judgment having regard to the complexity of the issue and its significance and the absence of direct authority;
6.2. whether the Deputy Master had been wrong to find that the claims made fell within section 8(2) and section 9 of the Limitation Act 1980 (“the Limitation Act”):
6.3. If section 8(2) and section 9 of the Limitation Act applied, whether the Deputy Master had been wrong to find that time started to run for the purpose of those sections when each of the sums claimed was paid to the Respondent;
6.4. whether, if the money claim was statute barred, the Deputy Master was wrong to also strike out, and give summary judgment for the Respondent on, the claim for the declaration that the First Loan Agreement was unenforceable.
The test on appeal.
The parties were agreed that on this appeal I should conduct a review of the Deputy Master's decision, and not a re-hearing, and that the relevant question was whether I am satisfied that the decision of the Deputy Master was wrong. The principles are well known and are set out in the notes in the White Book at 52.21.1.
Shortly before the hearing of this appeal, there was a change of legal representation on behalf of the Appellants. As a result, an amended skeleton argument on behalf of the Appellants was served on 15 April 2021, the Thursday before the window for the appeal. The Respondent objected to certain passages in the skeleton argument, and it was accepted by the Appellants that there were some new arguments raised, one of which necessitated an application for permission to amend the particulars of claim. I will deal with these at the appropriate point in this judgment.
Issue 1: Was the Deputy Master wrong to make a summary determination?
CPR 24.2 provides that the court may give summary judgment against a...
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