Justin Oliver Zinda v Bank of Scotland Plc
| Jurisdiction | England & Wales |
| Judge | Lord Justice Munby,Mr Justice Hedley,Lord Justice Mummery,Lord Justice Rix |
| Judgment Date | 23 June 2011 |
| Neutral Citation | [2011] EWCA Civ 706,[2011] EWCA Civ 95 |
| Docket Number | Case No: B5/2010/2334,Case Nos: B2/2010/2334 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 June 2011 |
[2011] EWCA Civ 706
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BRENTFORD COUNTY COURT
HIS HONOUR JUDGE OPPENHEIMER
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Mummery
Lord Justice Munby
and
Mr Justice Hedley
Case No: B5/2010/2334
The Appellant appeared in person
Mr Thomas Grant (instructed by Walker Morris) for the Respondent
Hearing date: 8 June 2011
This appeal raises a short but important point of principle of great practical significance in relation to the standard form of suspended possession order used in mortgage cases and granted on a daily basis in hundreds of County Courts up and down the land. That is the reason why, although this is a second appeal, permission was granted by Rix LJ.
The facts
The facts lie within a short compass and are commonplace.
On 3 March 2003 the appellant, Mr Justin Oliver Zinda, executed a mortgage deed, charging his house in Northolt to the respondent bank to secure a loan from the bank of £133,000. The loan was repayable over a 25-year term with interest-only instalments. The mortgage was on the usual basis. So long as Mr Zinda paid the monthly instalments of interest the bank would not seek repayment of the capital or possession of the property, but if he fell into arrears the full amount of the secured indebtedness would become payable and the bank would be entitled to take possession. Clause 3 of the mortgage deed stated that "The mortgage secures further advances."
Mr Zinda fell into arrears. In August 2005 the bank issued possession proceedings in Brentford County Court. On 24 October 2005 Deputy District Ryan made an order in the following terms:
"1 The defendant give the claimant possession of [the property] on or before 21 November 2005.
2 This order is not to be enforced so long as the defendant pays the claimant the unpaid instalments under the mortgage of £11046.50 by the payments set out below in addition to the current instalments under the mortgage.
…
> Payments required
£96.02 per month the first payment being made on or before 21 November 2005."
A simple calculation shows that payment off of the arrears of £11,046.50 at the rate of £96.02 per month would take about 9 1/2 years. In the bottom left-hand corner of the order the following words appeared:
" To the defendant
The court has ordered that unless you pay the arrears under the mortgage at the rate set out above in addition to your normal payments, you must leave the premises …"
In the bottom right-hand corner there was the following:
"If you do not make the payments or leave the premises, the claimant can ask the court, without a further hearing, to authorise a bailiff or High Court Enforcement Officer to evict you. (In that case, you can apply to the court to stay the eviction; a judge will decide if there are grounds for doing so.)"
It is to be noted that this was not some special form of order, or an order in a form unique to Brentford County Court. The order was in the standard form set out in Form N31.
On 20 March 2008 the bank agreed to consolidate Mr Zinda's remaining arrears of £16,887.83 with the outstanding balance of the loan. The new mortgage balance was £168,699.71. The revised monthly instalment payment was set at £1,070.42. Subsequently it was reduced. The term of the loan remained unchanged. This consolidation, I might add, was in accordance with a practice which the Council of Mortgage Lenders has long sanctioned: see Cheltenham and Gloucester Building Society v Norgan [1996] 1 WLR 343, 349.
Mr Zinda again fell into arrears. On 18 September 2009 he applied to suspend enforcement of the possession order. On 21 September 2009 the bank applied for a warrant of possession. Mr Zinda applied for execution of the warrant to be suspended. His applications were dismissed by District Judge Allen on 28 May 2010. By then the arrears amounted to £20,500.28. The total amount outstanding was £197,496.78. The current monthly instalment was £951.85. The last payment received by the bank had been the sum of £10 paid by Mr Zinda in January 2010. Before the District Judge Mr Zinda accepted that the property was in negative equity. Insofar as he was in a position to make any proposal, all he could offer was an amount significantly less than the amount of the monthly instalment.
Mr Zinda appealed. His appeal was heard by His Honour Judge Oppenheimer. On 14 September 2010 Judge Oppenheimer made an order dismissing the appeal.
Before the District Judge and again before Judge Oppenheimer Mr Zinda took a number of points. Given the limited basis upon which Rix LJ subsequently gave him permission to appeal to this court, I need refer to only one of these points. Mr Zinda contended that the effect of the arrangement in March 2008 had been to discharge the arrears which existed at the time of the suspended possession order and bring those arrears into a larger loan upon which a new interest rate was agreed; that even if only for a short time, until he fell again into arrears, there were therefore no arrears (the arrears at the time of the possession order having been paid up, albeit in the form of the new borrowing); and that the possession order had thereby been extinguished. Before the District Judge, as before us, the bank accepted that the effect of the consolidation was to clear the arrears on which the possession order was based. But it disputed, as it continues to dispute, that this has the consequence for which Mr Zinda contends.
Mr Zinda's argument was rejected both by the District Judge and by Judge Oppenheimer. In her judgment the District Judge said this:
"There are sometimes orders that say "on payment of arrears this order should be discharged." Yours says the opposite. Yours says unless you pay the current monthly instalments this order can be enforced.
… The terms of this order are quite clear, that the court can enforce the order if – whatever you do with regard to the original arrears – you do not pay your normal instalments and continue to do so."
Judge Oppenheimer agreed. He said:
"There are really two separate questions that I have been able to identify. One is whether there is an ambiguity in the order. I hold there is not and that the district judge was right about that. But, secondly, whether, as a matter of law, the order was ever discharged either expressly or by implication, or by operation of law as a result of the fact that there came a time when there were no arrears because of the March 2008 consolidation. That is an interesting point of law on which no authority has been cited to me by counsel acting for the respondent; nor any authority cited by Mr Zinda to me. It is to be remembered that he is a third year law student. I have to say that this is an interesting and very important point of law, which one day ought to be considered by the Court of Appeal if it has not already been so considered."
He continued:
"I hold that the order was indeed unambiguous in its terms and continues in accordance with its terms until discharged. I have no authority before me to suggest that the order automatically was discharged upon consolidation of the arrears. For my part I am not prepared to say that there is any such rule of law. This court is not to invent one. In my judgment, therefore, the district judge was not wrong when she held that the order was unambiguous."
Mr Zinda sought permission to appeal. His application was considered on the papers and dismissed by Jacob LJ on 8 November 2010. So far as material his reasons were as follows:
"Mr Zinda argues that the effect of the consolidation was to discharge the [order]. I am unable to see why or how … The order suspends enforcement so long as two criteria are fulfilled: payment of the existing arrears and payment of current instalments. Whilst I accept that the effect of the consolidation was arguably to wipe out the existing arrears (instead adding them to the capital owing) the second criterion – payment of current instalments – cannot have been discharged."
Mr Zinda renewed his application. It was heard by Rix LJ on 20 January 2011. He gave permission but limited to what in the order he made was described as "the construction and/or discharge of the possession order point". In his judgment Rix LJ explained that he was giving permission because on this one issue the case raised an important point of law or practice which brought it within CPR 52.13(2)(a): Zinda v Bank of Scotland [2011] EWCA Civ 95. He identified the point, which he provisionally thought was ultimately a point of construction, as being whether the possession order continues to bite for the entire length of the mortgage, even if the arrears which led to it being made have been paid up. He spelt out the limited basis upon which he was giving permission to appeal:
"I do not extend my permission to the other points raised by Mr Zinda, such as a factual point about estoppel as to what he was told by the bank at the time of the consolidation of the mortgage, or an argument that he is entitled to rescind the consolidation of the mortgage, or an argument based on human rights. It seems to me that those arguments have no merit, and in any event do not on the facts of this case give rise to anything that could be described as an important point of principle or practice."
The appeal came on before us on 8 June 2011. Before us, as below, Mr Zinda appeared in person. The bank was represented by Mr Thomas Grant, for whose lucid and compelling submissions I am grateful.
The initial skeleton argument filed by Mr Zinda was so skeletal as to give little indication of the nature of his arguments. Mr Grant accordingly, and most helpfully, sought in his skeleton argument to meet in advance a variety of...
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