Mortgage Five Zero Ltd v The Secretary of State for Business and Trade
| Jurisdiction | England & Wales |
| Judge | Mr Justice Adam Johnson |
| Judgment Date | 25 October 2023 |
| Neutral Citation | [2023] EWHC 2654 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CH-2023-000093/PT-2023-000650 |
[2023] EWHC 2654 (Ch)
Mr Justice Adam Johnson
Case No: CH-2023-000093/PT-2023-000650
Case PT-2023-000650
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND & WALES
Rolls Building
Royal Courts of Justice
Fetter Lane, London
EC4A 1NL
CHANCERY APPEALS
ON APPEAL FROM DEPUTY INSOLVENCY AND COMPANIES COURT JUDGE
AGNELLO KC
Appeal CH-2023-000093
PROPERTY TRUSTS AND PROBATE LIST (ChD)
Case PT-2023-000650
Matthew Parfitt (instructed by Howes Percival LLP) for the Secretary of State for Business and Trade and the Official Receiver
Mortgage Five Zero Limited and Mr Jason Campbell did not attend and were not represented
Hearing dates: 20 October 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on Wednesday 25 October 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
This Judgment concerns a number of matters relevant to Mortgage Five Zero Limited (“ Mortgage Five Zero” or “ the Company”). The matters include resolving applications made in the name of the Company by its sole director and 50% shareholder, Mr Jason Campbell, as well as resolving other applications made against the Company and against Mr Campbell personally by the Secretary of State for Business and Trade (“ the SoS”) and the Official Receiver (“ the OR”).
The Winding-Up Order
On 4 April 2023, Deputy ICCJ Agnello made an Order winding-up Mortgage Five Zero on public interest grounds, on a Petition by the SoS (Case CR-2023-000613). Up until that time, Mortgage Five Zero operated a business providing non-regulated legal services to members of the public with mortgage problems. These services offered the tantalising prospect that mortgagors could escape their repayment obligations and moreover might have claims against mortgagee banks and building societies, on the basis that many mortgage deeds were routinely deficient and ineffective, for failure to comply with the requirements of s.2 of the Law of Property (Miscellaneous Provisions) Act 1989 (“ the 1989 Act”). The deficiency was said to be that under s.2, a mortgage deed was required to be executed both by the mortgagor and the mortgagee, and not by the mortgagor customer alone.
The s.2 Argument
This unmeritorious argument is misconceived, because s.2 applies only to contracts for the future sale or disposition of interests in land, and not to documents such as deeds which actually create or transfer such interests. This point was authoritatively stated over 10 years ago by the then Master of the Rolls, Lord Neuberger (with whom Smith LJ and Elias LJ agreed), in Helden v. Strathmore Limited [2011] EWCA Civ. 542, [2011] 2 BCLC 665 at [27]–[28]. Lord Neuberger MR was clear and emphatic in Helden. He said:
“ 27. Mr Helden's case on section 2 is hopeless. It proceeds on a fundamental misunderstanding of the reach and purpose of that section, a misunderstanding, it is fair to say, which appears to be not uncommon. Section 2 is concerned with contracts for the creation or sale of legal estates or interests in land, not with documents which actually create or transfer such estates or interests. So a contract to transfer a freehold or a lease in the future, a contract to grant a lease in the future, or a contract for a mortgage in the future, are all within the reach of the section, provided, of course, the ultimate subject matter is land. However, an actual transfer, conveyance or assignment, an actual lease, or an actual mortgage are not within the scope of section 2 at all.
28. As is spelt out in its opening words, section 2 is concerned with ‘a contract for the sale or other disposition of an interest in land’. Its purpose is also clear from the fact that it replaced section 40 of the Law of Property Act 1925, and from the contents (and indeed the title) of the interesting and full Law Commission report which initiated it — Transfer of Land: Formalities for Contracts for sale etc. of Land (Law Com. No. 364). The section was directed to tightening up the formalities required for contracts for the creation or transfer of interests or estates in land and it was not concerned with documents which actually create or transfer legal estates or interests in land …”.
This unambiguous guidance has been followed in later cases including, most importantly for present purposes, the decision of HHJ Hodge QC (Sitting as a Judge of the High Court) in Shaun Campbell & Ors v. Chief Land Registrar [2022] EWHC 200 (Ch), in which claims made by several parties who appear to have been associated with Mortgage Five Zero, and who relied on its view of s.2, were summarily dismissed. The parties included Shaun Campbell, understood to be the brother of Jason Campbell.
The claims were all claims for rectification and indemnity, based on the proposition that registered charges on the claimants' properties were void, given the failure of the relevant mortgage deeds to comply with s. 2. HHJ Hodge QC described the claimants' basic submission i.e., that all mortgage deeds must effectively incorporate a contract or agreement to create a mortgage and therefore must be signed both by mortgagor and mortgagee, as “ simply a nonsense” (see at [38]). This is essentially the proposition at the heart of the Company's business model. The problem is, as HHJ Hodge QC made clear, that it confuses the idea of an agreement to create a mortgage with the question of the creation of a mortgage. That is the very point made in the Helden case. Thus, said HHJ Hodge QC at [39], the “ claimants' case is founded on a hopeless misunderstanding of the applicable law.” HHJ Hodge QC struck the claims out and certified that they were all totally without merit (see at [40]). He made an ECRO against Shaun Campbell.
The Judgment of Deputy ICCJ Agnello KC
The SoS took the view that it was contrary to the public interest for Mortgage Five Zero to be offering services to the public based on the misconceived argument rejected so emphatically in the Helden case. Deputy ICCJ Agnello KC agreed and made the winding-up Order proposed by the SOS. The OR is now acting as liquidator.
At [6] of her Judgment, Deputy ICCJ Agnello KC said that stepping back, she could not think of a more extraordinary thing for a company to be doing, and that it was contrary to the public interest to allow it to continue in a manner likely to be a temptation to vulnerable members of the public who were probably already in financial difficulties. The Judge thought it particularly concerning that the Company continued to trade even in light of the comprehensive judgment of HHJ Hodge QC. She considered this demonstrated a lack of commercial probity (see at [23]–[24]), because the services offered relied on a legal argument which was hopeless.
The Chancery Appeal ( CH-2023-000093) and related Applications
The winding-up Order made by Deputy ICCJ Agnello KC spawned an appeal to the Chancery Division (Appeal CH-2023-000093). The Appellant's Notice was filed on behalf of the Company, but like the other applications referred to in this Judgment, the human actor who caused it to be issued was Mr Jason Campbell. As to this, Mr Parfitt in his submissions for the SoS and OR pointed to the received wisdom that a company director has continuing authority after the making of a winding-up Order to issue an application on the company's behalf to appeal that Order, but not otherwise (there is little authority on the point, but the practice is analysed in the recent decision of the Singapore Court of Appeal in Sun Electric Power Pte Ltd v. RCMA Asia Pte Ltd [2021] SGCA 60).
The Company's application for permission to appeal is still pending and needs to be dealt with. In addition, the Appellant's Notice as filed in the High Court included (i) an application for a stay of execution of the winding-up Order pending determination of the appeal, and (ii) an application “ … to add the Insolvency Service to proceedings”. (For completeness I should mention that the Company initially – and mistakenly — sought to file an Appellant's Notice in the Court of Appeal. This earlier version of the Appellant's Notice included other applications, among which was an application by Mr Campbell to be joined as a party, but these further applications were not included in the Appellant's Notice filed in the High Court. I will therefore treat them as having been abandoned).
The Company's application for a stay of execution of the winding-up Order was refused on the papers on 5 May 2023, but the Company sought an oral renewal. The present hearing on 20 October 2023 was originally fixed as the hearing of that application. The Company's other application to join the Insolvency Service was undeveloped in the Appellant's Notice, and it seems to me has now been overtaken by events, given that the OR is participating in the appeal as liquidator. I will treat that application as having been superseded and will say no more about it.
In addition to the applications made in the Appellant's Notice, the Company has now made yet further applications in the context of the present appeal which remain to be dealt with. These are as follows:
i) An application dated 15 July 2023 to refer a matter of general importance to the Court of Appeal (i.e., the question whether the Helden decision should be reconsidered), under the leapfrog procedure in CPR, rule 52.23.
ii) An application dated 10 September...
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