Mr Damon Lawrenson v Crédit Immobilier De France Développement
| Jurisdiction | England & Wales |
| Judge | Mr Justice Kerr |
| Judgment Date | 09 June 2023 |
| Neutral Citation | [2023] EWHC 1378 (KB) |
| Court | King's Bench Division |
| Docket Number | Appeal No: KA-2022-000228 |
[2023] EWHC 1378 (KB)
Mr Justice Kerr
Appeal No: KA-2022-000228
IN THE HIGH COURT OF JUSTICE
HIGH COURT APPEAL CENTRE
ROYAL COURTS OF JUSTICE
KING'S BENCH DIVISION
ON APPEAL FROM
THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
FOREIGN PROCESS SECTION
(MASTER COOK)
IN THE MATTER OF COUNCIL REGULATION (EC) NO. 44/2001
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr William Buck (instructed by Napthens LLP) for the Appellants
Mr Turlough Stone (instructed by Brodies LLP) for the Respondent
Hearing date: 3rd May 2023
Approved Judgment
This judgment was handed down remotely by circulation to the parties' representatives by email and will be released for publication on the National Archives caselaw website. The date and time for hand-down is 09:30am on 9 June 2023.
Introduction
This appeal is against an order made without notice and without a hearing by Master Cook, sealed on 12 October 2022. He granted the respondent's application to register a notarial deed ( the Deed) executed in France in 2008. The Deed records the terms of a charge over a property in France acquired in 2008 by the English appellants. It is an “authentic instrument” under Council Regulation 44/2001 (EC) ( the Judgments Regulation).
An authentic instrument is a creature of many civil law jurisdictions. It must be formally certified by a notary public. In some jurisdictions, including France, a notarial deed can be enforced directly by the creditor without a court judgment. In France, a creditor may proceed directly to enforcement measures on the strength of a notarial deed formally recording the debtor's obligations, albeit subject to judicial supervision in the event of a challenge by the debtor.
Under the Judgments Regulation, authentic instruments can be registered in England for the purpose of enforcing against UK based assets of the debtor. Broadly, they are treated as equivalent to a judgment of a court in an EU member state, which can be registered here under the Judgments Regulation (under a saving provision applicable where the judgment or authentic instrument was made before “IP [implementation period] completion day”, 31 December 2020).
Under the Judgments Regulation, the domestic court must register most foreign judgments, authentic instruments or court settlements if the correct formalities are observed; unless to allow enforcement in this country would be manifestly contrary to public policy. The public policy exception has been discussed in several judgment cases (see the 2023 White Book, vol. 1, at 74.7.3 and 74x.10.5) but, it appears, in only one authentic instrument case in Scotland (see at 74.11.1, Baden-Württembergische Bank AG, Petitioner [2009] CSIH 47).
The appellants say the papers filed ex parte under CPR Part 74, as amended, and consequently the Master's order, were defective in that (i) the Master's order wrongly referred to the Deed as a “judgment”; (ii) the wrong property was named as the one charged and the wrong notarial deed produced; and (iii) the Master was not told about extensive and ongoing litigation in France challenging the effects of the Deed and the respondent's rights under it.
I will address the issues in that order. They correspond to, respectively, the third, first and second grounds of appeal. There were two other grounds of appeal but they were not actively pursued before me. The appeal is governed by Part 52 of the CPR, subject to a modification in rule 74.8(2) providing that the appellant (not being entitled to be heard below) does not need permission to appeal nor to rely on evidence in any appeal.
I must therefore consider the extensive written evidence from the parties, most of which was not before the Master. I must allow the appeal only if the decision below was wrong or marred by a serious procedural irregularity such that it would be unjust to allow the decision to stand ( CPR rule 52.21(3)). The appeal court's powers are the broad powers set out in rule 52.20.
Under those provisions, I can affirm, set aside or vary the order below or remit the matter back for further consideration. However, by article 57(1) of the Judgments Regulation:
“[t]he court with which an appeal is lodged under Article 43 or Article 44 shall refuse or revoke a declaration of enforceability only if enforcement of the instrument is manifestly contrary to public policy in the Member State addressed.”
Facts
In January and March 2008, the appellant UK nationals bought two properties in France for development and rental. One was at Les Jardins de St-Benoît, near Narbonne ( the St-Benoît property). The other was at Le Haut du Val, Bellême, near Le Mans, about 800 kilometres to the north ( the Bellême property). The dealings referred to below relate to the St-Benoît property except where indicated otherwise.
Each was purchased with a mortgage from a predecessor in title of the respondent, secured on the property. I refer to the predecessor in title as “the respondent” as nothing turns on this. The St-Benoît loan was for €253,076 recorded in a notarial deed (i.e. the Deed) dated 31 January 2008, with annual interest at 4.95 per cent. The Bellême loan was for €177,090, recorded in a different notarial deed dated 4 March 2008, with annual interest at 4.95 per cent.
From 2010 to 2013 there was correspondence between the parties over whether the price paid for the St-Benoît property had been much too high. The respondent did not wish to engage with the appellants on this topic. The appellants got into difficulties with the mortgage repayments and defaulted on the mortgage repayments from August 2011. The respondent indicated that it would take enforcement action unless the arrears were made good.
On 7 October 2013, the respondent served a foreclosure notice on the appellants ( the 2013 notice), requiring outstanding sums to be paid within eight days, failing which enforcement action would be taken before an enforcement judge. If payment were not made, the appellants would be required to appear before that judge and a process of forced sale of the St-Benoît property would commence. Such a notice expires two years after service unless it is renewed.
The appellants served a defence to the 2013 notice, saying they had not been properly served; the respondent had not completed necessary formalities; and the notice did not justify the amount claimed. On 16 March 2015, about 18 months later, the court at Narbonne dismissed the appellants' objections to the 2013 notice, ordered the sale of the Saint-Benoît property and fixed the amount payable as €411,348.15 plus interest ( the March 2015 judgment).
On 1 June 2015, the respondent took over the mortgage business of its predecessors in title, which had been parties to the agreements and notarial deeds in respect of the St-Benoît loan and the Bellême loan. It is not disputed that in the subsequent English registration proceedings and this appeal nothing turns on those changes in the name and legal personality of the mortgagees, which acquired the relevant rights and liabilities of the predecessors.
On 5 October 2015, the appellants issued a claim in the Narbonne court alleging breach of duty by the respondent ( the October 2015 claim). It was alleged that the respondent had owed a duty of care to the appellants, who lacked experience of investing in the French property market, to provide appropriate information, advice and warnings. This could be described as a collateral challenge to the outcome of the enforcement process following the March 2015 judgment.
The appellants had also appealed against the March 2015 judgment. The Montpellier Court of Appeal dismissed that appeal on 3 December 2015 ( the December 2015 judgment). However, the respondent accepted that the amount then due and recorded in the appellate court's judgment should be reduced from the sum of €411,348.15 stated in the March 2015 judgment, to €315,048.15; though with a higher rate of interest, 7.95 per cent, than that stipulated in the March 2015 Judgment to accrue until payment.
That lesser sum is indeed recorded in the appellate judgment, but with the higher rate of interest accruing up to payment. The reason for the reduction in the amount due was not made clear in the appeal court's judgment. It appears to result from deducting the notional sale price of the property. It was not the result of any payment made by the appellants. The substituted higher rate of interest appears to have resulted from a previously made error.
The December 2015 judgment also included a provision permitting a forced sale of the St-Benoît property at a minimum price of €120,000. This was far less than the appellants had paid to acquire the property and was about €133,000 less than the appellants had borrowed from the respondent to acquire it. They had, indeed, not fared well in their foray into the French property investment market.
The respondent did not seek to sell the St-Benoît property and has not done so since, to realise in part its security. It is not suggested that it was obliged under the December 2015 judgment to do so. The appellants say the respondent does not wish to be burdened with the property for fear that it would be unable to find a buyer willing to pay the minimum of €120,000 set by the Montpellier Court of Appeal in the December 2015 judgment.
The appellants assert that because they contracted with the respondent in 2008 as consumers (which is not disputed), the December 2015 judgment became suspended and unenforceable after the expiry of two years after it was given, i.e. it became unenforceable from 3 December 2017. The respondent says that the two year period has not expired because certain events since have...
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