Paragon Finance Plc v Pender
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE PETER SMITH |
| Judgment Date | 25 November 2003 |
| Neutral Citation | [2003] EWHC 2834 (Ch) |
| Court | Chancery Division |
| Date | 25 November 2003 |
[2003] EWHC 2834 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(Mr Justice Peter Smith
JUDGMENT AS APPROVED
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
MR JUSTICE PETER SMITH:
INTRODUCTION
This is the Defendants application for permission to appeal and if permission is granted, an appeal against the order of Her Honour Judge Mayer sitting in the Barnet County Court, when she dismissed the Defendants application dated 21st January 2002 to set aside an order for possession dated 5th January 1995. She further dismissed the Defendants oral application made at the hearing on 9th January 2003 for permission to appeal out of time against the order for possession. In addition, she granted the Claimants permission to enforce the order for possession and to issue a warrant of possession not to be enforced before 27th February 2003 and finally she permitted the Claimant to add the costs of the proceedings to the Security under the terms of clause 16 of the Claimants Mortgage Conditions 1990 Edition.
On 17th February 2003 Neuberger J granted a stay of execution on terms that the Defendants pursue their application for permission to appeal and if granted permission to . appeal, they appeal with reasonable dispatch. On 28th July 2003, Patten J ordered that the application for permission to appeal be stood over to a date to be fixed, with a time estimate of two days and that the stay of execution continue.
The Defendants attached a detailed argument in support of the grounds of appeal to their Application Notice.
Following the issue ''of the application for permission to appeal, the Defendants changed solicitors. Joseph Aaron of Joseph Aaron & Co. the new solicitors, served a witness statement dated 23rd July 2003. In that witness statement he sought to raise on behalf of the Defendants three further arguments, which had not been raised before. The first of those was an argument asserting that the Claimant no longer had any title to sue (the "Title to Sue issue"). The second is an allegation that there was an implied term in the mortgage agreement between the Claimant and the Defendants, which conferred a discretion to vary-the interest rate in favour of the Claimant to the effect that the discretion so conferred was one which the Claimant was bound to exercise fairly, honestly and in good faith as between both parties to the contract and not for an improper purpose or purposes and not in an arbitrary, capricious or unreasonable way.
Finally, they wanted to. raise an alternative argument under the Consumer Credit Act 1974, to the effect that the agreement between the parties was an extortionate credit bargain.
As Mr Aaron indicated in his witness statement these points have been raised in other actions, brought by the Claimant against different borrowers where Mr Aaron's firm were representing the Defendants. All of those decisions await in effect my ruling. Although Mr Aaron, in paragraph 11 of his witness statement suggests that it would be fair, convenient and cost effective and avoid inconsistent decisions if the matters could be decided by me, one has to bear in mind the clients that are represented on an individual case basis.
Nevertheless, I permitted the arguments to be deployed in full (as the Claimant answered them in full).
FACTUAL BACKGROUND
The Defendants are the registered proprietors of property (the "Property") known as 29, Knightswood Close, Broadfields, Edgware, Middlesex HA8 8FR, under title number NG1,520302. The Property includes a dwelling house within the meaning of section 21 of the County Courts Act 1984. They charged the property in favour of the Claimant by a legal charge (the "Charge") dated 1st August 1989 and made between the Defendants (1) and the Claimant (2).
The Claimant ultimately became the registered proprietors of that Charge at HM Land Registry.
The loan secured by the Charge is not a regulated consumer credit agreement.
The loan was made following a mortgage offer (the "Mortgage Offer") dated 6th July 1989, whereby the Claimant (then known as National Home Loans) offered to lend £75,522.54 to be repaid over 25 years on an interest only basis with an initial variable interest rate of 12.99%. The monthly payments were stated to be gross £817.53 per month and net £736.34 (taking into account what was then the MIRAS relief available at that time).
By clause 7 of the special conditions, the offer of loan incorporated a 3 year fixed rate and a provision for 3 years to defer (but not ultimately reduce) part of the monthly payments.
At the time of the loan the Defendants stated that the Property had a current value of £109,000.00 with an existing mortgage in favour of the Halifax Building Society. The Defendants self certified their income. The First Defendant stated that he was a supervisor signalman with a gross annual income of £20,760.00 and the Second Defendant stated that she was a care assistant with a gross annual income of £10,200.00. The value of the property reflected a valuation made 4 years earlier, which valued it at £100,000.00.
MORTGAGE CONDITIONS
The final offer of loan of 7th June 1989 was expressed to be subject to the Claimants Mortgage Conditions (1988 Edition). However, by a Deed of Variation dated 11th July 1990 the Defendants agreed that the Charge should be amended so that the Claimants Mortgage Conditions (1990 Edition) should apply instead.
The form of the Charge follows a standard form and is a one page document referring to the conditions to which I have already made reference. Under clause 7 of the 1990 conditions, it is provided that for the purposes of section 101Law of Property Act 1925 (" LPA 1925") the sum secured by the Mortgage should become due 28 days after the date of the Mortgage and in particular in favour of the purchaser, the power of sale should arise 28 days after the date of the Mortgage. It is further provided that the restrictions contained in section 103 of the LPA 1925 should not apply to the power of sale and finally, by clause 7.3 provided that if (amongst other things) two payments were not made then all monies secured by the Charge including interest should immediately become due and payable so that all powers should immediately become exercisable by the Claimant at any time thereafter.
Condition 9.6 is important for the purposes of the dispute between the parties. It provides:—
"9.6 Without prejudice to any rights of the Company whether at common law by statute or otherwise the Company may at its absolute discretion without the consent of or notice to the Borrower (or the Surety if any) assign or transfer all or any of its rights and benefits and/or transfer all or any of its obligations embodied in the Mortgage together with any securities or other property of the Borrower charged to or held by the Company in support thereof to any person or persons whatsoever. The Borrower (and the Surety if any) agree that to the extent that the Company agrees to assign or transfer (whether at common law or in equity) its rights and benefits to any person they shall be bound to any such assignee in like manner and to like extent as they are bound to the Company under the Mortgage and to the extent that the Company shall be released from further obligations to them under the Mortgage and such transferee shall assume obligations towards them which differ from such released obligations only so far as such assumed obligations are owed by and constituted by claims against such transferee/assignee and not the Company. The Borrower (and the Surety if any) hereby irrevocably consent to any such assignment or transfer."
It will be seen therefore that the Defendants acknowledged that the Claimant at any time might assign or transfer the Mortgage and upon such assignment the Defendants agreed that to the extent that the Claimant agreed to assign or transfer (whether at common law or in equity) its rights and benefits to any person they should be bound to any such assignee in the like manner and the like extent as they were bound to the Claimant under the Charge. In addition they agreed to the extent that the Claimant should be released from further obligations to them under the Charge, and such transferee should assume obligations towards them, which differ from such released obligations only so far as such assumed obligations are owed by and constituted by claims against such transferee/assignee and not the Claimant. The Defendants irrevocably consented to any assignment or transfer.
Under clause 3.3 the interest on the loan, chargeable by the Claimant was variable from time to time as it should determine and might be increased or decreased at any time and with effect from such date or dates as it shall determine.
PROCEDURAL HISTORY
By 1994 the Defendants had fallen into arrears and the Claimant issued an undated claim for possession of the Property. A Particulars of Claim was served on 7th April 1994, claiming possession of the Property. The arrears at that time were stated to be £2,419.65 as at 19th May 1994. The payment schedule showed that between 1992 and 1993 the payments became irregular.
The Defendants prepared a draft affidavit in November 1994. Judge Mayer commented (and I agree with her) that there had been professional input in the preparation of this affidavit.
Although this was not revealed to Her Honour Judge Mayer, the Defendants' witness statement dated 27th October 2003 (paragraphs 3 and 4) showed that a Mr McPherson, who...
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