Robert Mason v Godiva Mortgages Ltd
| Jurisdiction | England & Wales |
| Judge | Martin Chamberlain |
| Judgment Date | 30 November 2018 |
| Neutral Citation | [2018] EWHC 3227 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ13X02317 |
| Date | 30 November 2018 |
[2018] EWHC 3227 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Martin Chamberlain QC
(sitting as a Deputy Judge of the High Court)
Case No: HQ13X02317
Candace Mason (with leave of the Court) made submissions on behalf of the Claimants
Mark Fell (instructed by Eversheds Sutherland) for the Defendant
Hearing dates: 9, 10 and 11 October 2018
Judgment Approved
Martin Chamberlain QC:
Introduction
The Defendant, Godiva Mortgages Ltd (“Godiva”), a wholly owned subsidiary of the Coventry Building Society (“Coventry”), is a mortgage lender. It is authorised and regulated by the Financial Conduct Authority (formerly the Financial Services Authority). The Authority has made rules, the Mortgages and Home Finance: Conduct of Business Sourcebook (“MCOB”), with which authorised persons are required to comply when carrying on the “regulated activity” of entering into “regulated mortgage contracts”.
The Claimants, Mr Robert Mason and Mrs Norma Mason, engaged the services of an intermediary or broker, Mr Martyn Balm, who offered his services through a number of corporate entities, including Access Business Finance Ltd (“ABF”). With the assistance of Mr Balm, the Masons entered into a regulated mortgage contract with Godiva on 4 February 2008 under which Godiva lent £487,500 on an interest-only basis for a five-year term. The loan was secured on the Masons' home in Egham, Surrey. The Masons met all the interest payments during the term of the mortgage, but were unable to repay the capital at the end of the mortgage term.
The Masons say that Godiva should never have offered them the mortgage. It should have realised that the income figure of £100,000 for each of Mr and Mrs Mason stated in the online application form (which Mr Mason says he instructed Mr Balm to remove) was implausible and likely to be false. It should therefore have known that the mortgage was unaffordable. By this claim, the Masons seek damages for breach of a common law or contractual duty of care which they say Godiva owed them and for breach of the duty imposed by s. 150(1) of the Financial Services and Markets Act 2000 (“ FSMA”), which was in force at the time of the contract but has since been repealed and replaced by the materially similar s. 138D. Section 150(1) conferred, as s. 138D confers, a right of action by a “private person” against an authorised person for breach of the rules in MCOB. Godiva accepts that Mr and Mrs Mason are private persons for these purposes.
Godiva resists the claim. It says that it was not offering advice: that was Mr Balm's job. In those circumstances, no common law or contractual duty of care arose and Godiva did not breach any of the applicable rules in MCOB. In any event, Godiva contends that none of the loss pleaded by the Masons can be shown to have flowed from any breach by it. It counterclaims for the total outstanding balance on the mortgage account and for an order for possession of mortgaged property, not to be enforced for 12 months.
Representation
There have been a number of interlocutory hearings in this matter. Latterly, most have been before Master McCloud. It was apparent from the orders she made, and was confirmed to me at the trial, that she had permitted Mr and Mrs Mason to be represented at these hearings by their granddaughter Ms Candace Mason. Ms Mason has lived with Mr and Mrs Mason from the age of 4 and continues to live with them in the mortgaged property the subject of the proceedings.
There was evidence in the form of notes from their GP that Mr Mason (who is 79 years old) suffered from a number of medical conditions and was suffering from stress in connection with the proceedings and that Mrs Mason (who is 80) was suffering from anxiety in connection with the proceedings and was not medically fit to be cross-examined.
Mr Mason attended on the first day of the trial. Mrs Mason did not. Mr Mason told me that he and Mrs Mason wished to be represented by Ms Mason because she was better able to present the case than them. I had careful regard to paragraphs 92–93 on pp. 1–25 to 1–29 of the February 2018 edition of the Equal Treatment Bench Book and in particular to the excerpt there set out from the judgment of Hickinbottom J in Graham v Eltham Conservative and Unionist Club [2013] EWHC 979 (QB), at [31]-[38]. I considered that it was appropriate, exceptionally, to permit Ms Mason – a close family member – to represent Mr and Mrs Mason at the trial. First, there was cogent medical evidence that they would find it very difficult to represent themselves. Second, it was obvious both from the interlocutory history of the proceedings and from what I was told by Mr and Ms Mason, that Ms Mason had done a lot of work on the case and was in a position to put their case more effectively than they would be able to themselves. Third, it was obvious that, although she had filed a “witness summary”, Ms Mason was not in truth seeking to give evidence of her own. Mr Fell, for Godiva, had no objection to my permitting Mr and Mrs Mason to be represented by Ms Mason.
I am grateful to Ms Mason for putting Mr and Mrs Mason's case clearly and succinctly in circumstances that I am sure have been stressful both to Mr and Mrs Mason and to her. I am also grateful to Mr Fell and his team, for Godiva, who very properly recognised the difficulties that Ms Mason faced as a lay person in finding her way around the documents and did their best to assist her, both by locating the important documents and by identifying any points of law that might arguably assist the Masons' case. I permitted Ms Mason to make additional submissions in writing after the conclusion of the hearing and Mr Fell to respond in writing to those submissions insofar as they raised anything new. Ms Mason's written submissions were received on 15 October 2018. Mr Fell's submissions in reply were received by the associate on 19 October 2018 and transmitted to me on 22 October 2018. I have carefully considered both of these documents.
The evidence
The Claimants' principal evidence was contained in three “witness summaries” of Mr Mason, Mrs Mason and Ms Mason; and in the evidence of Mr Martyn Balm, in respect of whom a witness summons had been issued.
Each of the “witness summaries” was endorsed with a statement of truth and signed, though not dated. It was only Mr Mason's statement that contained substantive evidence of real relevance to the proceedings. Mrs Mason's statement contained just a single paragraph of substantive text, which conveyed her perception that Martyn Balm had groomed and lied to the couple, without details. Ms Mason's “witness summary” was endorsed with a statement of truth. As I have said, it summarised the Masons' position but did not purport to give first hand evidence relevant to any of the issues in the case.
Mr Mason was cross-examined. I formed the impression that he was a straightforward and honest witness, though he had some difficulty remembering the order in which events had occurred more than 10 years ago. When it was pointed out to him that the documents showed his memory to have been at fault, he accepted appropriately that he must have been mistaken.
Deputy Master Brown had directed that, if Mr Balm was to be called, Mr and Mrs Mason must file and serve a summary of his evidence. They did not do so. Ms Mason rectified this, at my direction, by sending the summary by email to Godiva's solicitors on the morning of the second day of the trial. By postponing the start of Mr Balm's evidence until 2pm that day (the court did not sit in the morning), it was possible to ensure that Godiva was not prejudiced.
In assessing Mr Balm's evidence, I have borne in mind that he was being asked questions about events that took place more than 10 years ago; and that he had not been shown many (if any) of the relevant documents in advance of giving evidence. Even taking these matters into account, however, I found Mr Balm to be an unsatisfactory witness. He was defensive and at times argumentative. He was repeatedly at pains to minimise his own role in providing advice to Mr and Mrs Mason. First, he emphasised that the authorised intermediary was the limited company, ABF, even though that entity (which has since been dissolved) was owned and run by Mr Balm and his wife Alison. Then, he suggested that the mortgage application might have been submitted by Pink Home Loans, a mortgage club, rather than by him or ABF. This was contrary to the documentary evidence, which showed very clearly that the information had been submitted directly to Godiva by ABF. I find it impossible to place much if any reliance on Mr Balm's evidence.
Godiva's evidence was given by Ms Jane Jennings, a Senior Customer Relations Manager employed by Coventry for over 40 years, and Mr Andrew King, a Technical Operations Manager who has been employed by Coventry for 5 years. Both were cross-examined. Both gave clear and helpful evidence relevant to their areas of expertise, but neither was involved with the Masons' mortgage application. Whilst their evidence as to Godiva's policies at the relevant time put the documents in context, my principal conclusions are drawn from the documents themselves.
What the documents show
Having sold the family paint-finishing business, and with a view to moving into property development, Mr and Mrs Mason formed a company, Mason Homes Ltd, in 2002. Part of the capital to be used in the business came from a loan of £350,000 from TMB, secured by a mortgage on the Masons' home in Egham, Surrey. It appears that this loan was organised through Mr Balm or one of his corporate entities.
In 2007, Mr and Mrs Mason again sought the assistance of...
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