Southern Pacific Mortgage Ltd v Heath
| Jurisdiction | England & Wales |
| Judgment Date | 29 January 2009 |
| Neutral Citation | [2009] EWHC 103 (Ch) |
| Docket Number | Case No: 8BM30221 |
| Court | Chancery Division |
| Date | 29 January 2009 |
[2009] EWHC 103 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIMINGHAM DISTRICT REGISTRY
On appeal from the Worksop County Court
Birmingham Civil Justice Centre
The Priory Courts
33 Bull Street
Birmingham B4 6DS
His Honour Judge Purle QC
(Sitting as a High Court Judge)
Case No: 8BM30221
Mr. Bradley Say (instructed by Burton & Co LLP) appeared for the Appellant
Mr. Clifford Payton (instructed by Glenisters) appeared for the Respondent.
Hearing Date: 29 th October 2008
The Issue
This case raises a point on multiple agreements under the Consumer Credit Act 1974 (“the Act”). References to section numbers are references to the Act, unless otherwise stated.
The Respondent's predecessor advanced £28,932.50 to the Appellant under a mortgage dated 7 th May 2002 (“the 2002 mortgage”) secured on her home at 52, Lowton Street, Worksop, Nottinghamshire (“the property”). The Appellant fell into arrears and possession orders have been made against her. She now wishes to appeal those orders and seeks permission to appeal out of time. Mr Say (who appears for her) contends that the mortgage is unenforceable.
Approximately £19,000 of the advance was required under the terms of the 2002 mortgage to be applied to discharge a previous mortgage on the property granted by another lender. The rest was used by the Appellant for her own purposes.
The 2002 mortgage appeared on its face to escape the consumer protection provisions of the Act, as it exceeded the then limit of £25,000. The advance included charges for credit but, even with those stripped out, still exceeded £25,000.
Mr Say argues however that the mortgage was a multiple agreement in 2 parts within section 18(1)(a). The first part was the advance of approximately £19,000. This was in the category of restricted-use credit falling within section 11(1)(c), as the advance was to refinance the Appellant's existing indebtedness to the previous mortgagee. The rest was in the different category of unrestricted-use credit falling within section 11(2), as the Appellant was free to do whatever she wanted with it. Under each part, credit of less than £25,000 was provided. Each part was therefore to be regarded as a separate consumer credit agreement regulated by the Act. This result follows, Mr Say contends, from section 18(2).
If Mr Say's analysis is correct, the 2002 mortgage was not properly executed under section 61, and the Court has no power to enforce it under section 65, as no document containing all the prescribed terms was signed by the Appellant: section 127(3), the effectiveness of which was confirmed by the House of Lords in Wilson v First County Trust Ltd (No 2 [2004] 1 A.C. 816. Section 127(3) was repealed by section 15 of the Consumer Credit Act 2006, but not so as to affect improperly-executed agreements made before the repeal came into force, which was 6 th April 2007: see The Consumer Credit Act 2006 (Commencement No 2 and Transitional Provisions and Savings) Order 2007, SI 2007/123, Art 3(2) and Schedule 2. Accordingly, section 127(3) still applies to the present case.
Permission to Appeal and Extension of Time
I need first to consider the questions of whether permission to appeal should be granted, and the time for appealing extended.
On the first of those questions, the points raised by Mr Say are clearly highly arguable. There is some controversy over the ambit of section 18, and there are conflicting judgments at County Court level. I have no doubt that, for that reason alone, this is a proper case for permission to appeal to be given. That, however, is separate from the question of whether the Appellant should have an extension of time for that purpose.
The Appellant wishes to appeal 2 possession orders, the first of which was made as long ago as 18 th June 2004 by District Judge Smith. No argument based on the Act was advanced on either occasion.
At the time of the first possession order, the Appellant was in arrears (then totalling £1,014.07) under her mortgage. The possession order was suspended on condition that the arrears were paid by monthly instalments of £39.61 in addition to the current instalments under the mortgage.
Following further defaults, the second possession order of 29 th September 2006 was made, again by District Judge Smith. The arrears at that date were £1,107.26. The order was again suspended on condition that the arrears were paid by an instalment of £45.00 by 20 th October 2006, and then £35.00 monthly, in addition to the current instalments under the mortgage.
The Appellant at the time of both possession orders was receiving advice from the Citizens Advice Bureau. They did not alert her to the potential availability of the defence she now puts forward.
In July 2007, the Appellant contacted Framework, a local housing charity. Whilst their in-house Barrister was considering her papers, a Warrant of Execution was issued out of the Worksop County Court.
The Appellant's present solicitors were instructed on 12 th September 2007 and obtained public funding for her on 4 th October 2007.
On 16 th October 2007, District Judge Hudson stayed the Warrant pending appeal provided an appeal notice was filed by 13 th November 2007. This condition was complied with. The appeal notice also sought an extension of time.
On 30 th November 2007 Judge Inglis directed a 2.5 hour hearing of the permission application, with the appeal to follow at a later date (if permission was given). That hearing came before Judge Machin in Lincoln on 15 th January 2008, who transferred the entire matter to Birmingham to be heard by the Designated Chancery Judge, with a time estimate of 2 days. He did not deal with the question of permission, which remains open.
On 20 th May 2008, I made an Order without a hearing transferring the matter to the High Court and giving directions.
It is apparent that since Framework came on to the scene and solicitors were instructed, the matter has progressed with proper expedition.
It is also the case that the Respondent is in no worse position, as a result of the delay, in answering the Consumer Credit Act point than it would have been had the point been taken at the outset. Moreover, I do not think that the Appellant can realistically be blamed for not having this point in mind until she was alerted to it following consideration by Framework's barrister of the matter. The point is not obvious, either to a lay person or indeed to most lawyers. I am neither surprised nor remotely critical that the Citizens Advice Bureau did not spot the point.
In those circumstances, there is considerable merit in granting an extension of time for the purposes of what is otherwise an entirely proper appeal. If Mr Say is correct, the Appellant is at risk of being turned out of her home when Parliament has declared the 2002 mortgage to be unenforceable. The possession orders, though made some time ago, have not been enforced and the interests of justice are in favour of allowing the Appellant now to take the Consumer Credit Act point.
I have had regard to the check list set out in CPR 3.9, as required by Sayers v Clarke Walker [2002] 3 All ER 490. Applying that list:—
(i) The interests of the administration of justice require a determination of the enforceability of the 2002 mortgage;
(ii) Though not made promptly, the application has been made and pursued promptly once it was known that there was a point to be taken;
(iii) There has been no intentional non-compliance as the Appellant was not aware of the point until late in the day;
(iv) The explanation for the delay is, again, that the Appellant was unaware of the point until late in the day;
(v) There is no other relevant default;
(vi) As noted above, to attribute fault is unrealistic;
(vii) No trial date is affected;
(viii) The Respondent is not significantly adversely affected by the delay;
(ix) Granting the extension allows an important issue to be aired. If the Appellant succeeds, she will keep her home and be relieved of any obligation towards the Respondent. This prospect is not in the Respondent's interests, but the Respondent has no legitimate complaint if that turns out to be the case, as this will do no more than reflect its legal position.
I accordingly grant permission to appeal, and an extension of time for that purpose.
Multiple Agreements
The first 4 sub-sections of section 18 provide as follows:—
“(1) This section applies to an agreement (a 'multiple agreement') if its terms are such as—
(a) to place a part of it within one category of agreement mentioned in this Act, and another part of it within a different category of agreement so mentioned, or within a category of agreement not so mentioned, or
(b) to place it, or a part of it, within two or more categories of agreement so mentioned.
(2) Where a part of an agreement falls within subsection (1), that part shall be treated for the purposes of this Act as a separate agreement.
(3) Where an agreement falls within subsection (1)(b), it shall be treated as an agreement in each of the categories in question, and this Act shall apply to it accordingly.
(4) Where under subsection (2) a part of a multiple agreement is to be treated as a separate agreement, the multiple agreement shall (with any necessary modifications) be construed accordingly; and any sum payable under the multiple agreement, if not apportioned by the parties, shall for the purposes of proceedings in any court relating to the multiple agreement be apportioned by the court as may be requisite.”
The first thing to note about these provisions is that in deciding whether the section applies, regard must be had to the “terms” of the agreement itself, which have to be construed in...
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