State Bank of NEW South Wales t/a COLONIAL State Bank v A CAREY Harrison III
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ALDOUS,Lord Justice Jonathan Parker,LORD JUSTICE JONATHAN PARKER,LORD JUSTICE TUCKEY |
| Judgment Date | 08 March 2002 |
| Neutral Citation | [2002] EWCA Civ 363 |
| Docket Number | A3/2001/2239/A |
| Court | Court of Appeal (Civil Division) |
| Date | 08 March 2002 |
[2002] EWCA Civ 363
Lord Justice Aldous
Lord Justice Tuckey
Lord Justice Jonathan Parker
A3/2001/2239/A
A3/2001/2239
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE A3/2001/2398
CHANCERY DIVISION
(His Honour Judge Seymour
(sitting as a deputy High Court judge))
Royal Courts of Justice
Strand
London WC2
MISS E WINDSOR (Instructed by Messrs Allen & Overy, London EC4M 9QQ) appeared on behalf of the Appellant
THE RESPONDENT appeared on his own behalf
I invite Lord Justice Jonathan Parker to give the first judgment.
Before the court is an appeal by State Bank of New South Wales Ltd, the claimant in the action ("the Bank"), against an order dated 3 October 2001 and made by His Honour Judge Seymour QC, sitting as a High Court judge in the Chancery Division.
Before Judge Seymour was an application by Mr Carey Harrison III, the defendant in the action, for permission to appeal against an order dated 10 January 2001 and made by Master Bowman. By that order, Master Bowman ordered that Mr Harrison give to the Bank possession of his house at 1 Rectory Grove, Clapham Old Town, London SW4 0DX within 28 days, but stayed the order pending an application by Mr Harrison for permission to appeal (Master Bowman having refused such permission). In ordering that possession be given in 28 days, Master Bowman refused an application by Mr Harrison that the order be stayed pursuant to section 36 of the Administration of Justice Act 1970.
Mr Harrison did not seek to appeal the possession order; rather, he sought permission to appeal against Master Bowman's refusal of his application that the possession order be stayed pursuant to section 36 of the 1970 Act. Judge Seymour concluded that there were no grounds for challenging the Master's refusal to grant a stay under section 36 and that the proposed appeal would have no real prospect of success. Accordingly, he refused Mr Harrison permission to appeal against Master Bowman's order. However, the judge then went on to stay the possession order until the conclusion of the hearing of a forthcoming appeal in other litigation to which Mr Harrison is (but the Bank is not) a party. In granting that stay, the judge made it clear that he was not exercising the discretion conferred by section 36, which he described as "inapplicable in the circumstances of the present case", but rather "a general power to order a stay of execution of a judgment". The judge refused the Bank permission to appeal against the grant of this stay, but permission was granted by Robert Walker LJ on 13 November 2001. That is the appeal which is now before us.
Mr Harrison has himself issued an Appellant's Notice, which is also before us, whereby he seeks to appeal against Judge Seymour's refusal to grant him permission to appeal against Master Bowman's order. He also seeks to appeal against two further aspects of Judge Seymour's order: first, the judge's refusal of his application for permission to adduce further evidence in support of his application for permission to appeal; and second, the judge's refusal to grant him permission to amend his Defence in the action.
It is convenient at that this point to set out the relevant provisions of section 36 of the 1970 Act. They are as follows:
"(1) Where the mortgagee under a mortgage of land which consists of or includes a dwelling-house brings an action in which he claims possession of the mortgaged property, not being an action for foreclosure in which a claim for possession of the mortgaged property is also made, the court may exercise any of the powers conferred on it by subsection (2) below if it appears to the court that in the event of its exercising the power the mortgagor is likely to be able within a reasonable period to pay any sums due under the mortgage or to remedy a default consisting of a breach of any other obligation arising under or by virtue of the mortgage.
(2) The court-
(a) may adjourn the proceedings; or
(b) on giving judgment, or making an order, for delivery of possession of the mortgaged property, or at any time before the execution of such judgment or order, may-
(i) stay or suspend execution of the judgment or order, or
(ii) postpone the date for delivery of possession,
for such period or periods as the court thinks reasonable."
I need not read the remaining subsections of section 36.
The factual and procedural background to the matters now before us can be summarised as follows.
In 1989 or thereabouts Mr Harrison, who had recently retired after a career in banking, became a Name at Lloyd's. To enable him to do so, he procured the Bank to guarantee his liabilities to Lloyd's, up to a limit of £70,000. The Bank in turn took an "all moneys" second charge over his house at 1 Rectory Grove ("the Property") as security for its liability under the guarantee. As a Name, Mr Harrison incurred very substantial losses. In August 1995 Lloyd's made a call on the Bank under the guarantee in the sum of £70,000 and in February 1999 the Bank paid that sum to Lloyd's.
In May 1997 Mr Harrison issued a writ against Lloyd's. It appears that the writ was subsequently renewed on a number of occasions. He was also joined as a party in the current Lloyd's v Jaffray litigation, to which I shall make further reference later in this judgment.
In April 1999 the Bank formally demanded repayment of the £70,000, with interest, under the personal covenant by Mr Harrison contained in its charge. Payment was not forthcoming, and in June 1999 the Bank, as chargee, commenced proceedings against Mr Harrison claiming possession of the Property, together with a money judgment for the sums owing to it.
After a number of adjournments, the hearing of the proceedings was concluded before Master Bowman on 9 January 2001. Mr Harrison was represented before the Master by Mr Rupert de Cruz of counsel; the Bank was represented by Mr Peter Watson of Messrs Allen & Overy. The Master delivered judgment the following day, 10 January 2001.
At the outset of his judgment, Master Bowman recorded that the Bank's claim for possession was not resisted, but that Mr Harrison was seeking a stay or suspension of the order pursuant to section 36 of the 1970 Act. After summarising the procedural history, the Master turned to the section, and referred to a number of authorities bearing upon the exercise of the power conferred by the section to stay or suspend an order for possession in favour of a mortgagee for such period as the court thinks reasonable, "if it appears to the court that in the event of its exercising the power the mortgagor is likely to be able within a reasonable period to pay any sums due under the mortgage" (see section 36(1)). The Master then turned to the evidence, and in particular to Mr Harrison's fourth witness statement, which had recently been served. Mr Harrison's case, as developed in that witness statement, was that he had cross-claims against the Bank for unliquidated damages resulting from negligent advice given to him by the Bank in connection with his decision to become a Name at Lloyd's, and that if those cross-claims were successful they would extinguish his indebtedness to the Bank. On that basis, Mr Harrison sought a stay or suspension of the possession order pursuant to section 36 pending a final determination on his cross-claims.
The Master concluded, on the authorities, that in order to justify an exercise of the court's power under section 36 he would have to be satisfied that the cross-claims would be likely to succeed, and that on the available evidence he could not be so satisfied. He went on to conclude that in any event there was no prospect of payment within a reasonable time. As to that, he said (at page 18 of the transcript of his judgment):
"The Bank has now been out of its money for some time and the earliest at which this action could be heard, given some degree of acceleration, would be in the course of next year. There cannot be many circumstances in which, where the court is called upon to exercise its discretion under section 36, that such an interval of time could be regarded as reasonable unless the prospects of success were high. The prospects of success in this case are not high. In those circumstances, on timing alone, I could not be confident that this would be an occasion for the exercise of my discretion."
The Master accordingly declined to exercise his discretion under section 36, and ordered possession in 28 days. He also refused Mr Harrison permission to appeal.
Mr Harrison applied to the High Court for permission to appeal against the Master's refusal to stay or suspend the possession order. The High Court subsequently directed that the application be heard on notice to the Bank, with the substantive appeal to follow immediately thereafter if permission to appeal were granted.
In about June 1991 Mr Harrison was advised by Mr David Charity, a solicitor, acting under the name "Legal Action Charity", that he was entitled to set aside the Bank's charge on grounds of misrepresentation and undue influence. In August 1991, acting on that advice, Mr Harrison wrote to the Bank purporting to rescind or to set aside the charge.
On 28 September 2001 Mr Harrison issued an application in the High Court seeking permission (a) to amend his Defence in the action so as to include the allegations of misrepresentation and undue influence and (b) to adduce further evidence in support of his application...
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