In Dickinson v UK Acorn Finance Ltd  EWHC 3856 (Ch) the High Court ruled that a District Judge in the lower court had been correct to strike out the Claimant’s claim on the grounds that it was an abuse of process, despite there being scope to allow the claim to continue as a matter of public policy.
The Defendant (Acorn) held a legal charge over the Claimant’s smallholding and had obtained a possession order and issued a warrant of possession. During the possession proceedings, the Claimants had failed to challenge the enforceability of the charge. Prior to execution of the warrant, the Claimants had issued a claim in the High Court against Acorn, alleging that Acorn’s charge was unenforceable pursuant to article 61(3) of the Financial Services and Markets Act 2000 (Regulated Activities Order) 2001 (as amended), on the grounds that Acorn had administered a regulated mortgage contract without being authorised to do so.
Acorn applied to strike the claim out on the grounds of estoppel or alternatively as an abuse of process – the Claimants having failed to challenge the enforceability of the charge within the possession proceedings. The District Judge struck out the claim as an abuse of process. Although there is a public policy exception where a claim is found to be an abuse of process, the District Judge held that it was appropriate to strike out the claim having considered the competing public interest arguments – namely the need to uphold the statute’s intention to prevent lenders from enforcing agreements that would otherwise be unenforceable balanced against the public interest in preventing abuses of the Court process.
The Claimants were granted permission to appeal on one point only – whether the District Judge was wrong to hold that the claim should be struck out as an abuse, notwithstanding the public policy exception. The scope of the ground included whether the District Judge had erred in considering the balance of the prejudice between the parties in making a judgment as to the public policy exception.
In dismissing the appeal, Judge Hodge QC found that in considering the public policy exception, a broad merits-based judgment, taking account of both the public and private interests involved and all of the facts of the case, was necessary in order to answer the question of whether, in all circumstances, a party was misusing or abusing the process of the Court by seeking to raise an issue which could have been raised before.
In performing this exercise, the District Judge was entitled to have regard to the potential prejudice to Acorn if the Claimants were allowed to challenge the enforceability of the charge at this stage. Although it was also necessary to consider the prejudice to the Claimants in addition, the District Judge had done so. The decision was a value judgment for the District Judge, and was not one with which the appeal court could properly interfere.
In obiter, Judge Hodge QC remarked that, had he been required to consider the matter afresh, it did not seem to him that the prejudice to the Claimants caused by refusing them permission to raise the point as to the enforceability of the legal charge at such a late stage was so great that it could be said to render the present claim not an abuse of the Court’s process.
For borrowers facing possession proceedings, this judgment offers a reminder of the importance of raising all possible defences within the forum of the possession claim. If they later try to raise novel issues as part of a separate claim, there is a real risk of that claim being struck out as an abuse of process, even where this will cause them significant prejudice and public policy appears to be in their favour. The judgment should be useful to lenders faced with similar claims from customers seeking to delay enforcement of possession orders or other judgments.