When a new point is raised during appeal which has not been addressed previously in the court below, should the new point be admitted and considered by the appeal court?

The background

In Notting Hill Finance Limited v Sheikh [2019], the parties were engaged in a claim for possession brought by the mortgagor over the respondent’s property. The unregulated loan agreement increased the interest rate payable on the loan from 30.04% to 289.6% in the event of the respondent’s default. The respondent did default on his payments and possession proceedings were issued in the County Court.

At first instance, a possession and financial order, which included interest at the higher rate, was awarded in favour of the mortgagor. The respondent did not engage solicitors for the hearing and did not raise any defence to the claim. Having later appointed solicitors, the respondent appealed on the grounds that the interest uplift constituted a common law penalty and that the relationship was ‘unfair’ for the purposes of the Consumer Credit Act 1974.

This defence was put forward at the appeal but had not previously been raised at first instance. The appeal judge concluded that only in unusual, if not exceptional, circumstances could a new point be considered on appeal which had not been raised previously. In this case, the court did in fact find that the respondent’s circumstances were exceptional as a result of the respondent representing himself at a summary hearing and allowed the appeal. The mortgagor took the matter to the Court of Appeal.

The decision

The Court of Appeal dismissed the mortgagor’s appeal, finding in favour of the respondent. There was no specific requirement for circumstances to be ‘exceptional’ for a new point to be raised on appeal; it was at the court’s discretion as to whether to accept such a point.

Three factors are to be considered by the court when deciding whether to permit new points:

  1. The nature of the proceedings
  2. The nature of the new point
  3. Any prejudice which may be caused to the other party

In this case, the County Court proceedings were found to have constituted a limited possession hearing, that if the new points had been raised the outcome of the hearing would have differed, that the respondent had acted quickly following the first hearing with no prejudice or loss suffered by the mortgagor and that, as the possession claim and judgment for the defaulted sum were not challenged, the hearing was not wasted. The Court of Appeal concluded that the litigant acting in person was not relevant to its decision.

Advice and action for landlords

Notting Hill Finance is a caution for landlords, particularly those claiming against litigants who act in person. This case demonstrates that, provided the three-part test is applied, it is entirely reasonable for new points to be raised at a later hearing or appeal whether or not the litigant has engaged legal representation.

Landlords are advised to appoint legal advisers at an early stage. This case was prolonged as a result of the appeals, and even where a new point is later added and accepted by the court, the case does give guidance that, in many cases, that new point can be valid and the matter should continue as such.

The Court of Appeal dismissed the mortgagor’s appeal. There was no specific requirement for circumstances to be ‘exceptional’ for a new point to be raised on appeal; it was at the court’s discretion as to whether to accept such a point.