Error in procedure in striking out possession claim
On 29 October His Honour Judge Mackie QC gave Judgment in the Appeal of Barons Bridging Finance plc (2) Reddy Corporation Ltd v. Nnadiekwe  (unreported). In possession proceedings, the District Judge faced with a simple application to suspend the possession order had then gone on to strike out the claim for possession. HHJ Mackie held that the appellants had insufficient opportunity to deal with the additional matters raised and allowed the appeal against the strike out.
The lenders were two finance companies that lent money to Ms Nnadiekwe secured by a legal charge over two properties in favour of Barons Bridging Finance but, it seems, in reliance on a credit licence then held by Reddy Corp. Ms Nnadiekwe defaulted and a claim for a money judgment and possession order was issued. No defence was filed and judgment was entered and a possession order made in favour of Barons Bridging Finance. A warrant of possession was issued against one of the charged properties and suspended on the application of Ms Nnadiekwe. She breached it and Barons Bridging Finance once more attempted to enforce. Ms Nnadiekwe applied to suspend the warrant for a second time before a District Judge who not only set aside the warrant of possession, but also struck out Barons Bridging Finance's claim.
The District Judge had struck out the claim when it transpired Reddy Corp had had its credit licence revoked and Barons Bridging Finance had been found to have engaged in widespread unlicensed trading. HHJ Mackie noted that these were exceptional circumstances and indicated that it was precisely the kind of situation where the Court would consider reopening a final decision. However, he considered that the District Judge had erred in striking out the claim at a hearing where the District Judge had before him an application to suspend the possession order and nothing else. He had failed to give the lenders sufficient opportunity to deal with the additional matters that were raised. Barons Bridging Finance had not known at that hearing that the possession order itself and the judgment were at risk of being set aside.
Will accepting rent make a tenancy binding on the lender?
On 5 October 2012 the High Court gave Judgment in Paratus AMC v Persons unknown (unreported). A tenancy agreement had been signed 18 months after the charge had been registered. That tenancy was not binding on the lender but the tenant argued that in accepting mortgage payments from her (when they had known she was not the borrower), the lender was estopped from pursuing possession proceedings against her. The High Court disagreed.
Payments were made, but they were sporadic and whilst the tenant had been speaking to Paratus about the payments there was no evidence that Paratus had expressly or impliedly consented to her becoming a tenant or treated the tenancy as binding. In the absence of such evidence the tenant did not have any real prospect of establishing that there had been any representation, encouragement or assurance that gave rise to an estoppel.
Appeal of application to suspend warrant
In the context of the huge numbers of applications to suspend warrants that are made each month relatively few are appealed. That is in part due to the breadth of the Court’s discretion and, from the lender’s perspective, the practical and costs consequences of trying to appeal short suspensions. In Jameer v. Paratus AMC (CA) (29.10.2012) the appeal was brought by the borrower, first to a Circuit Judge and then to the Court of Appeal.
A possession order was granted in 2011 and in due course a warrant applied for. The warrant was suspended on payment of the monthly instalment plus an amount each month towards the arrears. However, the borrower defaulted and a further warrant was issued. The borrower again applied to suspend which the District Judge refused. A Circuit Judge dismissed the borrower’s appeal despite her attempt to introduce further evidence as to her employment and finances.
The Court of Appeal also dismissed her appeal on the basis that on the evidence the decisions of the District and Circuit Judge were not plainly wrong. Relevant to that decision were:
- The borrower’s failure to produce all of the evidence promised as to her finances and the inconsistencies in what she did present;
- The borrower’s failure to adhere to the terms of the original suspension;
- The implication from the borrower’s own evidence that she could have made the payments but did not do so.
Enforcement – section 93 of the Tribunals, Courts and Enforcement Act 2007 came into force on 1 October amending the Charging Order Act. Where a debtor is required by a County Court or High Court order to pay a sum by instalments, a charging order may be made even though there has been no default in payment. However, the court must take the fact that there has been no default into account in deciding whether to make the order. An order for sale to enforce the charging order may in any event not be made where there has been no default in payment.
County Court counter services – pilots are currently underway for revised opening times for counters in the County Courts. As a result the majority of County Courts are now only offering a counter service between 10am and 2pm. However, the following courts are running an appointments only system:
London – Bow, Willesden, Clerkenwell and Shoreditch
Midlands – Telford
North East – Bradford, Doncaster
North West – Blackpool, Stockport ,West Cumbria
South East - Hastings, King's Lynn, Oxford Combined Court Centre
South West - Newport (Isle of Wight) Combined Court, Weston-Super-Mare
Wales – Newport Civil and Family Court
FSA complaints data for 2012 – the FSA has published information for the first half of 2012 on complaints received. The number of complaints has risen, largely due to the increase in PPI complaints.
An FSA MMR policy statement PS 12/16 was issued on 25 October reporting on the main issues arising from CP 11/31 and making final changes to the draft rules in CP 11/31. The rules will (on the whole) be implemented in April 2014.
The FSA summarises the areas where it has made significant changes to the previously published conduct approach as:
- Advice: to clarify what the FSA understand by regulated advice and change the approach to contract variations by allowing them to be completed without the need for advice, provided there is no increase in the amount outstanding under the mortgage.
- The transitional rules: to allow lenders to make their own decisions about whether to make exceptions to the responsible lending rules provided there is no increase in the amount outstanding under the mortgage.
- The approach to high net worth and business lending (Chapter 4): instead of providing a complete carve-out from the MMR proposals the rules provide a tailored, higher-level approach for both.
- With effect from 26 October 2012 to require lenders to keep responsible lending records for the period the mortgage remains with the lender, and not just for three years.
Payment by account and IT development by HMCTS
Speaking at the CCUA conference Paul Harris from the Court Service confirmed the intention remains to introduce a full payment by account service (dispensing with the need for court cheques for bulk users) but that a replacement system is required to give scalability across all areas of the Court systems and greater flexibility for future development. A delivery date has not been announced.
There is also ongoing development around systems for transmission of data, rebuilding PCOL and case numbering.