Mortgage – Possession order – Set-aside – Court making possession order in favour of respondent bank – Appellant appealing against dismissal of application to set aside order – Whether permission to appeal out of time should be granted – Whether practice direction PD 51Z applicable to appeals against decisions concerning possession – Whether CPR 39.3 applicable – Whether appellant’s defence having reasonable prospect of success – Appeal dismissed
The appellant lived in a mortgage-free house at Lavender Cottage, 2 The Street, Bury St Edmunds. She wanted to sell that house and buy another at 59 Southgate Street, Bury St Edmunds. She approached a mortgage broker (H) to obtain a bridging loan. H made a proposal to the respondent bank, which on 19 November 2001 offered to lend the appellant £97,500 in respect of Southgate Street.
The mortgage offer was signed by the appellant in the presence of a witness on 22 November 2001.The appellant paid the sums due under the mortgage until July 2007, when she stopped. On 8 August 2013, the respondent brought possession proceedings against the appellant, who filed a defence and counterclaim, alleging fraud.
On 6 August 2018, a master made a possession order in the absence of the appellant. The appellant’s application to set aside the possession order was dismissed in November 2018 expressly on the premise that CPR 39.3 applied, which enabled the court to proceed with a trial in the absence of a party.
The appellant sought to appeal. The issues which arose were: (i) whether permission should be granted to appeal out of time; (ii) whether the practice direction PD 51Z: Stay of Possession Proceedings – Coronavirus applied to appeals against decisions concerning possession; (iii) whether CPR 39.3 applied; and (iv) whether the possession order should have been set aside because the appellant’s defence had a reasonable prospect of success.
Held: The appeal was dismissed.
(1) There had been a short delay in applying for permission to apply which was not serious or significant and caused no prejudice. Therefore, the court would give relief from sanctions and extend time for permission to appeal. Although it would have been more satisfactory to have evidence on that aspect, in view of the complexities of the case and the short period of delay prior to issue (albeit in the wrong court), that could be overlooked in the exercise of the court’s discretion: Denton v T H White Ltd [2014] EWCA Civ 906; [2014] 1 WLR 3926 applied.
(2) PD 51Z was made on 26 March 2020 in response to the Covid-19 pandemic and came into force on the following day. In Okoro v Hackney London Borough Council [2020] EWCA Civ 681; [2020] PLSCS 100, the Court of Appeal held that PD 51Z applied to appeals in possession proceedings up to the Court of Appeal. It followed that, had the present appeal been due to be heard after PD 51Z was made, the appeal would have been stayed. However, on that date, all that remained was for the reserved judgment to be handed down and it was undesirable, when following a heavily contested appeal, where there was a reserved judgment ready to be handed down, following extensive preparation, to postpone hand-down of the judgment until PD 51Z ceased to have effect. That conclusion was not intended to inform any other court about what to do with a reserved judgment in another case: it was a course of action taken by reference only to the circumstances of the present case: Arkin v Marshall [2020] EWCA Civ 620; [2020] PLSCS 89 and Okoro considered.
However, it was important that the hand-down of the judgment did not have an effect inimical with PD 51Z. In the event of the appeal being dismissed, any possession order had to be stayed under PD 51Z for however long it applied; and an extension of time to apply for permission to bring a second appeal until after PD 51Z ceased to apply would preserve the purpose of PD 51Z. The stay should be lifted pursuant to CPR 3.1 for the very narrow purpose of issuing the reserved judgment and making a consequential order subject to those provisos.
(3) There was a compelling argument that the 6 August 2018 hearing had in reality been a trial, although it had been labelled a disposal hearing. If it were nonetheless to be treated as a disposal hearing, CPR 39.3 would apply by way of analogy, unless there were special reasons to disapply it. The application had also been brought under CPR 23, which gave the court power to re-list any application which had proceeded in the absence of a party under CPR 23.11. The master had been right to regard the CPR 39.3 factors as determinative, whether because they had been directly in point or by way of analogy. It was not a case where the court could set aside an order without at least being satisfied that there was a real prospect of success: Hackney London Borough Council v Findlay [2011] EWCA Civ 8; [2011] PLSCS 19 applied; Forcelux Ltd v Binnie [2009] EWCA Civ 854; [2010] HLR 20 considered.
(4) The master had concluded that the appellant had not disclosed a defence with reasonable prospects of success. The appellant had not dealt specifically with the good reason for her non-attendance. However, she asserted that she had satisfied the three requirements of CPR 39.3, including that she had had a good reason not to have attended the trial, so that she might proceed to apply for the order to be set aside; but she had failed to show that she had a reasonable prospect of achieving a different outcome. The master’s decision had not been wrong, nor had there been a serious procedural or other irregularity in the proceedings before him giving rise to any injustice.
(5) Following the strict approach in Levy v Ellis-Carr [2012] EWHC 63 (Ch), the master had found that the appellant could have attended the hearing but had made a conscious decision not to do so. Although an application under CPR 39.3 required the less rigorous approach found in Bank of Scotland v Pereira [2011] EWCA Civ 241; [2011] PLSCS 73, the master had come to the right conclusion to the extent that the appellant had not proved that she had a good reason for not attending the hearing. Even making allowance for a litigant in person, the appellant did not satisfy the lesser Pereira test. In particular, there was no medical report provided at the time of the hearing itself on 6 August 2018 and no reason given why one had not been provided.
The appellant appeared in person; Benjamin Wood (instructed by Eversheds Sutherland (International) LLP) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Copeland v Bank of Scotland plc
