Practice and procedure – Appeal – Grounds of appeal – Appellant claiming possession of property after respondent failed to repay loan – Court making possession order on summary basis under CPR part 55 – Judge granting respondent permission to raise new point on appeal – Whether respondent entitled to raise point not argued at initial hearing – Whether serious procedural irregularity – Appeal dismissed
The respondent and the appellant entered into a loan agreement under which the appellant loaned the respondent the sum of £50,000 for a term of six months. The loan was secured by a third mortgage over the respondent’s home in Buxton. Under the agreement, the aggregate sum, comprising the principal sum plus contractual interest and charges, was repayable on 10 July 2018. In the event of default by the respondent, the interest rate would rise to 12% compounding monthly (a rate of 289.6% per annum).
The respondent failed to repay the sums due at the end of the term and the appellant commenced proceedings against the respondent under CPR 55. It sought an order for possession and a money judgment for the amount due. At the hearing before a district judge, the respondent appeared in person and did not oppose the making of a possession order or the making of a money judgment for the arrears.
After the hearing, the respondent instructed solicitors and lodged an appeal on the basis that default interest of 289.6% per annum was a penalty and unenforceable. A separate application was made to set aside the district judge’s order under CPR 3.1(7) on the basis of the penalty argument and an argument that the relationship between the appellant and the respondent was unfair within section 140A(1) of the Consumer Credit Act 1974 and the court was entitled to delete the term as to default interest.
The appeal judge held that there were exceptional circumstances, including the respondent’s status as a litigant in person, which justified allowing the respondent to rely on those new grounds. The failure to identify the potential defences gave rise to a serious procedural or other irregularity in the proceedings such that the appeal should be allowed under CPR 52.21(3)(b). The appellant appealed.
Held: The appeal was dismissed.
(1) There was no general rule that a case needed to be “exceptional” before a new point would be allowed to be taken on appeal. Whilst an appellate court would always be cautious before allowing a new point to be taken, the decision whether it was just to permit the new point would depend upon an analysis of all the relevant factors, including, in particular, the nature of the proceedings in the lower court, the nature of the new point and any prejudice that would be caused to the opposing party if the new point was allowed to be taken: Pittalis v Grant [1989] QB 605 and Rana v Ealing London Borough Council [2018] EWCA Civ 2074 applied. Singh v Dass [2019] EWCA Civ 360 followed.
It was hard to see how it could be just to permit a new point to be taken on appeal where there had been a full trial involving live evidence and cross-examination in the lower court, and the new point might have changed the course of the evidence and/or might have required further factual inquiry; but there might be exceptional cases in which the appeal court could properly exercise its discretion to do so. However, in cases where a pure point of law was sought to be taken on appeal which could be run on the basis of the facts found by the judge in the lower court, it was more likely that the appeal court would permit the point to be taken, provided that the other party had time to meet the new argument and had not suffered any irremediable prejudice in the meantime: Jones v MBNA International Bank Ltd [2000] EWCA Civ 314 and Preedy v Dunne [2016] EWCA Civ 805 followed.
(2) Although it was unnecessary for the judge to ask whether the facts of the present case were “exceptional”, he correctly identified the main factors relevant to the exercise of his discretion. The hearing of the claim for possession under CPR 55 before the district judge was not really a trial at which any disputed factual evidence was led or tested by cross-examination. Given the very limited nature of the initial hearing and the binary decision to be made, the most weighty reason identified in the authorities as to why a new point should not be permitted on appeal, namely, that it would subvert an evidential process which had already taken place at a full trial in the lower court, was not present. The respondent had acted quickly, the appellant had suffered no prejudice and the initial hearing had not been wasted as the possession order and principal monetary judgment were unchallenged. The need for finality in litigation carried less weight where the litigation process had been short-lived and summary in nature. The appeal judge was correct to permit the new points to be taken on appeal.
(3) It had not been necessary for the judge to approach the appeal by deciding that the decision of the district judge was rendered “unjust” within CPR 52.21(3)(b). CPR 52.21(3) enabled an appeal court to allow an appeal where the decision of the lower court was wrong or unjust because of a serious procedural or other irregularity in the proceedings in the lower court. That provision had to be interpreted purposively where a new point was permitted to be taken on appeal. It now appeared that the relevant decision for the judge at the initial hearing was whether to give judgment for the appellant for default interest, or to give case management directions leading to determination of the penalty/consumer credit points at a subsequent hearing. Those points having been permitted to be raised by the respondent on appeal, it was clear that the district judge’s decision to grant judgment for the appellant for default interest, rather than to give case management directions, was the wrong option.
(4) The question whether, and to what extent, district judges hearing possession cases had any duty to unrepresented litigants to identify points in their favour, and whether a failure to do so amounted to a serious procedural or other irregularity within CPR 52.21(3)(b), should await a case in which it needed to be decided.
Robert Brown (instructed by Viceroy Legal) appeared for the appellant; Robin Kingham (instructed by Attwood & Co of Grays, Essex) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Notting Hill Finance Ltd v Sheikh
