Mortgagee proceeding for possession and for recovery of arrears – Mortgagee obtaining unopposed order for possession – Judgment silent on claim for arrears – Whether mortgagee estopped from bringing later action to recover amounts due
On 24 June 1994 the plaintiff, who had advanced £160,000 on the security of a legal charge over the defendants’ freehold factory in Basildon, Essex, brought county court proceedings claiming repayment and interest as well as an order for possession. On 22 August 1994 the court made an unopposed order for possession, but no money judgment was granted other than a direction that the costs of the possession claim should be added to the amount outstanding under the charge. In September 1996 the plaintiff applied to the High Court for summary judgment for the recovery of the outstanding debt, and in October 1997 the defendants were ordered to pay £375,000 to the plaintiff. In making the order, the judge rejected the defendants’ contention that the county court judgment had operated to estop the plaintiff from reasserting the money claim. The defendants appealed.
Held: The appeal was dismissed.
Since no money judgment had been made, the defendants could not plead res judicata save in the extended sense employed in Henderson v Henderson (1843) 3 Hare 100, whereby the plea applied to every point that the parties, exercising reasonable diligence, might have brought forward at the time. However, although such an estoppel could arise out of a default judgment, such a judgment had to be scrutinised with extreme particularity in order to ascertain its scope: see Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 per Viscount Radcliffe at p1010. Given that the plaintiff could have brought a separate action for the recovery of the arrears, it could not be said to have behaved inequitably when it decided not to proceed for such recovery at the same time. As regards the defendants, all that was known was that they had effectively consented to the making of a possession order. It could not be sensibly supposed that they expected to be released from their indebtedness as soon as such an order was made.
Martin Hutchings (instructed by Kingsford Stacey Blackwell) appeared for the plaintiff respondents; Patrick Ellum, solicitor advocate, appeared for the defendant appellants.
Alan Cooklin, barrister