England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM WEST LONDON COUNTY COURT
(His Honour Judge Cowell)

		Royal Courts of Justice Strand London WC2 Monday 19th November, 2001

1. LORD JUSTICE CLARKE: This is an application for permission to appeal the order of His Honour Judge Cowell dated 15th May 2001, in which he granted an order for possession against the applicants, Mr and Mrs Grant-Sinclair, and in which he gave judgment for the sum of £72,631.31 plus interest at 10.93 per cent, making a total £92,482.1O.
2. The Appellant's Notice was filed on 24th July 2001 and is therefore two months out of time. The appellant would therefore require an extension of time in which to file his appeal. However, I shall consider his application on the merits.
3. The facts are set out in the judgment of the judge. In short, the applicants had a mortgage with Halifax Plc ("the Halifax") which was secured by way of a legal charge over 19 Yew Tree Road, London NW12 ("the property"). The applicants, it appears, fell into arrears under the Halifax mortgage. However that may be, on 5th August 1998, on the face of the documents, the applicants entered into a loan agreement and mortgage with the First Alliance Mortgage Co Ltd ("First Alliance") for a sum of £84,060, Part of that sum was, so it was said, made up of legal costs of £740 and a "pre-paid finance charge" of £10,818.05.
4. The remaining sum of £72,631.31 was made up of three elements: first, a sum of £63,693.91 paid to the Halifax in order to redeem the applicants' mortgage; second, a sum of £3,818.45 paid in respect of the applicants' outstanding debt to Barclaycard, in order to procure the removal of the caution which Barclaycard had registered against the property; and third, a sum of £5,108.95 which was paid to the applicants' joint account. The applicants had thus had the benefit of a total sum of £72,631.31. The loan agreement and mortgage, which on its face was signed by both applicants, states the interest rate to be 10.95 per cent per annum.
5. The first applicant, that is Mr Grant-Sinclair, wrote to First Alliance on 28th August 1998 saying that he did not agree to the monthly repayments or the finance charge of £10,818.05. He claimed that those figures were not on the form when he signed it. He also queried the mortgage term of 30 years, saying that he was originally told that the term would be 15 years.
6. Subsequently, on 16th July 1999 First Alliance wrote to the first applicant informing him that on 12th July 1999 the mortgage loan had been included in a transfer of mortgage loans to RFC Mortgage Services Ltd ("RFC MSL").
7. The letter also stated that RFC MSL was a subsidiary of GMAC RFC, which in turn was a wholly-owned subsidiary of General Motors Acceptance Corporation. As I understand it, the respondent GMC RFC Ltd is the same company as RFC MSL.
8. On 23rd July 1999 solicitors to the First Alliance informed the applicants that their mortgage account was in arrears and that court proceedings would be issued unless the full amount was repaid. On 27th July RFC MSL advised the applicants that after 4th August 1999 the administration of the applicants' mortgage would be transferred to them. The applicants were also told that they would be given a new account number and that there would be a change of payment date.
9. In a letter dated 25th July 1999 the applicant wrote to RFC MSL advising them that he did not agree to the transfer of the mortgage to RFC MSL until the dispute with First Alliance was resolved. RFC MSL subsequently informed the applicants of their new account number.
10. The respondent originally claimed not only the monies advanced of £72,631.31 plus interest, but also the "pre-paid finance charge" of £10,818.05 and I think also the legal costs. But it subsequently abandoned those claims and sought judgment for £72,631.31 plus interest at 10.95 per cent per annum, on the basis that that was the rate agreed in the loan agreement and mortgage.
11. A number of points were pleaded first in a defence and later in an amended defence, some of which were subsequently struck out. The judge held that the respondent was entitled to recover as the legal holder of the charge which had originally been held by First Alliance. Thus, First Alliance was the original chargee under a charge dated 5th August 1998, the transfer of the charge to the respondent was dated 12th July 1999 and that transfer was registered on 4th August 1999. The judge held that in those circumstances the respondent was entitled, by reason of sections 33 and 34 of the Land Registration Act 1925, to enforce the charge or mortgage.
12. The judge referred to a number of defences advanced by the applicants. The first was an allegation of forgery. It was originally alleged that the signatures of the applicants, that is to say Mr Grant-Sinclair and Mrs Grant-Sinclair, were forgeries. But that allegation had been struck out before the trial. Thus the point was not live before the judge and is not live now.
13. Secondly, the applicants relied upon a case that the form - that is to say the agreement - was signed in blank when they signed it and that it was only later that First Alliance filled in the figures.
14. The judge considered this point. He held that it was not necessary to decide it in order to determine the respondent's claim to the alleged charge of £10,818.05 because the respondent abandoned its claim to that sum and indeed, as I have already indicated, abandoned its claim to all sums except the amount of the principal admittedly paid and interest at the contract rate.
15. Equally, the judge observed that the point that, as he put it, Mr Grant-Sinclair was particularly annoyed about, namely that the repayment period was some 360 months whereas a much shorter period was agreed, was irrelevant because the respondent's claim was only to the three payments totalling £72,631.31 and interest. The judge correctly observed that it did not matter what the repayment period was to have been.
16. He added this:

"The only thing that would be affected by signing in blank would be the interest rate, which is 10.95%. But I have to say that a defence such as it is now suggested exists of signing in blank ought to have been put forward at the appropriate time. I do not think it right to let that be introduced after the extensive interim applications that have been made throughout the currency of this litigation. In so far as I can point to general fairness, it does seem to me that the claimants have been very fair in abandoning the six items that I have referred to, which even includes solicitor's fees of £559."

17. The judge thus held that it was too late to take that point so far as the interest was concerned. In my judgment, that conclusion was well within the judge's discretion and I can see no possibility of an appeal to this court succeeding, since it would be necessary to show that the judge erred in principle in the exercise of that discretion.
18. The third point, which was the main point which was advanced before the judge as indeed it has been advanced before me today by Mr Butt, who has assisted the applicants on their application, relates to what is called securitisation. I permitted Mr Butt to address the court, and I must say that he has done so with admirable courtesy, clarity and succinctness.
19. The point which Mr Grant-Sinclair has been concerned about throughout is this. The transfer of the charge was plainly part of a much larger transaction, which may well involve entities other than the respondent having a beneficial interest in the respondent's rights under the charge. The applicants have been trying to obtain the documents evidencing those underlying transactions and to rely upon them as a defence to the claim. The judge held, however, that such documents were irrelevant and that the respondent was entitled to exercise its rights under the charge of the registered transferee of the charge. In short, the judge held that the respondent was the legal owner of the charge and entitled to enforce it by statute.
20. The judge explained that the applicants are protected because any payment to the registered transferee of the charge, that is to the registered owner of the charge, would be a good payment in law under the charge and would afford the applicants a defence if anyone else were to seek to enforce the charge. The judge explained this with painstaking care over several pages of his judgment.
21. The applicants submit that the judge was wrong in that regard and that they should have been entitled to investigate the beneficial interests of those concerned. But the judge was to my mind plainly right, and I can see no arguable basis upon which the applicants could advance an appeal to this court on this ground.
22. During the course of the argument my attention has been drawn to an interesting case, namely City Mortgage Corporation Ltd v Reilly and Reilly, which was an unreported decision of Judge Rubery in the Stroke-on-Trent County Court, dated 28th November 1997. On analysis that decision does not, in my judgment, assist the applicant for this reason. There the claimant was City Mortgage Corporation Ltd, which was the original lender and mortgagee. The original mortgage was dated 15th March 1996. On I think the same day a transfer of what Judge Rubery held to be the legal and beneficial interest in the charge was transferred to another company called Greenwich International Ltd. The transfer was not dated and it was submitted on behalf of the claimant, which was City Mortgage Corporation Ltd, that it took effect only in equity and not in law. I should add that notice to the defendants of the transfer was given on the same day, 15th March 1996.
23. The judge rejected the claimant's submission and held that the transfer operated as a transfer of the legal interest and that notice of that transfer had been given to the defendant, so that the transferor or assignor, City Mortgage Corporation Ltd, no longer had any rights under the charge. Those rights were vested in the transferee or assignee, namely Greenwich International Ltd. Accordingly, the claim failed.
24. I can see nothing in the reasoning of Judge Rubery which in any way contradicts any of the reasoning of His Honour Judge Cowell.
25. For those reasons, I have reached the conclusion that the points advanced in the written materials until today do not afford the applicants any realistic prospects of success on appeal.
26. I turn therefore to a new point which has been taken today for the first time, no doubt as a result of the advice of Mr Butt. He submits that the defendants are entitled to have the agreement reopened under the provisions of sections 137 to 139 of the Consumer Credit Act 1974. In short, he submits that the interest rate of 10.95 per cent was grossly exorbitant and/or unfair and that it should be set aside by the court. There is some evidence that the rate in the Halifax mortgage was substantially less, perhaps something of the order of between six and seven per cent.
27. However, the difficulty that faces the applicants in this regard is that no suggestion that the interest rate was exorbitant under the Consumer Credit Act 1974 was put to the judge, or indeed to the respondent. Even now there is no evidence to support the case that at any rate when the mortgage was entered into in 1998, a rate of 10.95 per cent was grossly exorbitant. In my judgment it is much too late to take that point now. It would involve a retrial to include that issue. In addition, I think I am right in saying that the applicants would also like to have a retrial of some of the other issues determined by the judge. In my judgment litigation cannot proceed on that footing.
28. I also observe that, as far as I can see, the relevant period in respect of which that would be relevant if it were live, would be between the date the arrears began and 15th May 2001 which was the date of the order. But it seems to me that it would be wrong to permit the applicants to take this new point now, and I do not believe that there is a realistic prospect of persuading the full court to allow an appeal on that basis.
29. So while, as ever in circumstances like this, I have some sympathy for Mr and Mrs Grant-Sinclair, I regret that I cannot grant permission to appeal.
ORDER: Application for permission to appeal refused. (Order not part of approved judgment) ____________________