England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
CIVIL DIVISION
ON APPEAL FROM BRENTFORD COUNTY COURT
(His Honour Judge Marcus Edwards)

		The Royal Courts of Justice The Strand London Friday 1 March 2002

Friday 1 March 2002

1. LORD JUSTICE ROBERT WALKER: This is an application by Dr Mukesh Chandubhai Chauhan, who has appeared in person to seek permission to appeal from two orders made by His Honour Judge Marcus Edwards sitting in the Brentford County Court on 3 September 2001 and 9 November 2001. The first and more important of those orders determined questions of principle as to how the mortgage accounts should be prepared on the occasion of the redemption of a charge on Dr Chauhan's property, 343 Uxbridge Road, Acton, London W3.
2. The story begins with a charge dated 31 July 1992 to Woolwich plc ("the Woolwich") to secure an advance of £135,000 at variable rate which, according to the Woolwich (and, indeed, so far as I can see according to the documents) then stood at 10.15 per cent. Later Dr Chauhan and the Woolwich agreed to switch to a fixed rate of interest of 9.25 per cent for a period of 10 years. In 1993 there was a further advance for a home improvement loan of £20,000. This was described in the documentation as at a variable rate but it was, I think, common ground (so far as anything in this troublesome case is common ground) that that was an error because it was the invariable practice of the Woolwich to have the same rate of interest for two advances from the Woolwich secured on the same property, and that the home improvement loan should have been also at a fixed rate of interest.
3. Numerous disputes and differences arose and Dr Chauhan was from time to time in contact with quite senior officials in the Woolwich. In October 1995 he had the misfortune to be injured in a road traffic accident and that plainly had a deleterious effect on his professional work. At all events, it is common ground that in 1996 that there was an agreed move to a fixed rate of 4.99 per cent, although again many matters in connection with that move are in dispute.
4. Nevertheless Dr Chauhan was, in the Woolwich's view, in arrears under the mortgage and at some time in 1998 (I thought it was 29 September 1998 but Dr Chauhan's skeleton says 28 August) possession proceedings were started by the Woolwich. Those proceedings were adjourned because Dr Chauhan was out of the country. Directions as to the evidence were given in December 1998 and on 29 January 1999 District Judge Allen made a possession order which was, however, suspended on terms that the sum of £150 a month should be paid. District Judge Allen formed the view that the arrears under the mortgage were £4,387. On 25 August 1999 Dr Chauhan obtained permission to appeal out of time from that order and relatively soon after that, in the New Year of 2000, the mortgage was in fact redeemed (and no doubt replaced by some refinancing).
5. However, the redemption of the mortgage was by no means the end of the dispute because there was still a serious question as to the state of accounts. On 6 December 2000 His Honour Judge Marcus Edwards allowed an appeal from the district judge, set aside the order of 29 January 1999 and gave directions for the matter to go ahead as multi-track proceedings; that is, proceedings which are going to be given careful case management and a good deal of the court's time. There was a case management conference held on 15 March 2001.
6. At the case management conference and at trial, five main issues were identified. They are set out in a summary of the Woolwich's position in the appeal bundle. The first was the time at which the two loans (the main loan and the home improvement loan) moved from being variable to a fixed rate. The second issue was whether a particular mortgage instalment was paid in October 1993. The third was the terms and, in particular, the critical dates for the transfer to the fixed rate of 4.99 per cent which occurred during 1996. The fourth was an issue as to whether Dr Chauhan was entitled indefinitely to a discount because the mortgage which he had initially effected had been classified as a premier mortgage, which because of its size was entitled to a discount. The fifth issue was, if Dr Chauhan was shown never to have been in arrears, as to consequential losses which he had suffered as a result of an adverse credit rating.
7. These and other issues were the subject of an extensive hearing, which I am told occupied two days. It is plain that the judge looked at many documents and heard oral evidence from several witnesses. On the first issue the judge observed that Dr Chauhan had changed his mind twice. The judge quoted from his letter of 16 January 1993 in which he said:

"Further to my telephone conversation of 15 January 1993, this is to confirm in writing that I would be grateful if you could fix my mortgage for ten years at 9.52%. If it can be fixed for February or March 1993 I do not mind, so long as it is for a fixed period of 10 years at the above interest rate."

8. Dr Chauhan's case at trial was that he had then had yet another change of mind and wished to remain at the flexible rate. The judge who saw and heard Dr Chauhan's evidence said that it was on this point inconsistent and implausible. The judge commented that:

"The mortgages were plainly very important to the defendant. He scrupulously confirmed in writing all his other instructions. He did not confirm in writing this particular one, which was so important."

9. So the judge, having also referred to later correspondence, in particular letters of 11 February 1993 and 4 June 1993 from the Woolwich, and letters of 26 May 1993 and 17 March 1994 from Dr Chauhan, came to the conclusion that on the facts his case on the first issue simply did not stand up.
10. On the second issue the judge found that the instalment due in October 1993 had not been paid. That may have been the fault of Dr Chauhan's bank, but that was not a matter which could be regarded as the responsibility of the Woolwich.
11. The judge then considered the home improvement loan and concluded that that also had become fixed at 9.25 per cent with effect from 1 November 1993.
12. He turned to the third issue, which was the circumstances in which (after many differences of opinion and complaints by Dr Chauhan to the Woolwich) it was agreed that for the future there should be a fixed rate of 4.99 per cent. It is plain that the Woolwich agreed to that from October 1996, but Dr Chauhan said that it should have been earlier. He pointed out that he asked, and that the Woolwich had agreed in principle, as early as June. However, the judge made some clear findings about this. He said:

"The fact is, however, that there was no obligation on the claimant [that is the Woolwich] to offer or agree to any rate, new or otherwise, at any particular date.

Further, the defendant only asked for the new rate to be fixed on both loans on 30/07/96. On 5/09/96 the claimants seems to have sent him a form to convert to the fixed rate of 4.99 per cent. The then Mrs Chauhan seems to have deliberately withheld it. Also the defendant himself had apparently been away for a few weeks. He was living at another address, but his mail continued to be sent to his old one. He signed the conversion letter on 29/09/96. There was then a two- or three-week delay whilst the signature of Mr Chauhan's then wife on the form was obtained. In my judgment, no delay can be attributed to the claimants."

13. On the fourth issue, the discount, the judge rejected Dr Chauhan's arguments. He said that the discount had been agreed by the Woolwich for a short period simply because they did not regard it as worth arguing about. The judge concluded on this point:

"I am unable to see that, once he had left the variable rate with his respective discount on each respective original agreement for the fixed rate on each agreement, and then gone on to the new fixed rate of 4.99 per cent, he was entitled in some way to revive the previous discounts of some years before. There is nothing in the conditions or rules to such effect. The rules entitle the claimants to set such rates as they choose, provided that they advertise them and that there is nothing to contrary effect in their contract with the borrowers."

14. The judge also dealt with the issue of the redemption penalty to which Dr Chauhan objected and said that he could find no evidence of any agreement to waive it.
15. On 9 November 2001 it was necessary for an order giving effect to the judge's ruling in principle to be corrected under the slip rule. It is regrettable that an order which had been prepared by counsel and initialled by counsel (and I think the judge as well) had to be corrected. However, apologies were expressed and there is to my mind no doubt at all as to what was intended. It was therefore a proper case to correct the order under the slip rule.
16. This is a matter which has occupied different courts and judges for many, many hours. Plainly it is a complicated matter about which Dr Chauhan has very strong feelings. Dr Chauhan is, I believe, a trained mathematician as well as practising medicine and he has gone very closely into this matter. However, the judge also investigated the matter very carefully. He saw and heard the witnesses. He gave a full and careful judgment with detailed reasons. It seems to me that an appeal in this matter would have no reasonable prospect of success. It would to my mind be hopeless and I must dismiss this application.
ORDER: Application refused.