England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BIRMINGHAM DISTRICT REGISTRY
HIS HONOUR JUDGE PURLE

		Royal Courts of Justice Strand, London, WC2A 2LL
		16th February 2011

Lord Justice Lloyd:

1. This is a second appeal. The appeal comes directly from an order of HHJ Purle sitting as a deputy High Court judge in Birmingham, the order being made on the 8 April 2010, although not I think finalised until a bit later. He was hearing an appeal from District Judge George sitting in the High Court in Birmingham. Her order was dated 21 September 2009 although drawn up on 25 September. Mr Carr, the appellant, was given permission to appeal on one ground against HHJ Purle's order by Patten LJ when he considered the matter on the papers, and he was also given permission to rely on the additional evidence on the one point in relation to which permission is granted. He now renews his application orally, seeking permission to appeal on the other grounds which he wishes to rely on.
2. The history in brief is that Kensington Mortgage Company Limited, the claimant, started proceedings against Mr Carr and his wife, Mrs Stephanie Carr, relying on a default under a mortgage over a property 257 Huntington Terrace Road, Cannock, Staffordshire. It got a possession order in March 2007 which it executed in July 2007. At that stage Mr Carr applied to set the order aside and claimed that he was in truth the sole legal and beneficial owner of the property, that his wife had forged his signature on a transfer of the property into joint names and on the mortgage in favour of Kensington Mortgage Company Limited. It turned out that she had forged his signature on a whole lot of other mortgages in the meantime as well. Those allegations were either accepted or proved before District Judge George when the matter came to trial. Accordingly, Mr Carr was in truth the sole legal and beneficial owner of the property and not liable personally to Kensington Mortgage Company on their purported mortgage, nor for the loan which Kensington thought and intended should be secured by that mortgage.
3. However, as an alternative to reliance on the mortgage, Kensington Mortgage Company argued that part of its loan had been used, directly or indirectly, to pay off a number of liabilities of Mr Carr and that it should be subrogated to the rights of those creditors and entitled to recover those amounts from the proceeds of sale with interest on them. They relied first of all on an amount of just over £28,000 which was paid ultimately to Nationwide Building Society in respect of a first mortgage over the property, and secondly on an amount of about £3,300 paid to First National Bank, again to redeem a mortgage over the property. District Judge George accepted that Mr Carr was not liable for the repayment of the whole of the rest of Kensington's advance but held that he had had the benefit not only of those two amounts but also of £6,108 from one of the advances which Mrs Carr had procured, from a lender known as SPML (Southern Pacific Mortgage Lending), and of £21,681, which was the whole of the advance from another lender, known as I Group. One element in the latter amount was said to be a payment to Mr Carr's solicitors in respect of costs on the divorce from his first wife. On that basis the district judge accepted that he was liable not only for the Nationwide and the First National Bank sums, but also for those two amounts that I have mentioned, and she also held that he was liable for interest. She therefore made an order requiring him to pay Kensington just under £71,000 inclusive of interest and also costs, and made an interim costs order of £20,000. Also, whereas there had been a previous order restraining the claimant from taking any further steps to enforce the order for possession or to sell the property, she varied that order to allow Kensington to sell the property over which, of course, subject to rectification of the register, it had what appeared to be a valid registered charge. In addition she made directions as to what should happen on the sale of the property, namely that the reasonable costs of sale should be deducted; the sum of just under £71,000 due from Mr Carr and interest on that sum should be deducted; the interim costs should be deducted and the balance should be paid into court pending detailed assessment with any balance payable to Mr Carr. Then she refused permission to appeal but permission to appeal was later given by HHJ Cooke.
4. Pursuant to that permission Mr Carr appealed and his appeal came before HHJ Purle. The outcome of that appeal, to put it in short terms, was that the sums of £6,108 and £21,681 were deleted and were replaced by a single amount of £7,500, which was said to be a sum in respect of which Mr Carr had been unjustly enriched because it had gone to the solicitors on the divorce from the first Mrs Carr.
5. The £7,500 item is the one point on which Mr Carr has already been given permission to appeal, supported by evidence that Mr Carr was not liable to and did not pay the solicitors anything for the divorce because he had the benefit of public funding. If that is all that is at stake it should be possible for a further appeal to be resolved by agreement, assuming Kensington acts in a sensible manner. HHJ Purle, as I say, reduced the amount due from Mr Carr, and the effect was to reduce it to £47,099.56, which included some £8,200 of interest. He dismissed the rest of the appeal; he made no order as to the costs of the appeal, but he did of course leave in place the order as to costs below.
6. Mr Carr wishes to pursue other challenges to the judgment as it now stands, and he complains strongly of the fact that Kensington were allowed to sell the property, which they did as a result of District Judge George's order. He complains that the appeal to HHJ Purle was not able to come on in time to prevent the sale taking place. Instead of the sale taking place he argues that he should have been allowed to pay off the amounts truly due from him, which he says is only the Nationwide mortgage and the First National mortgage, but, even if there was more due from him, he says he should have been allowed to pay it off in accordance with the Nationwide conditions and thereby prevent a sale and remain in occupation of his own house. I have every sympathy with that complaint, but the fact is that the appeal to HHJ Purle came on after the property had been sold and there is no way in which history can be rewritten in that respect.
7. He additionally complains of the fact that, when it was sold, it was sold for, he says, £77,500, whereas he says it had been valued at almost £130,000. That therefore is, in effect, a complaint that Kensington have acted in breach of their duty, which they undoubtedly owe to him, to sell at the best price reasonably obtainable.
8. That is a legally recognisable complaint on his part, but it is not one that can be pursued on this appeal. It would be possible, and necessary, for him, to bring a further claim against Kensington alleging that they were in breach of their duty in equity to sell for the best price reasonably obtainable, and claiming that they should compensate him by paying him the difference between the net proceeds on the actual sale and the net proceeds as they would have been if the property had been sold for the right price. That is not something which can be raised in these proceedings and, much as Mr Carr would wish it to be otherwise, he cannot set off, against the sums for which he is held liable, the amount that he claims Kensington are liable to him for because of having sold the property at too low a price. That will require a separate claim and will require him to allege and prove the breach of duty on their part.
9. Mr Carr also complains that he should not have to pay interest on the Nationwide mortgage and the First National mortgage since the dates on which those two mortgages were paid. In respect of that, as it seems to me, the fact is that he has to bear the liability to Kensington for having paid off these debts of his; they were not paid off directly by Kensington but the position has been traced through and indirectly they were so paid. By the fact that they were paid off he was relieved of the obligation that otherwise would have continued to pay interest on those amounts, and that is the amount that HHJ Purle's order requires him to pay. So I see no basis on which he can complain about the question of interest.
10. The £7,500, as I say, is in issue, and that is the point on which he already has permission to appeal.
11. Mr Carr complains about the fact that Kensington failed to follow their own internal procedures and guidelines on approving the mortgage in the first place, but I agree with HHJ Purle who dealt with that point, implicitly if not explicitly (indeed I also agree with District Judge George), that this is not a point on which Mr Carr is able to rely for saying that a different result should follow than HHJ Purle has set out in his order. This is not a point on which he could successfully appeal against that order to the Court of Appeal.
12. So far as costs are concerned, it was a matter for District Judge George to consider in her discretion. The position has been reviewed by HHJ Purle on allowing Mr Carr's appeal in part, and I am satisfied that the order that he made was one that it was within his discretion to make in terms of costs and there is no prospect that he could challenge the costs order on appeal.
13. There is a further matter that is of concern about the way in which matters proceeded before District Judge George, and Mr Carr mentions two quite distinct points. The first is a concern about the transcript of the judgment of District Judge George. The appeal bundle, as submitted, includes two versions of the transcript, one which is labelled by Mr Carr "original transcript" which has not been marked up or commented on, and another which is marked by him "altered transcript" which has a number of his manuscript comments on it, which says here and there that a passage has been changed or that it does not match the tape.
14. This morning Mr Carr showed me a further version of the transcript together with a letter from the court service (at Birmingham County Court) sent to Mr Carr in November 2010 in response to a letter that I have not seen, dated 1 November 2010, which had been referred to the district judge. The letter says that it appeared from the transcript of the appeal hearing before HHJ Purle that the transcript of the judgment that District Judge George had given had been queried by Mr Carr, and the letter then says:

"The District Judge therefore checked the transcript that had been returned to the transcribers and realized that the wrong copy had been sent, for which she apologises."

On that basis it was said that the correct approved transcript should be sent to the parties and to the higher court for the further appeal. That resulted in a further version of the transcript being produced which Mr Carr has shown me this morning and which I have had a short opportunity to consider. I had earlier this morning read both of the other versions of the transcript so that the matter was clear in my mind. So far as I can see, the new transcript, the one made available in November, is in substance the same as the other versions of the transcripts, although undoubtedly in terms of its detailed arrangement it is somewhat different.

15. Now, it is the case that when a judge gives judgment orally, so that there is no immediately available written text, and when that judgment is recorded and later transcribed, it is well established that the judge is given the opportunity to check the transcript for corrections both of errors of transcription and revision of matters of grammar and style and that sort of thing, though of course the judge is not entitled at that stage to alter the substance of the reasoning, let alone the outcome of the case.
16. I have not checked every detail of the new transcript against the previous versions, but so far as I can see the changes are within the scope of the freedom allowed to the judge in terms of altering the precise text and not the substance. That is one matter which Mr Carr complains of and, as it seems to me, that is not a complaint which is justified.
17. But there is a second point, and that does cause me concern. As I say, Mr Carr was ordered to pay Kensington's costs before District Judge George and those are to be assessed, if not agreed. In a small bundle of documents that Mr Carr has shown me this morning, which include the letter that I have just quoted from and the new transcript, there is a page from what I take to be a summary or a chronology of the work done by the solicitors for Kensington. I mentioned that District Judge George's judgment was given on 21 September 2009 and it is recorded that the trial took place over two days. The court sat for the first time on 1 June, and the trial was then adjourned to enable further information to be supplied. The chronology that I have mentioned includes an entry dated 15 September 2009 which is in the following terms:

(Checked to audio – no bundle)

"Preparing for trial, checking court bundles, mortgage statements, Libor calculations, discussing matter with DDJ George and counsel, collating historical office copies, drafting forms of authority."

That is said to account for eight hours and 12 minutes of the time of a grade C fee earner.

18. The matter of concern, of course, is the words "discussing matter with DDJ George". I assume that that is a mistake, of course; District Judge George is a full rather than a Deputy District Judge. Mr Carr says the solicitors had no business, when the second day of the trial was coming up, having any direct discussion with District Judge George to which he was not a party. On the face of it that is a legitimate complaint. That is not a point which is within the scope of Mr Carr's grounds of appeal, because I dare say the appellant's notice was filed before he had that document or at any rate before he realized its significance, although he did have it before Patten LJ dealt with the matter on paper.
19. I am, as I say, concerned about that entry in the chronology. There may be an entirely innocent and proper explanation for it. It is not something which either the claimant's solicitors or District Judge George has been asked to explain, and it seems to me that there ought to be that opportunity before the matter is dealt with finally.
20. But for that, I would simply dismiss the application for permission to appeal. But because of that feature, while recording that I see no reason to grant permission to appeal on the grounds outstanding from Mr Carr's appellant's notice and his grounds of appeal document, I do not propose to make an order here and now dismissing the application. I propose to adjourn the matter for a period of about six weeks, so that Mr Carr may have the opportunity of putting that entry for comment to the solicitors for Kensington Mortgage Company and to District Judge George, who may of course know absolutely nothing about this entry, and asking for an explanation of what the discussion was from the solicitors and indeed so far as the district judge was concerned, whether she has any recollection at all of there being any such discussion, and if so what it is. It is, of course, now getting on for 18 months ago.
21. I do see a possible ground for concern arising from that. I do not say it would necessarily amount to a ground of appeal against (as it has to be remembered) the order of HHJ Purle, rather than the order of District Judge George; but I am not willing to close the matter off entirely while that point remains outstanding.
22. Accordingly, I will adjourn this application on the basis that it is to be relisted before me some time in the future, and if in the meantime something has come to light then it may be that I will need to reconsider the application for permission to appeal. If the matter has been satisfactorily dealt with then it may be that the order I will then make is simply to dismiss the application.
23. I would therefore summarise the position by saying that Mr Carr does of course already have permission to appeal on the question of the £7,500. That is covered by the additional evidence for which he has already been granted permission to adduce. If that evidence has the effect that it appears to have then it may be that the sensible thing is for Kensington Mortgage Company to concede that it is not entitled to that £7,500 so that the costs of pursuing that matter on appeal need not be incurred.
24. So far as the other grounds of appeal already advanced are concerned, I do not see any justification in them for granting permission to appeal; but, because of the one issue that has come to light about the contact that there appears according to the solicitors' records to have been between District Judge George and the solicitors on 15 September 2009, I leave the matter outstanding so that that can be explored. It may be that the best course is for the solicitors to take their own initiative rather than waiting for Mr Carr to ask them the question and to look into their own records as to what this discussion was. A discussion with counsel would be privileged, but even if there were a question of privilege it may be that that is something that would have to be waived in conscience in order to satisfy, or attempt to satisfy, this court that there is nothing of concern in that particular matter. It would be right for the matter to be raised with District Judge George through the Birmingham court so that she can be made aware of this entry to see if she has any recollection of that discussion.
25. So, as I say, the only formal order I make is to adjourn the application to be relisted before me and for a further oral hearing not before Monday 4 April. That allows a period of six weeks in which the matter can be investigated.

Order: Application adjourned