Harris v Natwest

This is an application which Mr Harris makes for permission to appeal against the order of HHJ Tysack QC in the Plymouth County Court on 26 July 2007. The judge dismissed Mr Harris’s claim against the bank and ordered him to pay costs, summarily assessed in a very large sum of money -- £34,000. I understand that that arose because there were a great deal of preliminary hearings and matters in this action. The claim concerned the proceeds of sale of some land: Blackhill Quarry or Quarries near Launceston in Cornwall. It comprised two bits: one owned by Mr Harris, the claimant, and another owned by his late mother’s estate. Mr Harris and his mother had each held personal bank accounts with the defendant bank and they also held a partnership account with the bank. The bit of land owned by Mr Harris’ mother was charged in 1989 in favour of the bank as security for the partnership account. The bit of land owned by Mr Harris was charged in 1991 in favour of the bank for both the partnership account and for Mr Harris’s personal account. After the death of Mr Harris’s mother the bank sought repayment of what was owed to them on these accounts, and a sale of the land was instigated. The bank took over the sale. I think they were asked to do so by Mr Harris as an attempt to avoid an ongoing dispute between himself and the co-administrator of his mother’s estate.

In April 1995 the bank, as mortgagees in possession, sold the property for £170,000. The net proceeds after deduction of costs were £165,825.58. This amount was offset against the outstanding balances on the bank accounts in an amount of rather over £90,000 for one of them for the partnership account and rather over £67,000 for Mr Harris’s own account; and all that, as to the amounts of money, was not in dispute. Mr Harris wanted the bank to pay the balance of the money -- some £8,000 as it then stood after some legal costs had been deducted -- to him, or at least most of it; but in a letter dated 2 May 1995 a firm of solicitors acting on behalf of his late mother’s estate wrote to the debt recovery and insolvency division of the bank, saying:

The bank, according to it, was not therefore in a position to ascertain the distribution of the balance of the proceeds of sale. They wrote to the administrators of the estate on 20 July 1995 to inform them that the surplus would be distributed to them and the claimants, in proportions to be decided by the parties:

On 14 August 2001 the bank confirmed to Mr Harris that the amount in deposit then amounted to £9,500-odd, which has increased on account of interest. Mr Harris and the bank then entered into some correspondence regarding the money, culminating in a letter dated 7 May 2003 setting out the way in which the money was be distributed, with 63.4% of it going to Mr Harris -- and that amounted to some £6,470 and it included a deduction of legal fees in the sum of just over £1,000.

Mr Harris issued a claim form against the bank in 2005 and amended it on 17 March 2006, claiming against the bank amounts which he valued between £50,000 and £100,000, saying in short that they were responsible for a conspiracy to defraud him by misinterpreting the law, or a conspiracy to pervert the course of justice by misinterpreting the law. The particulars of claim are not perhaps entirely clear as to the exact basis of his claims but they have become clearer as time went on. The claims which HHJ Tysack decided at the trial were, in short, a claim to the effect that, firstly, the bank had lost some mortgage documents, which caused the sale to be delayed and which resulted in a loss of £4,500 in interest; secondly, that the bank was not entitled to deduct legal fees from that money; thirdly and importantly, and this is the main burden of Mr Harris’ complaint and his application to this court, that the bank were not entitled to hold onto the money for as long as they did, and my account of the facts showed that they hung onto the money for really quite a long time, until the distribution proportions had been determined. In a sentence, in a very short sentence, Mr Harris’s case was that the bank knew, or ought to have known, perfectly well in 1995 or soon after that what the correct distribution of the balance of the proceeds of sale was and they ought to have given effect to that.

In consequence of all this, Mr Harris claims that he got into financial difficulties because he had not got the money and, among other things, that regrettably his home was repossessed. Mr Harris wishes to appeal against HHJ Tysack’s decision. HHJ Tysack made the following findings: first, that Mr Harris had failed to establish as a fact that the loss of the mortgage documents had led to a delay -- as I explained to Mr Harris a moment ago, that is a finding of fact and there is no reasonable possibility that this court would disturb that finding of fact upon an appeal; secondly, that there was an ongoing dispute between Mr Harris and the co-administrator of his mother’s estate, and that the bank were in those circumstances entitled, perhaps obliged, to delay payment until this dispute had been resolved and the correct distribution portions ascertained; thirdly, that Mr Harris had failed to establish that the bank were not entitled to deduct their legal fees as in most instances they would be; fourthly that a limitation period of six years applied to the action and that the action, the cause of which had accrued back in 1995 if Mr Harris was correct, was out of time. I am not going to deal with limitation, although Mr Harris has things to say about that finding, because if Mr Harris cannot establish that he has got his basic claims then the question of limitation would not arise.

The essential points which Mr Harris makes in his grounds of appeal and skeleton argument, which I have carefully read and which he has supported this morning by a well-constructed, if I may say so, additional statement, are these: firstly, that the loss of the mortgages did cause delay and that the judge was wrong to find that they did not (I have already dealt with that. There is no reasonable prospect of that being brought forward successfully in this court); secondly, he was denied the surplus funds from the sale of the land when he ought to have received them and that in consequence his flat was repossessed; and thirdly that the bank misinterpreted the Partnership Act 1890 and its consequences by not reimbursing him when he had paid more than his share of the debts of the old firm, and when part at any rate of the sale proceeds was in respect of land which he owned himself and which his mother’s estate had nothing to do with. The grounds of appeal acknowledge that the solicitors for his mother’s estate had nominally challenged his contentions and told the bank that the surplus should not be delivered until agreement was reached. But the contention is, with reference to much detail about the value of the quarries and the information which the bank had in its possession from valuers and so forth, that the solicitors were plainly wrong and Mr Harris was plainly right and that the bank should have made or accepted this judgment and paid him his proper share much sooner than they did. Mr Harris has said this morning that so many of the statements made by the bank in correspondence or in their evidence to the court were untrue or suspect. Some of the land had nothing to do with his mother’s estate and it is said that the bank had valuation evidence which they should have acted upon.

This seems to me to be a plain misunderstanding of the position of the bank. Mr Harris had a dispute with the other administrator of his mother’s estate and it was not for the bank to resolve that dispute even, if I may say so, if the resolution was obvious. It was for the parties themselves to resolve the dispute and for the bank then to distribute in accordance with that resolution, which is essentially the position that the bank took. HHJ Tysack, in effect, so held; see for example paragraph 15 of his judgment.

When Waller LJ came to refuse Mr Harris permission to appeal on the papers, he wrote as follows, as reasons for the refusal:

As I have indicated the issue of limitation does not arise if, as the judge rightly held, in my view, Mr Harris did not have a sustainable claim in the first place. For these brief reasons the application for permission is refused.