Royal Bank of Scotland Plc v Luwum (Rev 1)

This is an appeal by the defendant, David Luwum, against a possession order made against him on the application of the claimant, the Royal  Bank  of  Scotland  Plc (“the Bank”). The order was made in Nottingham County Court on 8 August 2007 by His Honour Judge Inglis. Permission to appeal was granted by Moore-Bick LJ. Mr Luwum appeared before us in person, as he did below. Mr Eyre represented the Bank but did not do so before the judge.

Mr Luwum initially sought to challenge the judge’s findings of fact in relation to a telephone conversation the judge found he had made with a representative of the Bank. The position that he ultimately adopted before us was that he accepted the judge’s primary findings of fact but disagreed with the legal conclusions that he had drawn from them. Mr Eyre’s response is that the judge’s primary findings justified the legal conclusions that he drew and that the possession order was rightly made.

In 2003 Mr Luwum opened a “Virgin One Account” with the Bank via The One Account Limited. It was a type of account that was the fruit of a joint venture between the Bank and Virgin Direct Personal Finance Limited. It was a secured current account with an overdraft facility. The limit on the facility was originally £68,000, which Mr Luwum drew down in full immediately. The limit was later increased by agreement to £72,000, which was its limit at the material time. The account was governed by various conditions, clause 15 of which entitled the Bank to demand immediate repayment of any borrowing on the account, with interest and charges, if Mr Luwum exceeded the facility without the Bank’s prior agreement. The term of the account was 20 years, within which period Mr Luwum had to repay any borrowing, interest and charges.

The terms on which the account was offered required Mr Luwum’s liability to the Bank to be secured, as it was, by an all moneys charge dated 12 August 2003 over his house, 91 Holgate Road, The Meadows, Nottingham. By clause 1.1 Mr Luwum promised to discharge his obligation on demand and, by way of security for their due performance, charged his house to the Bank by way of legal mortgage. There is no dispute that if Mr Luwum exceeded the permitted overdraft facility on his account and did not satisfy the Bank’s demand for repayment, the Bank was in principle entitled to claim possession under the charge. The only issue is whether, in the particular circumstances of this case, the Bank had precluded itself from enforcing that right by the issue of the proceedings to which I shall come.

Mr Luwum was made redundant in 2004 and has not worked since, which has been the cause of his difficulties. By January 2006 his overdraft had for some time been in excess of the agreed £72,000 facility. On 12 January it stood at £73,355.41, an excess of £1,355.41. On that day The One Account Limited made a formal demand on him by letter requiring a repayment of all the money due on the account. The letter referred to the unacceptable level of performance in relation to the account, summarised the balance and interest due and demanded payment of the full amount. It explained that the facility was terminated but that interest would continue to be applied to the account if it was not repaid immediately. It warned that “If you’re unable to repay the total amount outstanding, or to provide us with a satisfactory proposal of repayment, we retain the right to realise the security we hold on your property.” It explained that the Bank could seek a possession order. The letter included the following paragraphs:

“If you do not make a satisfactory proposal for repayment within 28 days from the date of this letter, we may also provide credit reference agencies with details of the total amount of outstanding debt. …

You must now contact my colleague David Le Page directly on [a given number, the times when lines were open also being given] to discuss how you propose to take this situation forward.

Failure to contact us may also result in your property being repossessed and should we not hear from you within 28 days from the date of this letter, we will arrange to pass your details to the Royal  Bank  of  Scotland  Plc who will progress this relationship.”

The main issue before the judge, and now before this court, is what happened during the six weeks following that letter. What is not disputed is that the case was transferred to the Bank’s Credit Management Services department and on 23 February 2006 John Carter of that department wrote to Mr Luwum, saying in part as follows:

“We refer to letters sent to you by the One account dated 12 January 2006 regarding the arrears on the above account.

Responsibility for collection of the arrears has been passed to this Department due to the problems previously outlined.

The borrowing with the One account has not been repaid in accordance with agreed arrangements. As a result the position has now been passed for litigation. Shakespeares solicitors have been instructed to apply to the courts for a Possession Order on the Bank’s behalf, as the borrowing is secured by a First Legal Charge over the property, 91 Holgate Road, Nottingham.

Please note that the costs of the Legal Proceedings will be added to your debt.

We strongly recommend that you seek advice as soon as possible. …

Please can you give this matter your urgent attention. The contact number for the department is [and it was given] and the contact is John Carter.”

The Bank issued proceedings against Mr Luwum on 10 April 2006. It is relevant to note that, following the letter of 12 January 2006 and before the issue of the proceedings, Mr Luwum made the following payments to the account: (i) £260 on 2 February; (ii) £1,550 on 2 March; and (iii) £300 on 4 April. The first two payments brought the amount due on the account below £72,000 by 2 March (in fact to £71,625.30). Following the third payment the balance on 4 April was £71,690.54, still within the £72,000 limit. On 10 April, when the proceedings were issued, the balance was still within the permitted limit, although the debiting of interest on 11 April took it to £72,002.21, just over the limit. By 15 May it had risen to £72,334.31, and by 12 June to £72,667.24. By 7 July, after a £1,000 credit, it reduced to £71,667.24 although by 11 July, eight days before the possession claim first came before the court, it had risen as a result of a further interest debit to £72,012.86, just under £13 over the limit.

Mr Luwum put in a manuscript Defence on 18 April referring to his redundancy and difficulties in finding employment. He said his ex-girlfriend had lent him some money to pay the mortgage. He was still looking for a job but once he had one he would pay. He asked for the case to be thrown out as his balance was within the agreed limit. That was a reference to the effect of the first three payments I have mentioned, although at the date of his Defence the account was in fact just over the limit. Mr Luwum made no reference to having reached an agreement with the Bank of which the effect was, as he was later to claim, to preclude it from bringing its claim against him.

The Bank’s claim came before District Judge Smith on 19 July 2006. The Bank’s evidence, in a witness statement of Miss Aziz of its solicitors, was that as at 12 July the balance due on the account was just under £72,000, with interest accruing daily at £11.03. Mr Luwum intended to attend the hearing but he arrived at the court late and only after the judge had already made against him a possession order and a payment order in the sum of £72,000.14, that being the amount said then to be due under the account.

On 4 August 2006 Mr Luwum issued an application notice to set aside the judgment, the grounds being that “the flexible financial arrangement sold to me was based on entailing a facility of credit to the agreed limit. It is not a direct mortgage arrangement as is normally sold in the High Street.” He attached a document occupying some two pages setting out his case. Judge Inglis described it as an obscure document that was not always easy to follow and he quoted part. He made the point that the only defence that Mr Luwum appeared to be advancing was based on the nature of the underlying contract and mortgage. He was not relying on anything that had happened since 12 January 2006. He appeared to be relying on the point that he had maintained the account within its agreed limit. No reliance was placed on the making of any agreement with the Bank by which it was said that the Bank had agreed to give Mr Luwum time in which to bring the account to within that limit.

On 28 October 2006 District Judge Reeson set the earlier order aside. That was not because he was satisfied that Mr Luwum had a defence on merits but because the application had only been allocated a ten-minute slot and he took the view that Mr Luwum should be entitled to have his defence heard properly. By then the Bank had indicated that it was prepared to hold its hand and not enforce the possession order, provided that Mr Luwum paid at least £547.01 a month over the remaining 16 years and ten months of the mortgage term. It proposed that to him in a letter of 10 October but Mr Luwum was not prepared to agree. The Bank’s position before District Judge Reeson had been that it wanted the possession order restored. The District Judge ordered the Bank to serve evidence in response to Mr Luwum’s evidence. Miss Aziz made a witness statement in compliance with that order which made the point that Mr Luwum had exceeded the agreed limit of the facility and that it followed that the Bank had been entitled to demand immediate payment in full. Her evidence explained the nature of the Bank’s case for possession.

The effect of District Judge Reeson’s order was that proceedings were adjourned to come on for a re-hearing in due course. On 23 November 2006 Mr Luwum made his second witness statement but the Bank was apparently unaware of this document because he did not serve it on them and it only learnt of it at the trial the following August. He made various points not material for the present purposes. The one matter he raised that is relevant was that, following receipt of the letter of 12 January 2006 and noting in it the Bank’s instructions to telephone Mr Le Page, he did telephone the Bank. I quote what Mr Luwum says:

“I phoned and had a detailed ways forward conversation with one of the staff members (whom I can not recall name). The following resolutions were reached: (a) I agreed with the Bank for me to return the cheque books and bank cards; (b) We frost the increases on the facility level were suspended till my financial situations have improved; (c) I informed the bank that having been unemployed for over eighteen months I am entitle for housing benefit from the social security department and have applied to them to make payment towards my accommodation; (d) In addition to that I also inform the bank that my family and friends had pledged their support to make regular payment to the account to with immediate effects.

The bank agreed on my proposal and set the account to be reviewed on a later date.

These agreed ways forward invalided the demand made by the bank for full repayment on their letter dated 12th January 2006 and also the claim in the second part of the statement 2 made in article 8 by the claimant’s solicitor which state ‘however, that limit is no longer applicable’. In addition this claim is inaccurate as the limit was frozen, not withdrawn.

I continued making payments to the account as later agreed with the bank and brought the account balance within the facility level as agreed and continued to maintain it within the agreed limit.

Having invalided their demand for full repayment by agreeing with my proposal detailed above and after I brought the facility within its agreed limit the bank went behind my back without any warning and issue the proceedings against me.

Nevertheless, on receipt of the court warrant issued, I contacted the Bank with that regards but was informed that unless I agree to grantee a monthly repayment of over £500 the court process will not be stopped.

I reminded the bank of the above mentioned new arrangement to bring the facility within its agreed limit, which I did; the nature of the account sole to me and pleaded with them on the bases that the facility is within it agreed limit and could only grantee every thing legally possible to ensure the balance remains within limit.

The bank when ahead and brought up the case to court when the agreed facility is already within its limits.”

It is worth noting that the nature of any agreement there said to have been reached with the Bank is imprecise. Mr Luwum could not remember to whom he had spoken. In his subsequent evidence his memory became more precise as to his discussion with the Bank. The result was that the agreement he recalled making became rather different from that asserted in this witness statement. It is, however, also important to note Mr Luwum’s reference to the fact that he had approached his family and friends to help meeting his liability to the Bank and his position is that the payments I have earlier listed as made following the letter of 12 January 2006 were all enabled by loans. The judge referred to this statement in his judgment and Mr Eyre did not dispute before us that we could and should proceed on the basis that Mr Luwum had borrowed the money to enable him to make those payments. .

There was more evidence in April 2007, although I add that in the meantime, at a directions hearing on 31 January 2007, Mr Luwum reaffirmed to the court that he had come to an agreement with the Bank following receipt of the letter of 12 January 2006. On 16 April 2007 he made his third witness statement in which he said this:

“ii)

John Carter on behalf of The Royal Bank of Scotland abused his position by:

•

Contacting me before the end of the agreed three months period to bring the account within its agreed limit. Hence Neglecting/Breaking the Banking Code Article 14 etc.

•

Dishonestly threatening me with a court order before the end of the agreed three months period. …”

Later, in the same statement, after referring to the letter of 12 January 2006, to the option in it to provide a satisfactory proposal for payment if Mr Luwum was unable to pay the total amount due, and to its instruction in it to him to telephone Mr Le Page within 28 days, Mr Luwum said this:

“c)

I took the option …, contacted David Le Page within 28 days from the date the letter was written and discussed the followings:

i)

I asked him to verify if the DWP is making enough payment into the account. He said no.

ii)

I asked why I was not informed about this earlier, although he rightfully replied; it is my responsibility to ensure that payment is being made into the account. The court should note that having:

•

Trusted the agreement that DWP made as detailed under Article 3: a), I did not see the need to continue phoning their office for the payment.

•

Communicated the DWP agreement to the one account.

•

Neither the DWP nor the one account customer service department who did not, yet they could have informed me about the delayed payment to the account before the letter of 12th Jan 2006 was issued. Till this point in time, I did not know any better.

iii)

I said I do not want my home to be repossessed by the bank and asked him what I can do. He said I have to make a satisfactory proposal to ensure that the credit limit is reduced within the agreed limit.

iv)

Although the information mentioned her under Article 3:c ii) was withheld from me by both the one account and DWP, amongst many think discussed and agreed upon, I proposed that:

•

I will make follow up payment I am entitled to from the DWP.

•

I will contact families and friends to help make paying to the account.

•

I requested him to give me five months to bring the account back to the agreed limit.

v)

David Le Page agreed on the first two part of the proposals but said he can only offer me a maximum period of three months to bring the account within the agreed facility limit, which I agreed and David Le Page added, the account would be under management pending review after three months. …

4 a) Late in February 2006, I received a letter dated the 23^rd February 2006 from customer service manager of The Royal Bank of Scotland ….

b)

I phoned the contact number indicated in the letter and spoke with John Carter. After confirm that he is aware and responsible for the letter, we discussed the following:

i)

I highlighted to John that I had telephone conversation with David Le Page, pointing out that I do not want the case to go to court and agreed with David Le Page that the account would be reviewed in three months from the date of one account letter dated the 12^th Jan 2006.

ii)

John said, since my telephone conversation with David, no significant payment had been made to the account and he had no option but to take action.

iii)

I pleaded with John and said, I had already obtained agreement of support from families and friends within the follow months he will see payment to the account while waiting for the DWP to process my payment and requested him to withdraw the case from the appointed solicitor.

iv)

Having known my concern of NOT wanting the case to go to court AS detailed under Article 4:b)-i), John said, he can only withdraw the case from the solicitor if I agree to change my financial arrangement from flexible credit limited to a fixed monthly repayment mortgage.

v)

I disagreed with John Carter on principle and matters ended unresolved. …

5 a) I kept the original agreed proposal I made to David Le Page, continued to make payment into the account and brought the account to the agreed limit as supported by the statement of the Claimant’s solicitor detailed here under Article 1:e). …”

The essence of that statement was that Mr Le Page agreed that Mr Luwum should chase up the payments he was entitled to from the DWP and that he could or should contact his family and friends to help with payments to the account; and he is said also to have agreed that Mr Luwum could have three months within which to bring the account within the facility limit and that “the account will be under management pending review after three months”. Mr Luwum did not there suggest -- at any rate in terms -- that if he did bring the account within the facility limit within three months, the Bank would simply restore the account to its status before the demand letter and allow him to continue to enjoy the facility as if there had been no prior default. The essence of the evidence of the conversation with Mr Carter is that Mr Carter declined to agree to stop the reference of the case to a solicitor. He would only recall it if Mr Luwum agreed to change the current arrangement to a fixed monthly repayment mortgage.

That evidence was followed by a witness statement made on 15 May 2007 by Mr Orton of the Bank. That does not purport to answer Mr Luwum’s prior statement. Indeed, it does not refer to it and it is not clear that Mr Orton had even seen it. Its essence was once again to explain the basis of the Bank’s claim for possession. He referred to Mr Luwum’s point in his evidence in support of the application to set aside the prior possession order, namely that he had brought the account back to within its permitted limit, and he explained why that was no answer to the Bank’s claim.

Mr Orton’s statement led to a fourth witness statement from Mr Luwum dated 13 July 2007. He referred back to his witness statement of 16 April and, after referring to what he said was the agreed proposal, continued:

“3.

I continued with the payment as proposed, despite the fact that I was contacted by the bank before the end of the agreed period for the account to be reviewed and having disagreed with John Carter in principle during the subsequent telephone conversation as detailed in my Defend statement, John on behalf of the Royal Bank of Scotland choose to ignore the satisfactory proposal in place, which superseded the demand letter of the 12^th Jan 2006.

4.

As it is shown in the account history, on the 2^nd March 2006 the account balance was brought down to within the agreed facility of under £72,000, but the Royal Bank of Scotland went ahead to issue legal proceedings to the court on 16 April 2006, regardless of my advice to John and fact the account was already brought to it agreed facility. This carefully planed act of the bank to prematurely issue legal proceedings with the intentions to deprive me off my home and facility arrangement rather than reviewing the account as previously agreed, courses me some confusions of as to whether or not to continue with the payment in the months of May and June, but made a decision to continue with the payment to the account regardless of all those harassment.”

The case came on for trial before Judge Inglis on 30 July. The essence of what Mr Luwum told the judge at that hearing was, I understand, that the arrangement he had come to with Mr Le Page was that the account would be maintained and managed for three months from 12 January 2006, and that if Mr Luwum had managed to reduce the balance to £72,000, the Bank would consider taking it out of management and permitting the normal operation of the account to resume. If he did not so manage to reduce the balance, the demand letter would stand and Mr Luwum might face legal proceedings.

Faced with that case being made by Mr Luwum, on the Bank’s application the judge adjourned the trial to 8 August so as to enable the Bank to put in evidence in response. The result was a witness statement of Mr Le Page made on 2 August. He referred to Mr Luwum’s claim that he had reached an agreement with him following the demand letter of 12 January 2006 and said he had never spoken to Mr Luwum either at that or at any other time. He had been through One Account’s computerised records, which he exhibited, and said that no such agreement as Mr Luwum asserted had been made. He said it was inconceivable that Mr Luwum could have contacted One Account either during January 2006 or at any other time without there being a record of it. He said it was “impossible for an employee of the One Account to access any customer’s account details without leaving an ‘electronic footprint.’” He said there was no indication in the Bank’s records that there was any contact subsequent to the formal demand and prior to that detailed on 23 March 2006. He continued:

“5.

It is the case that the One Account will on occasion agree to defer action for a limited period following formal demand to allow the customer an opportunity to bring his or her account balance back within the previously agreed limit. However, this will be subject [to] their maintaining payments at the minimum level required by the One Account thereafter. The formal demand is not ‘withdrawn’ in those circumstances and this is not, therefore, something that would have been agreed with the Defendant, as I understand he has suggested. Action is merely suspended while the customer’s account is monitored to ensure the agreed terms are adhered to, and will continue should there being any default in maintaining the required payments of the previously agreed limit and is again exceeded.

6.

An account transaction history covering the period 2 February 2006 to 11 July 2006 is now [exhibited]. It is noted that the Defendant made a payment of £1,550 on 2 March 2006, which reduced the Account balance below £72,000.00. However, the previously agreed limit was again exceeded the following month. As such action would have been taken at that stage irrespective of any earlier agreement with the Defendant.”

The matter came back before Judge Inglis for hearing on 8 August for the substantive hearing. One might have expected Mr Le Page to attend the hearing so that he could be cross-examined by Mr Luwum on his statement, but he did not attend the hearing. Mr Brennan (then counsel for the Bank) said that the only explanation for his non-attendance that he could give was that Mr Le Page was unable to attend at such short notice; he was apparently too busy. The judge said he had read Mr Le Page’s statement and would admit it, although obviously it would, as an untested statement, carry less weight than might have otherwise been the case. Mr Luwum was present in person and gave oral evidence in chief in which he once again summarised what he said he had agreed with Mr Le Page, and he was cross-examined by Mr Brennan. We have a transcript of the day’s proceedings. At the beginning of the hearing the judge identified the only remaining issue as being:

“the narrow question, Mr Luwum, of what if any agreement you reached with Mr Le Page, because that is the only thing standing between you and an outright order for possession.”

The judge was then faced with a finding as to whether there had been any -- and if so what -- telephone conversation between Mr Luwum and Mr Le Page. The judge pointed out that Mr Le Page’s negative evidence might have been more helpful if he had annexed a printout or similar document showing the occasions on which Mr Luwum’s account had been accessed by his department between 12 January  and  23  March  2006. He said of this omission:

“31.

… That would have been an important document, simply indicating whether or not the account had been accessed by some member of staff, because it is inconceivable that a conversation such as Mr Luwum advances would have taken place without the person from the bank getting up on the screen the position and history of the account since no doubt they deal with many hundreds of accounts each. So a bare assertion by Mr Le Page, who does not turn up and does not evidence his assertion by a print-out, is not helpful to his case.”

The judge then referred to what Mr Le Page had said in paragraph 5 of his statement, which I have read, and upon which Mr Luwum placed importance because he said it was close to what he claimed he had agreed with Mr Le Page; and, apart from his own experience, he had no idea that the Bank was prepared to engage in such arrangements. The judge pointed out, however, that what Mr Le Page there said was that, in the sort of circumstances he was describing, the demand letter was not “withdrawn”. All that happened was that the Bank might forbear for a time from enforcing its legal rights. Mr Luwum’s most recent assertion had apparently been that Mr Le Page had agreed to withdraw the letter of demand.

The judge then focused on the factual issue of whether there had been a conversation at all between Mr Luwum and Mr Le Page and, if so, what was said. The case against there having such a conversation was based on Mr Le Page’s evidence that the printout of contacts between Mr Luwum and the Bank disclosed no contact of the nature Mr Luwum asserted or at the time he asserted it. Mr Brennan also made the point, which the judge regarded as strong, that Mr Luwum’s case that there had been such a conversation had developed quite radically over the months. It had not been a feature of the original handwritten Defence or of the application to set the judgment aside. It had only emerged in and since Mr Luwum’s second witness statement of 23 November 2006, and the assertion that Mr Le Page had agreed to withdraw the letter of demand had only crystallised in the course of the previous month or so.

The judge regarded the question before him as a tricky one. His findings and conclusions were as follows:

“36.

On balance, I think that Mr Luwum did have a conversation with someone at the bank after 12 January. It would have been surprising in fact if he did not do so if, as was the case, he was then going to make arrangements to incur liabilities to other people, his ex-girlfriend, relatives and friends without ever talking to the bank at all. But I am not satisfied that he reached an agreement or understanding that goes the distance of the case as is has now developed. In particular, I do not find that there was any question of the position being reversed in any circumstances as if the letter of 12th January had not been written at all. That would have been a most surprising thing for the bank ever to agree in any circumstances. It would be a very uncertain and complex thing for them to do and would be inconsistent with what might be expected. The truth is that once that letter had been written the legal position changed radically. It is plain -- and there is scope for misunderstanding of this; there is scope also, I think, for unfairness in this -- it is plain that armed with the right to demand the full amount and having made the demand, the bank can bring proceedings for possession which they can enforce, and there is no effective discretion, but it is right that they can exercise forbearance, forbearance that may last for quite a number of years, so that consistently with the letter they wrote in October and discussed before District Judge Reeson they would be prepared to forbear in enforcing any order of possession providing monthly payments were kept up that were satisfactory to them. That would over time reduce the debt. As Mr Luwum has complained, that would in fact have the effect of reducing the payment regime to one that he had not originally signed up to, but that reflects the changed conditions in which he found himself after 12th January.

37.

I do not find that the conversation which on balance I find he had with the member of staff at the bank went any further than this, that if he was to make payments and get the indebtedness down to below £72,000 the bank would consider the position to keep the matter under review. I do not regard them as having given away by any representations when he then reacted to any legal rights that they had. Indeed, if the conversation had been construed that they had done so, the letter of 23rd February before which only £260 had been paid would have disabused Mr Luwum of the fact. Moreover, at the end of the three-month period and for a time thereafter the £72,000 figure had in any event been exceeded. I do not think there was anything about the conversation that was as firm and clear and crystallized as Mr Luwum now has come to assert. Although I have found that he had some conversation, I do not regard the bank as binding themselves not to take legal proceedings when and if they chose to do so. It was simply an indication that they would consider the position as it went along and would decide what to do later. As I say, there may have been an element of stringing the customer along, getting him to make payments that in the end would do him no good. Indeed, for the time that these proceedings had been running from shortly after the order made by District  Judge  Smith, the account has been serviced to the extent of keeping the indebtedness below £72,000. But as to whether the bank in a telephone conversation with Mr Luwum compromised their legal rights to enforce the mortgage, the answer I give in my judgment on the facts is no, they did not.”

Having made those findings, the judge said that there was nothing standing between the Bank and an order for possession, and he made such an order.

As I have said, Mr Luwum initially challenged the judge’s findings of fact. The essence of his case was going to be that he reached a firm agreement with Mr Le Page that was sufficient to prevent the Bank from issuing proceedings against him in April 2006; and, moreover, that if Mr Luwum brought his account within the £72,000 limit within three months, the Bank would restore the account to its normal operation. He asserted that his evidence about this was clear. Mr Le Page did not attend court to put, and be cross-examined on, any different version and so the judge ought to have accepted his (Mr Luwum’s) account.

The kernel of the findings of fact that the judge made is in paragraph 37 of the judgment. That was to the effect that the most that the Bank said to Mr Luwum was that, if he made payments that brought the account below £72,000, the Bank would consider the position and keep the matter under review. That is what the judge said in the first sentence of that paragraph, and I regard it as implicit in what he said in the fourth sentence, where he referred to the three-month period, that he was saying that the Bank would review the matter at the end of the three-month period.

His further finding was that the Bank had said nothing to Mr Luwum that amounted to the giving away of its legal rights; and I interpret that as including a reference to its right -- following the demand letter of 12 January 2006 -- to take proceedings for possession. The judge added that, even if Mr Luwum had interpreted the conversation as amounting to the giving up of any rights, Mr Carter’s letter of 23 February would have disabused him of the position. The judge also pointed out that at the end of the three-month period the account balance anyway exceeded £72,000, which was correct. It exceeded it by a small margin on 12 April 2006 and continued to do so until 7 July 2006. The judge’s conclusion was that there was nothing “about the conversation as firm and clear and crystallised as Mr Luwum has now come to assert”. The Bank did not bind itself not to take legal proceedings when and if it chose to do so. All that was said was that it would consider the position as it went along. The finding was that the Bank said nothing to compromise its rights to enforce the mortgage.

In my judgment the evidence that Mr Luwum gave in chief and in cross-examination fully justified the judge in making a finding that he came to an arrangement with Mr Le Page that, if he brought this account within the £72,000 limit by the expiry of the three-month limit, the Bank would review the position generally. It was not committing itself at the point of the conversation with Mr Le Page to move in any particular direction. All options would still be open to it even if by the time of the review the account had been brought within the limit; and there is a passage in Mr Luwum’s cross-examination in which he appeared to accept that this was the nature of the arrangement he had come to with Mr Le Page.

Where, however, I respectfully consider that the judge went wrong was to make the further findings that it was either explicit or implicit in the arrangement that the Bank was conveying to Mr Luwum that, despite the three-month agreement, the Bank could the next day take proceedings for possession. Whether it was legally entitled to do that is one thing. But there is nothing in the evidence to justify the judge’s view that the Bank was reserving to itself any such right. The Bank was, on the basis of the judge’s unchallenged primary findings -- I make clear, as I have indicated, that Mr Luwum does not now challenge those findings -- giving Mr Luwum a three-month amnesty, at the end of which the matter was to be open to be review.

Mr Eyre submitted that it was implicit that the Bank was merely keeping open the question of whether at the end of the three-month period it should or could compel enforcement of its right to possession, and that there was nothing in the arrangement which would have entitled to Mr Luwum to believe that the Bank did not remain entitled to issue possession proceedings within the three-month period. All that was implicit was that the Bank would review the future of any such proceedings at the expiration of that period. In my judgment Mr Eyre’s suggested interpretation is an unsound one and is a most improbable intention to attribute to the Bank when Mr Le Page made his arrangement with Mr Luwum. I am of the view that the plain sense of the arrangement was that Mr Luwum was to have a three-month amnesty during which he would have the chance to bring the account within its permitted limit, and, if he did so, the Bank would then review the position.

Unfortunately, because it appears that Mr Luwum’s arrangement with Mr Le Page was not recorded by One Account Limited, his case was transferred to the Credit Services Department of the Bank with a view to proceedings being brought against him by the Bank. That was because, so far as the internal records that the Bank have shown, Mr Luwum had not responded to the invitation to contact Mr Le Page within the 28 days set out in the letter of 12 January 2006. The first step in that direction was Mr Carter’s letter of 23 February 2006, although in the meantime Mr Luwum had already changed his position in reliance on his arrangement with Mr Le Page by borrowing £260 from friends and relatives in order to make the first payment he made towards bringing the account within its permitted limit. It is, I consider, given the judge’s findings of fact about the arrangement with Mr Le Page, a proper inference that the reference of the case to the Credit Services Department was a mistake and it is unfortunate that Mr Luwum was unable to persuade Mr Carter of that. Unfortunately the Bank did issue proceedings against Mr Luwum and did so during the three-month period; moreover it did so at a time when the account had been brought within its permitted limit, the whole purpose of the three-month amnesty being to enable Mr Luwum to do just that.

Mr Luwum submits that in these circumstances the proceedings were issued prematurely. I agree. I am not persuaded that his arrangement with Mr Le Page amounted to the creation of a contract that entitled him to require the Bank to hold its hand in the proceedings, because it is unclear to me that any consideration moved from Mr Luwum to the Bank in exchange for Mr Le Page’s promise. But the clear sense of the arrangement was that Mr Le Page was making a representation or promise to Mr Luwum that the Bank would hold its hand on enforcing its rights for three months, and Mr Luwum changed his position in reliance upon that by borrowing £260 from friends and family in order to make a payment to the credit of the account, which was the very purpose of the arrangement that was made. In my judgment those circumstances had the consequence of estopping the Bank from reneging on its promise and starting the proceedings it did before the expiry of the three-month period.

For these reasons I conclude that the judge ought to have held that the proceedings should not have been issued at all because, in the circumstances that had happened, the Bank had become estopped from issuing them. The judge should have dismissed the proceedings. I would allow the appeal and set aside the judge’s order.

I agree and have nothing to add save for this, that in my judgment Mr Luwum should be complimented in a stressful situation for the natural ability of his advocacy and for his careful and helpful preparation for this appeal; and in his turn Mr Eyre, although unsuccessful, should be complimented for the moderation and succinctness of his submissions on behalf of the Bank.

I also agree that the appeal should be allowed for the reasons given by my Lord, Rimer LJ, and I also agree with the further comments made by my Lord, Rix LJ.