Mortgage Express v Butcher & Anor

This is the judgment of the Court.

On 19 December 2011 we dismissed an application by the claimant, Mortgage Express, for an extension of time for appealing and for permission to appeal, among other things, that part of the order of District Judge Mildred in the Bournemouth County on 22 July 2010 which declared that the second defendant, Anthony Martin, has an equitable right to occupy 159 Northfield Road, Ringwood, Hampshire (“the property”), for his lifetime or, if sooner, until he permanently ceases to reside there, and that that right has priority over Mortgage Express’s charge over the property. We said that we would give reasons later. These are our reasons.

The case concerns a transaction under which the first respondent, Clinton James Butcher, agreed to purchase the property from Mr Martin for £210,000 (which was substantially less than its market value), and promised Mr Martin that he would be entitled to remain in occupation of the property after completion for the rest of his life. The sale was completed in February 2008. Mr Butcher raised £300,000 from Mortgage Express, secured by way of charge on the property, but he did not disclose the promise made to Mr Martin. Mr Butcher defaulted in payment of the sums due under the charge. He has been adjudicated bankrupt and cannot be found. Mortgage Express brought proceedings against both Mr Butcher and Mr Martin for possession of the property. Mr Martin counterclaimed a declaration that he has the right to remain in occupation of the property for his life.

The trial of the action took place on 20 June 2010 and 1 July 2010, and on 22 July 2010 District Judge Mildred handed down his judgment. He found that Mr Butcher had dealt fraudulently with both Mr Martin and Mortgage Express. He held that Mr Martin had an equity to remain in the property for the rest of his life as a result of Mr Butcher’s promise to Mr Martin to that effect, and that that equity was binding on Mortgage Express, which had failed to make enquiries which it should have made. Mortgage Express was refused permission to appeal by the District Judge.

Following the District Judge’s refusal of permission to appeal, Mortgage Express’s solicitors confirmed to Mr Martin’s solicitors by letter dated 30 July 2010 that it did not intend to make an application to the Court of Appeal for permission to appeal.

The time for appealing expired on 13 August 2010.

In a subsequent letter dated 14 October 2010 Mortgage Express’s solicitors informed Mr Martin’s solicitors that it was “conducting litigation where the same issue as in this case is to be determined” and “subject to [Mortgage Express] being successful in that litigation”, Mortgage Express would appeal out of time unless terms could be agreed.

In a judgment given by His Honour Judge Behrens, sitting as a High Court Judge, in favour of various mortgage lenders in nine test cases on 19 November 2010, notices of appeal were filed by various individuals who claimed priority over those lenders on a similar ground to that raised by Mr Martin in this case. At around that time, Mortgage Express filed a notice of appeal from the District Judge’s order. The notice of appeal contained an application for permission to appeal and an application for an extension of time for appealing.

Our reasons for refusing Mortgage Express an extension of time for appealing may be shortly stated.

Mr Martin is an individual of relatively modest means, who had suffered a considerable time of uncertainty and mental anguish as to whether he might lose his home and suffer severe financial loss, not as a result of any default on his part but as a result of the scheming of a fraudster. On successfully establishing his case before the trial judge, he was entitled to expect Mortgage Express, a relatively substantial commercial organisation, to inform him promptly, in accordance with the timetable laid down by the Civil Procedure Rules, if it intended to appeal. Indeed, Mortgage Express did inform him promptly of its intention, and that intention was not to appeal. Mr Martin not unreasonably then proceeded to live his life in the belief and expectation that his right to remain in occupation of his home would take priority over any right enjoyed by Mortgage Express.

By changing its decision, more than two months after the time for appealing had expired, and then expressing its new intention whether or not to appeal as conditional on the outcome of other cases to which Mr Martin was not a party, Mortgage Express was not only seeking to impose on Mr Martin its own uncertain timetable for attempting to appeal. It was seeking to do so irrespective of both the requirements of the Civil Procedure Rules and Mr Martin’s reasonable expectations. Furthermore, whilst a successful appeal would have a devastating effect on Mr Martin, the refusal of an extension of time for appealing would not deprive Mortgage Express of the benefit of its security over the property: it would merely defer its right to realise that security until after Mr Martin’s death or his earlier vacation of the property.

There is an additional point which provides some, if limited, specific support for our conclusion. Prior to making the order in Mr Martin’s favour, the District Judge invited him to give an undertaking to make a will, under which his executors were required to notify Mortgage Express of his death, and to provide a copy of the will to Mortgage Express. Mr Martin agreed to do so, and that undertaking is recorded in the District Judge’s order. Mr Martin duly had a will dated 1 November 2010 prepared at his own expense, and provided a copy of it to Mortgage Express.

It is true that the will was provided after Mortgage Express put Mr Martin on notice that it had changed its mind about not appealing; but even then Mortgage Express expressed its intention to appeal as conditional on the outcome of other proceedings, as explained above. Not only was Mr Martin not a party to those other proceedings, but he was never informed about them; in particular, he was never told when it was expected those cases would be resolved.

For these reasons, having regard to the matters in CPR 3.9 and the Overriding Objective, we refused Mortgage Express’s application for an extension of time for appealing.