Watson v Counsell & Anor

I have before me applications for permission to appeal against three orders:

Towards the end of the hearing before me, I became aware that David Richards J had dismissed certain applications made by Mr Watson on 3 November 2006. Mr Walsh, who appears for the Mortgagee had not seen this order before and knew nothing about it. I did not know then what applications had been before the Judge. Mr Watson was not able to explain clearly to me precisely what had taken place before the Judge, but I understood him to say that the Judge had not actually decided anything and that the matter was to be dealt with at this hearing. He certainly did not suggest that any of the applications with which I have been dealing had been decided by the Judge.

Accordingly, I completed the hearing and prepared a draft judgment on the footing that I was not treading where David Richards J had already trod. Mr Watson has since sent me a communication in which he deals further with the hearing before David Richards J. I have now had the opportunity to review the Court files but unfortunately they are incomplete. Further, in spite of request from me to Mr Watson to provide the relevant notices of the applications which were before David Richards J, he has not provided anything further. The position so far as I am able to tell is this:

The facts appear largely from the judgments of HH Judge Weeks and DJ Watson. I do not need to repeat them in this judgment although I will refer to relevant facts as I proceed. There is some additional material which Mr Watson seeks to rely on which I will also mention.

Mr Watson appears, as I have already noted, to have brought all of his appeals in the Chancery Division. The hearing of them was listed before me sitting in Bristol as a High Court Judge. However, although the High Court is the correct forum for the appeal from the order of HH Judge Weeks (and thus for an application for permission to appeal which has been refused by the lower court), the correct forum for the appeals from DJ Frenkel and DJ Watson is the Circuit Judge. It would be a complete waste of time were the applications for permission to appeal, which all relate to the same subject matter, to be heard by different judges. Accordingly, in hearing these applications I am sitting both as a High Court Judge and as a judge in the County Court hearing all the applications. Mr Watson, as well as Mr Walsh who appeared before me on behalf of the Mortgagee, agreed to that course.

The Mortgagee’s Action started off as an apparently conventional possession action against Miss Counsell based on mortgage arrears; as a result of Mr Watson’s involvement it became more complicated. Mr Watson was in occupation of the Property and claimed a beneficial interest in it. On 9 January 2003, he issued an application to be joined in order to resist the possession order which had been made and in respect of which a warrant for possession had been issued. In his application he stated that he paid the deposit for the Property and paid all the mortgage instalments since the purchase. The Mortgagee, he says, knew he was living there with the children of the relationship between himself and Miss Counsell.

On 10 January 2003, DJ Singleton ordered that Mr Watson be joined as 2^nd defendant to the Mortgagee’s Action. The application to suspend the warrant for possession was adjourned, when Mr Watson was to produce evidence about his ability to pay mortgage instalments.

Mr Watson filed a defence on 17 January 2003. In it he said that at all times he had been in occupation of the Property and paid a deposit for the Property of £10,000. I interpose here to say that it is clear from the evidence which I have seen that no deposit was ever paid for the purchase of the Property although it is almost certainly the case that Mr Watson did pay to Miss Counsell a sum of that amount or thereabouts which found its way to her solicitor’s client account and was used in the purchase: but as between vendor and purchaser (Miss Counsell) exchange of contracts and completion were simultaneous, or virtually simultaneous, and money did not pass to the vendor until completion. Mr Watson also said in that defence that he had an over-riding interest in the Property pursuant to the Land Registration Act 1925. It would appear from this allegation that Mr Watson was, at least by this stage, in receipt of legal assistance of one sort or another unless he himself is versed in the technicalities of the Land Registration Act 1925. His case has consistently been that the interests which were overriding interests were

As to the tenancy, there has been dispute between Mr Watson and Miss Counsell about whether they were joint tenants (as Mr Watson alleged) or whether Miss Counsell alone was the tenant (as she alleged). It does not matter which is correct. There is no doubt that following the purchase of the Property in the name of Miss Counsell, the tenancy came to an end. Mr Watson says it did not do so immediately but ran until the end of the period for which rent had been paid: nothing turns on that and, on any footing, the tenancy was at an end long before the Mortgagee’s Action was commenced. Accordingly, even if the Mortgagee took subject to Mr Watson’s interests under the tenancy, the tenancy (and Mr Watson’s rights) expired long ago. As to the Mr Watson’s suggested overriding interests as a purchaser, I will return to this aspect in due course.

The Reply of the Mortgagee in the Mortgagee’s Action denied that Mr Watson contributed to the purchase price and asserted that, even if he did, his interest in the Property did not take precedence over that of the Mortgagee, his sole interest being in the proceeds of sale of the Property.

On 17 February 2003, Deputy DJ Major suspended the warrant for possession, adjourning the substantive hearing of the application to suspend to a date in April on terms as to payment of the current instalments of the mortgage and arrears. Mr Watson was to file and serve by 4 March 2003 a statement of all witnesses upon which he wished to rely in support of his defence. That was unrestricted and therefore included evidence to establish his overriding interest.

Mr Watson did not comply with the timetable for his statement. In the absence of a statement, Mr Corry, the solicitor acting for the Mortgagee, produced a witness statement dated 2 March 2003. Exhibited to it was a copy of Miss Counsell’s mortgage application form. At least, exhibit CTC1 is stated to be a copy of that form and is stated to be 7 pages long. The actual exhibit was not in court nor was any copy of the exhibit as such. However, a copy of the mortgage application form was available and it is indeed 7 pages long excluding the front page before the beginning of the form itself.

Mr Watson did eventually provide a witness statement, on 7 April 2003, the day before the hearing which was due to take place. He states that he purchased the Property but that it was put in Miss Counsell’s name due to the fact that he had a bad credit rating, the clear implication being that he could not himself, therefore, obtain a mortgage. He says that he paid a deposit of £11,000 (not £10,000 I note) and that he had paid all mortgage instalments. He says that he dealt with the purchasing solicitors Batchelor Sharp (although he did not produce any evidence from them to that effect and Miss Counsell’s case was that she dealt with all aspects of the purchase). I note that this statement is not entirely consistent with Mr Watson’s submissions to me that he did not have the first idea about what was going on in relation to the mortgage, having been told, he said, by Miss Counsell that she was handling it and “that everything would be OK”.

I note paragraph 11 of his statement where he says that he understood the arrears to be as high as they were because the Mortgagee had placed a surcharge onto the interest rate on the basis that he was a tenant in the Property. So far as I can see, this aspect did not feature in the hearing before DJ Watson concerning the account. It was not mentioned by Mr Watson before me and no evidence has been produced at any stage to substantiate the correctness of Mr Watson’s stated understanding. Accordingly, I say no more about that aspect.

On 8 April 2003, the matter came before DJ Neil. Mr Corry, in a witness statement in Mr Watson’s Action made on 11 February 2005, deals with a number of points, including the making of this alleged concession. He says simply that counsel for the Claimant conceded the point. I think that his evidence is based not on his personal knowledge but on the Note of the hearing which was prepared by Mr Walsh to report to his instructing solicitors and which is dated 8 April 2003, the day of the hearing. This records that Counsel (Mr Paton) for Mr Watson conceded the Abbey National v Cann point (ie the overriding interest point) prior to the hearing. Mr Corry also exhibits a copy of the mortgage application form (again 7 pages of it, but again no copy of the actual exhibit was available before me).

Apart from Mr Walsh’s note, I do not have any record of the hearing before DJ Neil. I have only his order which provided for the warrant for possession to be stayed provided that Mr Watson paid the current instalments together with arrears at a stated rate. At the hearing, Mr Paton attended alone, without the attendance of his instructing solicitors. It is, I think, clear that Mr Paton had no instructions from his instructing solicitors to abandon the overriding interest point. It appears that he did, nonetheless, do so in the sense that he did not run it although he may not formally have conceded it in front of DJ Neil. Mr Watson tells me, not on oath but in has address, that Mr Paton did not discuss with him abandoning the point; if Mr Paton did concede the point, he did so without authority.

It seems unlikely that Mr Walsh’s note of what happened is inaccurate. Mr Watson himself did not challenge Mr Corry’s witness statement and his reliance on Mr Walsh’s note at the time. He did so at the hearing before me; perhaps he did so before DJ Watson as well, but I do not know about that. However, for reasons which I will come to, it is not necessary for me to resolve what happened on that occasion. Indeed, on this application, I could not possibly do so. If the point were of significance, it could only be resolved by receiving evidence from Mr Paton and from Mr Walsh confirming his note of the hearing. The question would then arise whether the point was taken before DJ Watson and if not, whether Mr Watson should be entitled to take it on an appeal, a question which could not be dealt with on this application for permission to appeal but, I think, only pursuant to a substantive appeal since the issues raised would be ones in respect of which it could not be said that there was not a “real prospect of success” within CPR 52.3.

The matter then came before the court again on 26 February 2004, I believe because Mr Watson had failed to keep up the payments required, but the reason does not matter. He adjourned the application and stayed the warrant for possession subject to the making of a certain payment by Mr Watson. The warrant was stayed for a period of 3 months to enable Mr Watson “to take steps to transfer the tile to the security from [Miss Counsell] to himself”.

Then, on 20 May 2004, the Mortgagee brought the matter back before DJ Frenkel. On that occasion, he made the first order which is now appealed against, namely dismissing the application for a stay and granting the Mortgagee permission to issue a warrant for possession forthwith. Permission to appeal was refused because Mr Watson was “not the mortgagor of the security and within the protection given by section 8 of the Administration of Justice Act 1970 and section 36 of the Administration of Justice Act 1973”. Mr Watson tells me that he did not raise the overriding interest point on that occasion because he had no evidence on that occasion to establish it: the evidence was too difficult to get.

The evidence which he refers to relates (a) to his status as a joint tenant at the time of the purchase and (b) the circumstances of the acquisition in Miss Counsell’s sole name of the Property and Mr Watson’s intended beneficial interest. What Mr Watson now says is that the mortgage application form was fraudulent; he has only recently managed to obtain it and now that he has obtained it, he has the evidence which he did not have before DJ Frenkel. He says that, since the application was fraudulent, and since he can now show he was a joint tenant (again as the result of evidence which was not available before DJ Frenkel), he can establish his overriding interest and therefore, as I understand the submission, take free of the mortgage. Since this new evidence forms the basis of his appeals against all three orders in relation to which permission to appeal is sought, I shall leave further consideration of its effect until later.

On 7 June 2004, Mr Watson issued a notice of appeal against DJ Frenkel’s order. His ground of appeal was that he could settle the arrears within 3 months. He also referred to the “Trust of Land Act” and “the Childrens Act”. In his arguments in support, he referred to the fact, as he alleged, that the Mortgagee knew of his interest in the Property (ie that he had contributed to the purchase price and mortgage instalments). This seems to be a reiteration of the overriding interest point. But the order he sought was that he paid monthly instalments (in a sum sufficient to meet current instalments) an order for the arrears to be settled within 3 months and an order for transfer of the Property to him within 5 months. This order, sought by Mr Watson himself, seems to me to be hardly consistent with the proposition that he had an overriding interest which entitled him to take in priority to the Mortgagee.

On 9 June 2004, HH Judge Bursell QC refused Mr Watson’s application for permission to appeal. That, accordingly, was an end of Mr Watson’s possibilities of appealing the order of DJ Frenkel. Once permission to appeal an order of a district judge in an action such as the Mortgagee’s Action has been refused by the appeal court (in this case, the Circuit Judge), there is no further avenue of appeal. Mr Watson has referred to me to the decision in Taylor v Lawrence [2003] QB 528 and to the difference between the procedure in the County Court and the High Court in relation to re-opening appeals, and in particular the provisions of CCR Order 37 Rule 1, then preserved by CPR part 50. However, since that decision, the CPR have been amended and the old CCR Rule 37 is no longer preserved. Instead, the matter is dealt with exclusively by CPR 52.17 which, expressly, does not allow for re-opening of appeals in the County Court: see CPR 52.17(3) and Gregory v Turner [2003] 1 WLR 1149. There is no way of re-opening HH Judge Bursell QC’s decision even if there were any reason for thinking it was wrong (which, as will become apparent, I do not consider there is). As to the effect of the fraud which Mr Watson now alleges, I shall deal with that later in relation to all three intended appeals.

Following the decision of HH Judge Bursell QC, the Property was repossessed and sold by the Mortgagee. Mr Watson then launched Mr Watson’s Action on 7 September 2004 in which he sought a declaration that he owned the Property and that the “net proceeds of sale….currently held by [the Mortgagee] belongs to him” and that in the meantime the Mortgagee was not to pay out the net proceeds to Miss Counsell or anyone else.

Mr Watson made a statement in support of his claim. By this time, his case had become that there was an understanding when the Property “was purchased in November 1999, it was held jointly and that the beneficial interest in the property is shared equally”. He refers to the £10,000 deposit (not, by now, £11,000). He says, in effect, that he purchased Miss Counsell’s interest in April 2002 so that the net proceeds of sale currently held by the Mortgagee belonged to him. There is no suggestion in the Claim Form or in the statement in support that the net proceeds of sale are other than what the Mortgagee holds after discharge of the mortgage. There is no hint that the overriding interest point was still live.

The Mortgagee paid the net proceeds of sale (at least, what it retained) into court. The matter then came before HH Judge Weeks for trial. Both Mr Watson and Miss Counsell were represented. The Mortgagee took no part in the trial. It is clear from the way that the matter proceeded that the trial was conducted on the basis that the only issue related to the net proceeds of sale. If the overriding interest point had still been live then (a) the Mortgagee would have been concerned to appear at the trial since its security would have been under attack and (b) Miss Counsell would also have needed to address the point since, if the Mortgagee’s security over the Property did not bind Mr Watson, then she could have found herself liable under her covenant for payment in the mortgage for amounts which the Mortgagee could not recover from the proceeds of sale of the Property.

HH Judge Weeks, after hearing evidence, decided in favour of Mr Watson as against Miss Counsell. He declared that from 30 April 2002 (as to which see paragraph 27c below), Miss Counsell held the Property on trust for Mr Watson alone “subject to the mortgage” and that Mr Watson was entitled to the entirety of the net proceeds of sale. He ordered payment out to Mr Watson’s solicitors.

In the course of his judgment, HH Judge Weeks dealt with three relevant matters:

Following that decision, not being satisfied with the account produced by the Mortgagee, Mr Watson made an application (in Mr Watson’s Action) dated 3 November 2005, seeking an order that the Mortgagee pay him “all monies and interest in relation to the proceeds of sale of [the Property] held in its client account from 1 July 2004 to date at a rate of 8%”. He obtained an order from DJ Frenkel on 23 December 2005 that the Mortgagee produce and file (and serve on Mr Watson) an account of the money which they had paid into court, commencing on 1 January 2003 until payment into court and to include the particulars of the costs of sale of the Property. This was to be done by 22 January 2006 with Mr Watson making his objections by 17 February 2006. The Mortgagee filed an account with a letter dated 10 January 2006 to which Mr Watson responded with his Statement of Objections dated 17 February 2006. DJ Watson gave further directions on 29 March 2006. The Mortgagee’s solicitors invited the court by a letter dated 7 April 2006 to strike out Mr Watson’s application without a hearing. It then filed a witness statement of Miss Hicks, a legal assistant with the solicitors, dated 27 April 2006 accompanied by a bundle of invoices

On 23 May 2006, the substantive hearing was held in front of DJ Watson. Judgment was handed down on 16 June 2006, the judgment being sent to the parties on 23 May 2006. It appears that the order was drawn up and entered on 23 June 2006: that, at least, is the date on the amended form of order from which Mr Watson now appeals. The actual order determined that the Mortgagee pay an additional sum of some £3489 odd to Mr Watson which DJ Watson found due on the taking of the account. Permission to appeal was refused. It was expressly stated that the order is final and that an appeal lay to the Circuit Judge in the County Court. Mr Watson nonetheless launched all his appeals in the Chancery Division of the High Court.

Mr Watson, who appeared before DJ Watson in person argued the overriding interest point. As DJ Watson explained the point, Mr Watson’s argument was based on the ground that, as the Mortgagee well knew, Mr Watson had occupied the Property prior to the date of the mortgage and that therefore the mortgage did not bind him. DJ Watson held that this point was not open to Mr Watson saying “His interest in the property is subject to [the Mortgagee’s] mortgage as paragraph 1 of Judge Week’s order makes clear. I cannot go behind that.” He also referred to the Mortgagee’s Action saying that this argument could and should have been advanced in that action if it was to be pursued since it was in that action that the Mortgagee was asserting its security against Mr Watson. DJ Watson found as a fact (basing his decision on Mr Walsh’s note which I have already mentioned) that Mr Watson’s counsel had expressly abandoned the overriding interest point. If not, then DJ Watson considered that the point should have been raised in the hearing before HH Judge Weeks which it was not.

Apart from that, DJ Watson found that the point was misconceived. As he put it:

“Mr Watson’s beneficial interest….did not come into existence until the purchase….and both his shared beneficial interest prior to 30 April 2002 and his enhanced beneficial share after 30 April 2002 were subject to the mortgage as was Miss Counsell’s beneficial share which Mr Watson acquired after that date. I need only refer, once again to the first paragraph of Judge Week’s order of 15 July 2005, which states this plainly. There has been no appeal from that order.”

Of course, HH Judge Weeks did not, I should observe, actually decide the overriding interest point. It was simply not an issue before him and was not raised. The parties proceeded before him on the basis that the argument was only about the proceeds of sale left after the Mortgagee had taken what was due to it. Indeed, Mr Watson’s Action was from the beginning based on that premise, seeking a declaration only in relation to the net proceeds of sale held by the Mortgagee.

I turn then to consider Mr Watson’s applications for permission to appeal each of the three orders ignoring, for the moment, the evidence which Mr Watson says is new evidence on which he now seeks to rely. All three appeals turn, essentially, on the overriding interest point (although, in relation to the appeal against DJ Watson, there may be an issue in relation to the actual account). Apart from the new evidence, the overriding interest point is, in my judgment, a completely hopeless point and without any merit. It is clear that, whether the Property was to be acquired by Mr Watson, by Miss Counsell for herself or by her as a trustee for both of them, the balance of the purchase price over and above the £10,000 (or thereabouts) which Mr Watson was providing at the outset, would need to be borrowed. Mr Watson must clearly have known this. He must also clearly have known that Miss Counsell would need to borrow the money and that it would be secured by a mortgage on the property. It is fanciful to suggest that she would have been able to borrow the money without security and Mr Watson cannot have believed otherwise. Further, it is fanciful to think that Miss Counsell had other property on the security of which she could have borrowed the necessary funds. It is inconceivable that Mr Watson believed that to be the case. He has never suggested in evidence that that was so and, so far as I am aware, has never suggested it to anyone until he raised the suggestion in front of me. It is not a point which he should be allowed, in any event, to raise for the first time on an appeal.

I have already considered Mr Watson’s claim to an overriding interest in respect of his alleged joint tenancy and have explained that that is not a point which has any relevance any more since the tenancy came to an end years ago. Further, it is occupation, not a tenancy, which enables an overriding interest to be asserted, and there is no dispute that Mr Watson was in fact in occupation (whether or not the Mortgagee knew of this) at the time of the purchase.

Mr Watson, however, claims an overriding interest by virtue of his beneficial interest in the property. But such interest as he acquired in the Property at the time of the purchase (be it a half share or some other share) arose only as a result of the purchase itself. It is clear from the decision of the House of Lords in Abbey National Building Society v Cann [1991] 56 that where a purchaser (in this case Miss Counsell) relies on a building society loan for the completion of a purchase, the transaction of acquiring the legal estate and the granting the charge are one indivisible transaction at least where, as in this case, there has been an agreement to grant the charge on the legal estate when obtained. The purchaser never acquires anything other than an equity of redemption and there is no scintilla temporis during which the legal estate vests in the purchaser (in this case, Miss Counsell) free of the charge (in this case, the mortgage to the Mortgagee). Accordingly, Mr Watson cannot claim that the share which he acquired on the purchase takes priority to the mortgage.

Even if the payment of £10,000 were to have given rise to an interest in the Property which did take priority to the Mortgagee’s mortgage, that would have given Mr Watson a share of less than 12%, the purchase price being some £91,000 odd. But Mr Watson has received far in excess of that so that any interest based on the £10,000 has been fully satisfied.

Quite apart from that, it is fanciful, as I have already said, to suggest that Mr Watson did not know that the balance of the purchase price would be raised by a borrowing by Miss Counsell and that that borrowing would be secured on the Property. He may not have known the detailed provisions of the mortgage, but that he knew a mortgage would be needed is clear. Once the mortgage had been granted, he, on his own case, met the instalment payments on it and made no suggestion to the Mortgagee that he was not bound by it. He did not pursue, in the hearing before DJ Frenkel leading to the first order appealed, nor did he do so in the hearing before HH Judge Weeks, the point that he was not bound. In my judgment, he is estopped, in accordance with well-established principles in relation to mortgage transactions such as this, from claiming priority to the Mortgagee. The case is so clear, in my judgment, that Mr Watson does not have that real prospect of success which is a prerequisite for the granting of permission to appeal. The law is illustrated again in the Abbey National case at p 94B to G: and see also Fisher & Lightwood’s Law of Mortgages (12^th ed) at 40.4.

That is enough to dispose of the applications in relation to all three appeals (subject to Mr Watson’s points on the “new” evidence) apart from a detailed point on the account. However, I should add that, even if that were not so, permission to appeal should not be granted.

In relation to the order of DJ Frenkel, the effect of the refusal of permission by HH Judge Bursell QC is to bring an end to the matter for the reasons already given.

So far as the order of HH Judge Weeks is concerned, the application is out of time by a very long way. There are, further, strong grounds for saying that an appeal should not be allowed because the overriding interest point was not pursued at the appropriate time and that it would be an abuse of process to allow it to be raised at this stage. Considering the factors set out in CPR 3.9

In my judgment, even if Mr Watson had a real prospect of success on the merits, it would be wrong to allow him now to raise the overriding interest point which should have been taken and pursued at a much earlier stage.

So far as the decision of DJ Watson in relation to the overriding interest point is concerned, the position is again strong against Mr Watson. DJ Watson’s function was simply to conduct the taking of an account as between the Mortgagee and Mr Watson following HH Judge Weeks’ decision that Mr Watson, as between himself and Miss Counsell, owned the whole beneficial interest in the net proceeds of sale of the Property. It is true that the application for permission to appeal was not nearly so delayed as in relation to the order of HH Judge Weeks; in relation to DJ Watson’s order it was made 2 months after the order, but still many weeks out of time. But it would be equally an abuse to allow this appeal to proceed, even if it had any merit which it does not, as in the case of an appeal from the order of HH Judge Weeks.

That brings me to Mr Watson’s case that he now has new evidence available which (i) demonstrates that the purchase transaction was based on a fraudulent application by Miss Counsell and, (ii) shows that the Mortgagee knew, contrary to its assertion, of Mr Watson’s occupation of the Property.

In his Appellant’s Notice, Mr Watson seeks to justify the late application for permission to appeal on these bases:

It appears that Mr Watson is referring to two matters in these grounds. First, there is the application form completed by Miss Counsell for the mortgage from the Mortgagee. Secondly, there is a recent letter (dated 6 December 2006) from the letting agents stating that, at the time of the mortgage offer, they were asked to confirm (and presumably did so confirm) that the rental was paid up to date: it is implicit that the confirmation was sought by and given to Mr Simmonds, who was Miss Counsell’s mortgage broker.

It is said that the application was fraudulent because it contained a statements that Miss Counsell was single when she was in fact living with Mr Watson and that she did not reveal Mr Watson’s intended occupation of the Property in the relevant box on the form. It should be noted that the form does not ask who, if anybody, is already in occupation of the Property.

As to the first of those, Miss Counsell was indeed single and there is, in my judgement, absolutely nothing in the point.

As to the second, it may be that there would be a cause for complaint by the Mortgagee against Miss Counsell for failing to reveal that Mr Watson was an intended occupier. Mr Watson submits that this failure, which he categorises as fraudulent, assists his argument in relation to the overriding interest point.

I disagree with those submissions. Even if the mortgage had been obtained by reason of a misrepresentation in the application form, and even if that misrepresentation was fraudulent, that would not prevent the Mortgagee obtaining a valid security in respect of loan finance provided on the basis of the application form. I can see no argument to the contrary since either the Mortgagee did not know that the representation was untrue, in which case there is no reason at all to think that the security would be invalid; or it did know (for instance because Mr Simmonds' knowledge, assuming that he knew the true position as Mr Watson alleges he did was to be imputed to it), in which case the Mortgagee was not misled and the misrepresentation was ineffective and again there is no reason at all to think that the security would be invalid.

Then Mr Watson says, if I understand his case correctly, that the possession order was obtained by fraud because the mortgage application form was relied on by the Mortgagee to show that it had no knowledge that Mr Watson was in occupation. He says that the possession order was therefore obtained by fraud because the application form itself was fraudulent. Now, even if Mr Simmonds knew of the true position as alleged by Mr Watson (ie that Mr Watson was in occupation as a tenant, would remain in occupation as a beneficial owner and was providing part of the price) and even if it were correct that Mr Simmonds’ knowledge was to be imputed to the Mortgagee (which I do not for a moment accept), there is not a shred of evidence to suggest that the Mortgagee itself actually knew of Mr Watson’s occupation. It is impossible to see, therefore, that there is any fraud on the part of the mortgagee. In any event, the Mortgagee had a right to possession as a result of the default in payment of mortgage instalments which was not to be defeated by Mr Watson claiming an overriding interest, in the light of my conclusions on the that point.

Further, this evidence is not in any real sense new evidence. It appears that Mr Corry on two separate occasions exhibited the application form, complete except for the front page, to a witness statement. Mr Watson has not said that he did not receive the witness statement and, if he did receive them, it is unlikely that he did not also receive the exhibits. But that is not the real point. The real point is that if he had really wanted the application form, it was a document which had been exhibited and which he could have obtained. Had the Mortgagee and its solicitors refused to provide it, an application to the court would have produced an order for its production. In any event, Mr Watson says in his own Statement & Objections to the account dated 17 February 2006 that he first had sight of the application from in 2002 which only goes to emphasise that he knew of its existence and could have sought a copy.

I would mention at this juncture Mr Watson’s plea that he is a litigant in person and does not really understand what is going on. I do not accept that he did not and does not understand perfectly well what is going on, or, if he did not fully understand, he had been in receipt of legal advice from fairly early on if not at the beginning of this saga. His grounds of appeal and his skeleton argument bear all the hallmarks of having been prepared with well-informed legal assistance, as did his documentation for earlier applications. I do not think that he has any real excuse for not seeking production of the application form, through the court if necessary. The fact that he has now obtained the full application form does not make it new evidence such as should permit him to rely on it to re-open the possession order and the order of HH Judge Weeks.

The second aspect is the alleged new evidence which shows, according to Mr Watson, that he was a joint tenant of the Property. I am perfectly willing to accept for the purposes of this application that he was a joint tenant of the Property prior to the purchase. But that does not assist his case. His case on the overriding interest is misconceived and it makes no difference to it whether he was a tenant or not. Further, it makes no difference, either, that the Mortgage might, as Mr Watson says is the case , fall to be treated as if it knew of the tenancy and/or Mr Watson’s occupation. In that regard, Mr Watson’s case is that the Mortgagee knew of Mr Watson’s actual occupation as a tenant and that he would remain living at the Property because Mr Simmonds is said by Mr Watson to have been an agent of the Mortgagee whose knowledge was to be imputed to it. But even if the Mortgagee did know, that would not turn the interest acquired by Mr Watson in the Property as a result of the purchase into an overriding interest taking priority to the Mortgagee’s charge.

Since the hearing before me, Mr Watson has sent me written submissions in reply to the oral submissions of Mr Walsh on behalf of the Mortgagee. He reiterates the point which he made before me to the effect that the Mortgagee knew that he was in occupation of the Property at the time of the purchase. I have already dealt with that point and hold that it does not assist him. I have also dealt with his submissions based on an alleged fraud.

Next he says that there was no notice to quit. This point has never been raised before and I would not allow it to be raised now even if it had any merit. But it has no merit. By the time that the Mortgagee sought possession, any tenancy had long since come to an end. There was accordingly no need for any notice to quit.

Next, he says that his interest was never disclosed to the Land Registrar when the charge came to be registered. He relies on section 71 Land Registration Act 2002; however, section 71 did not come into force until October 2003 and was thus not in force when the Mortgagee’s charge was registered and has no relevance.

Next, Mr Watson refers to Article 8 of the ECHR (right to respect for private and family life). This is an entirely new point which he has not raised before. If it was to be taken, it should have been taken at the time when the possession order was sought and when Mr Watson sought to have the order stayed (at a time when he was represented). It is not surprising that his lawyers did not take the point since there would not seem to be anything in it. Article 8 (as incorporated into domestic law by the Human Rights Act 1998) does not result in a blanket exclusion of a mortgagee’s ability to gain possession of residential property when there are arrears of instalments. There is nothing unusual in the present case which would enable Mr Watson to invoke the Act against the Mortgagee.

Mr Watson then refers to the lawyer’s duty of confidentiality to his client. I do not understand the relevance of this duty to the present case.

Accordingly, none of Mr Watson’s proposed appeals against the orders of DJ Frenkel, HH Judge Weeks and DJ Watson passes the threshold set out in CPR 52.3(6)(a) as having a “real prospect of success”.

This brings me to one detailed aspect of the account. One item to which Mr Watson was entitled was a return on the net proceeds of sale which the Mortgagee retained until paid into court. In his Statement & Objections dated 17 February 2006, Mr Watson seeks an account of “what percentage interest was calculated on the monies paid into court. Because interest is claimed at 8%”. It is the case that Mr Watson has never been told what happened to the actual net proceeds of sale: the Mortgagee’s account did not reveal it. DJ Watson dealt with the matter this way when he said:

“During the period July 2004 to February 2005, while [the Mortgagee] held this £78,311.66, they were trustees of it for Mr Watson’s benefit. As trustee they should have invested it. Mr Watson claims that it should have earned 8% pa. Mr Virgo’s skeleton argument does not address the issue. I am unable to discern the interest rate actually earned from the figure (£866.58) mentioned in DLA’s 10 January 2006 letter (nor, frankly, given the conflicting accounts of the arithmetic and the absence of evidence about it, can I be confident about the accuracy of this figure), but I treat the letter as an admission on behalf of [the Mortgagee] that Mr Watson is entitled to some interest on the money.”

DJ Watson then applied the same rate as earned by the money once paid into court ie 6% pa, arriving at a figure of £2,677. Mr Watson, in his amended Grounds of Appeal, submits that DJ Watson should have reserved judgment until he was sure of the accuracy of the figures. It is fair to note that Mr Watson has all along asked for an account and for interest (at 8%) on the capital sum payable to him. DJ Watson considered the Mortgagee to be a trustee and thus liable to account. But instead of determining what use had actually been made of the money by the Mortgagee – it might for instance have used it in its business – he simply awarded interest at 6% simple. Mr Watson says that what DJ Watson should have done was to have ordered disclosure of bank accounts to find out precisely how the money was invested or used. It may be that at the least he is entitled to compound interest. Given that DJ Watson recognised that the Mortgage was a trustee, I consider that Mr Watson’s position cannot be said to be unreasonable on this issue. As well as being reasonable, I consider that his argument has a real prospect of success and that he should be given permission to appeal on this one element, that is to say the return which should be accounted for by the Mortgagee. I hope, however, that Mr Watson will think seriously before continuing with any appeal pursuant to this permission: the amount of money at stake is likely to be modest (although I accept that if the money was in fact utilised in the Mortgagee’s business, the issue is more complex).

However, the granting of this limited permission is subject to one very important caveat which is that permission has not already been refused by David Richards J. If it has been, then permission should not be granted by me.

I refuse Mr Watson permission to appeal from the orders of DJ Frenkel and HH Judge Weeks. I also refuse permission to appeal from the order of DJ Watson save to the limited extent just indicated, namely, in relation to the return for which the Mortgagee must account on the net proceeds of sale in the period identified by DJ Watson; but this limited permission is subject to any prior refusal by David Richards J of permission.

Mr Watson’s grievance appears to be that he has put a large amount of money into the Property − the initial “deposit” and instalments which together amount to over £70,000. On another view, he says he has contributed over £100,000. The Mortgagee has contributed some £81,000, and yet the Mortgagee obtains over £90,000 from the sale proceeds whereas Mr Watson gets only £78,000 in rough figures. He regards this as unfair. But what he seems not to appreciate is that the Mortgagee was not buying a share in the Property, but lending money at interest. Nor does he seem to appreciate that his Mortgage instalments were not contributions to the price of the Property, but were payments of interest which were the price of the loan from the Mortgagee. I make these obvious observations in case Mr Watson thinks I have ignored his stated grievance.