Shearer & Ors v Spring Capital Ltd & Ors

In 2011, the first two claimants (“Mr Shearer” and “Mr Dawes”) were enjoying large country houses and expensive London flats while bogus solicitors were attempting to collect money due on high interest loans on behalf of their money-lending business, Logbook Loans. They could hardly have imagined that, in 2013, they would be asking real solicitors to invoke equity on their behalf to escape the burden of interest rates on their own debts which are at a level which Logbook Loans’ erstwhile customers might have thought modest.

Mr Shearer and Mr Dawes were (and perhaps, subject to sterilization of their assets, still are) rich men who are now subject to IVAs. Logbook Loans, in which they were shareholders, was active in the sub-prime lending market. That business came to an end when the companies’ consumer credit licenses were revoked, because it was discovered that undue pressure had been exercised on borrowers by the companies sending letters threatening proceedings which pretended to be from solicitors. The companies’ actions were heavily criticized by the regulators and by the First Tier Tribunal.

Mr Shearer and Mr Dawes now find themselves in the position of sub-prime borrowers, as guarantors of loans to these failed companies. These loans carry interest at 35% per annum, compounded quarterly. Mr Shearer has described that interest rate as “penal” in his evidence. Such a description might come as a surprise to some of Logbook Loans’ former customers, who were charged interest rates in excess of 400% albeit on smaller, shorter term, loans.

Mr Shearer and Mr Dawes regard the 35% rate as so onerous that they have attempted to stop interest on the debt running altogether by raising money from elsewhere and then trying to tender payment of the sums due to pay it off. Their existing lender and mortgagee, the first defendant, a fish processing company now also engaged in financing, has not allowed them off the hook. It had originally contracted for the underlying loans to continue until 2017, earning healthy rates of interest. It is a relatively well-secured lender enjoying an advantageous default interest rate against these guarantors and has some incentive not to make it easy for Mr Shearer and Mr Dawes to bring the interest stream to an end by validly tendering payment.

Whatever its underlying reasons for doing so, the first defendant has denied that the tender made on behalf of Mr Shearer and Mr Dawes was valid and claims that interest has continued to accrue at the default rate on the underlying loans of 35% p.a. compound on the outstanding balance, which, in February 2013, was said to exceed £3 million. The sums at stake in this action are therefore fairly large: some £20,000 a week (or more) for which Mr Shearer and Mr Dawes are personally liable. The first defendant has threatened to enforce against the security it holds. Mr Shearer and Mr Dawes say there has been “oppressive” conduct by their lender in not staying its hand, something which, again, might be of interest to some former customers of Logbook Loans.

These circumstances have given rise to this case and applications which involve a rather specialised sub-branch of the law of mortgages.

The claim is made as a CPR Part 8 redemption action whereby the claimants claim a number of declarations as to the sums owing by them to the defendants and a series of orders requiring the defendants to release and discharge a number of securities for loans advanced by the defendants. Among the claims is one that no interest should be payable from the date of the tender.

One significant issue in the action is whether the tender of the outstanding sum on the loans to the first defendant purportedly made on their behalf by their solicitors Edwin Coe in a letter dated 12 February 2013 was valid. There are other issues as to whether the sums claimed by way of debt were correctly calculated and are in fact due under the various loan and related agreements governing them, including the extent to which an acknowledged figure for the debt is even open to challenge.

Although the case as a whole ranges wider, these applications focus primarily on the validity of the tender.

The first defendant, contends that it is clear that the tender was invalid and that the court should so decide now, leaving the other accounts for trial. The claimants contend that it is arguable that the tender was valid and that there is at least an issue fit to go to trial on the point. They contend that, because there is a triable issue and, in any event because they say that funds were and are available to repay the debt, an interim injunction should be granted to stop the first defendant from enforcing any of the various securities.

Thus stated, the points may appear narrow and capable of easy and summary resolution on established principles. The first defendant points to the fact that, in an 18^th century case, the Lord Chancellor decided a dispute of this kind in less than two pages and that heavy weather should therefore not be made of it.

However, as will appear, because of the nature of the tender and subsequent events, the case raises issues which are not wholly straightforward. In particular, how the law of equitable relief from interest following a tender of the outstanding sum should be applied in the context of a modern debt refinancing where a borrower has to raise money to be able to pay off an existing loan and there are certain mechanics involved in sorting out the transfer of the debt.

These issues arise for four main reasons in this case. First, Mr Shearer and Mr Dawes proposed to pay off the debt by taking on new debts. This meant that the new lenders would need to have the securities held by the first defendant released in a satisfactory way either before or at the same time as making the new money available to the claimants to pay off the debt. This in turn meant that the availability of the money to back the tender would have to be conditional, for practical purposes, upon simultaneous release of the securities. Second, however, the tender was not, in terms, expressed as being conditional and it was not made clear until later that the money was coming from a new financing arrangement and could not or would not be provided save on release of the existing security. Third, the way in which the tender was made did not provide a real opportunity for the first defendant to consider the proposed release documentation before the sum in question was proffered. Fourth, the tender did not, in terms, offer any sum in respect of costs.

Each of those points is said to be in tension with fundamental requirements of the law relating to tender in equity which requires the borrower to tender the whole sum due including costs (if payable) without any conditions, themselves to be and to remain unconditionally ready, willing and able to pay the sum as well as cases suggesting that it is a requirement of validity that the borrower give the lender enough time before the tender is made to approve draft release documentation.

The first defendant contends that the way in which the money was to be provided and the way in which the tender was made, individually and in combination, mean that the requirements for a valid tender were not arguably satisfied in this case and the sooner that this is decided, the better. It contends that these requirements are made entirely clear by the case law and it is neither possible, in the light of the authorities, nor desirable as a matter of legal policy for there to be any significant flexibility in their application: certainty and clarity are needed.

It accepts that there may be exceptional situations, such as arose in the recent case of the Privy Council, Cukurova Finance International Limited v. Alfa Telecom Turkey Limited [2013] UKPC 20, in which a lender wrongfully frustrates the making of an effective tender, where the court may relieve the borrower of a duty to pay interest after tender has been attempted but has failed. It contends that such cases are truly exceptional and that the present case comes nowhere close.

The first defendant contends that there is no basis for an injunction restraining enforcement of the securities other than on the footing that the tender was valid and that, in any event, none should be granted. If such should be granted, it should only be on stringent terms including a fortified cross-undertaking and an undertaking not to act in breach of any of the agreements concerning the existing security.

The claimants submit that the tender was at least arguably valid. They say that there needs to be some “give” in the law to permit borrowers, old lenders and new lenders to sort out the administrative arrangements of getting money into the right accounts, approving releases and so forth for modern debt refinancing to work and that none of the points raised by the first defendant make the tender in this case so clearly defective that there is no issue to be tried. They contend that the offer to pay was sufficiently backed (the money was and remained sufficiently available) and, in so far as conditional, payment was only conditional on something inherent in the law of equitable tender and the right to redeem, namely simultaneous release of the security.

They contend that, even if the first defendant needed some time to consider the release documentation, that did not render the tender ineffective and that the release documentation was, as it turned out, entirely satisfactory to all requiring no significant time to evaluate. The claimants also submit that the law is not, and its application should not be, so rigid as to make it unduly easy for a secured creditor unreasonably to keep a debtor paying substantial interest by rules relating to tender which are practically impossible to comply with, when new secured refinancing is the way that the debt is to be paid off.

The action originally involved other claims between the claimants and the second and third defendants but those have been compromised (the proceedings against them have been discontinued) and it is unnecessary to say more about them save to note that this dispute was about obtaining releases of security for debts formerly owed to the SIPPs of the directors of the first defendant well after those debts had been paid. The remaining dispute is, in effect, only between the first two claimants and the first defendant. I propose to refer to the first two claimants as just “the claimants” hereafter unless the context indicates otherwise.

There are two applications before the court.

First, an application by the first defendant made by notice dated 4 June 2013 to strike out or grant summary judgment in respect of the allegations in the Details of Claim which contend that a tender of payment under a loan agreement was valid and certain consequential relief. There is an alternative claim that the sums are paid into court as a condition of maintaining the plea. In the further alternative, there is an application that the case be heard as a Part 7 claim with orders for disclosure. It is not necessary to set out the particular paragraphs of the Details of Claim alleged to be bad (19(c), (d), (e), (f) and (g)) here: they all plead or rely on the existence of a valid tender.

Second, an application by the claimants made by notice dated 11 June 2013 for an interim injunction until further order, restraining the first defendant from taking enforcement measures against any of the claimants’ assets charged to the first defendant.

The principles applicable to the strike out and summary judgment applications are not in dispute. Neither side referred to them or to any authority. However, I think it is valuable to have them expressly in mind.

As to the strike out application, the court may strike out a statement of case pursuant to CPR Rule 3.4 if it appears that the statement of case discloses no reasonable grounds for bringing the claim or part of claim. A case should be struck out if it is manifestly unsustainable in law. The fact that parties can argue about a point at length or that it may be tricky to get to the rotten core of it does not automatically mean that it is arguable: if it is, after argument, clearly bad, it should go.

However, in Hughes & Ors v Richards (t/a Colin Richards & Co) [2004] EWCA Civ 266 (09 March 2004), the Court of Appeal said, referring to the well-known Barrett case:

As to the summary judgment application, the court must consider whether the case has a real as opposed to a fanciful prospect of success. Some of the points on approach to summary judgment are applicable to strike out as well, especially where a point of law is better decided against a background of fact

The approach to be adopted was explained by Carnwath LJ in Mentmore International Limited v Abbey Healthcare (Festival) Limited[2010] EWCA Civ 761 at [20] to [23]:

In Doncaster Pharmaceuticals Group Ltd.& Ors v. The Bolton Pharmaceutical Company 100 Ltd [2006] EWCA Civ 661 Mummery LJ said:

In the light of the observations in Hughes, Barrett, Mentmore and Doncaster, I bear the following points in mind.

First, the applications in this case are supported by extensive evidence, amounting in total to 7 lever arch files, including several statements from Mr Shearer and Mr Stuart Thomas (who, with his brother, Mr Roderick Thomas, are directors and shareholders in the first defendant). The application bundles contain over 2000 pages, albeit many said to be irrelevant.

I was not referred to much of the witness statement evidence, but the core bundle of correspondence and contractual documentation alone is extensive. I was referred only to selected parts of exhibits, correspondence and agreements. Much material which was thought sufficiently relevant to the case to exhibit, went unexamined in court. At some points, it was suggested that contractual provisions, and the tender itself, needed to be interpreted in the light of prior and subsequent correspondence. Some of the evidence said to evidence the real availability of the money to back the tender was provided only relatively recently, 30 September 2013, and there is no reply to it.

Second, while there is evidence from some of the parties, there is no evidence at this stage from the proposed provider of the bulk of the re-financing, Lloyds Bank, or another lender, making it hard definitively to gauge their willingness to release payment against release of security. This is a potentially important issue. There is no evidence from the solicitors involved in the re-financing on the claimants’ side. Nor is there any from the first defendant’s solicitors relating to the rejection of the tender and there is limited disclosure save as appended to the witness statements.

Third, on some points, there are real conflicts of fact. For example, the claimants’ evidence says that the first defendant was trying to frustrate the tender and redemption. The first defendants’ evidence says that this is wholly untrue and is inconsistent with their conduct where, at a later stage they accepted or tried to accept the tender (on terms which the claimants then said they could not accept). For another example, the first defendant says that the bulk of the finance was coming from Lloyds Bank which had not agreed to the terms of the releases when the tender was made and may not have done. They say that this could easily have fallen through. The claimants say that, to the contrary, Lloyds later indicated that they were satisfied with the release documentation and would have been so satisfied at an earlier stage had the first defendant indicated it would accept the tender and had put the money into the claimants’ solicitor’s account for that purpose, held to their order.

Fourth, as to the law, it was accepted on both sides that there is no case which has had to consider a factual situation of the kind involved in this case. The parties cited between them 18 authorities, including one from New Zealand, several of which are from the 18^th and 19^th centuries, one of which involved argument and principles developed in mediaeval French and several of which themselves contain citations to other authorities of potential relevance.

There are not many reported cases specifically on the subject. The last English case prior to the very recent Privy Council case of Cukurova of this July (which touches on the issues in this case but which neither side contended was conclusive) was from a first instance judge in the 1950s who himself drew attention to the fact that the authorities on tender were hard to reconcile (see Barrett v. Gough Thomas [1951] 2 All ER 48 at 49 per Danckwerts J). A number of the authorities deal with the principles briefly. That may be because they are so clear as not to require elaboration, as the first defendant contends. But, having tried to grapple with them myself, it is more readily explicable on the basis that the courts have not had to deal with the kind of situation that arises in the present case and have therefore not needed to perform a more sophisticated analysis. The cases have largely concerned much clearer situations where it was pretty obvious that the person making a tender was not genuinely trying to pay but, instead, was trying it on.

One of the main cases relied upon, Wiltshire v. Smith (1744) 3 ATK 90 is a 2-page report on very different facts. It does not purport to lay down any rigid principle of direct application. It was nonetheless said to be conclusive in favour of the first defendant’s argument and had to be followed. Another, Graham v. Seal [1919] Ch 31, a decision of the Court of Appeal on very different facts and which likewise does not lay down any rigid principle, was said to be conclusive in favour of the claimants’ argument on another point. Several other cases were cited as illustrative of the acceptance or otherwise of the fundamental principles in issue but which appear equally explicable on other bases.

On a key point, conditionality of tender, a proposition is stated in unqualified terms in one of the leading texts on the law of mortgage, Fisher & Lightwood, edited inter alia by perhaps the most experienced real property judge of this division, which I find hard to reconcile with that decision of the Court of Appeal to which (in the relevant passage) no reference is made. A similar proposition appears in Halsbury’s on Mortgage.

That does not present an appetizing diet of precedent for a non-specialist in the field.

Fifth, the applications were originally estimated to take about 1 ½ days (3hrs and 6hrs respectively) which was subsequently reduced, before the hearing, to a day for both. One side’s skeleton ran to 29 pages, the other’s to 19. The total costs on both sides are said to be about £200,000 making it clear that significant time has been taken in preparation and consideration on both sides from solicitors and experienced counsel. In the event, it did take about 1 ½ days of hearing, although that was partly as a result of the argument ranging further and wider than either party anticipated (or, possibly, welcomed) as a result of questions from me on how the propositions for which each side contended would work in a range of situations. I did so because the main points of law and approach to the law in issue in the case appear to have wider importance in the law relating to equitable relief from interest and costs following tender.

Sixth, at the hearing, at one point it was said that an issue relating to the sum due was arguable and could not be determined now. Then, albeit in another context, the same point was said just a few minutes later to be so clear that it could be determined conclusively or almost conclusively at this stage by consideration of pre-contractual correspondence. It is therefore necessary to approach assertions of unarguablity with some caution.

Seventh, the case is potentially about a sum which is significant to the parties. Interest on the loans in question runs at a rate of over £1 million p.a. Whether interest has stopped running, and if so when, is important to each side. Each claims the other has not acted properly. In such a case, there is something to be said for providing an opportunity to test the solidity of the evidence fully and permitting full argument before making a final determination even if specific defects in the evidence cannot be identified now.

These considerations suggest right away that this case is unsuitable for summary determination. There is a temptation, which is particularly strong for one unfamiliar with this somewhat arcane area, to say no more than that.

Unfortunately, I do not think that is possible given the arguments presented to the effect that the law is crystal clear and the fact that an injunction is sought on the basis that the claims may be justified, as well as the fact that interest is running all the time (on the first defendant’s view). That is to say nothing of the possibility of appeals, even if it is obvious that the point is arguable (cf. Hughes). This suggests that this court should set out its reasoning somewhat more fully.

I have therefore attempted to engage as fully as possible with the arguments, given the constraints of time and the need for a judgment within a few days on the injunction point, to determine whether there really is nothing to be said for the claimants’ position that the tender was valid. The combination of these factors has made it longer than desirable.

The usual American Cyanamid principles apply in this case and neither side suggested to the contrary.

Before turning to the arguments in detail it is necessary to say something more about the facts.

As noted above, the claimants were in the sub-prime loans business. They were directors of two companies Nine Regions Limited (“9RL”) and Logbook Loans Limited (“LBL”) which together were in the business of lending money against the security of motor vehicle log books. LBL held certain intellectual property rights and 9BL made the loans which were for relatively short periods to people who could not easily get credit elsewhere.

In or around 2005-2006, Stuart and Roderick Thomas met Mr Shearer and Mr Dawes through a mutual acquaintance and invested some £1 million each through their individual SIPPs. Following the collapse of the sub-prime mortgage market, Barclays Bank, which was previously financing 9RL put it on notice that they had to redeem their loans in 2009. The first defendant (which, as noted, is controlled by the Thomas brothers) stepped in and on 4 February 2010 agreed to make two loans to 9RL (i) for £5,687,681.24 and (ii) for £2,100,000. On the same day, the Thomas’ respective SIPPs also made substantial loans to 9RL which do not need to be considered on this application since they have been paid off. The term of these loan agreements was 7 years maturing on 1 February 2017. The loan agreements between the first defendant and 9RL provided for a rather attractive interest rate of 20% p.a. (albeit somewhat higher for a short period for part of the sums advanced). These agreements are collectively referred to as the “Loan Agreements” in the subsequent contractual documentation and correspondence.

Those loans were secured by debentures over the assets of 9RL, personal guarantees from Mr Shearer and Mr Dawes and a number of charges over property owned by them. The loan agreements were later varied, inter alia, to increase the interest rate to 25% p.a. and for the provision of further security over a flat in London. In early 2011, the first defendant and the Thomas’ SIPPs were also granted deeds of guarantee and indemnity by the third claimant, Capital Cash Ltd of which Mr Shearer and Mr Dawes were also directors.

Meanwhile, 9RL and LBL were in trouble. As with other sub-prime loan companies, their practices, in particular as regards attempts to recover money lent, came under regulatory scrutiny and, in their case, were found badly wanting. In particular, the OFT discovered that some owing money to 9RL had received letters purporting to be from an independent firm of solicitors threatening legal action. The alleged firm, impressively named “Adams, Spencer & Phillips (Legal Services) Limited” was admitted by 9RL not to be a firm of solicitors at all: it was a vehicle for placing illegitimate pressure on borrowers. The OFT revoked 9RL and LBL’s consumer credit licenses.

These events prompted the Thomas brothers to try to get the money back that the first defendant and their SIPPs had lent to 9RL. On 13 September 2011 they made demands for repayment. It is not in dispute for the purpose of this application that the effect of these demands was that the sums due under the various loan agreements became immediately repayable and the first defendant and the SIPPs became entitled to enforce the security held by them, including the personal guarantees and various charges.

9RL and LBL appealed against the revocation of the consumer credit license but the appeal was dismissed in October 2011, with the Tribunal criticising their use of a “bogus” firm and making a number of other strongly worded observations about the integrity of these companies. Their demise was inevitable.

The position at the beginning of 2012 was that large sums were owed by 9RL to the first defendant and the Thomas’ SIPPs and the securities were at risk of being enforced. This resulted in negotiations between the parties. Mr Thomas says in his evidence that the purpose of these negotiations was “to achieve repayment of the sums due under the Loan Agreements”. The sale of 9RL’s business and assets through administrators was explored and eventually, the parties resolved the position by an agreement entitled the Standstill Agreement dated 13 February 2012. On the same day, 13 February 2012, the directors of 9RL placed it into liquidation and RSM Tenon were appointed as Administrators.

The Standstill Agreement recorded the background in the recitals. These said inter alia that the first defendant and the Thomas’ respective SIPPs were entitled to enforce the Existing Security, as defined, but that they had agreed not to take further steps to enforce any of the Security, as defined, subject to the terms and conditions of the agreement. The agreement provided for the provision of additional security (there were listed items under a defined heading of “Additional Security”). The agreement contained a number of terms calculated to result in payment of the outstanding debt.

It is appropriate at this juncture to mention the dispute between the parties as to one aspect of that agreement. One of the definitions clauses provides as follows:

“Outstanding Indebtedness” the aggregate amount from time to time owing (whether capital, interest or other sums due) to Spring RTS or STS [the SIPPs] under the terms of the Loan Agreements, being £13,719,492.90 as at 13 February 2012, the sum due under clause 6.1 of this Agreement and the Debt Assignment.

In the agreement, itself the figure of £13,719,492.90 was written in by hand and initialed by the parties in the individual counterparts. The first defendant contends that it is not open to the claimants to assert that any different figure was in fact due and owing at that date. The claimants contend that the agreement contemplates that the Outstanding Indebtedness was in fact lower than the manuscript addition provided and that, once a proper account has been taken, such would be shown to be much lower. It is, however, accepted by both sides that neither this aspect of construction of the agreement nor what the actual level of Outstanding Indebtedness was, if it is possible to go behind the figure at all, can be determined finally on this application although the first defendant submits that for the purpose of the claimants’ injunction application that the point of construction does not give rise to a serious issue to be tried.

It is not in dispute that, whatever it is, the sum outstanding was a significant one and the Standstill Agreement contained a number of other provisions to encourage the repayment of the debt to the first defendant within a year in exchange for holding back from immediate enforcement. In summary, these were as follows.

First, Mr Shearer was to procure the sale of his manor house in Gloucestershire and Mr Dawes was to procure the sale of his farm in the Isle of Wight and his flat in Chelsea (although at a later date, further Lloyds-name related security was added as a condition of prolonging the period for which no enforcement action would be taken in respect of the farm). The proceeds were to be applied to reducing the debt. Second, the interest rate in respect of the outstanding sums was to be 35%, which was the default rate from the earlier loan agreements, providing a strong incentive to repay quickly. Third, additional security, mainly in respect of shares in the third and fourth claimants was to be provided. This was to be added to the existing security.

The agreement provided a standstill on enforcement for a year, up to and including 12 February 2013 and the lenders, including the first defendant, agreed not to take any steps to enforce the security if the various steps were taken by the borrowers, including the claimants and if the agreement was complied with.

However, the agreement made it clear that at the end of that year, if the Outstanding Indebtedness had not been repaid, the first defendant would be entitled to enforce against the security. Thus clause 3.2 provided:

The interest clause, 5, provided that the rate payable of 35% per annum would continue to apply “until such Outstanding Indebtedness is settled in full”.

In early 2013, as unpaid creditors do, the first defendant turned the heat up on the claimants, following various alleged defaults.

In three letters to respectively 9RL, Mr Shearer and Mr Dawes dated 18 January 2013, Mr Stuart Thomas on behalf of the first defendant asserted that 9RL was in default of the Loan Agreements in that it had not paid the sums payable when due, including payment of interest on the last business day of September 2012 and the last business day of December 2012, had suspended or ceased to carry on all or a substantial part of its business and had been placed into administration (and subsequently liquidation).

Clause 9.1 of the various Loan Agreements provided that after an Event of Default, the Lender could by giving notice to the Borrower, “declare” the Loan and all accrued interest and all other amounts accrued or outstanding under this agreement “immediately due and payable.” The letter to 9RL said that, in accordance with that clause, the first defendant

“…hereby declare the Loans (as defined in each of the Loan Agreements) and all accrued interest and all other amounts accrued or outstanding under the Loan Agreements to be immediately due and payable. The aggregate amount outstanding at the date of this letter [i.e. 18 January 2013] under the Loan Agreements is £3,183,743.42”.

The letter pointed out that there was an entitlement to interest on unpaid amounts pursuant to clause 5.4 of each of the Loan Agreements and to costs and expenses in connection with enforcement of the Loans and/or the Loan Agreements and the recovery of the amounts due pursuant to clause 6.1 of those agreements. The letter to 9RL was copied to each of Mr Shearer and Mr Dawes, whose letters also gave the figure of £3,183,743.42 as outstanding at that date.

Separately, letters also dated 18 January 2013, were sent to Mr Shearer and Mr Dawes by the first defendant and the SIPPs concerning the Standstill Agreement. These letters made a number of claims of breach of the Standstill Agreement relating mainly to allegedly wrongful acts with respect to the third and fourth claimants. These letters said that, as a result of the breaches, “we are entitled to enforce the Security forthwith without waiting until February 2013”. They went so far as to allege that there had been a repudiatory breach of the Standstill Agreement. These letters were promptly answered by Mr Shearer and Mr Dawes in letters dated 21 January 2013 in which they rejected the claims altogether.

12 February 2013 was a critical date which must have been etched into the claimants’ minds. The parties had expressly agreed that the first defendant could enforce the security after that, if the debt was not paid. This date was rapidly approaching and there was doubtless concern on the part of Mr Shearer and Mr Dawes that an increasingly aggressive stance was being adopted by the first defendant with respect to the debt. The first defendant had already caused them to sell some of their nice homes. As experienced money-lenders themselves, they must have been thinking, what next?

Their concern may have been increased by the fact that, on 24 January 2013, just 6 days after the letters of 18 January 2013, Mr Stuart Thomas wrote another series of letters on behalf of the first defendant in similar form to those previously written, except that the sum now said to be outstanding had risen to £9,109,07.95.

In a letter to Messrs Ellison & Roberts (who were dealing with 9RL’s affairs) dated 24 January 2013, he said again that the first defendant asserted that Mr Shearer and Mr Dawes had repudiated the Standstill Agreement. Having complained less than a week earlier that the challenge to the sums owing and the request for recalculation of them, was itself a source of repudiation, he said, in something of a “you-asked-for-it” tone:

“Ironically, having carried out this detailed exercise, we are pleased that such pressure was applied and it will be necessary for us to issue revised demands to you and the guarantors immediately.”

He concluded that letter by saying that clause 12.1 of the Loan Agreements required Ellison & Roberts to treat the letter as a determination and treat it as “conclusive” evidence of the outstanding claim. The converse irony appears to have been lost upon him that, just a few days earlier, he had sent a letter including a demand which, by these lights should also have been treated as “conclusive” but which was now said to be nearly £6 million too modest.

No attempt was made or, I assume, could be made to defend Mr Stuart Thomas’ “revised demands”. He says in his evidence that they were made without legal advice which I accept. This amounts to conceding that the first defendant’s demands for many millions of pounds which he was requiring his counterparts to treat as conclusive shortly before the date for payment was, in fact, wholly unjustified. That was not the end of the first defendant’s unjustifiable demands as I shall explain below.

Mr Shearer and Mr Dawes know all about sub-prime lending and the serious consequences for a borrower of failure to pay back a loan which provides for significant interest before the date on which securities come to be enforced. They must have been increasingly conscious that the tables had been turned on them as a result of the ever increasing demands for repayment by the first defendant at what they regarded as a punitive default rate of interest, with the date upon which enforcement action would be taken against their security fast approaching.

Mr Shearer and Mr Dawes were however better placed than many of Logbook Loan’s customers may have been to find ways of paying off their troublesome debt and reducing the heavy interest burden. But the money was not immediately to hand: Mr Shearer and Mr Dawes had to raise money to do so and they set about getting it via the third and fourth claimants as I explain below. Their assets may have been heavily charged and subject to covenants but that did not mean that, in practice, subject to their IVAs, they could not get hold of a good deal of money, albeit by a somewhat convoluted route.

By 7 February 2013, there was evidently optimism that this could be done by 12 February 2013 because, on that date, Edwin Coe, who had been instructed on their behalf, wrote a pre-tender letter to the first defendant to set out (i) why its claim for £9,109,007.95 was misconceived and (ii) to put Spring on notice that Mr Shearer and Mr Dawes intended to tender under protest payment of the sum of £3,183,743 (together with further interest which had accrued since the date of the demand to the date of tender) in discharge of their obligations under their respective guarantees and in redemption of the sums secured by the existing and additional securities. The letter provided a detailed explanation for why the approach which underlay the claim for £9,109,007.95 would lead to that sum being treated as a penalty and, therefore, unenforceable. The letter explained that even the sum claimed in the earlier letter of 18 January 2013 was too high.

It said that, for the purpose of the tender, Mr Shearer and Mr Dawes:

“…intend to make available to you the full sum of £3,187,743 demanded by that letter under protest”,

reserving the right subsequently to apply to court for an account or determination of the sums properly due. The letter said that in Edwin Coe’s view:

“The securities which you hold in respect of the outstanding indebtedness will fall to be redeemed upon acceptance of such tender”

However, the letter did not enclose any draft release or redemption documentation for the first defendant to consider. Nor did it, in terms, say that the securities would need to be released immediately upon payment.

Edwin Coe requested that the first defendant provide by return an updated figure representing the amount which it contended was due, including further interest which had accrued since the 18 January demand. It said that, if there was a refusal to accept the sums validly tendered,

“…you will no longer be entitled to charge any continuing interest on any sums outstanding and Mr Shearer and Mr Dawes will seek a determination to that effect.”

It concluded by saying that they would seek to restrain by injunction “any attempt by you to enforce any of the securities in circumstances where they are willing and able to discharge the sums which are properly due and outstanding under the loan agreements”. This letter was therefore saying: you will have to let us repay this debt and if you do not, the interest will stop.

That letter having been written, Mr Shearer and Mr Dawes set about completing the task, which must have been started somewhat earlier, of “making available the full sum” referred to in it.

It is clear from the documents disclosed relatively recently that as at 7 February 2013, they were in no position to do so there and then. However, matters moved fairly swiftly thereafter and they got some refinancing in place.

This came from two sources: (i) the sale of some premises owned by the third claimant, Capital Cash Limited, with the proceeds paid out of the third claimant as repayment of directors loans to Mr Shearer and Mr Dawes and (ii) a loan provided to the fourth claimant which was lent on to Mr Dawes. I do not propose to go into these in detail but it is necessary to outline them because of the argument based on them.

The first defendant has criticized these fundraising efforts as themselves in conflict with the contractual obligations with respect to the securities and says that the monies were not available. I return to this issue below.

The claimants sought to raise the bulk of the money by procuring the sale of two of the third defendant’s premises. The precise details of this do not matter for the purpose of this application. Simplifying somewhat, the upshot was that, by 11 February 2013, Lloyds Bank had indicated that they were in effect prepared to be substituted as lenders to the tune of £2.5 million if the security in the Isle of Wight farm and the shares in the third claimant was released and they could be effectively secured in its place. The sum of £2.5 million was deposited in Edwin Coe’s account but Edwin Coe agreed to hold it to the order of the solicitors to Lloyds Bank. To that extent, the money had been earmarked for the repayment of the debt but was not immediately and unconditionally available for that purpose.

Lloyds Bank and their solicitors had not at that stage approved (nor were invited to approve) draft security release documentation and did not do so until considerably later, when their solicitors indicated that, while not what they would have drafted, what Edwin Coe had proposed was “fit for purpose”, with which their client, Lloyds Bank, agreed.

Mr Shearer’s evidence says (and it is not directly challenged on this application) that Lloyds were prepared to release a charge they had over the assets and allow the third defendant to repay the directors debts to Mr Shearer and Mr Dawes so that they could make the tender under protest to the first defendant. He says that the money had to be used for this purpose or returned to the third claimant but that, in order to release the money, they would have to receive releases for the charges given over the third claimant’s shares and a release from a charge over one of Mr Dawes’ properties.

Pausing there, without going into detail, on the evidence, there seems to me a high prospect of the claimants showing that, had at least these securities been released by the first defendant on or about 12 February 2013, Lloyds Bank would have paid the money over to the claimants on about that date, who would have immediately paid it to the first defendant. In fact, on the evidence, the claimants were straining at the bit to do so, since they very much wanted to satisfy the debt before any enforcement took place. This was a position in which, if everyone had wanted the debt to be paid off, at that level, a few days sorting out would not have prevented that from happening.

Of course £2.5 million was not enough and so meanwhile Mr Dawes was also busy raising further money via his offshore company, the fourth defendant (“Jade”). On 11 February 2013, just before the 12 February 2013 deadline under the Standstill Agreement, Jade, a company of which Mr Dawes is a director and controls the shares, entered into a short term 6 month Bridging Loan Agreement with Lincolnshire Mortgage Corporation Limited (“LMCL”) in the sum of £800,000. LMCL was prepared to allow the drawing down of funds for this loan while the dispute between Jade and the first defendant was resolved. However, by that agreement, it was provided that the funds would not leave Edwin Coe’s hands and were to be held strictly to the order of LMCL. One of the terms of that loan facility contemplated that a different loan would be used in partial discharge of the debt owed to the first defendant as follows in certain circumstances:

“If Jade/Iain Shearer/James Dawes are successful with their attempts to agree a redemption figure with Spring or if the court finally determines the amount due to Spring then LMCL will provide a fully secured loan in the normal manner under separate reference (10105842) which together with the funds to be returned from Edwin [Coe, the claimants’ solicitors] under this loan will provide for redemption of this loan together with the funding required to redeem Spring (as to which Iain Shearer and James Dawes are to provide the balance) and LMCL will then be granted a first and only legal charge over the Property by Jade.”

On 11 February 2013, a special meeting of the directors of Jade was convened in St Peter Port Guernsey. At the meeting, which Mr Dawes did not attend, it was proposed that Jade make an onward interest free loan to Mr Dawes to be used by him to “bridge” personal loan positions. It was resolved to make a loan of £831,119 to Mr Dawes on an interest free basis and with no formal security in place other than the support of the Supervisor of Mr Dawes’ IVA, Mr Sands. As a result, Mr Dawes put himself into a position to be able (at least in theory) to contribute a significant sum to paying off the sum demanded. The LMCL loan has since been extended to February 2014 and the £800,000 held by Edwin Coe is to be either returned to Cantor Law (for LMCL) or used to pay the first defendant although there is no express requirement that this part of the money should be in exchange for any particular documentation. That sum was also put into Edwin Coe’s account albeit subject to an undertaking given by Edwin Coe to LMCL’s solicitors to hold it to their order.

Without going into all of the nuances, the position seems to me to be, on the evidence currently before the court, that, as with the Capital Cash money, if all had wanted the deal to go through with respect to the Jade funds, it would have done and, together with the Capital Cash money, the money would have been available, the debt would have been paid off, the securities could be released and the claimants could relax again.

Quite often, the last thing a lender wants is for a loan to be repaid on time, particularly if it is a sub-prime loan whose high interest rate is said to be justified on the basis that it is “risky” but which, in truth, is very well secured: there is a lot of money to be made out of “default” interest rates in those circumstances, especially when they run at £20,000 per week. So a letter indicating that there will be early payment when a default rate is running can be a source of secret dismay and can provoke attempts of varying degrees of sneakiness to stop repayment of such a debt. Of course in many circumstances, early repayment is expressly regulated by contract, with penalties and so on. Here, it was not.

For whatever reason, in this case, the first defendant did not politely thank the claimants for their proposed tender of the sum asked for only a few weeks previously and say: “that is fine, we look forward to sorting all of this out quickly”. Instead, on 11 February 2013, Mr Stuart Thomas, for the first defendant, responded to Edwin Coe’s pre-tender letter, noting its contents and, referring to a Court of Appeal case, raised the sum said to be due to an astonishing £19,574,162.94. This was some £16 million pounds more than had been said to be due in the letter of 18 January 2013.

The e-mail said:

“That [i.e. the c.£19 million amount] is our redemption figure and that is the figure we require the guarantors to pay Spring Capital Ltd [i.e. the first defendant] in exchange for the release of the security which Spring holds.”

Somewhat surprisingly, this e-mail ended by urging the claimants (who by then were threatening injunctive relief) to bring that e-mail to the attention of the court in any application. A more prudent author might have preferred no-one ever to look at this document again since, as with the first defendant’s 24 January letter, no attempt has been made or could be made to justify this claim.

It is necessary to step back momentarily and consider how striking this is. A lender has said in a prima facie sensible, albeit potentially disputable, letter on one day that the sum £x is due and they want it repaid. Less than a month later, when it had been indicated that the borrower could and would pay £x with interest within a matter of days, the lender indicates that £x+£16 million is due and that security will not be released unless that is done.

A judge more cynical than me (Lord Hardwicke perhaps?) would have strong words for this. I confine myself, at this stage of the case, to saying that it smells fishy.

In any event, as is often the case with debtors who are a bit desperate, at the last minute, the claimants had by then scraped together money to pay the sum originally demanded (albeit by raising it in ways that their creditor said they were not entitled to do) and calling on associated undertakings to help out.

Having arranged to borrow the money, the claimants were in a position to instruct their solicitors to make a tender which they promptly did.

On 12 February 2013, Edwin Coe wrote the letter of tender. It set out the background and referred to the demand for £3,183,743.42. It explained that the c £19 million claim made the day before was no better than the c.£9 million claim. It continued:

“…being in a position to confirm that we hold the sum of £3,183,743, it is Mr Shearer and Mr Dawes’ intention by this letter to tender under protest the sum of that £3,183,743 (together with further interest which has accrued since the date of the demand to the date of tender) in discharge of their obligations under their respective guarantees, and in redemption of the sums secured by existing and additional securities which you retain”

It made reference to a previous request for an updated payment calculation and included a sum calculated to represent interest since the 18 January demand. It went on:

“Our clients now make tender under protest in the sense that they reserve their right subsequently to apply to court for an account or determination of the sums properly due, but that will not affect the validity of the tender. The securities which you hold in respect of the outstanding indebtedness will fall to be redeemed upon acceptance of the tender, as to which we attach a non exhaustive schedule to which there is attached a bible of draft documentation for your consideration.

The letter enclosed such draft documentation which consists of a number of draft release documents, some of which are in plainly standard form and others, so far as I can tell, are of a relatively uncontroversial nature. There were about 60 pages of these but quite a few of the agreements were in common form. The letter did not say that payment would be conditional upon execution of documents in precisely the form attached. As before, it indicated that if the tender was not accepted, redemption proceedings would be started and interest would cease to run. It said that an injunction would be sought to restrain enforcement of the securities.

There was some difficulty in getting the documents through by e-mail and fax on that date but the whole bundle of documents attached to that letter was in the first defendant’s hands shortly after although the first defendant rightly points out that it did not contain three of the documents (albeit not in such a way as to matter for this application).

Harbottle& Lewis (H&L) were then instructed for the first defendant. They asked for time to take instructions and for some further information on 1 March 2013, proposing that the tender monies should be paid over on account of a larger figure.

On 8 March 2013, these redemption proceedings were issued, which H&L contended was premature. There was subsequently an agreement with Mr Sands, as the IVA Supervisor on behalf of Mr Shearer and Mr Dawes) to try to sort out the SIPPs releases in respect of the previously paid debts, which eventually proved successful.

On 9 April 2013, H&L wrote to Edwin Coe setting out the reasons why the tender was not valid. Substantially the same points, somewhat refined, have been made in these proceedings. In the letter, they said that the first defendant was nonetheless prepared to settle the claim and execute deeds of release in respect of all of the outstanding security in a higher sum than previously tendered.

On 17 April 2013, Edwin Coe wrote again discussing the terms of the tender and said: “the tender does not fall by reference to some assumed conditionality in the execution of release, there is no such conditionality in the tender, with the pre-penultimate paragraph of page three being clear in the suggestion that the securities held by your client would fall to be released as a consequence of redemption”. This is somewhat ambiguous. I think what Edwin Coe was getting at was that the tender was not conditional on the execution of release documents in that particular form, although it could be read as saying that the payment was not conditional on the release of security at all – which later correspondence made clear that it would be. That ambiguity was not really cleared up in a further letter of 26 April 2013, which refers to the execution of deeds of release being “a consequence” of your client accepting the tender.

On 8 May 2013 Edwin Coe wrote a further letter in which they said:

“…it remains our client’s position that the tender under protest remains open for acceptance by your client”

I pause there to note, for the argument that follows, that by that time, H&L had had the draft release documentation for nearly three months.

On 9 May 2013, having repeatedly said that the tender was invalid for a range of reasons, including the absence of an offer to pay legal costs, and having threatened enforcement proceedings, H&L wrote to Edwin Coe seeking to accept the tender. The e-mail was apparently received at 19.29 on that Thursday evening.

However, the sum was not paid immediately because the Edwin Coe partner could not deal with it there and then. On the Monday morning 13 May 2013, Edwin Coe contacted Lloyd’s solicitors saying that the tender had been accepted and he would send over the draft release documentation.

H&L pointed out that, if the tender was valid they would expect the sums to be paid immediately. On 13 May 2013, H&L wrote again pressing for payment. Edwin Coe responded raising issues concerning the deeds of release. Mr Thomas says of this in his evidence that he acknowledged that such matters would need to be dealt with “but only once payment had been made”.

The first defendant’s position was that, for the tender to be valid, the sums had to be paid over and then a release would follow. That was said in the context of there having been very significant delays in granting deeds of release in respect of the SIPPsloans.

On 20 May 2013 Edwin Coe said that, to the contrary, the claimants were “entitled to a simultaneous release from the securities granted to the first defendant in exchange for the tender monies” and declined to pay the smaller undisputed debt requested without such happening. This was the first time that Edwin Coe had come out and said expressly that simultaneous release was required.

H&L maintained the position that there was no entitlement to simultaneous release. Mr Thomas also says in his evidence:

“It is my understanding that in order to be valid, a tender must be unconditional. Consequently, the Claimants decision to refuse to pay the sums purportedly tendered, save on the condition that Spring [the first defendant] simultaneously execute deeds of release renders the purported tender invalid.”

That view appears to have been shared by H&L. The point was also taken by H&L that the sums were not available to the claimants because they were not unfettered (see letter of 15 May 2013 “not only unconditional but to be based on available funds which continue to be unconditionally available thereafter”). Edwin Coe responded by saying that this was a further attempt to undermine their clients’ ability to tender under protest.

On 21 May 2013, Mr Thomas sent an e-mail to Mr Sands (for Mr Shearer and Dawes) setting out the new figures taking into account interest on a daily rate. By then, it was £3,607,720.07 and rising. This also appears to have contemplated that payment should be made first and then they would move to Deeds of Release. On no view does it unequivocally accept simultaneity.

There was further correspondence to which I do not need to refer at this stage leading up to this hearing. It suffices to say that there was an extended legal debate in which H&L maintained the position that “there is no right to simultaneous execution of [release] documentation”.

I have a suspicion, which it is impossible to confirm and which may be entirely unjustified, reading the correspondence as a whole that, by that stage (and possibly before) the first defendant and its advisors had twigged that the money to pay might be coming from a source that required release of the security documents simultaneously before it would be forthcoming. If that was so, and the law was as stated, it would have been possible for the first defendant to hold out indefinitely, writing letters and making beautifully crafted requests which appeared innocently to show that the claimants were quite unable to pay the sums while, all the time, holding in its own hands, the key to unlocking that payment which it refused to hand over: namely simultaneous release from security.

On 29 May 2013, for the first time, Edwin Coe referred to the case of Graham v. Seal which I discuss at greater length below.

In June 2012, the loan to Jade was extended for a further 6 months from September 2013 so that the claimants’ position is that the whole sum continues to be available as of today to discharge, at least, what was owing on 12 February 2013. It suffices to say that the claimants regard the correspondence as a whole as obstructive of payment and the first defendant says that it is only taking reasonable points. The upshot is that, as of today, no sum has been paid.

I now turn to the main legal arguments. It is convenient to begin with the “big-picture” basics.

The following principles are not in dispute.

The equitable jurisdiction has for many years regarded the right of a mortgager to redeem and recover security as of fundamental importance both in the law of real and personal property. The fundamental idea is that, if you have a mortgage but you have and keep aside the money to pay all of it off and tender that sum (plus costs) to the mortgagee unconditionally but he refuses to take it, you should be able to go to court to force him to give your deeds (or other security) back in exchange for payment and have interest stop running from the time of the tender. That is the heart of a redemption action and it has been well-known to equity for hundreds of years.

In order for a tender to be valid, the sum for payment must not just be tendered: it must be set aside in some way so that it is, in an effective way, treated as the mortgagee’s money to be had on demand (see the cases cited in Cukurova at [132] where the principle was challenged but confirmed).

There is, however, no obligation on a mortgagee to accept a tender. It is not a breach of contract actionable at law not to do so (see Bank of New South Wales v. O’Connor (1889) 14 App Cas 273, 283-284, albeit that this has been called into question by Cukurova at [42]). A mortgagee therefore has a choice: he must assess whether the tender is valid and, if it is, and he does not accept it, his right to interest is curtailed and he may face a redemption action.

If a mortgagee refuses a valid tender of all that is owing, the debt is not regarded as discharged. It is trite law that there is a fundamental difference between tender and discharge. Following tender, the principal remains outstanding and interest continues to accrue under the mortgage. There is also a fundamental difference between the requirements of tender in law and tender in equity, and its effects. A tender which is effective in law will act as a defence in certain circumstances and requires certain things to be done. In equity, a tender may give the court power to curtail a right to interest even if the tender is not one which would be effective in law to act as a defence to a claim (see, inter alia, Kinnaird v. Trollope (1889) 12 Ch 610). Nonetheless, there are close analogies at some points and the cases show the cross-fertilisation of equity with principles from the ancient common law concerning readiness to pay.

These principles, like others in equity, provide opportunities for gaming on both sides. A mortgagor without the money or who is actually going on to use it for something else can make a spurious tender and use the fact that it had been made to try later to reduce the intervening interest bill when the mortgage is actually paid off. Such a person secretly hopes that the “tender” will be refused and he can go on using the money. Conversely, a mortgagee enjoying a high interest rate or some other advantage can throw spurious obstacles in the path of a tender being validly made in a host of more or less transparent ways as a way of increasing the interest bill or getting a commercial benefit. Such a person secretly hopes that the money tendered will prove to have been unavailable.

Tender gaming of various kinds has been a sport played probably since this equitable jurisdiction was devised albeit not perhaps since time immemorial and it continues today: the most recent reported attempt was to win control of an important part of the Turkish telecoms market (see Cukurova) which resulted in a fundamental division in the Privy Council not so much as to whether, but on what basis, such could be stopped.

Those principles constitute the macro-structure of this equitable jurisdiction. This case, however, turns on its micro-structure: what are the precise requirements of the rules?

The issues as regards the validity of the tender in this case are threefold: (i) whether enough was offered; (ii) whether the money was made available and kept aside for payment; and (iii) whether conditions were wrongly imposed. As we shall see, they split into issues of still finer grain. Where there is a clearly triable issue, I deal with matters more briefly.

Whole outstanding sum must be offered

The mortgagee must offer to pay no less than the sum which is in fact outstanding at the date of the tender. That is clear beyond argument (see Halsbury’s, Mortgage, Vol 77 at para. 322 and Rhodes v. Buckland (1882) 16 Beav. 212).

However, where there is more scope for debate is whether a tender is invalidated if the borrower offers the whole sum but does not expressly provide a figure for the lender’s costs because the lender has not provided them. It may not matter because, in this case, it is not in dispute that if the borrower has tendered a sum which is in fact larger than the sum of the debt actually outstanding and any costs, the tender will not be invalid on this ground even if costs have not been expressly tendered separately.

It is accepted by the first defendant that there is an arguable case that the claimants tendered sufficient to satisfy this requirement although considerable time was devoted to it at the hearing. In a nutshell, the first defendant claims that the sum sought by it was correct or, if anything, too little. The claimants contend that, for a range of quite complex reasons, some of which are to do with how interest should be accounted for, in fact only £1,384,500.62 was owing on 12 February 2013. This is a significant discrepancy and the arguable disputes about it arise in the following way.

First, the first defendant accepted that it was arguable that the amount inserted in the “Outstanding Indebtedness” definition in the Standstill Agreement is re-openable, although, during the course of the hearing, it contended that it was unarguable that this was permissible. The question depends on (i) a not wholly straightforward point of construction of the Standstill Agreement; (ii) the impact of the initialing in a deed of a sum said to be the outstanding indebtedness at that date but not actually agreed in a term of the agreement to be the sum actually outstanding and, (iii) possibly, disputed evidence as to whether both sides, as opposed to just the first defendant, recognized that sum as being definitive at that date. On that issue, I was taken to some correspondence which suggests that the claimants did but there is equally other correspondence which suggests that the claimants only accepted that this was a sum which the first defendant regarded as due on that date. In my view, this clearly raises a triable issue. The sum in issue here is quite significant in itself.

Second, there is a different dispute over a part of the sum (amounting, I am told, to some £300,000) which does not depend on the Standstill Agreement and which is accepted to be triable on any view. I need say no more about it. The important thing is that it is a large sum – amply sufficient to cover any costs and a modest period of extra interest.

Third, there is a dispute over whether costs should have been offered in terms and whether, even if they were not, sufficient money was tendered to cover any possible costs. If the claimants are right as to either of the previous points, they will have tendered much more than was in fact due, even having regard to costs.

There is, on any view, a legitimate issue to go to trial of whether the absence of a costs offer was wholly fatal to the tender, quite apart from the point of law as to whether an express offer of costs in terms is required when a lender has provided a figure for what is due and owing at a given date. There may be an argument to be had as to whether it is conclusive in the light of the contractual provisions. I think the better view on the authorities cited to me is that costs or an undertaking to pay costs must be offered in the tender itself for it to be valid and the sum tendered is not otherwise enough to cover the debt and costs. However, I am not prepared to decide that now, since it may never arise.

So far, so arguable. The next issue is where things get a little harder.

Money available and kept aside for payment

The general principle is that the money must actually be tendered and it was formerly the case that the money had to be produced (see Fisher & Lightwood, para. 47.24). If a tender is refused by a mortgagor, to stop interest running, the mortgagee must either pay the money tendered into court, if there are proceedings in which that can be done, or keep the money ready and either make no profit on it or, if he makes a profit, he must account for that to the mortgagee. He must put the money on one side for the payment of the debt (see Gyles v. Hall (1762) 2P Wms 377; Bank of New South Wales v.O’Connor (1889) 14 App Cas 273, 283-284;and cases cited at Cukurova at [132]; Edmondson [1911] 2 Ch 301 at 310 cited at Cukurova at [136]).

In the words of Lord Mance in the majority of the Board in Cukurova at [47], the mortgagor must be “at all times both willing and able to redeem the” security.

A paradigm case of money put aside for payment of the debt might be a suitcase of cash or gold in the outstanding sum, presented to the mortgagee and then kept separately by the mortgagor marked “money for repayment of debt – do not use for anything else”. He would be able to say that the money was there at any time and was not touched for any other purpose. It was, in effect, treated as the mortgagee’s money albeit still in the possession of the mortgagor.

There is, however, a range of ways by which the law has recognized that a tender may be backed and money put aside. For example, in Cukurova, the mortgagor had arranged for another group company, Namrun, to hold the relevant sum in its account.

The sum remained in that company’s account for the payment of the debt for a considerable time. However, the company was not legally controlled by the actual mortgagors. Nonetheless, both the majority of the Board (represented by Lord Mance at [47]) and the minority (represented by Lord Neuberger at [144]) shared the view that the making of the tender was sufficiently “backed” by the Namrun account for the tender to be valid. In the present case counsel were not in a position to go into the detailed facts of the precise relationship between the companies in Cukurova or the basis of the conclusion. It does not appear that the Board required that the mortgagor have actual control of the account which contained the money by which the debt was to be discharged. The approach appears to have been to ask whether the money remained, for practical purposes, available such that it could and would be paid over at any time.

Determining whether that is so is not necessarily easy. For example, in Chalikani Venkatarayanim v. Zaminder of Tuni (1922) LR IA 41, a mortgagor wrote to the mortgagee asking for the amount due under the loan and said “Soon after receipt of your letter, we are ready to send respectable men with money and get the repayment of the amount of your debt made in full on the forenoon of the due date”. The lower courts concluded that this was not a bona fide offer and that the mortgagor had “neither the money nor control of the money” (see p 46). However, Lord Buckmaster, giving the judgment of the Board, declined to decide the case on this ground saying:

“It is very difficult indeed to say whether or no a man will be able to have control of money at a future date.”

The Board decided the case on a different basis, namely that the mortgagee had not clearly released the mortgagor from the obligation to tender the money as required.

Dixon v. Clark 5 CB 365 (1855) case concerned the effect of a tender in law not equity and the argument involved citation of texts in mediaeval French, which I have not gone into for this judgment or found very easy to follow. However, the main point in issue concerned the effect of tender as a defence to action at law, prior to the Judicature Acts, of an inadequate sum. The ratio of the case, so far as it is easy to divine, is to be found in the judgment of Wilde CJ that:

“In actions for debt or assumpsit, the principle of the plea of tender…is that the defendant has been always ready (toujours prist [in modern French, “toujours prêt”]) to perform entirely the contract on which the debt is founded; and that he did perform it, as far as he was able, by tendering the requisite money… and as in ordinary cases, the debt is not discharged by such tender and refusal, the plea must not only go on to allege that the defendant is still ready (uncore prist [encore prêt]), but must be accompanied by a profert in curiam [i.e. payment in] of the money tendered.”

Even for validity in equity, a tender must be uncore prist (see Gyles v. Hall). However, this case does not decide what the precise requirements are for a party to be toujours prist (or uncore prist) in such a situation. I am not persuaded that it is of sufficient assistance save by analogy, as Stirling J recognized in the next case relied on, Kinnaird v. Trollope.

In Kinnaird v. Trollope [1886] 42 Ch 610, no tender had been made and the mortgagor argued that, as a result of a particular summons taken out by them, they should be treated as having made a tender. Stirling J rejected that argument and his judgment proceeds on the basis that the rules for a tender valid at law and in equity are not necessarily the same (see pp615-616). He decided the case on a different ground, relying on Gyles v. Hall,where the court found that the mortgagor had not always kept the money ready for payment. He expressly declined to decide whether in equity interest on a loan might be stopped where there has not been actual tender. He said:

“In equity, no case has been cited in which interest has been stopped where there has not been an actual tender of the money due and it is contended that the rule of equity is strict that there must be such actual tender. I am not satisfied that that is not placing the rule too high.

It is not, however, in my opinion necessary to decide whether in equity anything short of an actual tender will stop interest.”

There was no discussion of what would constitute making or keeping money available for payment (whether “toujours” or “uncore”). Nor sufficient guidance as to what constitutes “actual tender” to translate without more into a modern setting.

Finally, the first defendant relies on Barratt v. Gough-Thomas [1951] 2 All ER 48. In that case, having served notice of intention to redeem on 14 December 1943, on 11 February 1944, the mortgagor stated that he was in a position to arrange for the immediate payment of the mortgage and, in March 1944, he instituted redemption proceedings.

Danckwerts J first observed:

“I have been referred by counsel…to a number of cases which seem to me to establish the principle that even if there has been a tender by the borrower of the amount due for principal and interest, that tender does not stop interest running after the date of tender unless there is evidence that the sum has been set aside and is ready for payment at any time. [He referred to Gyles v. Hall, Kinnaird v. Trollope, Bank of New South Wales v.O’Connor and Edmondson v. Copeland]

There was no actual tender in that case and he held that it was:

“…very much open to doubt whether the plaintiff was in a position to pay off the mortgage on Dec 14 1943. It may be he would have had to raise the money from a bank or in some other way in order to do it….there is…no evidence that any money was set aside for the purpose and was available for payment of the mortgage.”

Although there is scope for debate about the interpretation of this paragraph, I think the better view is that Danckwerts J was recognizing that a tender need not be backed by actual possession of the money in cash but that it would suffice if the mortgagor had in fact raised it from the bank at the date of tender. In that case, however, at the relevant date that had not been done. So there was no good tender even if raising the money would have sufficed. There was no discussion of whether the money would have been regarded as available if the bank had been prepared to lend the money but only on condition that it received the mortgaged security.

The upshot is that the cases have not really addressed the situation where a tender is made on the basis that a new lender is and remains willing to provide the funds to pay off the loan provided that it is substituted in the existing security immediately.

In this case, there is, in my judgment, a triable issue as to whether the tender in this case was sufficiently backed by the finance that had been raised at the relevant date and continued to remain available.

On the authorities, determining whether the tender was sufficiently backed involves findings, of mixed fact and law, as to how confidently the claimants would have been able to ensure that the money in their solicitor’s account would in fact have been paid over to the first defendant, at all material times.

I respectfully agree with Lord Buckmaster that this may not be an easy issue to decide. I think that, if anything, it is likely, on the material I have seen, that the claimants would be able to show that it was sufficiently backed. This matter may, however, require consideration of questions of whether the claimants in this case can be said to have had sufficient control of the funds and what was required for approval of their release.

In this case, the sum had been raised and was paid into a separate solicitor’s client account for the purpose of discharging the debt, albeit to the order of the new lenders or those related to them. The issue is complicated in this case by the fact that the funds were coming indirectly out of companies to a greater or lesser extent controlled by them, albeit over which there were charges in favour of the first defendant. In these circumstances, I consider it to be undesirable to resolve the underlying issue of law, save against the background of fully found facts.

The first defendant says that it is clear, beyond doubt, that the law would not regard the funds as available at the date of the tender in these circumstances. I do not agree that it is so clear and consider that there is a triable issue on the point. That question is in any event not wholly separable from the next issue, conditionality. This is because, if it is permissible to impose a condition of simultaneous exchange of releases and/or the money would have been and always remained available, albeit only upon such exchange, it could be said that the money was and always was available for the specific purpose of satisfying the debt (both toujours and uncore).

Finally on this issue, the first defendant raises a further point as to the legitimacy of treating as funds available for backing a tender which have themselves been obtained in breach of covenants relating to the very security it is sought to redeem.

The first defendant says that it is impermissible to back a tender with funds derived from the third and fourth claimants whose assets were charged to the first defendant and where Mr Shearer and Mr Dawes had covenanted that no payments would be made to them from the third and fourth claimants without written consent from the first defendant. They say that the Capital Cash (£2.5 million) and Jade (£800,000) money is tainted (perhaps, toujours or uncore sale if one wants to be mediaeval)because it substantially diminishes the value of their security, in breach of contract.

This issue affects two aspects of the case.

First, whether the court should treat money as available to the claimants for treating the tender as valid at all. Although the argument was not put in exactly this way, the first defendant may wish to contend that, if the money used for discharging the debt was obtained in breach of a covenant relating to security, it should have some say in how it should be deployed and could therefore (arguably) restrain the claimants from dealing further with the proceeds of that breach, including by way of discharge of the debt to the first defendant. If so, the money would not really be properly regarded as put aside. Conversely, it might be said that this reinforced the fact that it had been put aside since it could not be used for any other purpose than paying the first defendant.

Second, it may affect whether equitable relief from the obligation to pay interest should be granted. If the money for discharge of the debt comes out of the security, in breach of covenant, the court may say that it would be inequitable for a tender of that money to stop interest.

The jurisdiction to stop interest and force redemption is an equitable one, to which general equitable principles (including the requirement of clean hands) apply and it might be argued that it was not “doing equity” to a mortgagee to deplete a valuable corporate security (such as Capital Cash Limited) of assets without the consent of the mortgagee and then use those assets to try to stop interest from running.

On the other hand, there is a real question as to what the judicial response should be where the reason that a borrower is in that position is because the lender has nailed down so many of his assets with charges here and covenants there that, even though the lender actually has the assets which could be used to pay off the debt, they are unrealizable without the lender’s co-operation, which he will not give and would not have given. Answering that question is no easier as a result of the decision of the majority of the board in Cukurova.

The whole issue of clean hands and doing equity is a difficult one, not just in this context. In some contexts, including ones related to the present concerning relief from forfeiture, the rules might be treated as quite potent and strict (see for example Inglis v. Commonwealth Trading Bank of Australia [1972] ALR 591; and see also Shell v. Lostock Garage [1977] 1 Al ER 481; Equity Meagher, Heydon and Leeming 4^th edn and the reference to Meredith v. Davis (1933) 33 SR (NSW) 334 at 338, where a mortgagee had destroyed part of the security but was seeking accounts). In other contexts, the question might be more whether the mortgagor’s hands are relatively clean. Where a lender has “wrongly” or “oppressively” (in some general sense, albeit according to contract) prohibited a borrower from selling security but the borrower has done so nonetheless such that the money is to hand to pay the debt, it is not clear to me at this stage what the clean hands doctrine would have to say about the grant of equitable relief, if such a tender was otherwise valid. The position in such cases may be highly fact sensitive and it is possible to think of a range of fair solutions. Equity has become much more sharply defined over the years but in the background still lie general propositions such as in the Earl of Oxford’s Case (1615) 1 Rep Ch 1, where Lord Ellesmere said that the chancellor is there:

“…to correct men’s consciences for frauds, breaches of trust, wrongs and oppressions of what nature soever they may be.”

There are real difficulties in deciding, in such a case, whose consciences would benefit from correction and who was oppressing whom. In my view, there is an arguable point here and the first defendant accepts, indeed asserts, that this aspect of the case may be live in the action if it proceeds.

Conditionality

I finally come to the third aspect of micro-structure, where things get harder still. The sub-points are (i) the position as regards provision of tender documents (ii) the extent to which any conditions may validly be imposed in a tender and the extent to which availability of funds may be conditional on their fulfillment. The latter links to the availability point.

Again, I begin with fundamentals.

The text books say, and it is prima facie, clear that a valid tender must be unconditional but may be under protest (Halsbury’s on Mortgage Vol. 77 at para. 322, citing Thorpe v. Burgess (1840) 8 Dowl 603 and other cases). See also Fisher & Lightwood at 47.43 “must be unconditional”…”will be bad if made on condition”).

There is, however, scope for debate about two sub-aspects of this jurisprudence. Those relate to the impact on the validity of a tender of the imposition by a mortgagor of (a) a condition regarding the form of releases of security and (b) a condition that release of the security be simultaneous with payment of the outstanding sum. I deal with these in turn.

The first defendant submits that if a mortgagee provides insufficient time to consider draft release documents before tendering payment, the tender will be wholly invalid and will not stop interest running. It submits that this is so even if more is tendered than would satisfy the debt (including a sum being additional interest during the period for consideration of the tender documents) and it is clear that the original tender remains open for acceptance at any time.

The first defendant says that, for the tender to be valid in these circumstances, the borrower must make a new tender of payment (of an increased sum to account for the few days additional interest) and must do so after a reasonable time for consideration of those documents has expired. The first defendant contends that is so, if the release documents are non-standard but it seems to me that there is no basis for distinguishing the position based on the kinds of documents. However, it is said that the rule is strict, no matter whether the lender in fact has no problem with the documents and despite the fact that there is no obligation on the borrower to provide draft release documents at all. In the extreme case, provision of even a standard form simultaneously with the tender would make it invalid on the basis that any prudent lawyer would require a few minutes to consider it.

Thus stated, the proposition is unattractive but it forms the foundation of a major reason why the first defendant says that the case of tender is unarguable here. It amounts to saying that this tender must fail on a relatively minor technicality concerning the timing of provision of release documents that a mortgagor is not obliged to provide.

The principal authority relied on for this proposition is a case of Lord Hardwicke’s, sitting as Lord Chancellor (i.e. as a first instance judge in chancery, like this court) Wiltshire v. Smith 3 ATK 90. Because it is the primary authority said by the first defendant unanswerably to doom the claimants’ case, it merits detailed consideration.

This was a redemption action brought in May 1742 in which the plaintiff mortgagor contended that interest ought to end on 20 February 1741 because he had given notice of intention to pay off the mortgage and tendered the money and a deed of assignment but the mortgagee refused to take the money. The defendant averred that he offered to take the money provided he had time to consider the assignment which were beyond his expertise. Lord Hardwicke, rejecting the claim to be relieved of interest, expressed himself in trenchant terms:

“There is not one case in twenty upon the fact of an absolute refusal after a tender that is ever made out – for they are generally attended with circumstances that explain the refusal, and are nothing more than causes cooked up by country attornies to make themselves business. The plaintiff did not, as he ought to have done, send a draft of the assignment to the defendant, any time before the money was tendered.

The plaintiff insists that the defendant absolutely refused to take his money, or execute a deed of assignment; if this had been the fact, it would have been unconscionable and unreasonable in the defendant.

But the person who was to take an assignment of the mortgage swears, that the defendant desired further time or to that effect.

The question is, Who was in the wrong?

The plaintiff certainly was.

For where there are covenants on the part of a mortgagee, it is very reasonable that he should have some time to look them over. And the plaintiff’s attorney ought to have left the deed for a week with the defendant, that he might have an opportunity to advise upon it, and the plaintiff’s attorney should have appointed a time to pay the money after the defendant had been allowed a sufficient time to advise; or as I said before, he should have sent a copy, or the ingrossment of the assignment.

But the subsequent transaction, and what passed before the filing of the bill explains it.

Did ever a mortgagor, as is the case here, after he was put under this difficulty, lie by a year and a quarter without bringing the bill to redeem.

What could be the reason?

Why the plaintiff, the mortgagor’s attorney, told him you have made a tender of your mortgage money, and the defendant’s refusal has forfeited his interest, so that you may keep the money and compel the defendant to take the principal without interest from the time of the tender.”

I have reproduced almost the whole of the decision to show that this case lays down no general principle concerning provision of draft assignments To the contrary, this is a situation in which the court thought that the mortgagor and its lawyers were gaming the rules by pretending to tender the money with documents the mortgagee could not possibly deal with on the spot, taking the money away and then using the refusal to do so as an excuse to cut the mortgagor’s interest bill over a year later. One might say that Lord Hardwicke (a noted anti-Jacobite) was concerned to ensure that the tender was not, contrary to appearance, a pretender.

It does not suggest that, in every case, the provision of draft documents prior to tender is a condition of validity nor does it address the position where a mortgagor does genuinely wish to pay the mortgage off and supplies documents which are perfectly good to that end. I am, in any event, in this court not bound by this decision as a first instance ruling, although it must be given such respect as it merits, having regard to the nature of the reasoning.

The next case relied on is Webb v. Crosse [1912] Ch 323, in which the mortgagor’s solicitor attended at the offices of the mortgagee’s solicitor and told the managing clerk that he had come to tender the principal and interest and three guineas for the cost of re-conveyance with an undertaking to pay any further costs of re-conveyance excluding the costs of the vesting order. He produced a draft re-conveyance to which the original mortgagees, a Mr Crosse and a Mr Garrod, were made parties. He indicated that the money he was prepared to tender would only be paid in exchange for a proper re-conveyance. Unfortunately, some time before that, Mr Garrod had criminal proceedings started against him and had absconded. This had resulted in the exercise of a power under statute to vest the moneys secured by the mortgage and the right to receive the same in Mr Crosse and Mr Walker (in place of the absent Mr Garrod) but not to vest the legal estate in them. When the draft re-conveyance was provided, naming Mr Garrod, the managing clerk pointed out that it would be impossible to get the signature of Mr Garrod on it, because he was not to be found.

So, in this situation, the tender was made conditional upon the execution of a re-conveyance which (as the mortgagor well knew) could not be performed. It would have been possible for such a re-conveyance to be executed but only after the time-consuming step of obtaining a vesting order of the legal estate in Mr Cross and Mr Walker. But that was not offered.

Parker J held that this was not a valid tender for stopping interest running. He said at p328, referring to Wiltshire:

“But when such a tender is made conditional on the execution of a conveyance, it is I think necessary that a reasonable time shall be allowed to obtain the execution of the conveyance, especially when the conveying parties are not the parties to whom the tender is made”

He went on at p329:

“The tender was made, however, without giving the mortgagees notice of the mortgagor’s intention in that behalf, and on a condition which there was no possibility of the mortgagees being able to fulfil; and it was made to a person not authorized to receive it and who had been given no opportunity to procure authority for that purpose. Under these circumstances I am of the opinion that the tender was not such as to deprive the mortgagees of their right in equity to interest…”

This was, like Wiltshire,a situation in which the mortgagor was seeking to impose a condition of payment which the mortgagee could not possibly comply with there and them.

In Graham v. Seal [1919] Ch 31, Swinfen Eady MR approved Webb v. Crosse saying at p36:

“The mortgagee is entitled before the money is tendered to have a reasonable opportunity of approving the draft re-conveyance, and therefore the draft ought to be sent to him a reasonable time before the appointment to tender the money but that was done in the present case.”

The Court of Appeal did not therefore need to consider the consequences of a failure to provide documents in advance.

On this issue, Lord Justice Warrington said at p38 about Webb v. Crosse:

“…That seems to me clearly to import the statement that the tender may be an effectual tender for the purpose though it be made conditional upon the re-conveyance provided only that the form is observed of offering to the mortgagees a reasonable opportunity for executing that re-conveyance.”

The first defendant says that this suggests that “form” must be observed for the tender to be valid, but the court was not considering a situation in which a tender was made without limitation of time where (had it been accepted say a few days later) the money would have been readily available. Nor was it considering a situation in which the tender was not expressly conditional upon the form of any document. Nor did the other members of the Court of Appeal use that language. The court was not addressing the point that arises here.

First, I am un-persuaded that Lord Hardwicke would have found the present case quite as straightforwardly in the first defendant’s favour as is submitted. There is some force in the first defendant’s argument. But I am not persuaded that the Chancery court even in the 1740s (which for practical purposes meant Lord Hardwicke, given his dominance of that jurisdiction) would have said where a mortgagor was genuinely trying to discharge a debt, plainly had the money ready, made a tender with documents which were, in fact, acceptable but simply failed to re-tender again a few days later that equity would be powerless to say that interest would stop. All the more so when he commenced an action for redemption within weeks.

I read Lord Hardwicke more as saying in Wiltshire that it was a case in which the whole tender was a try-on and the fact that documents were not provided in advance showed that to be so because it involved an offer that the mortgagee could not safely accept. It seems to me to be a classic case of an experienced Chancery judge smelling a rat.

It does not seem to me that Webb v. Crosse takes matters any further – it relies on Wiltshire. The real point there was that the mortgagor had sought to impose a term which could not possibly be complied with namely re-conveyance by an absconded mortgagee. It says nothing about a case where there could easily have been compliance at the time or shortly after perusal of the draft documents. Like Wiltshire, the case lays down no general principle of the kind contended for, still less for a case in which the tender is not made conditional on the execution of the particular conveyance. Both of these were cases where a condition was sought to be imposed which the mortgagee could not fulfil. Graham v. Seal is in this respect similar and it is a case in which the court did not need to grapple with the point, because the requirement was so plainly fulfilled.

The first defendant nonetheless submits that this point is a particularly easy one and I should decide it now in its favour.

Had the matter been governed by clear authority, I would have had no hesitation in doing so. However, I do not find it easy and I do not consider that it is covered by clear authority. This is not just because of my unfamiliarity with this sub-branch of the law of mortgage redemption. I have real doubts as to whether it would be problem-free for an intellectual, property judge with a comma (to adapt a phrase of Lord Neuberger’s).

This is partly because the basis of the rule was not discussed in any of these cases. None of the texts cited to me analyse the issue and I was not referred to any of the academic literature on the point. In the few days available for delivery of a speedy judgment, it has not been possible to conduct independent researches.

The basis and ambit of the proposition that a tender is invalid if draft release documents are not provided in advance of the tender of the outstanding sum has gone unexamined in the cases cited to me for many years. That is an unpromising foundation upon which to submit that the issue should be determined summarily.

The trial judge may however think that this court’s equitable jurisdiction must be fine-tuned to a modern context in a different way. In the 21^st century of complex re-financings, the real problem may not be borrowers making spurious tenders (as Lord Hardwicke thought) but lenders keeping people from redeeming their assets with spurious objections, a right by which both pre- and post- 18^th century equitable jurisprudence has laid great store.

I am not prepared to say summarily that these are matters which should be left out of account in finessing and applying the law.

In my judgment, in addition to the uncertainties expressed above as to the law, this point raises a triable issue for at least the following reasons.

First, there is a triable issue as to whether the tender was, in any event, conditional upon the release documentation. If it was not, the point nearly falls away.

In my view the better construction of Edwin Coe’s letter of 12 February 2013 was that the tender was not conditional on the first defendant executing release documents in precisely that form. The letter said that it was enclosing a “non-exhaustive schedule” of releases. The use of the phrase “for your consideration” in relation to the “draft bible” does not suggest that the claimants’ solicitors were insisting on execution of the releases in precisely that form. There is therefore a real issue as to whether, as I suspect would have been the case, the money would have been paid, if the first defendant had responded with equally satisfactory signed releases of its own. Note that Webb v. Crosse is potentially ambiguous on this point. The better reading in my view is that the Court of Appeal was saying that if one requires the mortgagee to execute those very documents, they must be provided, not that a tender fails if it is simply conditional on the execution of any satisfactory release documents (as to which see further below).

It seems to me that if the tender is construed as not being conditional on the form of release and the drafts are simply treated as suggestions put forward by the claimants as to their form, it would be much harder to say that the tender was invalid on this ground. Harder, but not perhaps impossible, because the first defendant may say that, even if not made conditional, the effect of Wiltshire is that in every case, draft release documentation should be provided in advance of tender, regardless of conditionality on those documents even though that does not appear to be the effect of the later Court of Appeal cases which refer to it. I do not think Wiltshire goes that far and, if it does, I would not follow it. Moreover, such a conclusion would seem to me to be contrary to general equitable principles including, possibly, the requirements that equity should look to intent not form.

Second, it is not clear that, even if the proposition is correct in general, the law requires re-tender after time has expired to consider the release documents, for a tender which is not expressed to be limited in time to have any effect, possibly a few days after its actual date to take account of the time for perusal.

This may be illustrated by the following situation. Suppose that a standard form of release which admits of no variation is proffered at the same time as the money is tendered. The tender is rejected by the mortgagee. Equity should not, in my view, be powerless, in the absence of express re-tender to curtail interest simply because a standard form release document was not provided and agreed in advance, even if the tender is made conditional on signature of that release (see below). A fortiori, where use of such a form is not expressly or implicitly made a condition of payment of the debt. There are no authorities which have expressly considered this situation but it would seem to me rather unreal were it necessary always to re-tender after provision of drafts. This argument is also supported to some degree by the overall approach of cases such as Rourke v. Robinson [1911] Ch 480; and Edmondson v. Copeland [1911] 2 Ch 301.

Third, there are real factual issues as to the time required to approve the release documentation. Although the drafts here ran to 60 pages, they appear to me to be in an uncontroversial form. They were not disputed either by the first defendant or by the new lender Lloyds whose solicitors described them as “fit for purpose”, even though not quite as they would have done them. They contained no unusual conditions or covenants as far as I can tell. It is perfectly possible that they could have been approved in a few hours’ of a competent advisor’s time, even though for practical purposes, a week would have been needed for those advisors to find those hours.

In my view, there is a triable issue whether, in those circumstances, an otherwise valid tender is rendered invalid because inadequate advance notice was given of acceptable release documentation.

Fourth, there is in any event a point as to whether the tender, even if ineffective in February 2013, was nonetheless effective when it was indicated on 8 May 2013 that it was still open for acceptance or even a short time after 12 February 2013 when sufficient time had been given to consider the documents if it was understood that the money was still available. Of course, at that date, if the earlier tender was invalid, interest would have started to run, but, for the reasons given above, I cannot decide whether the sum still expressly said to be available in May would have exceeded that which was actually due. If so, it is arguable that the tender was valid from 8 May 2013 even if invalid from 12 February 2013 or was able to be treated as effective from a date shortly after. That may require the use of general equitable principles to resolve (see e.g. Meagher et al, above Ch. 3). It may also require the court to have some regard to the kind of reasoning adopted by the majority of the Board in Cukurova at [31]-[42].

Fifth, there is a further point as to whether, if conditional on the releases being executed in that form, it could not be effective because Edwin Coe did not have instructions on behalf of all of the parties to the securities. That point only arises, if the tender was conditional in this sense and, because I think the better view is that it is not, this issue may not arise. Even if it does, it is in my view well arguable that it is not necessary for all of the parties to security documentation to approve it in advance of tender particularly where, as here, the parties may be companies substantially controlled by the mortgagor.

Finally, there is a point, perhaps of mixed fact and law as to whether the courts in looking at this issue are really just invoking an anti-gaming principle to prevent abuse or whether there is a strict requirement of form. In this case, there was a prima facie honest pre-tender letter which suggests that it was genuine, and the overall facts and circumstances seem to point more to a genuine attempt to redeem. If the trial judge was less austere than Lord Hardwicke, he or she might conclude in this case that what was sent to the lender by way of pre-tender shows the tender was not a pretender.

Finally, all that said, I have no hesitation in saying that, as a matter of ideal mortgage practice, such draft release documents should be provided in advance of tender and agreed if possible, especially if the tender is sought to be made conditional upon execution of such documents, albeit perhaps not if the forms of release are completely standard – if for no other reason than to avoid the costs of this kind of argument. That, however, is a long way from deciding that a tender must fail, if that is not done.

This point also raises a difficult issue and I have left it to last. It is about the fundamental nature of a redemption transaction.

Again, I start with basics. The paradigm case of a valid tender is where a borrower physically attends upon the lender bringing the money owed with him in cash, saying: “here it your money - I am ready and able to pay off the whole debt including interest and costs and will keep this aside for you”. The older cases tend to concern mortgagors or their solicitors turning up in person with cash. The first defendant has not argued that this is, in modern times, required for validity of a tender, although even the more recent cases emphasise the need for actual tender as opposed to a mere offer to pay (see e.g. Devon Nominees Ltd v. Hampstead Holdings Ltd [1981] 1 NZLR 477).

But consider a different situation in which the lender cannot do that or anything like it because he has to borrow, or be given, the money from elsewhere. Suppose in that situation, the source of the new money (be it bank, group company, family member or whatever) says that it will definitely pay the sum to the borrower to discharge the existing debt but only if the existing lender’s security is released at the same time and the provider of the funds can take over the security at once.

In such a case, the borrower is not in a position to make a completely unconditional tender. It can, in those circumstances, only back any tender by saying: “while I do not have the money myself, I am just as ready and able to pay off the whole debt as I would be if I had come along with cash – the only thing I require to do so is for the security to be released at the same time and the funds will be yours”.

In such a case, the fact that the money will not be released by the new lender, save in exchange for release of the security means that the borrower is never in a position to do that. So, such a borrower will never be able to stop interest running by tendering the sum due.

The first defendant contends that this sort of situation does not arguably amount to a valid tender. It contends that a borrower must make an unconditional offer to pay, although by the end of the hearing, I was not convinced that the position was put quite that high.

While I can see that there is some force in the first defendant’s argument that the requirements of a valid tender are, in this sense, strict, I think that there is much more to be said for the counter-argument which the claimants advance. The claimants contend that because it is inherent in the law of redemption that once payment is made there will be simultaneous release of the security, it is possible to make a valid tender where the availability of the funds is conditional upon release of the security.

In Cliff v. Wadsworth (1843) 2 Y & CCC 598, the court was faced with a situation of a mortgagee causing difficulties to the mortgagor in effecting repayment. The mortgagor had done everything right: drafts of the releases (reconveyances and reassignments) had been provided and were approved in advance, he attended at the appointed time with payment in bank notes. One of the joint mortgagees refused to sign the engrossments unless the interest was paid to him rather than one of the other mortgagees.

The mortgagor brought a claim against the mortgagees and the Vice-Chancellor upheld it saying that, however the loss fell between the mortgagees, the mortgagor was not to blame and he was prevented from discharging the debt by the acts of one of the mortgagees. He held that the mortgagor who has wrongly refused to sign had made a “plainly untenable demand” which had the effect of preventing “the completion of the business” and had to pay the costs.

In Graham v. Seal [1919] Ch 31, the mortgagor came to tender payment, following agreement of the terms of a re-conveyance, but said that the payment was conditional upon the mortgagee there and then executing the re-conveyance in the previously agreed form. The Court of Appeal did not find it hard to conclude that this was a valid tender. Swinfen Eady MR said at 35:

“The obligation of a mortgagee is, as against payment of what is due to him, to re-convey and delivery up the deeds of the mortgaged premises. It is like the obligation of a vendor to convey and hand over the title deeds and the conveyance against the payment of the purchase money….in the paying off of a mortgage a mortgagee is not entitled to insist upon payment of the mortgage money with a view to his re-conveying at some future time. The mortgagor is not required by law to be at any time at risk in the sense that he must pay off all the mortgage money to the mortgagee and then at some future time obtain a re-conveyance of the mortgaged property. The transactions must be simultaneous, he is paying off the mortgage and obtaining a re-conveyance and delivery up of the title deeds. Under these circumstances the tender made by the plaintiffs…was a valid tender. There was no condition imposed other than that which the law enables the law to require, that is as against payment of the proper amount…the mortgagee must simultaneously give up the deeds and re-convey the mortgaged property.”

Warrington and Duke LJJ gave judgments to like effect.

There are two separate strands to this point. The first is whether a mortgagor can validly make a tender subject to a condition of simultaneous release of security. The answer to that seems to me to be plainly “yes”, in the light of Graham v. Seal.

I pause in reaching that conclusion only because, as noted above, one of the leading texts, Fisher & Lightwood’s Law of Mortgage 13^thEdn. says at 47-43 under the heading “Tender must be unconditional” that a tender will be bad if it is made on condition (save in circumstances which are not relevant here) and does not refer to Graham v. Seal in this context. Nor does Halsbury’s. But the explanation for that omission might be that, to an expert in the area of mortgage redemption, it is so obvious that this kind of condition is permissible because it is inherent in the very act (as the court seemed to think in Graham v. Seal) it hardly needs stating.

The second, logically separate, question is whether the funds to back a tender are properly to be regarded as “available” (or toujours prist), if in fact their provision is conditional upon the simultaneous release of security, even if that is not made an express condition of the tender. That question is not, in terms, addressed by Graham v. Seal, but it is the point that arises in this case because the tender here was not made expressly conditional upon simultaneous release but the availability of funds was.

This issue might be thought to be a narrow point of law, albeit one without direct precedent, which could (and the first defendant says, should) be decided now against the claimants to bring an end to this part of the claim. However, I think it raises a triable issue for two reasons.

First, I think that there are specific factual issues related to this case which might well be investigated before this point can be fairly resolved. In particular, it is necessary to determine the extent to which there was de facto conditionality and whether the money would have been paid (as opposed to might have been paid to discharge the debt) simultaneously with the release of the securities by the first defendant. That may require evidence from Lloyds and/or others

There is an oddity in this case in that the draft release documents were in fact approved by both the existing lender and the new lender and, on the face of it, the new lenders were ready, willing and able to provide the funds at all practical times. This area is likely to involve evidence from other witnesses as to what they would have done and cannot be resolved at this stage.

I do not think it is good enough for a mortgagee to say that the mere possibility that the funds might have been withheld even if the tender was accepted means that the tender could never be valid. There may be questions of degree here. After all, if a borrower tenders money which is in a bank account in his name, the bank might collapse before payment. If, in fact, it does not collapse and the money remains available for payment throughout, it is no answer to say that it might never have been made.

Second, my preliminary view is that, notwithstanding what is said (or rather not said) in that particular paragraph of Fisher & Lightwood or Halsbury’s on conditionality, the claimants are likely to be right on the law. I think it is clear that it is perfectly reasonable to impose such a condition and at the very lowest arguable that, if money is only available on fulfillment of that condition, that will not mean that it is to be treated as unavailable for the law of tender.

I say this because Graham v. Seal shows that it is inherent in the very nature of a redemption that there will be no period of time at which borrower or lender should be at risk (on the one side of non-payment and on the other of retention of the security for the debt). It can therefore be seen to be inherent in the act of tender that the normal expectation would be mutual simultaneous exchange were there to be acceptance. If the money for discharge of the debt would in fact have been forthcoming, had there been simultaneous exchange and the mortgagor refuses simultaneous exchange which would ensure “completion of the business”, there is a good reason for treating the money as being available in the sense required by law for the discharge of the debt.

In my judgment, it is somewhat artificial to say that, because the releases had not actually been approved by the new lenders but were in fact fine and would have been approved as soon as tender had been accepted, the tender must fail. I am therefore unable to accept the first defendant’s argument that it is plainly unarguable that the claimants were not toujours or uncore prist in the requisite sense.

There is also force in the claimants’ argument that, were it otherwise, it would become difficult to make effective tenders which relied on the provision of funds from elsewhere which were to be secured on the property the subject of the mortgage. Refinancing would become considerably harder and the law of tender would discriminate against those who, through impecuniosity, had to raise funds from elsewhere.

That brings me to wider considerations as to how such rules are formulated and refined relevant to whether this point can properly be decided now as I am strongly urged to do.

The following considerations seem to point away from trying to decide the matters now.

First, there is a serious question mark as to whether (and the extent to which) the cases referred to in the application above lay down strict rules on tender which must be complied with before the court has any jurisdiction even to consider reducing interest or whether they are rather instances of the exercise of a general equitable discretion to do so when it is clear that a borrower is ready willing and able to pay off the full debt and has offered the money to do so in exchange for return of security, keeping the money aside. So rules – such as the fact that full sum must be tendered are and have remained strict (see Devon Nominees). When one gets to second order points such as the precise terms of a valid tender and the requirements of provision of draft documents in advance, the cases do not express themselves as laying down any general principles or hard and fast conditions.

Second, there is a need for clarity in the law in the area, highlighted in Cukurova. That is not only a recent concern. In cases not directly cited to me on this application, Lord Hardwicke himself expressed the view that at least aspects of the law relating to the stopping of payment of interest on mortgages should be strict: Bishop v. Church 2 Ves Sen 371 at 372 “if a strict tender is not made, the Court cannot stop interest” and see also Garforth v. Bradley 2 Ves Sen 675).

On the one hand, one wants the rules to be strict to avoid abuse by “all-hat-and-no-cattle” offers to pay off the debt, or the imposition of conditions which the mortgagee cannot reasonably accept, at once or at all. Equitable rules have the effect of curtailing interest which is contractually due until actual payment so there is a compelling case for severity of application. All of the points on the importance of certainty made by the Board in Cukurova must be borne in mind and they may lead to the formulation of strict rules. On the other hand, one does not necessarily want anti-abuse rules (if such they be) to be so strict in this context that they reduce the incentive for legitimate, fully financed, attempts to pay back substantial loans and thereby enable lenders unfairly to keep borrowers on the line for interest and prevent redemption, a right regarded as fundamental to English law. Those are really questions of legal policy or approach.

Third, legal historians might say that, whatever his insensitivities in other contexts, Lord Hardwicke was just as sensitive in the 1700s as the Board in Cukurova was this July to the principles of meta-equity: whether the working out of a rule should be judicially developed piecemeal by examples and analogies or whether it should be subject to clear, certain statements of principle with strict precedential effect (see, as to the former, C Croft Lord Harwicke’s Use of Precedent in Chancery (1989) Legal Record and Historical Reality at 121-155 cited in Baker An Introduction to English Legal History 4^th edn. Ch 6 and, as to the latter, the debate between Lords Mance, Neuberger and Sumption). As the divergence in Cukurova shows, this is not an easy question in any given case and requires a wider view than I am able to provide on a relatively short hearing with limited pre-reading or time to consider.

Fourth, in Wiltshire, Lord Hardwicke appears to have taken into account the sharp practices of 18^th century borrowers in fashioning his responses to the law of tender. Likewise, the court in this case may wish to take account of the practices of 21^st century lenders in fashioning his or her own on this issue. The trial judge may think that a chancery court in 2013 should tune the rules of equity to avoid oppression and to benefit the cash poor as much as the propertied; for people who have to raise money as well as for those who do not and, moreover, that to do so would be consistent with the roots of this court’s jurisdiction (cf. Oxford).

For example, because the principles here may have wider application, it is possible that the claimants may wish to call evidence, supporting the submission made in their skeleton argument, concerning the adverse impact on modern lending practice of rigid rules of the kind suggested by the first defendant – an element of Brandeis briefing. They may want to show that, in the context of modern lending practice, it would be wrong for the court, in exercising this equitable jurisdiction, to put unreasonable juridical obstacles in the way of a borrower who wanted to stop interest running on a loan using new secured debt finance to back a tender. To some extent, they have done so already because Mr Shearer says in his evidence that:

“It is a fact of modern life that a mortgagor will only be able to redeem a mortgage loan with funds provided by a new financier who requires his own security to be put in place on release of the funds.”

and

“…the simultaneous release of securities upon payment of a secured debt is a standard and necessary requirement of modern commercial dealing.”

I find that evidence easy to accept, particularly since it comes from someone in the money-lending business. The claimants may at trial additionally wish to highlight, in so far as not a matter for judicial notice, how taking a different view would result in disproportionate benefits to lenders while crippling borrowers with high interest rates which they are powerless to bring to a halt, even when they have raised the money to pay off the loan. They may wish to say that this is undesirable, as a matter of policy, of which the strictness of equitable rules should take account. Given their close involvement in this industry, these claimants may be well-placed to back such arguments with hard evidence at trial.

Finally, as to approach, no-one doubts Lord Hardwicke’s contribution to the chancery jurisdiction, although his reputation as a judge of equity is tainted in modern eyes by the fact that he cared so prejudicially, and, one might add, pre-judicially, for the rich and the great: see e.g. Harvard Law Review, Vol. 11, No. 1, Apr. 25, 1897 at p59. Even before the 18^th century had come to a close, Lord Hardwicke’s views on what was probably the most important matter of property law on which he ever opined had been demolished by a judge famous for saying that law should keep up with the age (Pearne v. Lisle(1749) Amb 75, 27 ER 47.cf. Somerset v. Stewart (1772) 98 ER 499). There are relatively few cases in this area of tender and since, as Lord Sumption suggests in Cukurova at [187], Commonwealth jurisdictions still look to this court as a source of guidance on equity (see Devon Nominees) a modern chancery judge might pause before resting law which may have a wider impact on the relatively poor on a short, authority-free, opinion of Lord Hardwicke’s. If, in 2013, another such opinion were used to make it harder to escape from debt slavery, some in the Commonwealth might say that this court of equity was beyond redemption

For all these reasons, the points of law which arise in this case are better decided against the backdrop of found facts and legal principles of a kind which it has not been possible to explore in an application of this nature. It will be evident from the foregoing that I am not certain that the first defendant is right about them (cf: Barrett and Hughes).

The following additional considerations lead me to consider that summary determination is not desirable although I do not base my decision to decline to strike out and refuse summary judgment on them as such.

The increasing and unjustifiable demands and allegations concerning the outstanding loan and the Settlement Agreement are consistent with a desire on the part of the first defendant to put obstacles in the path of repayment. Mr Shearer says that the first defendant has been “deliberately obfuscatory” to that end. Set against that is the fact that the first defendant did, later in the year accept the tender. On its face, this appears entirely bona fide and is more consistent with the first defendant’s earlier expressed preparedness to accept repayment, but there are certain aspects of the manner in which it was done and the correspondence pre- and post-tender upon which it is not easy to form a fixed view, as I have indicated above.

It has, for some time, been the law that if a mortgagee is guilty of misconduct, the court has the power to take this into consideration in settling the terms on which a mortgagor may be allowed to redeem (see Webb v. Crosse at p330). The circumstances in which that might be done may be very limited and the claimants have not pleaded that this conduct either does or might be exceptional (cf. Cukurova) although that has been to some extent foreshadowed in argument. In that case Lord Mance said:

“…equity can and should respond by a special order as to interest or costs in exceptional situations where the mortgagee has by words or conduct rejected, made impossible or delayed repayment of the mortgage debt…”

I cannot resolve now whether an un-pleaded allegation of that kind would be arguable. The first defendant says that its conduct comes nowhere near this. However, if it was pleaded, it would involve canvassing at trial some of the same ground as would need to be gone into for the existing issues, albeit with greater investigation of the conduct of the first defendant than of the claimants. That is not a reason for refusing summary judgment or strike out as such but it suggests that summary determination of the issues could provide limited procedural advantage.

Finally, the prospect of a trial may be more likely to lead the parties to a sensible settlement, avoiding further litigation than determination now, with possible appeals.

If the tender was sought to be accepted in May because the first defendant genuinely wished to have its money back, rather than to demonstrate that the money was not available, there must be some prospect of it wishing to do so again. Now I have made it clear that there is likely to be nothing wrong with saying that payment should be conditional upon simultaneous release, it should be possible to sort this case out rapidly.

Even if not, the existing security is valuable and, if the claimants are concerned to be free of the debt, there may be accommodations which they may be able to consider. For example, it would be straightforward for the parties to agree that the existing strictures concerning the security should be released so that the claimants can, if they wish, realize more assets with which to make a new tender under protest even of a larger sum, given that interest may have continued to run.

The claimants may wish to do that quickly to stop further interest accruing. If the first defendant says that it is not prepared to consider a sensible approach for the realization of some of the security to enable the debt to be paid off rapidly or places obstacles in the way of such a course, that may itself colour the trial judge’s view of the position taken by the first defendant with respect to the February 2013 tender. It may mean that the equitable jurisdiction may be invoked from a later date (see point above) or it may support a Webb v. Crosse/Cukurova point in the future.

So where does that leave this case overall? The authorities on the micro-structure of this area of law have eschewed general principles, preferring to proceed somewhat piecemeal on their facts which, as noted, makes drawing sharp distinctions harder. It is right now to step back from and look at a bigger picture to see whether there is justice in the approach I am taking in leaving the matter to be decided by others.

I would tentatively suggest that if (and it is a big if) a high-level principle of this sub-branch of equity can or should be formulated which is more or less consistent with the authorities and which would be in tune with the requirements of the modern world, it is, perhaps, this.

If a mortgagor (i) tenders the whole sum owed (including costs) to which he actually has immediate access (de jure or de facto), (ii) keeps that money set aside and available for payment to the mortgagee but (iii) says it will only be paid (or, even if he does not say so, it will in fact only be paid) if the mortgagee does something which a mortgagee can ordinarily and reasonably be expected to do in the context of a redemption namely release the security simultaneously with payment, the tender is valid. Whether the court would nevertheless consider it right to exercise the jurisdiction to curtail interest then depend on general equitable principles.

If, however, the mortgagor makes payment conditional upon the mortgagee doing something the mortgagee cannot ordinarily or reasonably be expected to do in such a context, such as obtaining signatures from absent people, dealing with documents at once which require more time and so on, it is invalid.

If one asks simply whether, on that basis, the tender here might be valid, it seems to me that there is, at least, a respectable argument that it was.

In my view, none of the points raised is so weak that there should be conditional permission to bring the claim, requiring payment in.

Moreover, I cannot see how such a request would be realistic and it could stifle the claim. The whole point of the case is that, without reciprocal simultaneous release of sufficient security to satisfy the new lender, the claimants cannot pay in any money. That simultaneous reciprocal release is not on offer.

Nor am I persuaded by the argument that, once a redemption action is started in which payment in could be made by the mortgagor, such must be done as a condition of validity of the tender, at least in a case where the money to pay off the loan will only be supplied upon simultaneous release of security. Were that to be the law in this equitable jurisdiction, it would be practically impossible for a mortgagee to tender for redemption using new finance that was to be secured on the same property.

There is an issue, unsuitable for summary determination, against the borrower as to whether the law should be so strict, for reasons similar to those given above.

For all the above reasons, I think that just resolution of the case requires a trial (cf. CPR Rule 1).

The relevant paragraphs of the Details of Claim on this subject raise issues fit to go to trial and the first defendant’s application to strike out and for summary judgment should be dismissed.

For the reasons given, there is a serious issue to be tried as to the validity of the tender.

The first defendant does not put up a very strong argument that, if such is held to be the case, the balance of unquantifiable harm and the balance of convenience does not favour the grant of some kind of injunction to restrain enforcement of the securities on an interim basis. I will therefore give my reasons briefly for why I think that is appropriate.

First, it is unlikely to be as easy to quantify the loss caused to the claimants as a result of enforcement action which turns out to be unjustified as it is to be to quantify the loss to the first defendant of being unable to enforce straight away. The claimants’ assets are rather diverse and it is unclear that it would be possible to unravel easily what loss had been suffered if they were taken and subject to a forced sale. Some have family significance. Moreover, on the material currently before the court, I think that the real risk of damage to the first defendant in being unable to enforce straight away is modest.

Second, I have regard to the fact that the first defendant has been paid back most of the outstanding loan, with generous interest. The sum outstanding, although substantial, is less than would still have been in the possession of 9RL had the business of Logbook Loans and 9RL continued. To that extent, although the first defendant is being deprived of the money, it is actually in a relatively advantageous position as regards return of its money as a result of the default.

Third, if the claimants are wrong, the first defendant’s money is continuing to earn compound interest at 35% per annum which is reasonably well secured. It is possible that the first defendant will be able to prove that it would have invested the sums provided to greater advantage had it been able to enforce but I am unpersuaded at this stage that it would be easy to do so. There is no evidence that it would be possible to obtain higher returns in the fixed interest market and whether there are other riskier investment opportunities which would yield more than 35% and would be taken is speculative. A 35% return is pretty handsome, even for higher risk investments.

As to security, there is a debate about its value which I cannot readily resolve. This is addressed in the later statements of Mr Shearer and Mr Thomas. I accept that it is likely that the first defendant has the benefit of considerable security already, which is likely to be ample to cover the outstanding loans and interest for some time. I will not burden this already lengthy judgment with a detailed analysis of the valuation of the security and the rival arguments each way. It suffices to say that I accept the claimants’ evidence that there is a good deal of “headroom” provided by the existing security, including a valuable development site in London docklands and a number of shares in companies which may have significant value.

However, there is force in the first defendant’s argument that the cross-undertaking in damages should be fortified to some extent, by granting an appropriate charge in respect of such damages over one or more of the assets.

The first defendant contends that Mr Shearer and Mr Dawes should pay £1million into court as security for a cross-undertaking. I do not consider that to be realistic. The underlying rationale for this case is that they do not have readily realisable assets save in exchange for release of the existing security from which to make such a payment. In my judgment, adequate fortification would come from a suitable further charge to secure any damages on the cross-undertaking and I would expect such to be proffered.

I have also considered whether it would be right to require an undertaking to the court to comply with the terms of any charge.

In my judgment, although there is some force in that submission, it would be preferable for any claim for injunctive relief to restrain any alleged breach of the terms of the security to be made by a proper cross-application if that is warranted. I do not think that it would be appropriate to make it a contempt of court for the claimants to act in breach of their security agreements. This is a case in which the consequences of such breaches may be minimal to the first defendant (in that adequate security would remain notwithstanding any given breach) whereas the damage to the claimants may be large. That is not to provide a warrant or excuse for the claimants to breach these covenants. It is only to say that I do not think a case is made out for enjoining them from doing so at this stage.

There is another consideration at play here. The first defendant says that the only way in which the claimants have been able to raise the money for the tender is in breach of covenant. Suppose that is the case and the claimants wanted to raise further funds to make a further, increased, tender now that it is clear that the release documents are all in order, they may equally only be able to do so in breach of covenant. Were an injunction to be granted, it would effectively preclude the claimants from acting, albeit in breach of covenant, to try to make a tender to stop interest running.

If, as I have held to be arguable above, it is not a condition of validity of tender or equitable relief that the sums used to tender the debt should be “clean”, in the sense of not raised in breach of covenant, it follows that the claimants should be able to argue that they can (albeit with consequences in breach of contract) nonetheless validly tender the sums by raising further money. Requiring an undertaking would pre-judge that issue.

For the above reasons, I will grant an injunction until trial or further order and will hear counsel as to the form. An attempt should be made to agree the terms.

To pre-empt unnecessary debate, I am minded to order that the costs of both applications be costs in the case.

Given the nature of the issues, consideration should be given to whether it would better progressed as a CPR Part 7 claim. I believe it should be. Rule 8.1(3) allows the court to make an order that the claim should continue as if the claimant had not used the Part 8 procedure and I would be minded to make such an order with a timetable for a defence, disclosure and further evidence. The existing evidence would stand as evidence in chief but the parties would be free to supplement it. This judgment has been provided as quickly as possible as the parties requested, (which is one reason for its length). I will therefore give directions to that end, not immediately upon handing down but when the parties have had time to consider how they wish to proceed and hopefully agree directions. I will fix a hearing shortly for that purpose. There is no need to attend upon handing down of this judgment.

I would suggest that the trial judge should be given a more generous time estimate for pre-reading and for hearing the case if the points outlined above are to be fairly resolved. One hour, as was proposed by counsel for the first defendant for pre-reading, was not long enough in a case requesting final determination to read (i) nearly 50 pages of skeleton, (ii) nearly 150 pages of core documents in a total bundle of 2000, (iii) 6 detailed witness statements and (iv) 18 fact-sensitive authorities in an area of mortgage practice whose principles have not been properly analysed in the case law for some time. The court of chancery is faster than it was in the eighteenth century but it can still take more than an hour to insert a comma (cf. para. [191] above).

That said, I am grateful to counsel for the assistance they provided in attempting to enable me to decide this case as summarily as Wiltshire. It is regrettable that I have taken rather more than 2 pages to refuse to do so.

I conclude by tendering something of my own, in the light of Lord Neuberger’s observations on access to justice in his Tom Sargant Memorial lecture 2013 at para. 20: an apology for the length of this judgment. I have tried to introduce as much levity and raciness as a footnote to the law of mortgage permits to prevent those who are bound to read it from losing the will to live. That said, one does not need to be Lord Hardwicke to find such a text hard to swallow.

I say, somewhat ruefully, that had he reached the same conclusion as I have on an application like this in 1744, that Lord Chancellor invoking his own authority, would have been free to say no more than this:

“The question is. Who was in the wrong? I cannot yet tell. There must be a trial”.

Even though not all citizens had fair or equal access to justice in his court (cf. Sargant lecture at para. 26), such a judgment would have been none the worse. I suspect, because many would describe Lord Hardwicke as not just dirty-handed but cocky (cf. Mummery LJ in Doncaster) he would have had a go at deciding a case like this summarily and would have thought me rather at sea. But, in the end, those who do equity might say that, for this court, redemption lay when his opinions ceased to bind.