Bank of Scotland Plc v Copeland

This short judgment concerns the hearing, listed today, of the Defendant’s renewed application for permission to appeal against decisions of HH Judge Maloney QC reached on 2 May 2014.

In August 2003 the Claimant (“the Bank”) commenced proceedings in the Bury St Edmunds County Court seeking possession of 59 Southgate Street (“No. 59”), which is where the Defendant (Ms Copeland”) lives. The Bank holds security by way of mortgage over No 59. It claimed that as at 6 September 2013 it would be owed £121,779.87 by Ms Copeland and that that sum was secured by the mortgage.

Ms Copeland served a Defence and Counterclaim. It was of poor quality. The Bank applied to strike out that statement of case and for the Court to give judgment in favour of the Bank on the counterclaim. On 2 May 2014 Judge Maloney QC heard Counsel for both parties. He struck out the Defence and Counterclaim but allowed time for Ms Copeland to apply for permission to serve an Amended Defence, failing which, the Learned Judge ordered, the Bank could proceed to apply for judgment on its claim. As to the counterclaim, the Learned Judge gave judgment to the Bank “on the ground of limitation”.

Judge Maloney QC refused permission to appeal. Acting in person, Ms Copeland sought permission to appeal from the High Court. This was refused on the papers on 26 September 2014, but the High Court Judge refusing permission extended the time allowed for Ms Copeland to apply for permission to serve an Amended Defence.

Ms Copeland sought an oral hearing of her application for permission to appeal. On 13 November 2014 this came before Mitting J who stayed the application for two months to enable Ms Copeland to seek pro bono assistance. In the event, the Court received a notice dated 5 January 2015 recording that Hines & Co, solicitors, had been instructed to act on her behalf. Later correspondence suggests that they were retained on a fee-paying basis.

By letter of 23 January 2015 Hines & Co informed the Court that an amended version of a Defence and Counterclaim was “currently being worked on”. However by letter of 6 February 2015 Ms Copeland informed the Court that she had withdrawn her instructions from Hines & Co, that she felt wary of legal professionals, and that she had “no alternative but to construct my own re-pleadings, with the assistance of a lay representative”.

And so to today. The stay of the oral hearing of Ms Copeland’s application for permission to appeal from the decisions of Judge Maloney QC has expired. That application for permission has duly been listed. Hines & Co have written to say that they are no longer instructed and are applying to come off the record. Ms Copeland has not attended, but has sent a fax asking for more time.

A Ms Elizabeth Watson (Ms Copeland’s sister) has also sent a fax. This is lengthy and entitled “Affidavit”. It followed an application made by her on behalf of Ms Copeland to adjourn today’s hearing. That followed many, many communications sent to a wide range of people and in which Ms Watson has claimed to represent or speak for or assist Ms Copeland. The application to adjourn was refused by Mitting J on 27 March 2015.

Mitting J also ordered that at the hearing today Ms Watson would not be permitted to speak on behalf of Ms Copeland and that Ms Copeland must either be represented by solicitors or counsel or represent herself. He pointed out that Ms Watson was unsuited to represent Ms Copeland in these proceedings because she may have a conflict of interest (having regard to the alleged facts of the case) and her conduct had to date “not advanced her sister’s interests one bit”. From everything I have read, I respectfully agree with Mitting J. In the event Ms Watson too has not attended today.

This being the hearing of Ms Copeland’s application for permission to appeal, the Bank was notified in accordance with regular practice, and in the interests of saving costs, that it was entitled (but not required) to attend but would not usually be awarded the costs of doing so. It has elected to attend, and is represented by Miss Amy Nesbitt.

Miss Nesbitt has no instructions to make submissions on the substance of the matter, but it was helpful to be able to invite any submissions from her on the question of the most appropriate procedural course to take. Understandably her submission for the Bank is that I should dismiss the application. This would leave the Bank free to enter judgment for the sum it alleges and request its order for possession of No 59 subject only to argument about questions going, in particular, to the suitability of, timing of and arrangements for possession.

In preparation for this hearing I have, as I informed Ms Nesbitt, read what was available on the Court file. There is considerable documentation. It is reasonably clear that there will be other material not on that file but served by one party on the other over the course of the proceedings. In reading I have deliberately treated separately the many communications from Ms Watson.

Having read what I have, and doing the best I can in the unusual circumstances of this case, I propose to grant permission to appeal against the decisions reached by HH Judge Maloney QC on 2 May 2014.

In so doing I emphasise that the reasoned judgment of Judge Maloney QC deserves every respect. It clearly strove to do justice to the matter as a whole. In my view justice will be furthered if I grant permission, which will have the consequence of enabling the matter to be examined on its merits with the involvement of both parties and without undue further delay.

Let me state shortly why that examination is important in this unusual case; let me identify the substantive point that, regardless of others, causes me to grant permission.

Ms Copeland appears to have borrowed two sums of money from the Bank, one to invest in a scheme (“the Scheme”) and one to purchase No 59 as her new home. She granted two mortgages in favour of the Bank, the one over No 59 that is relied on in these proceedings, and the other over her former home, Lavender Cottage.

The Scheme is alleged by Ms Copeland to have been, at least by some point in time, fraudulent to the knowledge of the Bank by its relevant officer. Recognising that the matter was not at the stage of a trial, the Bank’s position before HH Judge Maloney was not that Ms Copeland’s allegation could be demonstrated to be wrong but that she had left it too late to advance it.

There was evidence, argued the Bank, that Ms Copeland had from as early as 2002 acquired some of the knowledge that she said pointed to fraud, had not pursued a claim then or as she learned more over subsequent years up to 2007, and was now barred by limitation. I note that Ms Watson is very bound up in the facts throughout the period, apparently as an investor herself, and as that makes her a potential witness it further emphasises her unsuitability to represent or speak for Ms Copeland.

The sums paid out by the Bank in connection with the borrowing were approximately £125,000 to the scheme in around November 2001 and £97,000 to the vendors of No 59 in around February 2002. On the documents it appears Ms Copeland alleges that the Bank received back two sums, around US$190,000 on around 10 July 2002 in connection with the scheme (this payment is emphasised at ground (e) of the Grounds of Appeal and is verified by paragraph 38 of a signed witness statement dated 3 September 2014, not before Judge Maloney QC) and around £136,000 on around 22 July 2002 as the proceeds of sale of Lavender Cottage (the mortgage being released to allow the sale).

That would leave little or no remaining debt from Ms Copeland to the Bank, regardless of the mortgages the Bank held.

However after the US$190,000 was apparently received back by the Bank it appears that a like sum may have been paid (as part of a total of about US$545,000) by the Bank to an account in Mexico and in connection with the scheme. The Bank no doubt says that this was with authority from Ms Copeland (apparently through Ms Watson) but the question is whether the Bank’s authority truly extended to the situation in hand if (as alleged) the Bank knew, at least by that point in 2002 that the scheme was fraudulent. There is alleged to be some material that is alleged to show initial action by some supervisory or regulatory authorities by then in relation to third parties alleged to have some involvement in the scheme that was not honest.

The focus of Judge Maloney QC was, understandably given what seems to have been the thrust of the argument before him, on whether Ms Copeland knew of the alleged fraud and the Bank’s alleged knowledge of it, at least by 2007 so as to render claims by her against the Bank too late by reason of limitation. There may well be argument on the appeal as to whether a limitation period applies in any event. However for the present, and subject to argument on the appeal itself, the essential question may be, even if limitation does affect a claim by Ms Copeland, the question whether the Bank is owed anything. Simply, what is the true state of the account between the Bank and Ms Copeland? That is a question that involves, among other things, consideration of what the Bank knew in 2002.

The question of how much (if anything) the Bank is owed is part of its claim. For all the deficiencies in the Defence and Counterclaim before Judge Maloney QC the document may have been enough to put in issue the Bank’s claim to still be entitled to £121,000 (which in turn would require it to show that it was authorised to pay out US$190,000 to Mexico in 2002). And, as I believe HH Judge Maloney rightly recognised, the fact that the Bank may have dealt with matters on two accounts may not necessarily mean that when it comes to the question whether Ms Copeland is still its debtor it can focus on only one account and not the other.

I give the following directions in relation to the hearing of the appeal. It is to be listed for one day. The Bank is to prepare the hearing bundle in the event that Ms Copeland does not appoint new solicitors. The bundle is to be lodged 7 days before the hearing. All further documents, including written argument on the appeal, are to be served by one party on the other and lodged with the court 3 days before the hearing. Ms Watson may not represent Ms Copeland on the hearing, and nor may she make any application on behalf of Ms Copeland in advance of the hearing.

The forthcoming hearing of the appeal may be a crucial hearing for Ms Copeland and I strongly urge her to take independent professional advice and secure independent professional representation. I will ask Miss Nesbitt to ask her Instructing Solicitors kindly to ensure a copy of this judgment is sent to Ms Copeland.