Lloyds Bank PLC v Michael Thomas Cook [2025] EWCC 43

[2025] EWCC 43Appeal No PR123/2024
IN THE COUNTY COURT AT BURNLEY
Date 24 th July 2025
ON APPEAL FROM DDJ VAKIL
Before
HHJ MALEK
Between
LLOYDS BANK PLCClaimantMR MICHAEL THOMAS COOKDefendantLLOYDS BANK PLC Claimant/ Respondent- and –MR MICHAEL THOMAS COOK Defendant / Appellant
Mr Jonathan Butters (instructed by CRS) for AppellantMr Matthew Tonnard (instructed by TLT LLP) for RespondentHearing Hearing dates: 23 May 2025
APPROVED JUDGMENTI direct that pursuant to CPR PD39A para 6.1 no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.

HHJ Malek :

[1]This is the hearing of the Appellant’s appeal commenced by way of an Appellant’s Notice dated 27 September 2024 (the “Appeal”). The Appeal is against the decision of Deputy District Judge Vakill (the “DDJ”) made on 9 September 2024 to strike the Appellant’s defence to the Respondent’s claim for possession of the Appellant’s residential dwelling at 4 Lovat Road, Preston (the “Property”).[2]The Appeal, essentially, raises a single but important issue: whether the DDJ was wrong to strike out the defence and grant possession summarily, in circumstances where the Appellant raised issues concerning the securitisation of the mortgage and the Respondent’s entitlement to enforce it. Background[3]The Appellant entered into a series of mortgage agreements with the Respondent and its predecessor entities between 2005 and 2008. The final agreement, dated 31 July 2008, was between the Appellant and Lloyds TSB Bank plc, now Lloyds Bank PLC. The mortgage was secured by a legal charge registered against the Property.[4]The Respondent brought possession proceedings in December 2023 on the basis that the mortgage term had expired and the Appellant had failed to repay the outstanding balance, which stood at approximately £100,000.[5]The Appellant filed a defence in April 2024, raising issues mainly concerning the securitisation of the mortgage and the possibility that the Respondent no longer held enforceable rights under the charge.[6]On 9 September 2024, the DDJ struck out the defence and granted possession. The Appellant now appeals that decision. The Legal Framework[7]The principles governing appeals are well established. CPR 52.21(3) provides that an appeal may be allowed where the decision of the lower court was either wrong or unjust due to a serious procedural or other irregularity. A decision is “wrong” if it involves an error of law, fact, or discretion.[8]In determining whether the decision of the lower court was “wrong” for the purposes of r.52.21(3)(a), regard must be had to the way in which the parties’ cases were formulated below: see King v Telegraph Group Ltd [2004] EWCA Civ 613; [2005] 1 W.L.R. 2282, CA, at [54].[9]The test for striking out a defence or granting possession summarily is whether the defence discloses a real prospect of success. This is the same test as under CPR Part 24: see Global 100 Ltd v Laleva [2022] 1 WLR 1046. The Grounds of Appeal[10]The Appellant asserts, in summary, that: a) The Defence raised “… the issue of securitisation of the mortgage”; b) The following principles of law apply: i) The Land Register should present the current state of the registered title of all registered land, including proprietorship of any charge, ii) Regulated mortgage contracts should only be entered into by regulated lenders and borrowers who are protected by such regulation. c) Securitisation (the onward sale of a mortgage by the lender) may offend both of these principles: i) a borrower cannot identify their contractual counterpart with any certainty, ii) Securitisation constitutes a “transfer of a registered charge”. Where the registered transaction is not registered at the Land Registry, the Register is not up to date; iii) the entity “acquiring the mortgage (most likely a ‘Mortgage Trustee’)” is a party to the mortgage for the purposes of section 26(1) of the Financial Services and Markets Act 2000 (“the FSMA”) and article 61 of the Financial Services and Markets Act (Regulated Activities Order) 2001 (“the RAO”); and iv) If “the Mortgages Trustee is not authorised by the FCA then the mortgage contract is unenforceable”. (“the Unenforceability Argument”) d) Notwithstanding that the Appellant accepts the Respondent “held all the rights [under the charge]”, it is disputed “… what those rights actually were” (“the Scope of Bank’s Rights Argument”); and e) The Defence, and the legal principles referred to above, could “…only be dealt with after disclosure and evidence of both sides”. At its highest, the Appellant can only assert that “… the Respondents rights under the charge ‘could’ have been affected…” (“the Premature Determination Argument”).[11]The Appellant elaborated on these arguments in its skeleton argument and I deal with further detail, under the heading of “Discussion”, below. New evidence[12]The Respondent seeks to rely upon a second witness statement from Mr Stuart Montgomery, which was not before the court below. It is submitted, by the Respondent, that this witness statement merely seeks to correct an inaccuracy in Mr Montgomery’s first witness statement dated 2 July 2024 in which he said that the Mortgage has been “securitised”, rather than subject to a “covered bond”. Mr Montgomery, in his second statement, goes on to explain the distinction (in so far as the Claimant understands it or uses these terms) between a mortgage that is “securitised” and a “covered bond”. Importantly, for these purposes, Mr Montgomery clarifies, in his second statement, that it is the beneficial interest in the Mortgage that is assigned, and not the legal title.[13]The principles governing the admission of fresh evidence on appeal are well established. They are governed by CPR 52.21(2) and are rooted in the decision of the Court of Appeal in Ladd v Marshall [1954] 1 WLR 1489, (since refined by subsequent authority). The court must be satisfied that the evidence could not with reasonable diligence have been obtained for use at trial, that it would probably have an important influence on the result, and that it is apparently credible. While these criteria are no longer rigid rules, they remain highly persuasive. The overriding objective remains paramount and it is often a case of attempting to strike a fair balance between the need for concluded litigation to be determinative and the desirability of achieving the right result in a judicial process.[14]Much of the evidence set out in Mr Montgomery’s second statement goes to explaining the distinction between a “securitised” mortgage and a “covered bond”. The distinction goes to how the SPV ( the assignee) funds the acquisition and the “ownership” of the SPV. In my judgment such a distinction would have had no influence on the decision below. This was simply not in issue. Accordingly, no purpose is served in admitting such evidence at this stage.[15]The more important piece of information contained in Mr Montgomery’s second statement is an amplification of his first statement. In his first statement he merely said that the “loan had been securitised”. He did not go on to explain, as he does in his second statement, that this actually means that the beneficial interest alone is assigned. In summary, whether the Mortgage was “securitised” or transferred pursuant to a “covered bond” only the beneficial interest is ever assigned. This was information that might, conceivably, have had an influence on the court below. It was also information that was available (with due diligence) at the earlier hearing and is apparently credible. Bearing in mind the limited scope of this part of Mr Montgomery’s evidence and the fact that it does not alter, to any material extent at least, the Appellant’s arguments / position the balance of justice favours the admission of this part of Mr Montgomery’s evidence at this stage. Discussion The approach to strike out of a defence in a possession claim[16]The Appellant argues that(a) a defendant cannot be fairly required to make out the full substance of his defence at the initial possession hearing in circumstances where disclosure is required, and(b) the DDJ should not have ordered possession on a summary basis where the evidence discloses a possibility that either claimant is not entitled to possession (at all or in the capacity in which it sues) or further parties ought to be joined into proceedings first.[17]I agree that it is a settled feature of the possession procedure under CPR Part 55 that a defendant is not required to file a defence in order to participate in the hearing. CPR 55.7(3) makes plain that a defendant who fails to file a defence may still be heard, though the court may take that failure into account when considering costs. The structure of the procedure is such that the court, upon issue of the claim, fixes a hearing (CPR 55.5(1)). At that hearing, the court may either determine the claim or give case management directions (CPR 55.8(1)).The test for whether the matter should proceed to trial is whether the claim is genuinely disputed on substantial grounds (CPR 55.8(2)).[18]I further agree, that the test is, in substance, the same as that which governs applications for summary judgment under CPR Part 24. The question then before the DDJ was whether the Appellant (defendant) had shown a real prospect of success in defending the claim. For my part I do not see this as a separate ground of appeal. The answer to this question, in reality, is dependent on whether or not the DDJ erred in law in the manner alleged pursuant to the Scope of the Bank’s Rights Argument. If he did then it is likely that he was wrong in concluding that the Appellant had not shown a realistic prospect of success. If he did not then his decision to strike out the defence is likely to be one that was open to him, bearing in mind the ambit of the discretion that he enjoys in such matters. The Unenforceability Argument[19]The Appellant argues, in summary, that: a) the assignee might not have been authorised by the Financial Conduct Authority, and b) (b) might either have been engaged in administering the mortgage, or have entered into a “regulated mortgage contract as a lender”; As a result of which the underlying Mortgage would be rendered unenforceable pursuant to s.26 of the FSMA.[20]The difficulty for the Appellant is that this argument is entirely speculative. There is no evidence to suggest the assignee is unregulated or (even if that were the case) it has “administered” the mortgage. Administered in this context means “notifying the borrower of changes in interest rates or payments” or taking any “necessary steps for the purposes of collecting or recovering payments” (see Art. 61 (3) the RAO). In fact the only available evidence (contained in the particulars of claim) tends to show that the Respondent (and no one else) contacted the Appellant about the sums due (or payments).[21]The argument that an assignee might be “entering” into an regulated mortgage contract “as lender” because the original assignor(a) retained a contractual right to transfer the loan agreement or any rights under it, and then(b) made such a transfer to an assignee, is even more speculative. There has, in this case, been no legal transfer of the Mortgage- only an equitable assignment. In these circumstances it is difficult to see how it could be said that the assignee had entered into a regulated mortgage contract with the Appellant (or any other borrower).[22]Of course evidence might emerge which would enable the Appellant to properly advance such arguments. However, that is to put the cart before the horse. It is, also, to add metaphor upon metaphor, a fishing expedition for a potential defence.[23]Accordingly, the Unenforceability Argument discloses no reasonable grounds for defending the possession proceedings. The Scope of the Bank’s Rights Argument[24]Whilst it is fair to say that the details of the Appellant’s argument under this head are, to say the least, sparsely set out in his defence and grounds of appeal; they are elaborated upon in his skeleton argument.[25]The argument appears to be that the effect of securitisation could be that the Respondent had lost its right to sue in respect of the debt. This, it is argued, is because: a) Where there was an equitable assignment only, whilst the respondent retained legal title to the debt, beneficial ownership will have absolutely transferred to the assignee. b) The position on equitable assignment of a chose in action was determined by the Court of Appeal in Three Rivers DC v Governor and Company of the Bank of England [1996] QB 192,(“Three Rivers”) where a majority held (per Peter Gibson LJ at 308A-B, with Waite LJ concurring and Staughton LJ dissenting on the point): i) “where … there is an agreement to assign a legal chose, in equity the assignee becomes the owner and controller of the legal chose. He is entitled to sue for the recovery of the chose, but as a matter of practice he will normally be required by the court to join the assignor either as plaintiff or, if he refuses to give his consent to this, as defendant”; and ii) “An assignor, if the assignment is known, will not be allowed to sue in his own name for himself. He may sue as trustee for the assignee if the assignee so wishes, but in that event he should reveal his representative capacity (R.S.C., Ord. 6, r. 3(l)(a)) and if he attempts to recover for himself, even if, for example, only part of the debt has been assigned, he will be required to join the assignee”. c) This remains the position where the equitable assignor of a chose in action pursues a possession claim as legal owner of a charge. In Bexhill UK Limited v Abdul Razzaq [2012] EWCA Civ 1376 (“Bexhill”) Aikens LJ held at [58] “when there has been an assignment that takes effect in equity, the general rule is that it is the equitable assignee who has the right to sue, because it is the equitable assignee who is beneficially entitled to the thing in action. The assignor will not be allowed to maintain an action regarding the thing in action unless the assignee is joined as a party to the claim: see Three Rivers DC v Governor and Company of the Bank of England”.[26]As a result, the Appellant argues, the DDJ should have followed Bexhill and declined to make an order for possession in favour of the equitable assignor of the chose in action.[27]In response the Respondent relies upon the Court of Appeal’s decision in Paragon Finance PLC v Pender [2005] 1 WLR 3412 (“Pender”). It is submitted that this very point was before the court which concluded:
“ [109]…..It is common ground that Paragon, as registered proprietor of the Legal Charge, retains legal ownership of it. One incident of its legal ownership – and an essential one at that – is the right to possession of the mortgaged property. I can see no basis upon which it can be contended that an uncompleted agreement to transfer the Legal Charge to the SPV (that is to say an agreement under which, pending completion, the SPV has no more than an equitable interest in the mortgage) can operate in law to divest Paragon of an essential incident of its legal ownership. In my judgment as a matter of principle the right to possession conferred by the Legal Charge remains exercisable by Paragon as the legal owner of the Legal Charge (ie as the registered proprietor of it), notwithstanding that Paragon may have transferred the beneficial ownership of the Legal Charge to the SPV. [110] It follows, in my judgment, that Paragon, so long as it remains the registered proprietor of the Legal Charge, is a necessary party to any claim to possession of the Property in right of the Legal Charge. [111] The only question then is whether the SPV should have been joined in the proceedings as an additional claimant. In my judgment, the answer to that question is plainly: No. On the assumption that the consideration for the transfer of the Legal Charge has been paid in full, Paragon has since retained its legal ownership of the Legal Charge as trustee for the SPV (see Whiteley v Delaney [1914] AC 132 at 141 per Viscount Haldane LC). But it does not follow that in that situation the SPV, as the owner of the Legal Charge in equity, is a necessary party to the claim; and on the facts of the instant case joinder of the SPV is wholly unnecessary. There is, after all, no issue between the SPV and Paragon as to the exercise of the mortgagee's rights under the Legal Charge: indeed the SPV has, by virtue of the administration agreements, expressly authorised Paragon to exercise such rights on its behalf. [112] In my judgment, therefore, there is no substance in the contention that the SPV should have been joined as an additional claimant in the proceedings. Nor, in my judgment, can the fact that Paragon has failed to describe itself as suing in its capacity as trustee affect the validity of the proceedings or of the orders made in the proceedings (in particular, the possession order). In any event, even if that failure could be said to amount to a formal defect in the proceedings (and I do not regard it as such) the court has ample powers under the CPR to correct such defects (eg under CPR Pt 17).”
[28]Accordingly, the Respondent argues, that the DDJ was right to make the order that he did.[29]The issue boils down to whether the Respondent as the legal owner and equitable assignor of the Mortgage was entitled to bring proceedings (without joining the beneficial assignee) against the Appellant and without confirming the capacity in which those proceedings were brought (i.e. as principal or as agent for the assignee). There is, in my judgment, a tension between the Court of Appeal’s decisions in Three Rivers and Pender on this point. The latter was decided after the former, but it does not appear that reference was made to Three Rivers when the court decided Pender. Bexhill was decided the latest in time, but it merely follows Three Rivers without reference to Pender.[30]I accept and note the dissenting judgment of Staughton LJ in Three Rivers holding wherein he said:
“In my judgment the assignor still has a cause of action at law; and the assignee has a cause of action in equity. That was ultimately the position of Sir Patrick Neill in his reply, and I think that is right. It is the solution which is nearest to reconciling all the authorities. It allows the assignee still to use the assignor’s name, if he wishes, as before the Judicature Act. Of course the assignee’s claim prevails, if he insists upon it. The Supreme Court Act 1981 says so. But where the assignee is a party to the action, and expressly declines to make a claim, I can see no reason why the assignor should not claim what is his legal right….”
[31]However, Staughton LJ’s dissenting judgment is just that, and not binding. Nor can the Respondent find succour in the argument that Pender ought to be followed because it more closely resembles the facts in the present appeal – In both Pender and Three Rivers the relevant part of the decision sought to lay down principles of general and more wider application.[32]For my part I prefer the reasoning of the court in Pender and that of Staughton LJ. The mischief that the court to sought to prevent in Three Rivers is the vexation of the debtor twice: once by the legal owner and once by the beneficial assignee. That the Appellant, as debtor and defendant in this action, might be vexed by the assignee at a future date in respect of the same claim seems to be wholly improbable. Even if that did turn out to be the case the Appellant would have a complete answer in the form of a receipt from the Respondent and any claim by the assignee in those circumstances is likely to represent an abuse of process. Little can be gained by joining the assignee to these proceedings- it is likely only to result in increased costs and delay.[33]That said, the decision that the DDJ was required to make necessitated in him coming to the conclusion that the Appellant enjoyed no real or realistic prospect of success. In the circumstances where there is a tension in the law, in the manner that I have described above, it was wrong for him to come to that conclusion. The Appellant may enjoy a slim chance, but it is not one that is devoid of reality. Had the case for the Appellant been put before the DDJ in the way that it has been argued before me and had he been referred, in particular, to the decision in Three Rivers (and for that matter the other authorities before me) rather than simply the decision in Stamp v Capital Home Loans Limited [2024] EWHC 1092 (KB); I suspect that he would have reminded himself of the summary nature of the application before him, and erring on the side of caution, concluded that the issues were not suitable for summary disposal. Whilst it is of some concern that this point was not argued before the DDJ at all, or at the very least, in the way that it has been argued before me; I note that Mr Butters did not appear in the hearing below and I, of course, make no criticism of him.[34]It may also well be the case that an amendment to the Respondent’s pleadings (even at or just before a final hearing) to the effect that it brought an action as agent would be allowed and thus, perhaps, dispositive of the issues raised in Three Rivers and Bexhill. However, that was not the stage of proceedings reached and was not an issue before the DDJ.[35]Accordingly, in my judgment this ground of appeal is made out. The Premature Determination Argument[36]By itself this argument cannot hope to succeed. It is an argument that must necessarily “piggy back” upon either the Unenforceability Argument or the Scope of the Banks Rights Argument. It is not, accordingly, a standalone ground of appeal and succeeds only to the extent that the Appellant has been successful on the Scope of the Banks Rights Argument. Conclusion[37]For the reasons given and to the extent set out the appeal is allowed.[38]Counsel are both invited to agree a consequential order and let me have it (via my clerk) for my approval. In the event that such an order is agreed and sent to me for my approval in advance of the handing down of this judgment then the parties and their representatives are excused from attendance at the handing down of this judgment.