Basinghall Finance Plc v Momoh [2015] EW Misc B4 (CC) (16 January 2015) [2015] EW Misc B4 (CC)

EWMISC
Basinghall Finance Plc v Momoh [2015] EW Misc B4 (CC) (16 January 2015)
[2015] EW Misc B4 (CC) · 2015-01-16
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MS. CRAMPIN (of counsel) appeared on behalf of the Claimant.MR. CUNNINGHAM (of counsel) appeared on behalf of the Defendant.

JUDGMENT

(As approved by the Judge)

JUDGE TOLSON:

1 This is an appeal brought against an Order for summary judgment made on 26 th September 2014 by District Judge Perusko in the Milton Keynes County Court. He gave summary judgment in favour of the respondent to this appeal, Basinghall Finance Plc., in the sum of £89,138.52 together with interest of £2,647 making a grand total of £91,785.52. He also directed that the appellant, Mrs. Faith Momoh, pay the respondent’s costs of the proceedings to be the subject of a detailed assessment.2 On 18 th November 2014 His Honour Judge Harris QC gave Mrs. Momoh permission to appeal that decision which was heard by me today on 16 th January 2015 over the space of some two hours. Both parties have been represented by counsel, Mrs. Momoh by Mr. Cunningham and Basinghall Finance by Ms. Crampin. I express my gratitude to both of them for their written and oral submissions.3 The debt is the shortfall due under a mortgage following the sale of a buy to let property purchased by Mrs. Momoh on a long lease back on 11 th May 2006. In order to purchase the property she took out a mortgage, of which the respondents (the finance company) are now assignees. In brief the history which gave rise to the shortfall on the sale of the property is this: over time arrears developed in respect of service charges and other matters due in favour of the landlord under the lease. In the middle of 2012 the position reached such a pass that the landlord served a s.146 notice.4 The state of affairs was brought to the attention of the respondent mortgagees who exercised their powers under the mortgage to pay off the arrears in the sum of £14,720.81. They then added that sum to the monies due under the mortgage creating substantial arrears which Mrs. Momoh failed to discharge. She maintained that they were not payable as a result of the professional misconduct of the mortgagees and she made a claim to the Financial Services Ombudsman. Her claim was rejected in November 2012. The result was that the mortgagees appointed receivers in respect of the property. The property came to be sold and the sale price was insufficient to discharge the amount due under the mortgage. The claim which was before Judge Perusko resulted accordingly.5 By the time the case reached the court below there was only one live ground of defence and that was that an unfair relationship existed between the lender andthe borrower within the meaning of s.140A of the Consumer Credit Act 1974 which reads:

“ Unfair relationships between creditors and debtors

(1) The court may make an order under section 140B in connection with a credit agreement if it determines that the relationship between the creditor and the debtor arising out of the agreement (or the agreement taken with any related agreement) is unfair to the debtor because of one or more of the following -(a) any of the terms of the agreement or of any related agreement;(b) the way in which the creditor has exercised or enforced any of his rights under the agreement or any related agreement;(c) any other thing done (or not done) by, or on behalf of, the creditor (either before or after the making of the agreement or any related agreement).(2) In deciding whether to make a determination under this section the court shall have regard to all matters it thinks relevant (including matters relating to the creditor and matters relating to the debtor).”6 As the Supreme Court has found in the case of Plevin v Paragon Personal Finance Limited & Ors [2014] UKSC 61 , the concept of an unfair relationship is a very wide concept indeed.7 If an unfair relationship is found then under s.140B of the Act the court acquires a wide range of powers to ameliorate the effect of the relationship upon the debtor. It is these powers which the appellant maintains should have been exercised here so as to eliminate or reduce the debt. She says that Judge Perusko was wrong, first of all, not to find an unfair relationship and, secondly, to exercise the summary jurisdiction in the face of such an ‘unfairness’ argument, because that is a jurisdiction which (at the very least submits Mr. Cunningham) should rarely be exercised in that context . This is a point which appears from the case of Bevin v Datum Finance Limited [2011] EWHC 3542 , and the decision of Peter Smith J .8 It is that core contention which is elaborated by Mr. Cunningham across his skeleton argument and in his oral submissions, and responded to by Ms. Crampin in her document and briefly orally.9 The way in which Mr. Cunningham develops his core submission relates entirely to a particular clause within the mortgage conditions which he says(i) was unfair to the debtor, and(ii) in being breached by the creditor produced the unfair relationship of which he complains. The term in question is para.11.2 of s.3 and reads as follows:
“If we have to pay any expenses to third parties we will try to give notice to you within a reasonable time stating the amount of the expenses, the nature of the service supplied by the third party, and the date on which we have to pay the expenses.”
10 On the first limb of his submissions, the height of Mr. Cunningham’s case appears to me to be that the clause itself might have been more favourably worded towards the borrower by, for example, providing either an obligation to give notice or an obligation to do so save in exceptional circumstances. On the second limb, Mr Cunningham submits that the borrowers were in breach of the term and so acted unfairly towards the lender. What Mr. Cunningham maintains is that not only did the lender fail to give notice of the £14,720 worth of expenses which it was going to pay across the six weeks (which the chronology establishes was the time within which the lender was contemplating discharging the liability before it did so) but it failed even to attempt to give notice to Mrs. Momoh as the term requires. He accepts that there are no other factors upon which he can rely which would tend to establish an unfair relationship even within the very broad ambit of s.140A.11 I reject the idea of an unfair relationship for the reasons which were given by Judge Perusko, but I add my own observations in particular in deference to Mr. Cunningham’s argument.12 First of all, it appears to me that the basis on which this appeal is advanced is extremely narrow. The situation is not to be compared either to the PPI policies which were the subject of the decision in Plevin , or indeed to the broad challenge to the interest rate provisions which were the subject of the decision in Bevin . Here I am dealing with a much narrower basis of challenge, so narrow indeed that it seems to me the proper analysis is as follows.13 The term itself is, on its face, intended to give (and does give) a measure of protection to the borrower. It seems to me it cannot, on its face, amount to a factor tending towards an unfair relationship.14 This leaves standing in isolation Mr. Cunningham’s point that it is in the exercise of the lender’s supposed rights that unfairness lies. The weakness in that suggestion however lies in the fact that it was (at least on Mr Cunningham’s case) a breach of the agreement for the borrowers to act as they did. It seems to me very difficult to say that there was an unfair relationship between lender and borrower when the agreement between them governing that relationship itself provided a remedy for the borrower.15 It appears to me that it will only be in very limited circumstances that an unfair relationship (I emphasise the word ‘relationship’) between lender and borrower can be established on the basis of actions giving rise to contractual rights and remedies on the part of the borrower.16 Moreover in the present case it is not a case of actions, so much as only one act which, in my judgment, has to be seen against the broad context of the case as a whole. That is something which Ms. Crampin elaborated for me by reference to the long history of non-payment on the part of Mrs. Momoh, and by reference to events after she came to be aware not just of the sums outstanding but of the fact that they had been discharged by the lender. In the light of these events and her own actions, it does not appear to me to be possible to conclude that she suffered prejudice in any substantial way as a result of not being told that the expenses were to be discharged before the lender did so.17 For all those reasons it appears to me that the judge was entitled to tackle this particular issue under the summary judgment procedure. It seems to have appeared to him to be a clear case and I share that view. The circumstances here seem to me to fall a long way short of those which were intended to be caught under s.140A of the Act. I see nothing in the Act itself in the circumstances of this case, or in the reason in the case of Bevin, which appear to me to have disqualified the judge from taking the course which he did.18 Indeed, it appears to me that the judge had a wealth of material before him which entitled him to judge the relationship between the lender and the borrower in terms of its fairness, in terms of the general circumstances, the narrowness of the challenge advanced and the course of dealings between the parties. It may well be a rare case which is susceptible to the summary jurisdiction where there is any substantial challenge to an agreement under s.140A, but in my judgment this was such a case. The lender established the fairness of it to the satisfaction of Judge Perusko. They also established the fairness of it to me and there are no grounds on which I could conclude that Judge Perusko was wrong.19 That concludes this judgment.