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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Lloyds TSB Bank Plc v Pygott [2002] EWCA Civ 1315 (22 August 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1315.html Cite as: [2002] EWCA Civ 1315

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BURY ST EDMUNDS COUNTY COURT
(His Honour Judge Sennett)

		The Royal Courts of Justice Strand London WC2 Thursday 22nd August, 2002

1. LORD JUSTICE ALDOUS: There are before me two applications by Mr Pygott for permission to appeal against orders made by His Honour Judge Sennett sitting at the Cambridge County Court. I will come to the applications, but before doing so I must set out the essential background to these proceedings.
2. By summons dated 29th June 2000 Lloyds TSB Bank Plc sought possession of a property called 4 Eldred Close, Bury St Edmunds in Suffolk. The schedule of the particulars of claim alleged that by a guarantee dated 31st March 1987, Mr Pygott and his wife guaranteed the liabilities of Mottramcourt Ltd up to a limit of £150,000 plus interest and costs to the Lloyds Bank. On 11th July 1991 the bank made a formal demand on Mottramcourt which was not met, and on 24th October 1991 the bank made formal demands on Mr Pygott and his wife under the guarantee. The sum outstanding to the bank under Mottramcourt Ltd's account was stated to exceed £146,000 which together with the costs in dealing with the affairs of the company, amounting to nearly £30,000, made debts of around £176,000. The schedule went on to allege that by way of security for the liability under the guarantee Mr Pygott had charged 4 Eldred Close to the bank by way of a mortgage dated 27th July 1992. The pleading went on to allege that the bank was in consequence entitled to possession under the mortgage having regard to the failure by Mr and Mrs Pygott to meet their obligations under the guarantee.
3. The summons was supported by a witness statement of Mr Graham Paul Waters who was employed as a legal executive of a firm of solicitors acting on behalf of the bank. He exhibited a copy of the guarantee and the mortgage and stated that the amount owing under the guarantee exceeding £176,000. He stated that a request had been made for payment and payment had not been made.
4. The mortgage is in a standard form and was signed by Mr Pygott. The guarantee (at page 130 of the bundle) is also in standard form and is in very wide terms. Mr Pygott told me that the guarantee and the mortgage were entered into on the basis of a letter of 30th January 1987. The relevant parts of that letter are in these terms:

"The basic proposition was to take over the existing facilitates which you have at Barclays, Church Street, Peterborough of £130,000 Term Loan and £80,000 overdraft facility in the name of the Company. In addition a further £55,000 overdraft on an account to be designated say Barn Building Account in the name of the Company to enable you to renovate and sell on the Barn and the portion of land surrounding it. Interest rate on all accounts to be 2½% over Base Rate, with an arrangement fee in respect of the Barn account of 1% of the total lending i.e. £550. It was envisaged that Barclays may insist on the Loan account running its agreed term to the end of June 1987 and would, in that event, retain the portion of the Farm in the Company's name, which is mortgaged to them. If that were the case the position could be covered temporarily, until that date, by a joint and several guarantee of your wife and yourself in favour of the Company, to cover the Current account and Barn overdraft requirements supported by a charge over the house and acreage in your private name. If Barclays wished for immediate repayment of the Term loan, as a result of the Current account being transferred to us, then there would be no problem in taking this on board and we would re-vamp the security position. A further suggestion was made as to the advisability of Term Assurance cover and I did get you a quote for £100,000 which we were to consider at a later stage."

5. In the event the guarantee that was signed was an all monies guarantee over the monies due from the company. It contained a proviso that the total amount recoverable from the guarantors was limited to a sum equal to £150,000. It contained a proviso:

"... that the liability of [the guarantors] hereunder may be determined by notice of discontinuance given in writing by [the guarantors] to the Bank at its Branch at:

Market Place, Stowmarket, Suffolk, IP14 1DY"

6. It went on to contain the normal clauses that one would find in an all monies guarantee, including that the guarantee was a continuing security notwithstanding that the liabilities of the customer to the bank may from time to time be reduced to nil, and notwithstanding any change of name.
7. Mr Pygott served a defence dated 15th November 2000. In that defence he alleged that the guarantee was discharged on 7th December 1987 by transfer of £240,500 from the account in the name of himself and his wife to the account of Mottramcourt Ltd. Thus it was alleged that the liability under the guarantee came to an end. The pleading went on to allege that enforcement of the demand was statute-barred by the Limitation Act. Other matters were raised which do not appear to have any substance as a defence to the claim.
8. There followed an application to strike out the defence and counterclaim which was adjourned to be heard on 26th February 2001 when a case conference was to take place. On that day the application was considered by District Judge Kirby. He ordered that the defence should be struck out and ordered possession was not to be enforced during the occupation of the property by Mr Pygott's mother without leave of the court. The money claim was adjourned generally with liberty to restore. He made a further order in respect of the Part 20 claim raised by Mr Pygott.
9. Mr Pygott appealed against the order striking out his defence and ordering possession. His appeal came before His Honour Judge Sennett who dismissed the appeal against the order for possession and striking out the defence. In essence the Circuit Judge concluded that the District Judge had been right to strike out the defence as it disclosed no grounds of defence which could succeed. In those circumstances he had been right to order possession. Against that order Mr Pygott seeks permission to appeal to this court.
10. At the outset it must be noted that this is an application for permission to appeal where there have been two previous judicial decisions. Thus it is an application covered by CPR 52.13 and this court will not give permission unless it considers that the appeal would raise an important point of principle or practice or there is some other compelling reason for the Court of Appeal to hear the case.
11. I have no doubt that if, as was established in this case, Mottramcourt Ltd owed the bank money, payments by Mr and Mrs Pygott which reduced the company's overdraft even if they exceeded £250,000 in total would not discharge the guarantee. The guarantee is an all monies guarantee. Thus provided there was money owing from Mottramcourt to the bank, Mr and Mrs Pygott remained liable to pay the bank up to the limit of £150,000. Thus the District Judge was right to reject the argument that the guarantee had been discharged as alleged.
12. In any case, I cannot see that this is a case in which there is an important point of principle or practice or there is any other compelling reason for the case to be heard.
13. Mr Pygott submits that the claim was one which had not been dealt with properly under the procedure. It should not have been dealt with summarily by the judge and this misapplication of the procedure, adopted under Part 24, has led to a breach of Article 6 of the Human Rights Convention. He says that he was entitled to a trial and to a fair trial. In essence he says that the order striking out his defence deprived him of a right to a trial with evidence and disclosure and that was contrary to his Convention rights.
14. Those submissions are misplaced. A person who has no defence is not entitled to a full hearing with witnesses, and it is in the interests of both himself and the other party that the matter be dealt with as quickly as possible. There is nothing in the documents that I have seen nor from what I have heard from Mr Pygott to suggest that he did not have a fair consideration of his case, namely a case which the judge concluded could not succeed.
15. Complaints about his human rights do not take into account the human rights of others. It must be a right that another party should not be troubled by vexatious litigation which could not succeed. In my view there is nothing before me which would suggest that there is any important point of principle or practice nor other compelling reason which would enable permission to be granted, and upon that ground alone I would refuse that application.
16. However, I will deal with the points that have been raised. The proposed amended pleading is set out in the bundle. I have read it more than once and have been unable to distil any cause of action against the bank. It appears to proceed upon a misapprehension as to the effect of the mortgage.
17. As I understand Mr Pygott's pleading, it alleges that Mottramcourt were the owners of land called Clarks Farm, Wetherdon, Suffolk which was mortgaged to the bank. When the company was put into liquidation in November 1993 the bank submitted proof of debt in the liquidation of around £160,000 as an unsecured creditor and put in the value of the security that it held over Clarks Farm at nil. However, Mr Pygott tells me that the value of the farm was considerable. He told me that it had planning potential for development and was also a flood plain. Subsequently the Official Receiver, who acted as liquidator, disclaimed any right to the farm. In those circumstances it is said that the bank lost its right to its security. That was rejected by the judge. He relied upon a judgment of His Honour Judge Barnett who had concluded at another hearing that the bank retained its security and had not shed its role as mortgagee. In those circumstances the bank was entitled as mortgagee to sell the farm so as to reduce its debt.
18. There is no doubt that the mortgage existed. There is no doubt, as I see it, from reading the mortgage that the bank were entitled to exercise its rights as mortgagees and to sell the farm.
19. Mr Pygott seeks in his counterclaim to contend that the transfer of the farm to the bank was at an undervalue and in those circumstances he has rights under sections 423 and 424 of the Insolvency Act 1986. In essence, as I understand his claim, he was the or a main creditor of the company and the transfer of the farm to the bank at a nil value was such as to defraud him as a creditor. That contention is misplaced, as the judge found. The bank obtained possession of the farm as mortgagees and any money raised from its sale would reduce their claim and, of course, their claim under the guarantee. It was not a transfer to them by way of a gift or at any value. It was an exercise of their right as mortgagees. The judge was therefore right in paragraph 42 of his judgment when he concluded that the action of the Official Receiver was not a gift of property as the sale was by the bank exercising its power of sale.
20. I conclude that there is no real prospect of success on an appeal of challenging the conclusion reached by the judge that it would not be appropriate to grant permission to amend to add an allegation based on sections 423 and 424 of the Act.
21. The counterclaim also contains a number of allegations against the Official Receiver and other persons for alleged fraud and corrupt practices. I agree with the judge that the remainder of matters set out, as far as I understand them, do not provide a cause of action against the bank by Mr or Mrs Pygott. Mr Pygott addressed me shortly on those matters today and I pointed out to him that this was not a matter between him and the bank. If he felt that the Official Receiver had not acted correctly, then he should seek recompense elsewhere.
22. Again Mr Pygott raised the issue of human rights. In particular he alleged that the decision of the judge meant that he had not obtained a fair trial. As I pointed out, that allegation is baseless. A court, in effect, should strike out actions without a trial where the action could not succeed.
23. I have read the judge's judgment with care and have come to the conclusion that there is no real prospect of an appeal succeeding against this judgment. Both applications must therefore be refused.
ORDER: Applications for permission to appeal refused. (Order not part of approved judgment)