Case No: B5/2008/0074
Neutral Citation Number: [2008] EWCA Civ 598
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BRENTFORD COUNTY COURT
(HIS HONOUR MARCUS EDWARDS)
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Friday, 11th April 2008

Before:

LORD JUSTICE MUMMERY
and
LADY JUSTICE ARDEN DBE
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Between:

	CHEVAL BRIDGING FINANCE LIMITED
	Respondent/Claimant	
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BHASIN AND OTHERS	Appellant/ Defendant	

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Mrs H Pine-Richman (instructed by Messrs J.R. Jones) appeared on behalf of the Appellant.

Miss N Sandells (instructed by Messrs Sherringtons) appeared on behalf of the Respondent.

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Judgment

Lady Justice Arden DBE:

1.	This is an adjourned application by Mrs Bhasin on notice to the respondent for permission to appeal, with permission to follow if appeal is given, against the possession order dated 17 December 2007 of HHJ Edwards, sitting in the Brentford County Court.

2.	The appellant’s case is that the judge wrongly refused to permit an adjournment to enable the appellant Mrs Bhasin to make an application under section 36 of the Administration of Justice Act 1970.  That gives the court the power to adjourn proceedings or to stay or to suspend an order for possession or postpone the date for the delivery of possession: 

“…if it appears to the Court that in the event of its exercising the power the mortgagor is likely to be able within a reasonable period to pay any sums due under the mortgage.”

3.	The appellant also seeks to adduce fresh evidence and also seeks a stay.  Now the background for today’s purposes can be stated extremely shortly by quoting the relevant paragraph in the judge’s judgment, which is paragraph 3: 

 “The Third Defendant’s case is that she has been a victim of fraud, and that certainly appears from her evidence, upon which I based my judgment.  The fraud was, she says, committed by the First and second Defendants and the First Defendant’s firm, Messrs. King & Co., as a result of which she was persuaded to transfer her property to the First and Second Defendants in return for a very small consideration.  The First and Second Defendants re-mortgaged the property for a much larger sum.  They defaulted on the loan, which ought to have been paid back in full by November 2006.”  

4.	I would add to that that the amount for which the property was remortgaged was apparently £285,000.  The mortgagee was the respondent to this application and the amount outstanding as of today’s date is some £523,000.  

5.	Now the matter came before the Brentford County Court in August and a number of orders were made.  In particular, the court made an order for certain preliminary issues.  Those issues were heard by HHJ Edwards.  He gave judgment on 19 December 2007 and his decision is not appealed.  There was also an application for an adjournment on that date to enable the proceedings brought by the respondent against the appellant and the proceedings brought by the appellant against the Hastings and a Mr King to be heard at the same time.  This was adjourned.  I would note that the application was made under Civil Procedure Rule 3.1 on various grounds set out in a witness statement of Jennifer Lisa Phillips.  Those grounds include ground 5 that, in the event that the court makes an order for possession, the applicant will seek an order for the suspension of possession until the determination of the claim against the first, second and third defendant.  That application was stood over to be heard after the preliminary issues.

6.	In the action in which this appeal arises, there is no claim that Cheval was involved in the misdeeds which are relied upon by the appellant in the other action.  Those misdeeds include misrepresentation and undue influence.

7.	The judge heard argument -- indeed, we are told that he heard argument over half a day.  He gave the judgment to which I have referred.  He sets out the position in relation to the other proceedings and says that it is unlikely that they would come to trial before the middle of 2008 on an optimistic assessment.  As we understand it, they are indeed to be set down to be tried in July of this year.  

8.	He then records that the appellant’s case was that Mr and Mrs Hastings owned other properties and that there may be insurance to cover their claim.  The judge said that may or may not be the case.  The judge then goes on to point out that, in October 2006 or thereabouts, Mrs Bhasin had an offer of a mortgage for £240,000, but the judge states that that offer has no doubt lapsed. He goes on to say: 

“It is most unlikely that the offer would be made if it were to have been behind the security of the Claimant.”

9.	He adds that there is no evidence before him of the means, either capital or income, of Mr and Mrs Hastings; they could own properties but those properties could be subject to mortgage, such as the mortgage in this case.  The judge then continues as follows: 

“8. Without evidence as to assets which can be perhaps frozen in some way in order to reduce the necessary sum, and no evidence as to when a trial is likely to take place, and no assessment of the strength of the Third Defendant’s claim against all concerned, there is at present no evidence upon which a court could find that the total sum being claimed, about £428,000 at today’s date, could be repaid within a reasonable period of time.  It has to be remembered that the term of the loan ended as long ago as November 2006; we are now in December 2007.  I suppose if there were strong and convincing evidence that the whole sum might be repaid in, say, three months, or at a stretch six months, the court might grant an order for a stay or suspension.  But there is no such evidence before the court.

9. It has been made plain to the Third Defendant and her advisors since at least the date of the skeleton argument for the Claimant, which was September 2006, that the Claimant would be seeking a 28 day order.  There have been nearly three months since that date for the Third Defendant to assemble her evidence on which the court could exercise its discretion.  Nothing is before the court apart from what I have been told on instructions by counsel for the Third Defendant.  I have to say that she has said all that could be argued on behalf of her client, who is in extremely difficult circumstances.  

10. So far as concerns the application for adjournment, I shall refuse that.  The Third Defendant has had the opportunity to obtain the evidence.  More important, it is most unlikely that any evidence can be produced which would begin to satisfy requirement that the whole mortgage loan should be paid off within a reasonable period.  Obtaining the evidence might well take four or six weeks, and that again goes against the principle of s.36, which is that the whole sum, including costs, must be repaid within a reasonable period of time.  The application for an adjournment was made too late, there is no prospect of sufficient evidence being met and, therefore, I refuse it.”  

The judge went on to refuse the application for a stay under section 36 and made a twenty-eight day order for possession.  

10.	It will be appreciated that the power under section 36 is one which falls to be exercised by the judge in the proper exercise of his discretion, and therefore, so far as this court is concerned, it will only be reviewed on appeal if the discretion was exercised on a wrong basis, or in a way in which no reasonable judge could have exercised it. 

11.	Now, there are amended grounds of appeal which contain some repetition and so I will summarise the grounds as follows.  First, it is said there was a lack of a proper opportunity to obtain evidence after learning that Mrs Bhasin would be unsuccessful on the preliminary issues.  The judgment of the judge was sent out in draft three or four days ahead of the date fixed for handing down. Mrs Bhasin now wishes to obtain evidence to show that she would be able successfully to enforce any judgment obtained against Mr and Mrs Hastings or Mr King in order to apply the proceeds of that action to pay off the respondent’s charge.

12.	Secondly, the appellant relies on what is said to be a lack of notice that the court would be dealing with an order for possession at the same time as the judgment was handed down.  As to this, the claimant had -- in its skeleton argument on the preliminary issues in September 2007 -- stated that it would be seeking a possession order if successful on the preliminary issue, but the appellant says that it was not clear to her that such an order would be sought at the same time as the handing down of the judgment, especially since the hearing was listed for only half an hour and the appellant’s solicitors were told that the hearing would simply be to hand down the judgment which was not received until two days before the date fixed for hand down.

13.	Thirdly, the appellant relies on what she contends is a lack of prejudice to the respondent.  She submits that there is no evidence that the respondent would be prejudiced by delay. The appellant, on the other hand, is facing homelessness.  Fourthly, the appellant says that there was no basis for saying that it was unlikely that evidence could not be obtained in support of the application if she was given an adjournment.  And lastly, she states that it was wrong for the judge to say there was no evidence at all or that she would be likely to be able to pay off the mortgage debt within a reasonable time.

14.	I think it necessary only for me to indicate in broad outline the respondent’s response to some of these points.  On lack of notice, the respondents say the matter first came before the court on 15 August 2007 -- that was the date originally fixed for the trial on this possession action, but on that date an application for an adjournment was made by counsel on behalf of Mrs Bhasin, that being the late Mr Cenydd Howells.  He made an application on two  bases.  First, that counsel originally instructed in the case -- Mrs Pines Richman, who appears for Mrs Bhasin today -- was unavailable due to the illness of her father, and secondly because Mrs Bhasin was taking proceedings against the first and second defendant.

15.	Miss Nicole Sandells, who appears for the respondents, informs the court on this appeal that Mr Howells agreed that if the preliminary issues were determined in the claimant’s favour that would decide the case, even on Mrs Bhasin’s version of events.  She says in her written skeleton that it was made very clear to the court and to the third defendant’s representative (that is, the appellant’s representatives) that, if the respondent succeeded on the preliminary issues, an immediate order for possession would be sought.  She adds that in the final paragraph of her skeleton argument prepared for use on the trial of the preliminary issues, it was stated that the claimant was entitled to possession and sought an order for possession in twenty-eight days.

16.	The respondent additionally submits that there was no evidence to show that the mortgagor would be good for any judgment against them.  The claim was not entirely clear.  It was not entirely clear that the claim would, in any event, clear the entire mortgage, since even on Mrs Bhasin’s case she was responsible for £226,000 of the original mortgage loan.  Mrs Richman, however, did submit that Mrs Bhasin had had the previous mortgage offer of £226,000 and that she could pay off the mortgage if the first and second defendants paid off the rest of the loan.  The respondent in her skeleton argument also relied upon the fact that the appellant had had, in effect, since last December to make good any evidence, and that the balance now due is, as I have said, £523,521.44 exclusive of current litigation costs.

17.	The matter came before Carnwath LJ on paper.  He adjourned this matter into court on the basis that in the skeleton argument there was, in his judgment, a realistic argument (or there appeared to be a realistic argument) of procedural unfairness, based on the proposition that the applicant’s solicitors were led by the court to understand that no substantive order would be made on 17 December 2007 and that, given more time, the case regarding possession would have been strengthened.  He pointed out, however, that there was no evidence in support of either proposition, and he gave a direction that the applicant was to submit evidence in support of the skeleton argument within twenty-one days of his decision -- that is 19 February 2008 -- and in the meantime he stayed possession with liberty to the respondent to apply on notice to discharge or vary the stay.

18.	A quantity of further evidence has been filed which this court has looked at only de bene esse.  Before coming to that matter, I will give my conclusions on the submissions to which I have already referred -- that is lack of proper opportunity, lack of notice, lack of prejudice to the respondent, and no basis for saying that there could be no evidence of likelihood of ability to pay off the debt.

19.	I take first the question of lack of notice and lack of proper opportunity to present argument.  There is certainly no question of not having had time to make submissions on 17 December 2000 itself, because it is said the judge in fact allowed half a day for submissions.  Mrs Richman’s argument in the grounds of appeal was that there was a lack of a proper opportunity to make an application under section 36 or at all.  However, as regards this, it is clear that the preliminary issues had been heard on the basis that, if they were unsuccessful, the respondent would be seeking an order for possession.  It is said that there was a lack of notice but Mrs Bhasin was represented by solicitors and counsel and it must have been obvious to them if they had gone back to the files that, when judgment was handed down, the court would make the appropriate order and would hear submissions on that order.  In any event, the respondent to this appeal had made its position clear in September 2007.  If Mrs Bhasin or her advisers were under any doubt as to the claimant’s position they should have clarified the matter with the respondent’s solicitors or the court, and there is no explanation as to why they did not take those elementary steps or as to what happened on the hearing in August at which, as I have said, Mrs Bhasin was represented by the late Mr Howells.

20.	As regards lack of prejudice, I would stress that the onus on any application for an adjournment, whether under section 36 or otherwise, must be on the appellant and, if the application is under section 36, the criterion is not lack of prejudice to the respondent.  In any event, there may well have been a fall in the housing market and the judge would, no doubt, have taken the view that the appellant had to discharge the onus as it fell on her.  Moreover, as the judge pointed out, there was no guarantee that Mrs Bhasin would be successful in her claim against Mr and Mrs Hastings or that those two defendants would be able to meet any judgment or, indeed, that Mr King would be able to do so.  As to the question whether or not the judge was in error in not taking the view that there was likely to be evidence, the position was that it was for the appellant to show that she could discharge the mortgage debt within a reasonable time or that there was otherwise a proper case for an adjournment.

21.	In those circumstances the decision on the adjournment question being, as a I have said, a matter for the discretion of the judge; and he having given the reasons which he gave in the judgment, I, for my part, to do not think that it could be successfully argued that he was, for the purposes of section 36, wrong in principle on the evidence before him or that his decision was perverse, and for those reasons I do not think there is any real prospect of success in challenging the judge’s discretionary judgment on the basis of the evidence before him under section 36.

22.	In those circumstances, although this court has heard evidence de bene esse, in my judgment it is the question of whether that further evidence would lead to a different decision is not one which this court needs to deal with at this stage, since the judge made a decision which is not, as I see it, capable of challenge.  The question of further evidence does not strictly arise.  There has been an attempt to put in evidence.  There is conflict of evidence as to the position relating to the availability of assets to Mr and Mrs Hastings to discharge any judgment, and Miss Sandells has given us information on instructions today which conflicts with the evidence which has been put in by the appellant.  Accordingly, in those circumstances I do not think it is necessary to deal with the evidence.  I would just point out that the only other assets which Mr and Mrs Hastings are said to have are shares in Brook Bridging and Property Ltd, but that, as at June 2006, earned profits of only £6,000 in that financial year.  They have also earnings as directors of that company or another company, MS Travel, but they are not shown as very large.  

23.	On today’s application I would certainly not grant any application to admit further evidence.  Indeed, it would be, I think, unfair for the respondent for us to do so, given that the respondent has evidence which it has not had a proper opportunity to consider and put before the court.  However, in the course of argument it has emerged that there are two questions which, in my judgment, would justify the grant of permission to appeal and, as my Lord has already indicated, I would give permission to appeal on these two limited points and on the basis of directions which I will mention in a moment.

24.	The first question is whether, in addition to the power under section 36 of the Administration of Justice Act 1970, the judge had power to adjourn the hearing under CPR 3 to await the outcome of the trial of the action against the Hastings and Mr King in July.  Now, I would point out of course that the respondent is not a party to those proceedings and it is not suggested that a claim lies against them for damages in the same way as it has been brought against Mr and Mrs Hastings and Mr King.  Miss Sandells has submitted that any power under CPR 3, if available, could only be used for case management purposes; but there is arguably an anterior question as to whether, as a matter of case management, it would be right to hear any evidence as to ability to pay immediately on giving judgment or after the trial.  That would arguably be a case management point capable of invoking the powers under CPR 3.

25.	Miss Sandells argues very strongly that there can be no power under CPR 3, given that there is an express statutory power which, she argues forcibly, displaces the power under procedural rules.  But an application under CPR 3 was made in August and adjourned to be heard after the preliminary issues had been disposed of, so that was in fact before the judge on 17 December 2007.  In my judgment the questions whether the judge had any power under CPR 3 and if so whether he correctly directed himself as respects the exercise of any such power are worthy of consideration by this court because it may  affect a number of actions for possession and therefore this question, having been raised, should be resolved before this court on a full appeal.

26.	The second question is a separate question, which is whether, in the events which happened, Mrs Bhasin was “a mortgagor” for the purposes of section 36 and, if so, whether there was any power in the court to adjourn the proceedings to await the outcome of the trial of the proceedings against Mr and Mrs Hastings and Mr King.  This point had been conceded by the respondent, but it is an important point because it goes to the court’s jurisdiction under section 36 and it also, therefore, would define the court’s powers.  Miss Sandell’s argues persuasively that Mrs Bhasin derived title from the Hastings as mortgagors by virtue of the provisions of section 39; but it is also arguable that she was not in fact sued in that capacity and that she did not in fact acquire title in that way.  The position is that she was joined to possession proceedings, but it appears that no Particulars of Claim were made against her or served on her and therefore there is an arguable point here as to the court’s powers.  

27.	Now, having identified those two questions, I would give permission to appeal on those two questions and those two questions alone.  The appeal cannot be heard today and therefore I would adjourn the appeal to be heard by a full court -- that is consisting of three Lords Justices or Lady Justices, or two Lords Justices or Lady Justices and one High Court judge, but there to be one Chancery Lord or Lady Justice.  I would grant a stay of the hearing of the appeal.  I would direct that the appeal come on for hearing as soon as possible -- I think that means irrespective of counsel’s convenience.  I say that because obviously the respondent is concerned about recovering its money, which has been outstanding since November 2006.  I would stand over any application to adduce further evidence to the court hearing the appeal, and, so far as the documents are concerned, I would direct that the parties make any further amendment to the bundles within the next twenty-one days or, if earlier, not less than seven days before the date fixed for the hearing of the appeal.  I say that because this court has not had a complete bundle of the documents in this case or a bundle of authorities until it came into court and that is not a way in which an appeal or an application for permission to appeal should be conducted.  The papers should be got into proper order first.

28.	I will finally say that it is not necessarily conducive to the aims of justice that the claims in this action, together with those in the other action, should be resolved independently of each other, but that is a matter for the full appeal.

Lord Justice Mummery:  

29.	I agree, and I give the indication that I think the right order for costs would be costs in the appeal.  We are not deciding who has won and who has lost, but if you want to make objections to that you can.

Order:  Application granted; appeal adjourned