Neutral Citation Number: [2012] EWHC 4136 (Ch)
Claim No. 1BM30190
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
Civil Justice Centre
The Priory Courts
33 Bull Street
Birmingham
B4 6DS

Date: Friday, 23rd November 2012

Before:

HIS HONOUR JUDGE PURLE QC
Sitting as a Judge of the High Court
______________________
Between:

NAUTCH LIMITED & OTHERS
Claimants
-v-

MORTGAGE EXPRESS
First Defendant
-and-

WALKER SINGLETON (PROPERTY MANAGEMENT) LIMITED

Second Defendant
______________________
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______________________

Counsel for the Claimants (instructed under the Bar’s public access scheme): MR PAUL J DEAN

Counsel for the First Defendant (instructed by Wragge & Co): MR JAMES MORGAN

Counsel for the Second Defendant (instructed by DAC Beachcroft): MR PAUL MITCHELL
______________________

JUDGMENT
1.	THE JUDGE:  These proceedings concern the conduct of the first defendant, Mortgage Express (“ME”), as mortgagee in its handling of a number of accounts opened with it by a number of companies, the first 19 claimants, for whom the twentieth claimant (“Sovereign”) acted as managing agent.  In each case, one of the claimants took out a buy-to-let mortgage on a particular property.  The mortgages were of the interest-only type, for a lengthy fixed term.  The rate was also fixed for a specific period (around three years) though the first payment (for reasons I shall come to) was higher than subsequent monthly payments during the fixed rate period.  
2.	The claimants are all associated companies controlled by Mr Timothy Haines (“Mr Haines”).  They complain not only about the handling of their accounts by ME.  They complain also about the activities of the second defendant, Walker Singleton (Property Management) Limited (“WS”), a firm of surveyors, members of whom were appointed receivers under the Law of Property Act 1925 (“LPA”) at various times of different properties.  No point is taken by WS as to the choice of the claimants to sue WS as a firm rather than the individual appointees.
3.	At an early stage of the trial, Mr Dean, who appeared for the claimants, abandoned, with my encouragement, the claim of the twentieth claimant, Sovereign.  Henceforth, when I refer to the claimants collectively, they are to be taken as references to the first 19 claimants alone.  When referring to an individual claimant I shall do so by reference to the first word in its name.
4.	In the autumn of 2007, LPA receivers were appointed by ME over six properties owned by six of the claimants and enforcement proceedings were brought against three others.  There is no pleaded complaint about these appointments and proceedings.  A compromise was reached with each of those nine claimants in October 2007 to the effect that enforcement action would cease provided each reduced its mortgage arrears by £20 per month (“the Arrears Agreement”).
5.	The Arrears Agreement was said to be reviewable after six months.  One consequence of the Arrears Agreement was that the receivers’ then appointments were, or were treated as, terminated.  
6.	The Arrears Agreement was admitted by ME before me.  ME also accepted that the Arrears Agreement took effect in equity as a suspensory waiver.  As the trial proceeded, the precise terms and effect of the Arrears Agreement came to be in issue, though the fact and extent of the dispute only emerged in oral evidence and argument.  As ME’s admission of the Arrears Agreement (without which they would have been free to adduce evidence on the point) was based on the pleaded case, and  maintained in the light of Mr Haines’ main witness statement, it would be wrong of me to allow the claimants to depart from that pleaded case and evidence.  In any event, to the extent that Mr Haines did so, I was unable to accept his evidence, which lacked credibility on the point.  
7.	As will be seen, ME had, leaving aside the Arrears Agreement, the right to appoint a receiver in the case of each claimant’s property once that claimant was two months in arrears of its monthly interest payments, and the mortgage debt fell due.  
8.	The Arrears Agreement did not entitle the claimants in question to build up further arrears.  It related only to the existing arrears of the relevant claimant.  If further arrears built up, there would be no net reduction of £20 per month (the monthly payments in each case being around £600).  More fundamentally, the Arrears Agreement did not relate at all in my judgment to the current monthly instalments, which, if not met, would potentially give rise to new enforcement rights under the terms of the charges.  The only enforcement rights which were suspended were the existing rights arising under the then arrears.  The Arrears Agreement assumed that the current monthly instalments would be paid.  If not paid, any further default would attract whatever enforcement rights the charges gave ME in that respect.  
9.	One particular point should be made which may have some relevance in the case of Kazarka, which I shall come to later.  If all the arrears were paid off by one of the claimants before the expiry of the six months, that would preclude in my judgment ME ever from relying on those historical arrears as a reason for taking enforcement proceedings or appointing a receiver.  If during the same six months further arrears after the clearance of the historical arrears arose, one would then be thrown onto the terms of the particular charge and looking not for one month’s arrears, but two months’ arrears because that is what made the mortgage sum repayable and gave rise to the right to appoint a receiver.  
10.	The condition of payment of £20 per month off the arrears had to be strictly complied with for the suspension of enforcement action to subsist under the Arrears Agreement.  That, it seems to me, is a fair reading of the claimant’s pleading and Mr Haines’ witness statement.  Mr Haines, when giving evidence, and Mr Dean in his submissions, sought to give the Arrears Agreement more flexibility than the pleaded case and Mr Haines’ witness statement would allow.  It was suggested that an average only of £20 per month was required.  That might well be a valid approach if, say, £40 were paid in the first month and nothing in the second month as the first payment could be regarded as two months’ arrears payments.  However, I can see no warrant for construing the agreement as permitting, say, nothing to be paid off the arrears for four months or a sum smaller than £20 per month being paid off the arrears, leaving ME to wait the whole six months to see what the average was.  Nor can I see, as was suggested, whether in the context of the £20 per month, or the monthly instalment due under the mortgages, any basis for distinguishing between non-payment and late payment, for ME could never know in the case of a late payment when that would become a non-payment.  
11.	I also do not consider that ME was bound to bring the Arrears Agreement to an end by notice.  The agreement was to last six months if, but only if, there was payment off of the monthly amount of £20.  Had that been paid and had there been no other defaults, ME could not have brought the Arrears Agreement to an end at all.  However, if the £20 was not paid the condition for the continued suspension of ME’s enforcement rights was simply not engaged.  Moreover, as I have said, if there were new defaults in the payment of the monthly instalments, these were not protected by the Arrears Agreement, but gave rise to enforcement rights of their own.
12.	In January 2008, ME appointed WS as receivers in relation to properties owned by 14 of the claimants.  It is accepted by ME and WS that some, at any rate, of those appointments were invalid.  The person responsible for the decision to appoint receivers erroneously approached the borrowing on the basis that the securities over each property covered all borrowings within the group as a portfolio.  This was wrong, as ME now accepts.  Each of the claimants had a separate loan for the borrowing related to its property and there was no cross-collateralisation.  
13.	By the end of January 2008, ME terminated WS’s appointment in respect of a number of those appointments.  Other appointments remained until terminated much later, in November 2009.  There were other appointments in autumn 2008, but there is no pleaded complaint about those.  
14.	These proceedings were commenced in September 2008 and have undergone a number of amendments.  A schedule of issues was prepared in order to bring manageability to the trial.  During the course of the trial some of those issues evaporated into insignificance.  I propose in the remainder of this judgment to deal with the real issues.  
15.	I turn to consider the mortgage terms and conditions.  At the time of the various mortgages there was in force a “Conditions 2004” booklet of ME.  These contained the conditions that apply in this case.  There are four sections: Section A, Definitions and Interpretations 2004; Section B, General Conditions 2004; Section C, Loan Conditions 2004; and Section D, Mortgage Conditions 2004.  
16.	In Section A, “conditions” were defined as, “The Loan Conditions, Mortgage Conditions, General Conditions and Offer Conditions”.  These are the conditions set out in Sections B, C and D, and in the mortgage offer which preceded each mortgage.
17.	In the mortgage offers, the Section A definitions were incorporated in a number of places.  In addition, under clause 1 of the mortgage deed, the borrower agreed to be bound by “the conditions and the mortgage offer”.  
18.	The reference to “the conditions” in the mortgage deed is clearly a reference to all the conditions defined in Section A and not just the Section D mortgage conditions (referred to elsewhere in the mortgage deed, in its heading and clauses 5 to 7 inclusive, and specifically made part of that deed by clause 6).  There would otherwise be no point in referring to “the conditions” and “the mortgage conditions” separately.  Any other construction would be uncommercial and no one has suggested that only some of the conditions set out in the booklet and mortgage offer apply.  
19.	I should explain that I have assumed that the mortgage deed is in each case the same, apart from the borrower, date and property secured.  No one has suggested otherwise, though I have not been shown the mortgage deeds in each case and have not located them all in the very large volumes of documents before me.  The description of the mortgage deed which I have just recited is taken from the standard form deed executed by Vaudois in relation to its buy-to-let property.  
20.	Loan Condition 5 requires “the debt” to be repaid if “you are late paying money under the agreement and the amount overdue is equal to at least two monthly payments”.
21.	Loan Condition 6 provides that ME’s rights are not affected if “we failed to exercise them or we delay in exercising them; or we do not exercise them in full”.  
22.	Mortgage Condition 6 provides that the statutory power of sale arises upon signing of the mortgage deed.  
23.	Mortgage Condition 7 enables ME to exercise any of its LPA rights, which include the appointment of receivers “at any time after the debt has become due to be paid under the Loan Condition 5”.  
24.	A number of points of principle arise which can be considered generally before I turn to consider individual mortgage accounts.  
25.	Mr Morgan for ME contends that the whole of the mortgage debt becomes due and remains due (subject to questions of waiver) once the overdue amount is equal to at least two monthly payments, irrespective of whether that remains the case thereafter.  ME was, accordingly, entitled to appoint receivers in any case where there had been two months’ arrears, even if the arrears were cleared before (or after) any appointment.  Mr Morgan also contends that receivers were entitled to remain in office until the whole debt was discharged.  Thus, whilst ME made the challenged appointments on the erroneous basis of portfolio lending, it is possible that the appointments (or some of them) may be justified on this alternative basis.  
26.	I agree with Mr Morgan.  That is the clear effect of the Loan and Mortgage Conditions which I have mentioned, subject to the Arrears Agreement where it applies.  No other question of waiver arises.  Loan Condition 6 would be a real obstacle to any other conclusion on this point.  It is also clear from Brampton Manor (Leisure) Limited  v McLean [2007] BCC 640 that ME can rely on a ground of appointment even though not specified or relied upon at the time.  Despite Mr Dean’s valiant efforts, he failed to satisfy me that the present case was distinguishable.  
27.	The claimants seek to rely on section 3 of the Unfair Contracts Terms Act 1977 (“UCTA”) in answer to Mr Morgan’s point.  
28.	It is accepted by ME that the loan and mortgage conditions constituted ME’s written standard terms of business so that UCTA is potentially engaged.  
29.	Section 3(2)(a) applies to an exclusion or limitation clause.  None of the relevant conditions is either of those.  Section 3(2)(a), therefore, has no application.  
30.	Section 3(2)(b) provides that a party cannot by reference to any contract term claim to be entitled (i) to render a contractual performance substantially different from that which was reasonably expected of him, or (ii) in respect of the whole or any part of his contractual obligation to render no performance at all.
31.	The claimants’ case is that turning a long-term loan into a loan repayable on demand amounts to a substantial variation of ME’s obligation, which was to lend for the whole of the term at a fixed rate for the first (approximately) three years.  Effectively, this argument presuppose that ME is precluded from seeking early repayment, even in the event of default, and overlooks the fact that the loan was in each case repayable automatically upon default without there being a requirement of a demand.  
32.	Mr Morgan, relying on the reasoning of the Court of Appeal in Paragon Finance v Nash [2002] 1 WLR 685 argues that section 3(2)(b) has no application as ME’s obligation was to lend the money, which it did, and the acceleration of the repayment date on default did not vary ME’s performance obligations, but the borrower’s in each case.   
33.	The Paragon case concerned the validity of a standard clause entitling a lender to vary the rate of interest.  Section 3(2)(b) was held to have no application, Dyson LJ observing:
“Here, there is no relevant obligation on the claimant, and therefore nothing that can qualify as ‘contractual performance’ for the purposes of s 3(2)(b)(i).  Even if that is wrong, by fixing the rate of interest at a particular level the claimant is not altering the performance of any obligation assumed by it under the contract.  Rather, it is altering the performance required of the appellants.”
34.	I agree with Mr Morgan that the reasoning of Paragon applies here to the provisions making the loans repayable automatically on two months’ default.  ME did not assume an obligation to leave the loan outstanding for three years, or any further period.  Had the borrower in each case made the monthly payments due, ME’s right to repayment of the whole ahead of the expiry of the mortgage term, and its right to appoint a receiver, would not have arisen.  Not having a right to early payment is not the same as being under an obligation not to seek early payment.  Had ME sought repayment in the absence of the relevant two months’ arrears, it would have rightly been rebuffed.  That would not be because ME would be in breach of any obligation, but because it would on that hypothesis have no right to demand payment of the mortgage debt or to appoint a receiver.  As it was, there were in a number of cases two months’ arrears and ME’s enforcement rights were thereby engaged.  The whole of the mortgage debt fell due and ME could appoint receivers in consequence.  That remained the position in those cases where the arrears were paid off in whole or in part, whether before or after the appointment of receivers.  
35.	I would also add that I would, if necessary, regard a standard clause providing for payment of the whole to fall due on two months’ default as reasonable, though, strictly, this point does not arise.  Mr Haines confirmed in his evidence that he was aware of the mortgage and loan conditions which he accepted at the time having looked at other available buy-to-let products and having received legal advice.  Two months’ arrears is also in line with LPA section 103(ii).  
36.	A further issue arises in relation to the charging of legal fees to the mortgage accounts of the claimants.  In some cases these are referable to this litigation.  ME has a contractual right to add these costs to the mortgage debt.  It is however accepted by ME that this is subject to the court’s overriding discretion on costs issues.  If ME is not entitled to recover all its costs in these proceedings, some if not all of those funds will have to come out of the mortgage accounts.  This would have a knock on effect on the charging of interest.  Any adjustment of interest would, I would imagine, and I was assured by Mr Morgan, be readily capable of achievement.  The convenient course, therefore, is to defer final determination of the correctness of the charging of these fees, which on the face of it is allowed, until the conclusion of this judgment and the ensuing argument on costs.  At this stage it is enough to say that I would treat all legal fees post-dating 18th July 2009, the date of the pre-action protocol letter, as referable to this litigation in the absence of evidence the other way.  By the same token, I would treat legal fees predating 18th July of 2009 as not referable to the litigation.  
37.	Important issues also arise in relation to the opening charge of interest.  Complaint is made by some claimants that interest has been charged at the outset wrongly in advance, having the capacity to overstate arrears.  Complaint is also made that as all the mortgages were, according to the claimants, at a fixed rate of interest for 36 months, when a variable rate of interest (often at a lower rate) then cut in, ME wrongly adhered to the fixed rate after the expiry of the 36 month period, resulting in an overcharging of interest.  These complaints require consideration of the terms of the mortgages.  
38.	The first point to be made is that the mortgage offers in each case identified a specific date until which the fixed rate applied.  Clause 1 of the mortgage deed provided that the borrower agreed, as previously mentioned, to be bound by “the conditions and the mortgage offer”.  Accordingly, the contractual fixed interest period comes from the mortgage offers, and is not precisely 36 months.  
39.	ME has, at it happens, in some instances treated the fixed rate period as being a period of 36 months, when upon a proper reading of the mortgage offer it was longer.  This cannot affect the legal construction in the absence of circumstances giving rise to an estoppel.  ME has made concessions in those cases, which it does not seek to resile from, but that is no warrant for extending that concession across the board to other mortgages.  
40.	It follows that the pleaded complaints relating to the charging of fixed rather than variable rate interest outside the three years is misconceived.  In all cases the challenged interest has been charged down to the end of the specified fixed rate period in accordance with the mortgage offer and conditions.  
41.	Under ME’s Loan Conditions interest is charged from the “loan release date” until the end of the “interest period”.  
42.	The “loan release date” is defined as “the earliest date all, or any part of, the loan is sent to you or a solicitor instructed by us…”  
43.	The “interest period” is defined as “from the first day of the month following the loan release date until the end of the month and each subsequent month (or any different period which is specified as the interest period in the mortgage offer)”.  
44.	“Interest rate” is defined as “the rate of interest shown in the mortgage offer or any changed rate of interest which applies under the loan conditions or the mortgage offer”.
45.	The “payment day” is an important date.  This is defined as: 
“…the day of the month on which you pay the total monthly payment (or the last day of any month which does not have a corresponding day).  You chose the payment day in your mortgage application form.  If the payment day in a particular month is not a working day the total monthly payment will be collected on the next working day”.  
46.	ME’s general condition 5 provides:
“You must pay your total monthly payment on or before your payment day.
At (or shortly after) completion in your first payment letter we will tell you when the first total monthly payment is due and how much it will be.  Your first total monthly payment will be longer than usual as it will include an extra amount to cover the interest charged for the month your loan completes”.
47.	Loan condition 1(d) further provides: 
“The first monthly payment for a new payment for a new loan is normally due on the next payment day after the loan release date.  However, if the loan release date is ten working days or less before the next payment day, the first monthly payment will instead be due on the second payment day after the loan release date.  The first monthly payment will then be increased to cover the interest between the loan release date and the payment day on which the first monthly payment is due”.  
48.	Under loan condition 2(d) interest is chargeable to “the end of the month in which you repay the loan”.  
49.	The result of these conditions is that, apart from the first payment, the same amount is payable every month during the fixed rate period, whichever day of the month is chosen for the payment to be made.  The choice is made in the application form.  On the documents I have seen and which I assume apply to all of the application forms (as no-one has suggested otherwise) the choice is recorded in the direct debit form which each claimant was required to provide and which is replicated in the mortgage offer.  The same form provides that the default date, if no other date is chosen, is the 3rd.  
50.	As regards the first payment, that will be larger than usual as it will include an extra amount to cover the interest charged for the month the loan is advanced.  If the first payment is deferred for a month by the operation of loan condition 1(d), the initial payment will be greater still because of that extra month.  
51.	The operation of these conditions can be illustrated by reference to the example of Nautch.  The loan release date was 24th May 2006.  The payment day was chosen by Nautch to be the 28th.  As 28th May was less than ten days after the 24th, the first payment day became 28th June 2006.  The monthly payment was £602.80.  This had to be paid on 28th June for the whole of that month, even though two days remained.  To that limited extent, on this example interest was payable in advance.  In addition, additional interest for the period 24th to 31st May fell to be paid with that first payment, making a total of £761.35.
52.	The claimants have a number of pleaded complaints where losses are said to have occurred, by reason of the alleged overcharging of interest at the outset.  The situation arose because ME took in those cases the first monthly payment a month early, ignoring the deferral provisions of the second sentence of loan condition 1(d).  The payment was taken a month early, but that ultimately made no difference to the total interest payable when the next month’s payment came to be made.  As a result of the first payment having been taken early, the second payment was correspondingly less.  Had the first payment been taken on the correct date a month later, it would under the third sentence of loan condition 1(d) have been higher by the amount of the incorrectly taken first payment.  Overall, therefore, none of the claimants has been overcharged.  They have merely in some cases been required to pay on the wrong date initially.  
53.	It is possible that a claimant might have thereby suffered some loss of interest, but this would require evidence.  There is none.  This is unsurprising, as the case was not pleaded that way.  I could, in theory, order an enquiry as to the loss of interest, but the amounts due, if any, as a result of one month’s loss of interest are so trivial as to justify holding the claimants to their pleaded case.  Their claim as pleaded is to recover the whole of the alleged overpayment, but this is misconceived as the amount claimed in each case fell due one month later, but was not paid again.  As will become evident when I consider individual claimants, there are some cases where bank charges which should not have been incurred were incurred as the result of ME’s taking or attempts to take early payment.  They are recoverable, and have been pleaded, but they are very small.
54.	A separate complaint relates to the charging of receivers’ fees.  There is nothing in this complaint.  Fees were charged at the rate of 10 percent of rents received as agreed between ME and the receivers, which condition 8(c) of the mortgage conditions allows.  It is also permitted under section 101(3) LPA.  Section 109(3) mentions a lower figure. Nevertheless, section 101(3) permits the provisions of the Act relating to the exercise of mortgage powers to be varied or extended by the mortgage deed.  That seems to me to extend to the remuneration of the receivers, a conclusion supported by the judgment of Michael Briggs QC, as he then was, in Allan & Another v UCB Group Limited, 21st March 2002 at paragraph 11.  
55.	An entitlement to additional fees of £1,000 was also asserted on more than one occasion in relation to each appointment by WS, and may well have been agreed by ME.  However, it has not in fact been charged and I can, therefore, ignore this element of additional fees.  
56.	Mr Dean for his clients seeks an account against ME in relation to each mortgage.  However, full details of how the mortgage accounts have been managed and charged have been provided in these proceedings and objections have been raised in relation to specific items.  Mr Morgan resists an account on proportionality grounds, relying upon the decision of the Court of Appeal in Hurst v Bryk & Ors [1999] Ch. 1.  It seems to me that Mr Morgan is right in his approach and that I should not direct a general account, but rule on the points that have given rise to objection.  In doing so, I must, as Mr Morgan recognised, proceed on the basis that there is at least an initial onus on ME to explain what its charges are, though under the terms of the mortgage conditions the onus is upon the borrower to demonstrate the unreasonableness of the charges.  
57.	By dispensing with a formal account and inquiry that may operate to ME’s disadvantage, as they have not answered every point specifically.  However, the amounts at stake make that course commercially acceptable to ME.  So far as the claimants are concerned, they can have no realistic objection, in circumstances where there is every reason to conclude that an account and inquiry would serve no useful purpose, to the adoption of a procedure which may benefit them.  ME has not dealt in detail with every specific complaint raised in the shifting loss schedules, which have adopted what must be described as a somewhat scattergun approach.  
58.	Similar comments could be taken to apply in the case of WS, though no account, as such, is in terms sought against WS.  What is sought is an account against ME.  In draft orders put before the court by Mr Dean, however, damages against WS are sought for any sums due on the ME accounts.  Effectively, that indirectly seeks an account in respect of WS’s expenditure, as met or authorised by ME.  In this instance also, it is better that I should resolve the issues now rather than leave matters open to a disproportionate, and wasteful, accounting exercise
59.	There is one point concerning WS I should deal with straightaway.  Some claimants complain about WS’s practice of keeping a proportion of rents as a contingency fund, which is said to be contrary to Section 109(8) LPA.  That subsection requires the receivers to apply any monies received to (broadly) outgoings affecting the mortgaged property.  The receivers’ very purpose in setting a proportion of the rents aside was the creation of a fund or funds to meet the necessary outgoings.  This was in principle unobjectionable.  There is no serious challenge to the exercise of the receivers’ judgment in deciding how much to set aside.  Further confirmation of the requisite power is found in mortgage condition 7(c) which entitles receivers to make any “arrangement” which they consider necessary or incidental to the performance of their functions.  Again, the contingency funds fall squarely within that condition.  The amount of any contingency fund would be for the commercial judgment of the receivers, with which the court should be slow to interfere.  
60.	Other allegations are made against WS in relation to their conduct of the receiverships.  I shall deal with them in due course.  Before that, other general points arise for consideration.
61.	The first is that if in a particular case the receivers’ appointment was invalid, ME accepts that it is liable for any properly proved loss occasioned thereby.  ME would either be a trespasser or, in cases where there was a tenancy, would wrongfully interfere with the particular claimant’s contractual relations with that tenant, because of the wrongful appointment of receivers to collect rents which ought to be paid to the relevant claimant.  That would also be a wrongful taking of possession of the rents.  On the hypothesis of invalid appointments, the receivers would, unusually, become ME’s and not the borrower’s agents.  In the case of valid appointments, the receivers became the agent of the relevant claimant: LPA section 109(2), as confirmed in these cases by mortgage condition 7(d).
62.	By similar reasoning, WS are liable to the extent that they acted under an invalid appointment, either as trespassers or as persons interfering with the particular claimant’s contractual relations by claiming from any tenant rents payable to that claimant.  They might also be liable as purported agents of the claimant acting without authority.  They may well have an indemnity claim against ME, but that would not operate as a defence to a claim by the relevant claimant.  
63.	It follows that so far as any loss is established arising simply out of an invalid appointment, ME and WS are jointly and severally liable for that loss.  So far, however, as any loss is said to be referable to other wrongful acts or breaches of duty, whether on the part of ME or WS, the wrongdoing defendant is liable and would be liable alone, unless also acting as the other’s agent.
64.	I am not called upon in this case to determine any question of contribution or indemnity as between ME and WS as that issue has been compromised as between those two defendants.  I am concerned solely with liability towards the claimants.  
65.	The final general point is that in the case of an invalid appointment, subsequent arrears may build up which would have justified an appointment at a later date.  In such a case, Mr Morgan prays in aid the analogous principle that in assessing damages the court must assume that a party acting in breach of contract would have performed its obligations in the manner most favourable to itself.  He says that I should approach the question of damages here on the basis that ME could have appointed a receiver as soon as the arrears justified an appointment.  This is significant because in the case of the challenged January 2008 appointments, arrears at the end of January or later would in some cases have justified an appointment even if the arrears approximately two weeks earlier were not sufficient to do so.  In such an example, the damage is, therefore, limited (on Mr Morgan’s argument) to that occasioned by the two weeks prematurity in the appointment, and does not extend to any loss occurring thereafter, as there could then have been a valid appointment.  
66.	I heard some very interesting arguments on this issue, but on the facts which I shall find subsequently I do not think the point arises.  I am inclined to accept, as Mr Dean for the claimants contended, that the question I have to ask myself is whether the claimants would in fact have made an appointment later.  It is not enough that they could have done so, unless I am also persuaded that they would have done so.  That must, as Mr Dean says, depend on the facts of individual cases.  
67.	Ultimately, the distinction between “would” and “could” does not matter, because, in those cases where it matters, I am persuaded that ME would have made an appointment once it could do so.  The natural inference in my judgment is that, as ME was clearly looking to enforce its rights in January 2008, it would, in the case of any invalid appointment which ME did not discharge voluntarily by the end of January 2008,  have made a valid appointment once there were significant arrears.  I would regard two months’ current arrears as significant for this purpose.  
68.	I now turn to consider the claims of individual claimants.  
Nautch
69.	The appointment date was 15th January 2008.  The appointment was terminated on 31st January 2008.  There had been arrears in the past and Nautch was a party to the Arrears Agreement.  After the Arrears Agreement two further months’ arrears built up. For the reasons I have given those further two months’ arrears resulted in the whole of the mortgage debt becoming due and enabled ME to appoint receivers, even though that was not the basis of the appointment.  It matters not that by the date of the actual appointment the total amount outstanding was less than two months’ arrears.  Accordingly, on this example the appointment of the receivers was in my judgment valid.  It follows that the damages said to flow from the wrongful appointment are nil because there was no wrongful appointment.  
70.	There are other points taken on the account.  Charges made by WS are highlighted.  There is an unexplained solicitor’s fee of 8th July 2008, which I am not prepared to assume was litigation because it predates the letter before action, and there are unexplained enquiry agent’s fees of 22nd March 2009.  Though these are not specifically explained, it is evident that there must have been many occasions when it was appropriate for ME or WS to consult solicitors.  It is also clear on the evidence that WS did from time to time engage the services of an enquiry agent.  The individual claimants were adopting a hostile approach to the receiverships and were uncooperative.  Accordingly, I am prepared to assume that those fees were properly incurred.  The sums claimed, including “the receivers’ fees”, as one item is styled, which appears in fact to be a legal fee incurred on appointment, of £333.38 are allowed, and the claim in respect of those three sums is therefore dismissed.  
71.	It is also said that as a result of the receivers’ appointment and their inappropriate behaviour towards a tenant, Miss Rowley, the tenant was lost and a debt of £3,300 became irrecoverable in consequence.  This is in my judgment a hopeless claim.  It is quite clear that possession proceedings were started by Nautch itself against the tenant who, in February 2008, sent the bailiffs in.  The consequence was that the tenant vacated the property voluntarily.  There is a disputed issue as to whether WS representatives made certain statements attributed to them, which caused the tenant to leave.  They deny that they said (as was alleged) that the rent which had, before the WS appointment, been the subject matter of judgment in the forfeiture proceedings, should be paid to them.  They say they were seeking only the payment of current rent.  There is no direct evidence the other way, so the statements attributed to WS have not been proved.  In any event, I find as a fact that the reason the tenant left was because she chose to leave following the eviction proceedings taken by Nautch, and not because of anything said or done by WS.  Accordingly, the sums claimed under that head are all disallowed.  They amounted initially, until Mr Dean’s later moderation of the claim, to £8,923.40.  
72.	There are complaints about charges added to the mortgage account by ME.  The first two amounts, £63.12 and £111.63, are unobjectionable.  They both relate to legal fees and must be seen as relating partly to the previous enforcement efforts in October 2007, partly to the appointment in January and partly to the subsequent termination of that appointment, which was in fact an unnecessary step.  The remaining fees all appear to be litigation costs, which I leave to the end as previously indicated.  
73.	There is also an overcharge claimed in Nautch’s case for the sum of £415-odd “at the end of the three year fixed rate deal”.  As previously indicated, that claim is misconceived because it was not precisely a three year fixed rate deal.  
74.	I turn to consider the case of WS so far as Nautch is concerned.  The same £333.38 is claimed.  That claim is also dismissed.  The loss of Miss Rowley as a tenant is claimed.  That is also dismissed, as is the ancillary claim relating to the bailiffs and court charges.  There is, therefore, no sustainable claim against WS for Nautch.
Gnathic
75.	I turn to Gnathic.  There was an appointment on 15th January 2008 which was terminated on 27th November 2009.  It is in dispute whether this was a lawful appointment.  Gnathic was not a party to the Arrears Agreement.  There had been a historic two months’ arrears in August and September 2007.  Accordingly, it seems to me that, for the reasons I have given, the appointment of receivers was valid, notwithstanding the mistaken basis upon which the appointment was made.  
76.	There is also a complaint relating to the loss and tardy replacement of a tenant.  A Miss Southern was the tenant of Gnathic’s property.  She left the property in early March 2008.  This was said to be referable to WS’s refusal to allow her to sign a new tenancy agreement.  Mr Dean was inclined in closing submissions to exclude from the damages claim the loss of Miss Southern as a tenant, because the evidence is that she wanted to vacate the property in the near future at the time the receivers were appointed.  There was some discussion recorded in WS’s notes of her possibly taking an extended lease at a reduced rate of £575, but she has given no evidence and the probability is that she left because she wanted to.  In my judgment, the claim for loss of this tenant was quite hopeless, as Mr Dean effectively recognised.
77.	Mr Dean focused instead upon the rental void which then occurred between March and 19th July 2008 when a new tenant was installed by, oddly enough, Gnathic itself by its managing agent, Sovereign, also controlled by Mr Haines.  Complaint is made primarily that Gnathic was not allowed or encouraged to let the property.  In addition, it is said that the receivers themselves did nothing to effect a new tenancy, leading to, it is said, four months’ loss of rent, at £600 per month, amounting to £2,400.  
78.	It is not clear how ME could, upon the hypothesis of a valid appointment, which this one was, be liable for the activities of WS.  WS were on this hypothesis Gnathic’s agent.  It is not said that ME directed or interfered with the receivers’ functions or that the receivers acted in fact as ME’s agents: compare American Express v Hurley [1985] 3 All ER 564.
79.	I consider then the claim against WS.  WS were appointed over of a number of properties where the mortgagor, one or more of the claimants, was decidedly uncooperative.  This did not make their job an easy one.  
80.	There was also, unbeknown to WS, a letter of 15th January 2008 from ME to various of the claimants indicating that notwithstanding the appointments of receivers they, the relevant claimants, could still find new tenants.  It appeared at one stage to be suggested by Mr Dean’s clients that the effect of that letter was to displace the power of the receivers to let to new tenants.  Were that so then the complaint of a failure by WS to obtain a new tenant could have no substance because that would not be within WS’s power.  Moreover, they would not be under any duty on that hypothesis to assist Gnathic to do so, given that Gnathic did not recognise but positively disputed the validity of the appointment.  
81.	However, the letter of 15th January 2008 whilst doubtless indicating that ME could be expected to look favourably upon any tenant found by the borrower, cannot in my judgment be read as displacing the receivers’ powers.  It would therefore still be necessary for any new tenant to be approved by the receivers.  This was in practice likely to be something of a formality.  If ME was content with the mortgagor finding a new tenant, it is most unlikely in practical terms that the receivers would not be.  
82.	In this case WS, as LPA receivers, saw their duties as owed primarily to ME as mortgagee, and took no steps to relet Gnathic’s property as they were awaiting instructions from ME as to whether to proceed to an immediate sale, with vacant possession.  Nevertheless, they clearly were the agent, albeit in a very special sense, of the mortgagor, in this case Gnathic.  It is established by the Court of Appeal’s decision in  Selven Properties Ltd & Anor v RBS & Ors [2004] 1 WLR 997, that the peculiar position and ability of the mortgagee to act at a time and in a manner of its choosing spills over into the nature and content of the duties owed by any receivers appointed by the mortgagee.  Nonetheless, the agency is, though special, still a real one and there is no doubt that WS as receivers owed real duties to Gnathic.  WS were entitled and bound to exercise their powers with a view to achieving the primary purpose of paying off the mortgage debt, but that did not entitle them to abdicate the exercise of judgment and simply defer to the wishes of ME, or to ignore the interests of Gnathic as mortgagor.
83.	The delay is explained in this and other instances partly because the receivers needed to take instructions from ME as to ME’s preferred course.  ME did not respond timeously to the receivers’ suggestions and inquiries.  In consequence, nothing happened.  
84.	It is clear to me that WS as receivers should have been exercising their own judgment, especially when no response was forthcoming from ME as mortgagee, and even when there was eventually a response.  That is why professional persons are appointed to that role.  Otherwise, they were running the risk of inadvertently causing ME to assume the character and liabilities of a mortgagee in possession.  Whilst it may well be sensible or desirable (and certainly unobjectionable) for receivers to ascertain the mortgagee’s preferences and views, there is still a positive duty upon the receivers to make up their own minds and act appropriately, exercising their own judgment, in the interests of both mortgagee and mortgagor, all tempered by the consideration that the primary purpose of their appointment is to secure repayment of the mortgage debt.
85.	I have heard nothing to justify the four months’ delay in re-letting which occurred in this case and I do not consider that the Selven case can be prayed in aid as an answer to the point.  As the Court of Appeal noted in that case at [23]:
“Whilst a mortgagee has no duty at any time to exercise his powers to enforce his security, a receiver has no right to remain passive if that course would be damaging to the interests of the mortgagor or mortgagee. In the absence of a provision to the contrary in the mortgage or his appointment, the receiver must be active in the protection and preservation of the charged property over which he is appointed: see Lightman and Moss The Law of Receivers and Administrators of Companies (3rd edn, 2000) pp 153–154 (para 7-030).”
86.	In Knight v Lawrence [1993] BCLC 215 the receiver was held liable to the mortgagor and a guarantor for failing to serve rent review notices.  In disapproving of the approach of the receiver in that case, Browne-Wilkinson VC had this to say:
“The next question is whether there has been a failure to discharge that duty of care. Mr Lawrence's own evidence seemed to me to demonstrate that there had been such a breach of duty. In my judgment Mr Lawrence had a total misapprehension about the functions of a receiver. He regarded himself as being there to do what he was told by his appointor, the City of Westminster; provided he discharged what they told him to do he had discharged his functions. He was, in his own eyes, nothing but a rent collector.
That, to my mind, is an unhappy misapprehension of the functions of a receiver. Though he may be appointed by one party his function is to look after the property of which he is receiver for the benefit of all those interested in it. He is not, even in commercial terms, the mere agent of the appointor; he is there to safeguard the property for all who have interests in it. Simply to regard himself as the collector of rents without any further function was to misapprehend the nature of his appointment.”
87.	That was a much starker case than the present which resulted in a real diminution in the capital value of the mortgaged property.  Also, service of rent review notices did not require anything onerous to be done by the receiver.  In the present case, the receivers, should, it is said, have sought a tenant.  Whilst that required something more than the mere service of notices, it was well within the expertise of WS as LPA receivers to achieve. The tenancy would have been an assured shorthold.  There has been no evidence suggesting that putting in a tenant would in some way have adversely affected the selling prospects, even if the appropriate course had been to sell at that stage.  Moreover, had the receivers reached the view that putting in a tenant was (or was not) desirable, that is a view which, whilst proper to pass on to ME for comment, should have been carried into effect in the absence of reasoned objection from ME causing the receivers genuinely to change their minds.  As it happened, they simply waited for instructions, and did nothing.  
88.	That was in my judgment a breach of their equitable duty of care towards the mortgagor (Gnathic) and WS is liable for the financial consequences of that breach.  I am not however prepared to assume that WS could have found a tenant more or less straightaway had they tried to do so.  There are other examples in evidence where it took four months to find a tenant.  In the present case, Mr Haines discovered on 28th May that the property had been vacated and found a new tenant by 19th August.  It seems to me that six weeks should be allowed for finding a new tenant.  That would take the position to the middle of April, leading to the conclusion that there was in this case three months loss of rent.  There has to be deducted from that 10 percent, which would have been the receivers’ fees, and other outgoings, had the receivers collected the rent.  One has to take a broad brush figure.  I consider that a figure of £1,600 would be the right figure.  In my judgment WS (but not ME) is liable for that sum to Gnathic.  I will hear argument about interest subsequently.  There is no other liability of WS.
89.	Other losses said to have been occasioned by the appointments are summarised in the schedule of loss.  Two items of solicitor’s fees appear under the heading “charges made by WS”.  I treat these as litigation costs and will therefore defer further consideration of these until the end .  Other items were properly incurred, and cannot be recovered back from ME or WS.  These are the items of rental commission at £73.44, receivership validation report at £152.75, receivers’ fee of £587.50 and the enquiry agent’s fees of £69 and £86.25.  There are then more solicitor’s fees, which will be dealt with at the end.  Complaint is made also about various administrative and legal fees set out in the schedule of costs.  All the administrative fees and some of the legal fees were subject to intense scrutiny by Mr Dean in his closing.  A total of £1,100.13 was identified in respect of legal fees.  They all appear to be litigation costs and will be dealt with at the end.  
90.	There is said in this case also to be an overcharge at the end of the fixed rate period, but, as in the case of all other such alleged overcharges, there was none.  
Vaudois
91.	I turn to consider Vaudois.  This appointment lasted approximately two weeks from 15th January to 31st January 2008.  Vaudois was a party to the Arrears Agreement.  It is conceded by ME that the appointment was invalid.  Damages of £111.63 have been admitted, which is the joint and several responsibility of both defendants.  There are, in addition, legal fees and costs which appear to be litigation costs, which I shall deal with at the end.  There is included an instructing solicitor’s fee of 17th July 2009, which on the evidence appears to be an internal charge.  Given its date it seems curious to say the least.  I shall take that out as well, though it may come back in at the end of the day if it represents litigation costs.  
92.	There is also an overcharge claim at the end of the three year period, which fails for the same reasons as before.
Simulacrum
93.	I turn to Simulacrum.  Simulacrum was an appointment of 15th January 2008 and lasted down to 27th November 2009.  This was a valid appointment, as is accepted.  The only claim is for an overcharge of interest at the end of the fixed rate period which fails for the same reasons as all other such claims fail.  There are also legal fees relating to the litigation which will have to be revisited at the end.
Orchard
94.	This was a valid appointment of 30th January 2008, which was terminated on the following day.  There had been two months’ arrears in November 2007.  Orchard was not a party to the Arrears Agreement and its historical arrears were enough to justify the appointment.  
95.	There was a further appointment (not challenged in these proceedings) on 16th October 2008 which lasted down to 22nd December 2009. 
96.	There was a claim for loss of rent but that is no longer pursued.  Apart from that, there are claims for the receivers’ fee and various other fees.  With the exception of a figure of £111.63, these are all legal fees relating to the litigation to be considered at the end.  The £111.63 is, however, allowed as a proper charge to the mortgage account. 
97.	Complaint is also made in relation to interest at the end of the fixed rate period, which fails in this case as in all others for the same reasons.  
98.	The only loss claimed against WS is £111.63, and that is dismissed.  
Fidibus
99.	It is agreed that this was an invalid appointment.  It lasted from 15th January to 31st January 2008.  The claim is for interest at the end of the fixed period, which fails for the same reasons as before, and £111.63, the receivers’ fee.  That claim succeeds.  There are also legal costs which fall to be dealt with at the end because they are litigation costs.  
Linewater
100.	It is agreed that this was an invalid appointment, made on 15th January 2008 which was terminated on 31st January 2008.  The usual charge of £111.63 was made and should be removed from the mortgage account or be payable as damages.  Various other challenges are made.  One discrete issue is that on 4th June 2007 there appears to be a duplicate charge of £58.75.  One of them needs to come out of the mortgage account.  That was conceded, as was the need to take out the legal fee of £111.63.  Then there are two items of costs in March and May 2009, which I am prepared to assume were litigation costs, which will be considered at the end.  There is an overcharge claim which fails like the others.  
101.	The only claim against WS which succeeds is for £111.63.  
Moss
102.	This was an invalid appointment of 17th January 2008, which was terminated on 31st January 2008.  It is accepted that the mortgage account needs to be adjusted to take out the legal fee of £111.63 concerning that appointment.  There was also an earlier legal fee of £65.80, which was properly charged, and had nothing to do with any invalid appointment.  There are then other legal costs including the internal instructing solicitor’s fee which I am going to treat as litigation costs, and will return to at the end. All the administration fees previously claimed are no longer pursued.  
103.	There is another claim for interest at the end of the fixed period, which is dismissed for the same reasons of all other such claims.
104.	WS’s liability is limited also to £111.63.
Mimulus
105.	I then turn to Mimulus where there never was an appointment, though it appears that the claimants assumed there was one at some stage.  The only claim here is in respect of the overcharge made by ME at the first payment following completion.  For the reasons I have given, that sum of £515.74 is not a loss at all and is disallowed.  There are, however, bank charges totalling £135 which were occasioned by the wrongful operation of the direct debit too early, which Mimulus is entitled to recover, with consequential interest adjustments.  There is no claim in that respect against WS. 
Meadowshead
106.	Meadowshead falls into a similar category.  There was no appointment in January 2008, but there was an early payment giving rise to direct debit fees of £105 and another £70 bank charges, so that £175 is recoverable.  There are in addition disputed legal fees, most of which appear to be litigation costs.  However, one of them, 30th June 2008, predates any pre-action protocol letter.  That is £131.16.  At that stage Meadowshead was in arrears and so I think it was appropriate for ME to obtain legal advice.  I see no basis for disallowing that modest sum, so that sum remains in the account.  
107.	There is no extant claim against WS by Meadowshead.  
Grove
108.	Grove was a long-term appointment of 15th January 2008, lasting until 27th November 2009.  The claimants accept this was a lawful appointment.  There are, however, claims which remain extant in relation to WS’s management of the property.  It is said that Grove suffered loss of income because WS failed to tell Grove that the tenant, Mr Ransome, had vacated the property, which prevented Grove from re-letting that property.  This claim is misconceived.  It presupposes that following a valid appointment of receivers Grove retained the ability to let the properties.  A further letting by Grove might have been tolerated, but this did strictly require the receivers’ consent.  The effect of their appointment as receivers was to suspend Gtrove’s power to let the property and to vest that power in the receivers.  
109.	WS do appear in this instance to have put the conduct of the receivership on hold and to have allowed an excessive period of inactivity in relation to Grove, though I must take into account the fact that there was open hostility and obstruction on Grove’s part towards the receivers.  Nevertheless, the case is not put upon the footing of any failure by the receivers to let the property; the case is put upon the failure of the receivers to tell Grove of Mr Ransome’s departure.  The short answer to this complaint is that the receivers were not under any legal duty to tell Grove this.  A letting was eventually achieved, as it happens, by Grove, which put an end to the ongoing loss of income, but there is no sustainable pleaded basis in my judgment for finding WS liable for the loss of income down to that point.  Mr Dean sought to expand the claim in argument by saying that ME should have instructed WS to take the files off hold, or should have removed WS as receivers, or WS should have recommended their own removal.  None of this was the pleaded case, nor was it even the pleaded case that WS had failed to find a tenant for Grove.  In those circumstances, the claim in relation to Grove must in my judgment be dismissed.  
Kazarka
110.	It is in issue whether or not this was a valid appointment.  In my judgment, the appointment of receivers of Kazarka was not a valid appointment.  The receivership lasted from 15th January 2008 to 27th November 2009.  At the appointment date, there were only one month’s arrears.  All previous arrears had been paid off under the Arrears Agreement.  However, by the end of January 2008 there were two month’s arrears.  
111.	It is said that, as the appointment was invalid, the receivers’ fee and solicitor’s fee totalling £727.75 should be recoverable as none of these fees would have been incurred but for the invalid appointment.  However, given that ME maintained this appointment, even though it terminated other appointments, I infer that ME would in this instance (and not simply could) have exercised its rights as soon as it could if it had not made an earlier invalid appointment.  It could and would have done that just two weeks and a few days after the invalid appointment.  All the fees which are claimed would on that hypothesis have been incurred, a little bit later.  This head of the claim is therefore dismissed.
112.	Complaint is made in this case that a tenant, Mr Wignall, vacated the property leading to a loss of rental income, but only did so because of the sustained harassment he received from WS.  This in my judgment is a disingenuous claim.  There is a letter of January 2009 from Mr Wignall saying that he intended to relocate somewhere nearer his family and friends.  He was not happy with the approaches he had had from the receivers and conceded that a letter he had received from WS somehow made his decision slightly easier.  Nonetheless, there is nothing to suggest that his decision would not have been the same without WS on the scene.  There is accordingly no foundation for the claim that he left the property at the end of the tenancy in December 2008 (or at any other time) because of the WS appointment, or their behaviour.  The claim under this head is, therefore, dismissed.  
113.	There is also a claim for loss of income whilst a re-let was achieved by Kazarka.  The loss of income is not based upon any default of WS in finding a tenant, which would be a difficult claim to make in the case of an invalid appointment which was not recognised.  It relates to the delay naturally encountered by Kazarka, which was down to market conditions.  There is, accordingly, no sustainable claim under this head.  
114.	Various costs were also incurred by Kazarka in changing locks to keep WS out, and the like.  On the footing that ME would have made a valid appointment by the beginning of February 2008, it might be said that the lock changes would have occurred anyway, so that there was no loss arising out of the premature timing of the appointment.  On reflection, I do not think that is correct.  Had a valid appointment been made, based on 2 month’s arrears, Kazarka might not have challenged it.  I cannot assume that it would have been challenged.  The.fact is that WS never was validly appointed and that their taking of possession was a trespass which Kazarka is entitled to complain about.  
115.	The claim under this head is for £40 for the damage caused by WS’s initial trespass, and £155 for the removal of steel locks fitted by WS, and works to the window undertaken to gain entry.  These are recoverable as damages for trespass from WS.  Possibly, ME might also be liable because WS (as their appointment was invalid) were acting as ME’s agent.  The point is probably academic in the light of the compromise between ME and WS.
Pronator
116.	I move now to Pronator.  It is conceded that this was a lawful appointment.  Pronator was a party to the Arrears Agreement, which it breached.  There is therefore no sustainable damages claim arising out of the appointment, and none is pursued.
117.	An interest over-charge of £488.34 is claimed.  This is dismissed for the same reasons as in other cases.  
118.	There are legal costs relating to the litigation which will have to be reconsidered at the end of this judgment, with one exception.  There is a legal fee of 24th September 2007 of £65.80.  That was a proper charge.  Although there was no earlier appointment, Pronator was in arrears and it must be inferred that ME took legal advice on that situation,  as it was entitled to do.  All the other legal fees, as I say, will be reconsidered at the end.  
119.	There is no extant claim against WS in relation to Pronator.
120.	Home
There was no appointment at all in this case.  The only outstanding issue relates to legal costs in the sum of £128.80 and £60.  It may be that these were not litigation costs because there were arrears at the time that those legal costs were incurred.  Nevertheless, there is no focused evidence on the point and I will treat those as litigation costs to be dealt with at the end as legal costs.  
Horninglow
121.	This was an appointment made as late as October 2008.  There was no January appointment.  There is no pleaded challenge to the October 2008 appointment.  The appointment lasted until 27th November 2009.  There is said to be an excessive interest charge at the outset of £310.52.  That claim is dismissed for the reasons I have given.  An item of £40.25 (apparently relating to some other LPA receivership) has to come out of the mortgage account also, as was conceded by Mr Morgan.  Apart from that, there are items of legal costs.  The first one of £65.80 (and by the first one I mean the first one remaining in the schedule after various deletions by Mr Dean) is contemporaneous with the appointment, broadly speaking, and must be regarded as relating to that appointment and not a litigation cost.  It is therefore properly charged to the mortgage account.  I will treat the other two items as litigation costs, to be considered following this judgment.  
122.	There is no extant claim against WS by Horninglow.  
Donellan
123.	This was an appointment in December 2008, which is not challenged on the pleadings.  The only issue relates to fees charged to the mortgage account.  These are all legal fees and appear to be litigation fees in the absence of any other explanation.  They will be dealt with at the end.  
124.	There is no extant claim against WS by Donellan.
Nimar
125.	This was an appointment made on 15th January 2008 and terminated on 31st January 2008.  It is in issue whether or not the appointment was lawful.  In my judgment this was a lawful appointment.  There had been an overcharge in the sense of a payment which was taken one month early at the outset following completion.  For the reasons given earlier in this judgment, that did not overall result in any overpayment. Later, there were arrears in August and September 2007.  Those two months’ arrears justified the January appointment, notwithstanding that they had been paid off by the date of the appointment.  Accordingly, the appointment was valid.  It follows that the charges made by WS of a receiver’s fee and solicitor’s fee were all justified and cannot be recovered either against WS or ME.
126.	There are also claims in respect of charges added to the mortgage account by ME.  Because payment was taken early Mr Morgan accepts that ME is liable for £70 direct debit charges and £70 bank charges.  
127.	There are then legal fees.  There were arrears at the time the earliest legal fees in September 2007 were incurred.  It seems to me that ME was entitled in those circumstances to incur legal fees and I am not going to disallow them.  There is also a legal fee of £111.63 in February 2008 which is probably, given the amount, referable to WS.  As they were validly appointed this item remains in the account.  That leaves three more items of £152, £75 and £301.88, which I will treat as litigation costs and deal with following this judgment.  
128.	The claim against WS is limited to £264.38 and is dismissed.
Technic
129.	This also was an appointment on 15th January 2008 which lasted until 31st January 2008.  It is now conceded that the appointment was invalid so that the £111.63 receivers’ fee charge is disallowed and is recoverable against ME and WS, but not more than once.  There was a claim for loss of tenancies, which was abandoned.  There was a claim for an overcharge at the beginning, but for the reasons I have given this was made up by month two and there was no overcharge overall.  There are also claims that various fees should come off the account.  One is the £111.63, which, as I have said, must come off and then there are two lots of litigation costs which I assume are referable to these proceedings of £131.25 and £128.80.  All other items are no longer claimed, apart from the instructing solicitor’s fee of £60 at the end, which, again, I will assume is referable to these proceedings.  They will be considered in due course once I have concluded this judgment.
130.	The only claim made out against WS is for £111.63.
Mirror
131.	This was an appointment on 15th January 2008 which, it is conceded, was invalid.  It nonetheless continued at least ostensibly until 27th November 2009.  Notwithstanding that lengthy appointment, the losses are modest and are alleged to amount to £815.88, a figure which Mr Morgan for ME accepts.  There is an interest overcharge claim that fails for the same reasons as all other such claims.  There are also three sets of legal costs which fall to be treated as litigation costs and which I shall deal with at the end, which I have now reached.  
132.	I would like to conclude by thanking counsel and solicitors for the helpful way in which the documents, which were not arranged in the most readily accessible form, were nonetheless presented with great skill and care.  Thanks are also due to Mr Haines for his help in preparing some of the bundles.  I will now invite counsel to address me if they are ready to do so.
[Short adjournment follows then hearing continues]

133.	There are divergent approaches to costs in the submissions before me.  Mr Dean’s submission is that in every case where his clients have won something, however small, they should have their costs, and where they have not there should be no order for costs.  This litigation was (he says) occasioned by the high-handed behaviour of ME in insisting on treating the claimants’ relationship with ME as portfolio lending.  
134.	In financial terms, leaving aside questions of costs, the claimants have recovered collectively (and individually it is even less) under £4,000 either as damages or by way of credits to the mortgage accounts.  Had the claimants’ case been pleaded in that amount, or something close to it, it would never have proceeded in the high court.  It may have proceeded as a small claim.  Had it ever emerged at an earlier stage that this was all the claim was worth, it could have been struck out as an abuse of process for proceeding in the high court: compare Sullivan v Bristol Film Studios Limited [2012] EWCA Civ 570;  [2012] CP Rep 34; [2012] EMLR 27.  The case as presented on paper, and as ultimately fought out, has been a huge waste of money and of the court’s resources.  The costs on ME’s side (I have not been told WS’s costs) are said to be well in excess of £100,000.  On the claimants’ side they were asking for a contribution of £33,000 towards their costs some time ago, on 26th March 2010.  They must be a lot greater today than then.  The claimants have for long periods been self-represented, but they appeared at the trial by experienced junior counsel.  
135.	It seems to me that I should approach this matter globally, partly because the claimants have made common cause, but largely because the claimants, as well as the defendants, in their settlement attempts, endeavoured to reach a global solution.  A good example is the claimants’ offer of 26th March 2010, to which I have just referred.  
136.	On 28th June 2011 an offer was made by ME and WS worth roughly £123,000 to the claimants.   This involved the writing off by ME of substantial arrears and charges to the mortgage accounts.  The complaint is that ME then offered the claimants a payment plan for the remaining arrears which Mr Dean described as “mission impossible”.  Be that as it may, the offer was still a lot better in financial terms for the claimants than the result of the trial.  
137.	I have no doubt in saying that both ME and WS  have, judged against the offer of 28th June 2011, won in spades since that date.  The settlement offer was not formally withdrawn until day two of the trial. 
138.	The offer made by ME and WS in June 2011 was for no order as to costs.  I do not consider, and Mr Dean has not been bold enough to suggest, that the offer was any less effective because of its costs neutrality.  On any footing, even taking full account of the claimants’ costs for which they were seeking a contribution of £33,000 just a year or so before, this was a generous offer.  
139.	Before June 2011 the matter is different.  As I have said, the claims have been both exaggerated and a waste of time and money.  They eclipse because of their extravagance any supposed high-handedness of ME.  ME’s position well in advance of the trial, and Mr Morgan’s position throughout, was that ME’s approach to portfolio lending was wrong.  Mr Morgan still persuaded me in a number of cases that the appointments were valid.  On the majority of the general issues, and certainly on those that had any real financial significance, the claimants lost. It seems to me that looking at the litigation realistically and commercially, no one in their right mind would have brought proceedings at disproportionate cost for a sum of around £4,000 in the high court, and I doubt whether they would have brought such a claim in any other court.  
140.	Even if I were to award the claimants their costs, they would have to be assessed, if not agreed.  Their irrecoverable costs, following any assessment, would almost certainly exceed the amount of the successful claim (£4,000).   It should have been obvious to the claimants, had they ever addressed the true value of their claims realistically, that they were likely to incur irrecoverable costs greater than the combined value of their claims.  In those circumstances, Mr Morgan and Mr Mitchell are right to contend that the case as presented and fought has effectively been an abuse of process from the outset.  
141.	There is certainly no basis in my judgment for departing from ME’s contractual right to recover all its costs on the indemnity basis, and I so direct.  I also, with one qualification, accede to Mr Mitchell’s submission that WS should have all their costs on the indemnity basis from June 2011, and before that on the standard basis.  The one caveat I make in Mr Mitchell’s case is that, in relation to Gnathic, his clients did lose on a discrete point of liability concerning their conduct of the receivership.  Looked at overall, that has a small impact on costs, but it must have some and I shall, therefore, order that in the case of the Gnathic claim alone, WS shall recover only 90 percent of their costs on the standard basis down to the June 2011 offer.  The offer swamped that.  WS will therefore have all of their costs on the indemnity basis thereafter.  
142.	Finally, the only admissible offer that I have been directed to from the claimants was in the letter of 26th March 2010.  That letter asked for all of the arrears to be written off, all legal fees and charges to be removed from the mortgage account, and a contribution to legal costs of £33,000 plus a payment of £1,000 per claimant.  That was so unrealistic as not in truth to amount to a serious offer at all.  It is symptomatic of the commercial and legal unreality with which this litigation has been conducted by the claimants.  That is an additional reason why I have taken a hard line on costs.                   
[Judgment ends]