Commercial Union Life Assurance Company Ltd v Adams & Anor

On an application to join a person in possession to possession proceedings, the court should consider possession, non-party status, legitimate purpose and a reasonably arguable case on the merits. The merits threshold is higher than an O.14 test but is not insuperable. Where the order was obtained by default, the merits are the cardinal consideration alongside delay and prejudice. A judge exercising discretion must consider plainly relevant matters, including the proposed defence; omission may amount to an error of principle. If the proposed interest raises reasonably arguable issues of construction, execution or priority requiring evidence or trial, joinder should generally be permitted. Minor delay by an elderly and infirm applicant may be outweighed by the interests of justice.

Commercial Union brought possession proceedings as mortgagees against Arthur and Hazel Adams concerning agricultural property and a farmhouse. The defendants agreed to a consent possession order covering the whole mortgaged property. Mrs Muriel Adams, Arthur Adams’s mother, then applied to be joined, claiming a 30-year lease of the farmhouse and adjoining fields.

The Barnstable County Court refused the application, relying on delay and prejudice without addressing the lease or the merits of the proposed defence. The Court of Appeal considered whether the joinder criteria were met, and whether the lease, its execution and possible equitable subrogation defeated the required arguable case.

Lord Justice Hirst gave the leading judgment, and Lord Justice Aldous agreed. The appeal was allowed.

1. Under County Court Rules Ord.15,r.3(1), the relevant considerations were whether the proposed intervener was in possession, was not already a party, had a legitimate purpose for joinder, and had a reasonably arguable case on the merits. The merits threshold was somewhat higher than an O.14 test, but it was not an insuperable hurdle. The approach in Saudi Eagle [1986] 2 Lloyds Reports 221 supported that assessment.
2. The lease was reasonably capable of supporting Mrs Adams’s case. Its construction was not sufficiently clear to defeat the application summarily. Proper construction required evidence of the factual matrix under the principles in Prenn v Simmonds. The court also declined to assume, without evidence about the original document, that the alleged 30-year lease had not been sealed. The argument based on section 1(11) of the Law of Property (Miscellaneous Provisions) Act 1989 therefore did not provide a complete answer.
3. The proposed subrogation argument, based on Commercial Union’s repayment of the Agricultural Mortgage Corporation mortgage, also required fuller consideration. The authorities included Castle Phillips Finance -v- Piddington [1995] 1 FLR 783, Ghana Commercial Bank v Chandiram [1960] AC 372, Butler v Rice [1910] 2 Ch 277 and Orakpo v Manson Investments Limited [1978] AC 95. The issue remained open for trial and could not be treated as necessarily defeating the merits.
4. On an application following a default judgment, the merits were the dominant factor to be weighed against delay, the explanation for default and prejudice. The judge had omitted the lease and the merits from the discretionary balance. That was an error of principle permitting appellate intervention. In the circumstances, the interests of justice outweighed the minor criticisms of Mrs Adams’s conduct, having regard to her age and infirmity.

Mrs Adams was allowed to intervene unconditionally. The proposed payment of future interest into court was refused as unjust. Costs were ordered to be the costs of Mrs Adams.

• Court of Appeal (Civil Division) — on 7 February 1996, allowed the appeal and ordered that Mrs Adams be allowed to intervene unconditionally: [1996] EWCA Civ 501.
• Barnstable County Court — Judge Cotterill refused Mrs Adams’s application to be joined, principally because of delay and anticipated prejudice.