Alliance & Leicester Plc v Slayford & Anor

A mortgagee is not barred from pursuing a personal covenant claim merely because earlier possession proceedings did not include, or did not succeed on, a money claim. Maintaining a later claim is not itself an abuse of process. An additional element is required, assessed in all the circumstances. A successful equitable defence by a mortgagor’s spouse does not prevent the mortgagee suing the mortgagor personally, even where bankruptcy might ultimately lead to an application to sell the property.

Short, non-prejudicial delay and the parties’ personal circumstances do not ordinarily justify striking out the claim. The court must deal with both parties fairly and proportionately.

The Bank lent money to Mr Slayford secured by a legal charge over the matrimonial home. In earlier possession proceedings, Mrs Slayford established an equitable interest which took priority over the Bank’s charge, and possession was refused against her.

The Bank later amended its claim to seek judgment against Mr Slayford for substantial arrears under his personal covenant, intending that the judgment might support bankruptcy proceedings. The county court struck out the amendment as an abuse of process, viewing it as an attempt to achieve indirectly what could not be achieved by possession proceedings.

The Bank appealed. The Court of Appeal first considered whether time for service of the notice of appeal should be extended, then whether the amended money claim was an abuse of process.

1. Extension of time. The short delay in serving the notice of appeal caused no prejudice. Although compliance with court-ordered time limits was important, refusing an appeal for that reason would be wholly disproportionate. The defendants’ application to set aside the extension was therefore dismissed.
2. Convention argument. The proposed money claim was separate from the earlier possession proceedings. The later claim concerned Mr Slayford’s continuing defaults and raised questions of limitation and quantum. It was wrong to treat any future bankruptcy or trustee’s application for sale as part of the same proceedings. The Convention argument did not justify denying the Bank an appeal.
3. Instalments. The county court judge’s comments about an instalment order were obiter. Under County Courts Act 1984, s 71, the power to order payment by instalments had to be exercised consistently with Administration of Justice Act 1970, s 36, and Administration of Justice Act 1973, s 8. It would be wrong to order instalments known not to discharge the arrears within a reasonable time.
4. Abuse of process. A mortgagee has concurrent or successive remedies for enforcing payment, including possession, proceedings on the personal covenant and bankruptcy, subject to election where appropriate. The mere omission of a money claim from earlier possession proceedings does not create res judicata or Henderson v Henderson estoppel. The approach in UCB Bank plc v Chandler and Bradford and Bingley Building Society v Seddon was adopted.
5. A mortgagee which has been met with an O’Brien-type defence may sue the mortgagor personally and, as an unsecured creditor, pursue bankruptcy, even if that may lead to a trustee seeking sale of property in which the spouse has an equitable interest. The reasoning in Zandfarid v BCCI was applicable.
6. The unexplained delay did not prejudice a fair trial, and the parties’ age, health and financial circumstances did not make the claim abusive. The county court judge’s sympathy led him into error. The appeal was allowed, his order was set aside, and the District Judge’s order allowing amendment was restored.

• Court of Appeal (Civil Division): [2000] EWCA Civ 257. The appeal was allowed; the order of His Honour Judge Brandt was set aside and the order of District Judge Gypps restored.
• Colchester County Court: The amended Particulars of Claim were struck out as an abuse of process.