Heffernan & Anor v Grangewood Securities Ltd

Re-raising issues deliberately abandoned in earlier proceedings may constitute an abuse of process. The court must make a broad, merits-based assessment of all the circumstances, including whether the issue could and should have been raised earlier, whether the later proceedings misuse judicial resources, and whether reopening the matter would unjustly vex the other party. A consent order dismissing an earlier challenge may make subsequent proceedings abusive, particularly where the same issues were knowingly abandoned. That does not prevent a borrower from pursuing a limited redemption account to establish the arithmetic sum required for redemption.

The borrowers brought a redemption action concerning a secured loan over their home. They challenged the lender’s calculation of the redemption figure, including interest rebates, disbursements, default interest and administration charges, and alleged unconscionability, oppression, penalty and an extortionate credit bargain.

Earlier possession proceedings had resulted in a suspended possession order. In 1995, the borrowers applied to set that order aside on grounds including the absence of arrears, misrepresentation, oppressive terms and improper charges. By consent, that application was dismissed, while the warrant was suspended on payment of specified monthly sums.

The district judge dismissed the later action as an abuse of process, and the circuit judge upheld that decision, relying principally on Henderson v Henderson. The central issue was whether the borrowers could reopen matters raised and deliberately abandoned in the earlier proceedings.

1. Appeal dismissed on the principal issue. The Court of Appeal held that the borrowers could not reopen in fresh proceedings issues which had been raised in the earlier possession proceedings and deliberately abandoned by the consent order.
2. The governing approach was the broad, merits-based assessment described in Johnson v Gore Wood & Co (a firm) [2001] 2 WRL 72. It is not enough that an issue could have been raised earlier. The court must ask whether, in all the circumstances, raising it later misuses or abuses the court’s process. The same principle applies with at least equal force where the issue was actually raised and then abandoned.
3. Securum Finance Ltd v Ashton [2001] Ch 291 supported the conclusion. A second attempt to pursue an indistinguishable claim wastes limited court resources. The case for abuse is stronger where the earlier claim or issue was abandoned and its abandonment recognised by a consent dismissal.
4. The lender was entitled to regard the borrowers’ 1995 challenges as settled. Reopening substantially the same complaints in 1997, after the consent order had allowed payment over the remaining loan term, would unjustly disturb that finality.
5. The 1994 possession order did not independently establish abuse. On that application the lender needed to show default sufficient to remove the contractual bar to possession. It did not need to establish the full state of the account, and the later complaints about additional charges were not then before the court.
6. The borrowers could nevertheless maintain a redemption action limited to determining, as a matter of arithmetic, the amount required to redeem. They could not use that action to reopen the principles covered by the preliminary issues.

• King’s Lynn County Court: District Judge Hayes dismissed the action on preliminary issues on 7 September 1998.
• King’s Lynn County Court, Circuit Judge: His Honour Judge Holt dismissed the borrowers’ appeal on 27 January 1999, principally relying on Henderson v Henderson (1843) 3 Hare 100.
• Court of Appeal (Civil Division): The appeal was dismissed on the abuse-of-process issue. The order was set aside insofar as it dismissed the entire redemption action; a limited account could proceed.