Lloyds TSB Bank v R K & S L Marya

A mortgagee’s right to possession is not affected by a cross-claim which the mortgagor, or a principal debtor under a guaranteed liability, may have against the mortgagee, unless that right has been restricted by contract or statute. A contractual provision excluding counterclaims and set-off may reinforce the same conclusion. An application to reinstate a previously determined permission application requires a material ground showing that the earlier judgment overlooked a matter capable of affecting the outcome. Repetition of earlier arguments is insufficient.

The applicant sought to reinstate applications for permission to appeal previously dismissed by the Court of Appeal, including challenges to possession orders made by His Honour Judges Byrt and Simpson and a costs decision concerning a Part 36 payment. He also sought an adjournment to obtain legal representation, which was refused because the matters had been outstanding for a considerable period and he had ample opportunity to obtain advice.

The central issues were whether a cross-claim by the debtor company against the bank could resist possession of property charged as security for a guarantee, whether the earlier judgments should be reinstated, and whether acceptance of a payment into court discharged existing costs orders.

1. Applications refused. The applicant had not shown any new or material matter capable of undermining the earlier decisions. Repetition of submissions previously considered could not justify reinstatement or re-reinstatement.
2. The Court applied the established principle, identified in Mobile Oil v Rawlinson 43 P & CR 221, that, unless restricted by contract or statute, a mortgagee’s right to possession is unaffected by a cross-claim against the mortgagee. The principle also applies where the secured liability arises under a guarantee, as recognised in National Westminster Bank v Skelton.
3. The earlier stay of possession proceedings did not prevent the later possession order. The later order superseded the earlier procedural position. In any event, the debtor company’s cross-claim could not provide a defence to possession. Clause 11 of the guarantee separately provided that the guarantors could not claim the benefit of counterclaim or set-off until all liabilities had been discharged.
4. The outstanding application concerning the debtor company’s challenge to the costs-related order was a separate matter and did not alter the absence of any realistic appeal point concerning possession.
5. Acceptance of a Part 36 payment did not itself discharge liability under existing costs orders. Under CPR 36.13(1), the claimant’s costs were affected only to the extent that they had not already been provided for by earlier orders. The parties could agree a different result, but no such agreement existed.
6. The Court directed that no further applications to reinstate the orders considered that day could be made without permission. That direction did not apply to the specified outstanding matter or to application 0297, for which permission to apply within 14 days had been given in defined circumstances. Transcripts were to be supplied at public expense.

• Court of Appeal (Civil Division): Earlier applications for permission to appeal and reinstatement had been dismissed by Simon Brown LJ, and by Potter LJ and Jonathan Parker LJ on 16 January 2001. The present further reinstatement applications were refused.
• Mayors & City of London County Court: Possession orders and related decisions were made by His Honour Judges Byrt and Simpson and His Honour Judge Hull QC. The Court of Appeal declined to reopen those matters.