Lloyds TSB Bank Plc v Holdgate & Anor

Permission to appeal should be granted where there is a properly arguable contention that the lower court misunderstood the effect of a material House of Lords decision. The fact that a wife had seen a solicitor who witnessed a mortgage charge did not, without more, necessarily establish that the transaction’s implications had been adequately explained to her or that the bank could rely on that fact. The issue required proper and just resolution.

Lloyds TSB sought possession of a property charged by Mr and Mrs Holdgate to secure the liabilities of Mr Holdgate and his business partner. Mrs Holdgate alleged that the solicitor who witnessed the charge had not advised her privately about the risks, the extent of the liability or the unlimited nature of the security.

A county court judge made a possession order without hearing oral evidence and later refused permission to appeal, construing Royal Bank of Scotland v Etridge as permitting the bank to rely on the fact that Mrs Holdgate had seen a solicitor. Mrs Holdgate applied to the Court of Appeal for permission to appeal, an extension of time and a stay of execution.

1. Permission to appeal. Lord Justice Kennedy considered that there was force in the submission that the county court judge had misunderstood the effect of Royal Bank of Scotland v Etridge [2001] 3 WLR 1021, particularly the passages in the speeches of Lord Nicholls and Lord Scott identified in the judgment.
2. The judge’s approach treated the fact that Mrs Holdgate had seen a solicitor, including a solicitor who had also acted for her husband, as demonstrating that the transaction’s implications had been brought home to her. The Court of Appeal indicated that this interpretation was arguable and required examination on appeal.
3. The procedural context supported allowing the application. Mrs Holdgate’s case raised an issue which should be properly and justly resolved, and the absence of oral evidence at the original possession hearing did not justify refusing permission where a substantial issue of legal interpretation was shown.
4. Permission was granted on the first three grounds of appeal. Permission was refused on ground 4, which counsel accepted was not a matter of substance. The application was allowed.

• Southend County Court: Judge Yelton made a possession order on 21 September 2000, stayed for six months or until 28 days after judgment in Royal Bank of Scotland v Etridge. On 27 March 2002 he refused permission to appeal, holding that the solicitor’s involvement entitled the bank to rely on the transaction having been explained.
• Court of Appeal (Civil Division): Lord Justice Kennedy granted permission to appeal on the first three grounds and refused it on ground 4.