State Bank Of New South Wales (t/a Colonial State Bank) v Harrison III

A court may stay a mortgagee’s possession order for procedural reasons connected with the proceedings, including an appeal. Its case-management powers do not permit a stay merely because separate litigation may eventually improve the mortgagor’s position. The specific statutory scheme in section 36 of the Administration of Justice Act 1970 defines the relevant jurisdiction where a mortgagee seeks possession of a dwelling-house. Where the mortgagor relies on a cross-claim, it must appear likely that the mortgagor will be able, within a reasonable period, to pay the sums due or remedy the default.

The Bank obtained an order for possession of the respondent’s mortgaged home from Master Bowman. The respondent sought a stay under section 36 of the Administration of Justice Act 1970, relying on proposed cross-claims and related litigation concerning Lloyd’s. The Master refused a stay and permission to appeal.

Judge Seymour refused permission to appeal but granted a general stay of execution until the conclusion of specified proceedings in Society of Lloyd’s v Jaffray. The Bank appealed against that stay. The respondent also sought to challenge the refusal of permission, the refusal to admit further evidence and the refusal to amend his defence. The central issues were the jurisdiction to grant the general stay and whether the respondent had any appeal from the refusal of permission.

1. Respondent’s applications. Section 54(4) of the Access to Justice Act 1999 deprived the court of jurisdiction to entertain an appeal against the High Court’s refusal of permission to appeal against Master Bowman’s order. The challenges concerning further evidence and amendment of the defence attempted to raise the same issue in another form and were also dismissed.

2. Section 36. The statutory condition required it to appear likely that the mortgagor would be able, within a reasonable period, to pay the mortgage sums or remedy the default. Where disputed witness evidence could not be resolved without cross-examination, the mortgagor had not satisfied that condition at the interlocutory stage.

3. Jurisdiction to grant a stay. Lord Justice Jonathan Parker, whose reasoning was adopted by Lord Justices Tuckey and Aldous, held that Part 3 of the Civil Procedure Rules 1998 did not confer jurisdiction to stay the possession order merely because separate litigation might later benefit the mortgagor. Case-management powers could support a procedural stay connected with the possession proceedings, but not a stay concerning separate litigation to which the Bank was not a party. The only available jurisdiction was that under section 36.

4. Discretion. Even if jurisdiction existed, the stay was plainly wrong. Success on the preliminary issue in the Lloyd’s litigation would not necessarily resolve the respondent’s individual claim, and any relief was likely to be substantially delayed. The Bank’s appeal was allowed and paragraphs 5, 6 and 7 of Judge Seymour’s order were set aside.

• High Court, Chancery Division: Master Bowman ordered possession and refused a stay under section 36. Judge Seymour refused permission to appeal, refused permission to adduce further evidence and amend the defence, but granted a general stay pending related Lloyd’s litigation.
• Court of Appeal (Civil Division): The respondent’s applications were dismissed, the Bank’s appeal was allowed, and paragraphs 5, 6 and 7 of Judge Seymour’s order were set aside.