Paragon Finance Plc v Pender & Anor

A court may revoke an order under CPR 3.1(7) in exceptional circumstances, but the power must not become a back-door appeal. A challenge based on fresh evidence requires a satisfactory explanation for why the evidence was not produced earlier. Long delay, faded memories, lost documents and resulting prejudice may justify refusing permission to pursue a stale claim. A registered chargee retains the legal powers of enforcement until a transferee is registered. A lender’s contractual discretion to vary interest rates is constrained by honesty, proper purpose and rationality, but commercial financial considerations may justify higher rates. The statutory test for an extortionate credit bargain is assessed when the bargain is made and requires gross exorbitance or gross contravention of ordinary fair dealing.

The defendants appealed from the dismissal by Her Honour Judge Mayer in the Barnet County Court of their application to set aside a possession order made in 1995. They sought permission to appeal out of time and raised earlier allegations of misrepresentation and breach of contract, together with new arguments concerning securitisation, title to sue, an implied restriction on the variation of mortgage interest rates and an extortionate credit bargain under the Consumer Credit Act 1974.

The High Court considered whether the possession order could be revoked, whether the defendants had a real prospect of success on any substantive defence, and whether the claimant remained entitled to enforce the registered charge.

1. Jurisdiction and procedural power. The court could reconsider the matter notwithstanding the lower court’s mistaken view that CCR Order 37 was unavailable. The accrued procedural right was not removed by repeal. In any event, CPR 3.1(7) conferred an exceptional power to revoke an order, but it was not to be used as a back-door appeal.
2. Earlier allegations and fresh evidence. The alleged representations and implied term had no real prospect of success. The evidence of Mr McPherson was stale, inconsistent and unexplained by reference to its late production. The principles identified in Lynch v James Lynch and Sons (Transport) Ltd supported refusing relief where delay caused serious forensic disadvantage.
3. Title to sue. Under the registered-land regime, the claimant remained the registered chargee until registration of a transferee. It therefore retained the legal powers to enforce the charge and seek possession. Section 114 of the Law of Property Act 1925 did not displace that result. Any equitable assignment did not remove the claimant’s legal powers.
4. Interest-rate discretion. Applying the approach in Paragon Finance plc v Nash and Staunton, the implied term prevented dishonest, improper, capricious or arbitrary conduct, and conduct so unreasonable that no reasonable lender would adopt it. Commercial measures taken to address financial difficulties were not, without more, breaches. The evidence did not establish an improper purpose or breach.
5. Extortionate credit bargain. Section 138 of the Consumer Credit Act 1974 required assessment at the time of contracting. Securitisation alone did not make the bargain extortionate. The evidence did not show grossly exorbitant payments or a gross contravention of ordinary fair dealing.
6. The appeal was dismissed. Permission to appeal was refused on the matters previously considered by the county court. The stay of the warrant for possession was to be lifted after representations on timing.

1. High Court (Chancery Division): the defendants appealed from the Barnet County Court’s dismissal of their application to set aside the 1995 possession order. The appeal was dismissed.