Paragon Finance Plc v Pender & Anor

The High Court dismissed the defendants' application for permission to appeal and, on rehearing of the fresh points raised, dismissed the appeal. The court held that the defendants had no real prospect of successfully setting aside a possession order made on 5 January 1995. Key legal principles applied included: the statutory scheme for registered charges (Land Registration Act 1925 and the Law of Property Act 1925) which preserves the rights of the registered chargee pending registration of any transferee; the high threshold for reopening a concluded possession order or obtaining a new trial (see Ladd v Marshall principles and CPR/CCR provisions); limitation and prejudice from long delay (Limitation Act 1980 and authorities on laches); and the tests under the Consumer Credit Act 1974 for an "extortionate credit bargain". The court also held that allegations about securitisation and administration agreements did not, on the material before it, deprive the registered chargee of the right to enforce the mortgage.

Background and parties: The defendants mortgaged their dwelling to the claimant in 1989. A possession hearing before a district judge produced an order made on 5 January 1995. The claimant remained the registered chargee. In 2002 the defendants applied to set aside that possession order and for permission to appeal out of time. Her Honour Judge Mayer dismissed those applications; the defendants sought permission to appeal to the High Court.

Nature of the application: The defendants sought permission to appeal and, if granted, to challenge the possession order. On appeal they raised (1) a title to sue argument based on securitisation and an administration agreement, (2) an earlier misrepresentation / collateral contract case, (3) a new claim that an implied contractual term obliged the lender to exercise its discretions over interest rates fairly and not for an improper purpose, and (4) an alternative application under the Consumer Credit Act 1974 that the bargain was extortionate.

Issues framed by the court:

• Whether the defendants had a real prospect of setting aside the possession order in light of delay and prejudice to the claimant.
• Whether securitisation/administration arrangements meant the claimant lacked title to sue or to enforce possession.
• Whether the alleged misrepresentations or any implied term about interest rate variation had a real prospect of success.
• Whether the loan was an extortionate credit bargain under the Consumer Credit Act 1974.

Reasoning and conclusions: The court found the defendants’ original factual/material allegations were stale and showed little prospect of success; delay and prejudice (including evidential difficulties and increased arrears) weighed heavily against reopening the 1995 order. On title to sue and securitisation the court analysed the administration agreement and relevant statutory provisions (including section 114 Law of Property Act 1925 and the Land Registration Act 1925 sections 33 and 34) and concluded that the claimant remained registered proprietor entitled to enforce the charge pending any registration of a transferee; equitable assignments did not defeat the claimant’s enforcement rights. The court treated the misrepresentation and implied-term arguments as weak on the evidence and distinguished earlier authority (notably Paragon v Nash) that commercial decisions to increase rates to meet financial pressures are not necessarily improper. The Consumer Credit Act argument failed because the relevant tests require a high threshold at the time of contracting and the material did not show a grossly exorbitant or oppressive bargain. The application and appeal were therefore dismissed.

Appeal dismissed. The court concluded that the defendants had no real prospect of success on their pleaded grounds (misrepresentation, implied term, title to sue, or extortionate credit bargain) and that delay and prejudice rendered the reopening of the 1995 possession order inappropriate. The claimant, as registered chargee and under the administration agreement, retained enforceable rights to possession pending any registration of a transferee.

This was an appeal to the High Court (Chancery Division) from an order of Her Honour Judge Mayer in Barnet County Court dismissing the defendants' application to set aside a possession order dated 5 January 1995 and refusing permission to appeal out of time. Neuberger J granted a stay on 17 February 2003 pending pursuit of the appeal; Patten J ordered the application for permission to stand over on 28 July 2003. The High Court heard the defendants' application and dismissed the appeal ([2003] EWHC 2834 (Ch)).