Cheval Bridging Finance Ltd v Bhasin & Ors

For an application under the Administration of Justice Act 1970, section 36, the applicant bears the onus of showing a likely ability to pay the mortgage sums, including costs, within a reasonable period. The issue is not merely whether the mortgagee would suffer prejudice. The power is discretionary, and appellate intervention is justified only where it was exercised on a wrong principle or in a way no reasonable judge could have adopted. Questions concerning an additional case-management power under CPR 3 and the appellant’s status as a mortgagor remained arguable and were reserved for the full appeal.

The appellant was joined to possession proceedings brought by the respondent mortgagee. She alleged that other defendants had obtained title to the property through fraud and had subsequently re-mortgaged it. She sought an adjournment to pursue related claims against them and apply any recovery towards the mortgage debt, relying on section 36 and CPR 3. HHJ Edwards refused an adjournment and stay and made a 28-day possession order. On an adjourned application for permission to appeal, the central questions included whether the refusal was properly made, whether CPR 3 supplied an additional case-management power, and whether the appellant was a mortgagor for section 36 purposes.

Disposition. Arden LJ, with Mummery LJ agreeing, granted permission to appeal on two limited questions. The appeal was adjourned to a full court and the hearing of the appeal was stayed. The court refused to admit further evidence at this stage and stood over any further application to the full appeal court. Mummery LJ indicated that the appropriate costs order was costs in the appeal.

1. Section 36 of the Administration of Justice Act 1970 confers a discretionary power. An appellate court may interfere only where the discretion was exercised on a wrong basis or in a manner no reasonable judge could have adopted.
2. On an application for an adjournment or stay under section 36, the onus lies on the applicant. The relevant criterion is the likelihood of paying the sums due under the mortgage within a reasonable period. Lack of prejudice to the mortgagee is not the statutory criterion.
3. The evidence before the county court did not provide a proper basis for concluding that the mortgage debt could be discharged within a reasonable period. Potential recovery from claims against third parties was uncertain, including as to the strength of those claims, available assets and the enforceability of any judgment. There was therefore no real prospect of successfully challenging the refusal of relief on the evidence then available.
4. It was nevertheless arguable whether CPR 3 supplied a separate case-management power, notwithstanding section 36, and whether that power could justify awaiting the trial of related proceedings. That issue was reserved for the full appeal.
5. It was also arguable whether the appellant was a mortgagor for section 36 purposes, including in light of section 39, and whether the court consequently had jurisdiction to adjourn the possession proceedings. That issue was likewise not determined.
6. The court observed that admitting the further evidence at this stage would be unfair because the respondent had not had a proper opportunity to consider and answer it.

• Court of Appeal (Civil Division): On an adjourned application for permission to appeal, the court granted permission on two limited points, adjourned the appeal to a full court and stayed the hearing of the appeal. [2008] EWCA Civ 598
• Brentford County Court: HHJ Edwards refused an adjournment and a stay under section 36 and made a 28-day possession order. The preliminary-issues judgment was not appealed.