National Westminster Bank Plc v Rushmer & Anor

An appeal from an order for sale under the Trusts of Land and Appointment of Trustees Act 1996 may be treated as a rehearing where a procedural irregularity caused the first-instance judge to omit alternative cases. The irregularity does not require the whole decision to be reheard if the primary case was unaffected.

The discretion under sections 14 and 15 must be exercised compatibly with Convention rights. Careful consideration of the section 15 factors will ordinarily suffice to balance the secured creditor’s rights against the Article 8 rights of occupiers. A further suspension of sale requires more than a speculative possibility of recovery in proposed litigation.

National Westminster Bank obtained an order for sale of the property occupied by Mr and Mrs Rushmer and their children. The order was suspended conditionally to allow proposed litigation which might produce funds to discharge the debt. The suspension later expired after payments ceased and the proposed proceedings were not pursued.

Mrs Rushmer applied for a further suspension. The Master dismissed the application. On appeal, she alleged procedural irregularity, irrationality, failure to consider Article 8 rights and failure to reconsider the statutory factors in light of changed circumstances. The central issues were whether the appeal should be reheard and whether a further postponement of sale was justified.

1. Procedural irregularity. The bank’s solicitors sent the Master a letter without copying it to Mrs Rushmer’s solicitors. The Master relied on it and treated alternative cases as abandoned without giving her an opportunity to respond. Taken together, those matters breached the audi alteram partem principle and constituted a serious procedural irregularity under CPR rule 52.11(3)(b).
2. The irregularity affected only the alternative cases. It did not undermine the Master’s reasoning on the primary case and did not make the entire decision unjust. Because remittal would cause substantial further delay, the appeal was properly treated as a rehearing under CPR rule 52.11(1)(b).
3. Convention rights. The power to enforce a charging order under sections 14 and 15 of the Trusts of Land and Appointment of Trustees Act 1996 is Convention-compatible. The discretion must be exercised compatibly with the Convention rights of those affected. Ordinarily, proper consideration of the section 15 factors enables the court to balance the creditor’s rights under Article 1 of the First Protocol against the occupiers’ Article 8 rights. Express consideration of Article 8 is not invariably required.
4. The Master had considered the family’s interests, the children’s welfare and the bank’s position. His failure to refer expressly to Article 8 did not invalidate the order. A fall in property prices did not require the discretion to be re-exercised, and the child’s later swimming ambitions did not constitute a relevant new circumstance because the need to use the private pool had already been considered.
5. A further suspension was unjustified. The proposed claim against the liquidators required permission, lacked evidence of merits, quantum or benefit to the bank, depended substantially on Mr Rushmer’s evidence, and was likely to be costly and speculative. The earlier claim against the accountant had failed, and the debt had increased while the bank remained unpaid.
6. The bank’s interest therefore continued to outweigh the interests of the innocent wife and children. Enforcement of the sale order was justified and proportionate. The appeal was dismissed.

• High Court (Chancery Division): Master Moncaster ordered sale of the property on 17 July 2007 and dismissed the application for a further suspension on 3 November 2009. The High Court treated the appeal as a rehearing and dismissed it.