Chubb & Anor v Dean & Anor

In enforcement proceedings, the court may enforce the judgment debt but may not vary it or add contractual liabilities arising from the original transaction. Post-judgment interest is therefore limited to the applicable statutory rate unless the original judgment itself provides otherwise. Where mortgage proceeds are received through enforcement, the mortgagee may appropriate them between sums secured by the mortgage if the mortgage documentation confers that power. A high contractual interest rate does not alone establish an unfair relationship under section 140A of the Consumer Credit Act 1974. The court must consider transparency, the parties’ understanding and the overall circumstances. Alleged shortcomings in enforcement require a properly raised and evidenced claim.

The claimant had made a short-term bridging loan to the defendants, secured by a second charge over their home. After possession proceedings and a money judgment in the County Court, the claimant obtained a charging order over another property and later sought an order for sale.

Master Price adjourned issues concerning contractual interest and a facility fee, the possible unfairness of the relationship under sections 140A and 140B of the Consumer Credit Act 1974, and the appropriation of sale proceeds. By the hearing, the facility fee had been waived. The court had to determine the applicable post-judgment interest rate, the allocation of proceeds between the mortgage account and judgment debt, and whether an unfair relationship had been established.

1. Post-judgment interest. The County Court judgment attracted interest at the statutory judgment rate through section 74 of the County Courts Act 2009, the County Courts Interest on Judgment Debts Order 1991 and the Judgments Act. In these enforcement proceedings the court could enforce the existing judgment, but could not amend or vary an order made by another court. It therefore had no power to add contractual interest or facility fees to the judgment debt. The judgment debt continued to bear interest at 8 per cent.
2. Appropriation of proceeds. The mortgagee was entitled to appropriate the sale proceeds between the sums secured by the mortgage. The principle recognised in West Bromwich Building Society v Crammer [2002] EWHC 2618 applied beyond an appropriation between interest and capital. In addition, the mortgage terms expressly gave the claimant the powers of a receiver, including power to apply net sale proceeds among sums secured by the mortgage in such order as it determined.
3. Unfair relationship. The approach in Director General of Fair Trading v First National Bank [2001] UKHL 52 was applicable. The relevant question was whether the terms caused a significant imbalance, to the consumer’s detriment, contrary to good faith. Transparency and fair dealing were material. The interest and facility-fee provisions were clearly expressed, the defendants had legal advice and understood the bargain, and the combined rate was not so high as to make the relationship unfair.
4. Complaints about delay or inefficiency in enforcement were outside the issues reserved for determination, were unsupported by sufficient evidence of breach or loss, and could not justify an adjustment to the judgment debt. The defendants remained able in principle to bring a properly particularised and quantified claim, subject to any issue of abuse of process.
5. The court declined to adjust the order for an unfair relationship. The mortgage account was discharged from the sale proceeds, and the remaining shortfall continued to be secured by the charging order and bore interest at the judgment rate.