JL Homes Ltd v Mortgage Express & Anor

Applications for summary judgment and strike-out will succeed where the pleaded case has no realistic prospect of success, discloses no reasonable cause of action, or constitutes an abuse of process. A mortgagee is not a trustee of the power of sale or of the power to appoint a receiver. It may act in its own interests, subject to good faith and a limited duty of care. A receiver may be appointed where a contractual default has occurred, and statutory conditions may be displaced by the mortgage terms where permitted. A mortgagee may consolidate transferred mortgages where the contractual terms preserve that power. A company cannot rely on the consumer-credit unfair-relationship provisions applicable only to individuals. Repeated attempts to relitigate hopeless allegations may constitute an abuse of process and be certified as totally without merit.

JL Homes Ltd owned six buy-to-let properties. Three were mortgaged to Mortgage Express and three mortgages, originally granted to Keystone Mortgages, had been assigned to Mortgage Express. Mortgage Express appointed the second defendants as Law of Property Act receivers after mortgage arrears and alleged unauthorised lettings.

JL challenged the appointments, the receivers’ conduct, Mortgage Express’s consolidation of the mortgages, an alleged agreement to negotiate, and reliance on the consumer-credit provisions. It also sought relief connected with earlier Portsmouth County Court proceedings concerning the properties. Mortgage Express and the receivers applied for summary judgment, strike-out and an extended civil restraint order.

1. Disposition. Summary judgment was granted to the defendants. Alternatively, the entire claim was struck out. The proceedings were declared totally without merit, with consequential orders to be considered.
2. The defendants satisfied the applicable threshold under CPR 3.4(2)(a) and CPR 24(2). The claim had no realistic prospect of success, disclosed no reasonable cause of action, and there was no compelling reason for a trial. Unparticularised allegations in paragraphs 6 and 8 were abusive in form; the remaining allegations disclosed no reasonable cause of action.
3. The receivers had been validly appointed on the basis of mortgage arrears. The mortgage terms made the debt immediately repayable after at least two missed monthly payments. The statutory gateways in section 103 of the Law of Property Act 1925 were not applicable because the mortgage terms expressly disapplied that section. No two months’ notice was a precondition to appointment.
4. The unauthorised letting allegation also provided an independent basis for appointment. The mortgagor bore the burden of proving consent. Even if the buy-to-let mortgage offer authorised letting, the evidence did not establish consent to the particular company letting or sublettings.
5. A mortgagee is not a trustee of the power of sale or the power to appoint a receiver. It may act in its own interests, provided it acts in good faith, and owes only a limited duty of care. The receivers’ possession proceedings did not involve forfeiture of a tenancy, so relief from forfeiture was irrelevant.
6. The contractual consolidation clause preserved Mortgage Express’s power to consolidate mortgages, including mortgages transferred from another mortgagee. The contractual provision protecting legal rights and responsibilities did not remove that power, since consolidation restricted the borrower’s position commercially but did not alter its legal rights or responsibilities.
7. An alleged agreement to negotiate was inadequately pleaded and could not ordinarily constitute a binding contract. The estoppel case lacked a clear representation and detriment, and the consumer-credit provisions in sections 140A and 140B of the Consumer Credit Act 1974 applied only to individuals, not companies.
8. The earlier Portsmouth proceedings had finally dismissed or struck out substantially the same challenges. Repeated attempts to reopen those hopeless allegations were an abuse of process within the merits-based approach described in Johnson v Gore Wood [2002] 2 AC 1. The court therefore certified the current proceedings as totally without merit under CPR 3.4(6).