Dickinson & Anor v UK Acorn Finance Ltd

The Court of Appeal dismissed the appellants' challenge to a strike-out for abuse of process. The central legal question was whether borrowers could, at a late stage after a possession order and multiple interlocutory applications, invoke unenforceability under the Financial Services and Markets Act 2000 (notably sections 19, 22, 26 and 28) to resist enforcement of a secured bridging loan. The court held that the judge had applied the multi-factorial Henderson v Henderson (abuse of process) principle and the Lord Bingham approach in Johnson v Gore Wood correctly and that the statutory scheme under the Act did not operate as a trump card that automatically prevented a finding of abuse. The court also relied on section 28(3) and (7) of the Act to note that enforcement under the Act is conditional and that, in the present circumstances, the claimants were unlikely to be able to satisfy the conditions (including repayment), making the claim futile. The appeal was therefore dismissed for abuse of process and for want of viable relief.

The claimants, Mr and Mrs Dickinson, had taken a short-term bridging loan of ,630,000 secured by a legal charge over a rural property. The lender obtained a possession order in the county court in October 2011 after non-payment but enforcement was suspended for a period. Numerous subsequent applications and hearings in the possession proceedings followed. The claimants issued separate proceedings on 29 October 2013 contending that the mortgage was unenforceable under the Financial Services and Markets Act 2000 (section 26) because the lender was not authorised to carry on regulated mortgage business.

Nature of the claim: a declaration and relief based on unenforceability under section 26 of the Financial Services and Markets Act 2000 and related recovery/compensation provisions under section 28.

Procedural posture: The lender applied to strike out the claim as an abuse of process (Henderson v Henderson), and on grounds of estoppel. District Judge G. D. Smith struck out the claim as an abuse of process. HHJ Hodge QC upheld that decision on 6 October 2014. Permission to appeal to the Court of Appeal was given by Lewison LJ and the appeal was heard on 12 November 2015, with judgment on 25 November 2015.

Issues framed by the court:

• Whether the claim to rely on statutory unenforceability under the Act could be barred as an abuse of process given the earlier possession proceedings and repeated applications.
• Whether doctrines of cause of action or issue estoppel could prevent reliance on section 26.
• How the public policy underlying the Act (protection against unauthorised regulated lending) interacts with the judge-made abuse of process doctrine.

Reasoning: The court held that DJ Smith had been aware of and considered the statutory provisions but permissibly balanced competing public policies: protection against unauthorised lenders and the policy against abuse of process. The Act did not automatically prevail as a "trump card" because section 28 permits the court to allow enforcement where just and equitable and makes enforcement contingent on repayment in some circumstances. The judge had applied the broad, merits-based Henderson/Johnson approach and had not taken immaterial matters into account nor omitted material ones. The claimants had offered no explanation for the delay, had not paid prior costs, and were likely unable to repay the sums required under section 28(7), rendering the new proceedings futile. For these reasons the strike-out was upheld and the appeal dismissed.

The appeal was dismissed. The Court of Appeal held that the judge below had correctly applied the multi-factorial abuse of process principles (Henderson v Henderson as developed in Johnson v Gore Wood) and that the Financial Services and Markets Act 2000 did not automatically preclude an abuse of process finding. The conditional nature of relief under section 28 (including repayment under section 28(7)) and the factual indicators of futility supported the strike-out; therefore the Court would not disturb the first-instance evaluation.

Possession proceedings in Skipton County Court resulted in a possession order on 20 October 2011. Deputy District Judge Temple dismissed applications by the Dickinsons on 19 July 2013. An appeal was dismissed by HH Judge Behrens on 30 September 2013. The Dickinsons issued the section 26 claim on 29 October 2013. District Judge G. D. Smith struck out the claim as an abuse of process on 6 December 2013. HHJ Hodge QC affirmed that decision on 6 October 2014. Permission to appeal to the Court of Appeal was granted by Lewison LJ on 21 January 2015. The Court of Appeal heard the appeal on 12 November 2015 and dismissed it on 25 November 2015; permission to appeal to the Supreme Court was refused.