Notting Hill Finance Ltd v Sheikh

An appellate court has a discretion to permit a new point to be raised on appeal. There is no general requirement that the case be exceptional. The court should assess the nature of the proceedings below, the nature of the proposed point, and prejudice to the opposing party, including whether an earlier evidential process would be undermined.

A short possession hearing under Civil Procedure Rules 1998 Part 55 will ordinarily not be a trial. A new challenge may therefore be admitted where it would have led to case-management directions, the respondent has not relied detrimentally on its earlier omission, and finality carries reduced weight. If the new point shows that the lower court should have made a different decision, the decision is wrong under CPR 52.21(3)(a); this does not require a serious procedural irregularity under CPR 52.21(3)(b).

The claimant lender obtained, at a short County Court possession hearing, an order for possession and a money judgment of £99,749 on a secured loan. The borrower, who had not raised a defence at that hearing, appealed after obtaining advice. He contended that a default-interest clause imposing interest at 289.6% per annum was an unenforceable penalty and gave rise to an unfair relationship under the Consumer Credit Act 1974.

HHJ Godsmark QC allowed the borrower to raise those points, reduced the judgment to £71,000, and directed a trial of the default-interest issue. The lender brought a second appeal. The central questions were whether the new points could be advanced on appeal and whether the lower court's order could be set aside under CPR 52.21(3).

1. The lender’s appeal was dismissed. HHJ Godsmark QC was entitled to allow the borrower to raise the penalty and Consumer Credit Act points on appeal.

2. The governing approach was that stated in Pittalis v Grant [1989] QB 605, and restated in later authorities. An appellate court is cautious about new points, particularly where they would require new evidence or would have changed the conduct of a full trial. However, there is no general exceptional-circumstances threshold. The court must evaluate all relevant circumstances, especially the proceedings below, the new point and prejudice to the respondent.

3. Jones v MBNA International Bank Ltd [2000] EWCA Civ 314 concerned the strong finality considerations arising after a full trial. Those considerations had substantially less force here. Applying Forcelux v Binnie [2009] EWCA Civ 854, the first Part 55 hearing was a brief summary hearing, not a trial involving tested evidence. Had the default-interest challenge been raised, the district judge would probably have given case-management directions rather than entered judgment for that element of the debt.

4. The borrower acted promptly. The lender had not relied detrimentally on the omission, and the possession order and judgment for the principal contractual sum remained unchallenged. The limited factual inquiry now required did not subvert an evidential process that should have occurred at the initial hearing. The borrower’s effective lack of representation carried little independent weight: court rules apply equally to represented and unrepresented parties.

5. Once the new points were admitted, the district judge’s decision to award default interest rather than direct their determination was the wrong decision within CPR 52.21(3)(a). It was unnecessary, and incorrect in principle, to characterise the proceedings below as unjust because of a serious procedural or other irregularity under CPR 52.21(3)(b). The court did not decide whether the default-interest clause was penal or unfair; that issue remained for a full hearing. A 14-day stay of the possession order was granted.

• Court of Appeal (Civil Division): Dismissed the lender’s second appeal in [2019] EWCA Civ 1337. It upheld the decision permitting the borrower to raise the default-interest challenges and granted a short stay of the possession order.

• County Court at Nottingham (HHJ Godsmark QC): Allowed the borrower’s appeal from the district judge on the default-interest issue. The money judgment was limited to £71,000, and the remaining issue was remitted for trial with multi-track directions.

• County Court at Derby (District Judge Hill): Made an order for possession and entered a money judgment for £99,749, subject to a restriction on enforcement without the court’s permission.