Promontoria (Oak) Ltd v Nicholas Michael Emanuel & Anor.

The Court of Appeal considered whether a claimant assignee may rely on a redacted assignment deed to prove title to sue. The court reaffirmed and applied the guidance in Hancock v Promontoria (Chestnut) Ltd [2020] EWCA Civ 907: as a starting point, a document that the court must construe should in all normal circumstances be placed before the court in full, but limited redactions may be permissible where the redacted material is demonstrably irrelevant and the reasons for redaction are clearly and specifically explained. Mere confidentiality will seldom suffice.

The court held that the correct inquiry is whether, on the totality of the admissible evidence before the trial judge, the judge could safely reach the conclusion that the instrument effected an assignment of the relevant debt. Applying that test, the Court of Appeal concluded that the recorder had been entitled to admit and to rely on the redacted Oak Assignment and that Marcus Smith J erred in setting that decision aside. The appeal by Promontoria (Oak) Ltd was allowed because the trial judge’s admission and assessment of the redacted deed fell within the generous ambit of reasonable judicial discretion.

Background and parties:

• Promontoria (Oak) Ltd (claimant assignee) sued Mr and Mrs Emanuel (defendants, borrowers) for possession and a money judgment under an all-monies legal charge said to have been assigned to Promontoria by Clydesdale Bank Plc.
• Promontoria relied on an Assignment and Assumption Deed (the Oak Assignment) which it disclosed to the defendants in a heavily redacted form on grounds of commercial confidentiality. The defendants challenged Promontoria's title to sue.

Procedural history: The claim was tried before a Recorder in the County Court who admitted the redacted Oak Assignment and gave judgment for Promontoria. The Emanuels appealed to the High Court (Marcus Smith J) which held that the Recorder should not have admitted the redacted deed but, after further consideration, permitted Promontoria to rely on its registration as registered proprietor of the charge; the High Court awarded the Emanuels 50% of the appeal costs. Promontoria appealed to the Court of Appeal and the Emanuels cross‑appealed.

Nature of the application and issues before the Court of Appeal:

• (i) Whether a claimant relying on a redacted document to prove title to sue must, as a general rule, produce the unredacted document (and if so whether confidentiality justifies withholding it).
• (ii) Whether the Recorder was entitled to admit and rely on the redacted Oak Assignment; and whether Marcus Smith J erred in setting that admission aside and in his handling of alternative reliance on registration of the charge.
• (iii) The relevance of s.136 Law of Property Act 1925 as a hedge for debtors as to whom they should pay.

Court’s reasoning:

• The Court followed Hancock and summarised the applicable approach: ordinarily the whole document should be placed before the court; redactions are permissible only where the redacted parts are demonstrably irrelevant (and normally accompanied by a clear, particularised justification, with confidentiality only rarely sufficient); the court should be able to decide on the need for redaction if challenged.
• The central practical test is whether the trial judge can safely resolve the issue — here, whether the document effected an assignment — on the material before him. If the judge can reach a safe conclusion, he may admit and rely on a redacted instrument; if he cannot, the claimant will have failed to prove title.
• Applying that test, the Court found that the Recorder had reasonably concluded on the evidence before him that the redacted Oak Assignment was a valid deed effecting an assignment and that the redactions were justified by commercial confidentiality and irrelevance. Marcus Smith J was wrong to set aside that discretionary decision; the Court therefore allowed Promontoria's appeal.
• The Court commented on s.136 LPA 1925: a debtor is entitled to be assured that payment to the assignee will provide a good discharge and may ask to see evidence of an absolute assignment, but s.136 and its proviso provide procedural protections and remedies (payment into court, interpleader) where competing claims are or become known.

Result: Promontoria (Oak) Ltd's appeal was allowed; the Court concluded the redacted assignment could be relied upon as the trial judge had permissibly found. The Court did not determine in that appeal whether reliance on registration should be an alternative route, because it was unnecessary once the redacted deed was found admissible.

The appeal by Promontoria (Oak) Ltd is allowed. The Court of Appeal held that the correct approach to a redacted document on which a claimant relies is that set out in Hancock: the whole document should normally be disclosed, but limited redactions may be permissible where the redacted material is demonstrably irrelevant and the reason for redaction is particularised; the decisive question is whether the trial judge could safely determine the issue of assignment on the evidence before him. On that test the recorder’s admission and reliance on the redacted Oak Assignment was within reasonable judicial discretion and Marcus Smith J was wrong to set it aside.

County Court (Exeter) — Mr Recorder Willetts: admitted redacted Oak Assignment and gave judgment for Promontoria (date: trial May 2018; reserved judgment 16 July 2018). High Court (Bristol) — Marcus Smith J: [2020] EWHC 104 (Ch) (January judgment) and [2020] EWHC 563 (Ch) (March judgment); set aside admission of the redacted deed but permitted reliance on registration as alternative; awarded respondents 50% of appeal costs. Court of Appeal — [2021] EWCA Civ 1682 (allowed Promontoria’s appeal).