SLF Associates Inc v (1) HSBC (UK) Bank Plc & Ors

A claim under Law of Property Act 1925 s 91 to redeem or sell mortgaged property may require credible evidence of available funding and its source. The court must know the relief sought so that it can exercise its discretion judicially and proportionately.

A subsequent claim is an abuse of process where it seeks to circumvent a final possession judgment or obtain an inconsistent outcome. The Aldi guidelines require parties to disclose contemplated related claims to the judge managing the earlier proceedings, even where the later claim would fall within a different jurisdiction. Failure to do so may justify strike out under CPR 3.4(2)(b).

SLF claimed an interest in the equity of redemption of property charged to HSBC. It sought redemption and sale under Law of Property Act 1925 ss 91 and 50, relying on an option agreement with the bankrupt registered proprietor and payments made towards the mortgage.

HSBC had obtained a final possession order in the county court. SLF had unsuccessfully sought to intervene and appeal, and had separately issued specific performance proceedings concerning the option. The present claim was issued after those proceedings and sought, in substance, to delay HSBC’s enforcement pending resolution of SLF’s dispute with the proprietor. HSBC applied to strike out the claim as incoherent, procedurally defective and abusive.

1. Strike out. The Redemption Claim was struck out under CPR 3.4(2)(b). It was both a collateral attack on the final Possession Judgment and an abuse arising from failure to comply with the Aldi guidelines.
2. Funding and relief. A claimant seeking redemption and sale must provide credible evidence that redemption can be funded and evidence addressing the source of funds. A conditional or unsupported assertion of funding was insufficient. Although s 91 confers a broad discretion, that discretion must be exercised on evidence and cannot operate in a vacuum. The claimant must also state clearly the relief sought.
3. Collateral attack. The Possession Judgment had determined that the bank’s prior charge prevailed, that the option agreement and occupation arrangements breached the mortgage conditions, and that the specific performance proceedings should not delay enforcement. The Redemption Claim sought substantially the same practical result from a different direction and risked inconsistent findings.
4. Aldi guidelines. The guidelines require a party contemplating related proceedings to raise the matter with the judge managing the earlier claim. They apply to all parties, not merely claimants, and remain relevant even if the later claim would fall within the High Court’s jurisdiction. SLF’s staged approach deprived the court of the opportunity to manage the interconnected claims proportionately.
5. The alleged procedural shortcomings in obtaining the without-notice stay did not independently justify strike out under CPR 3.4(2)(c), and the deficiencies under CPR 3.4(2)(a) could potentially have been cured by amendment. They nevertheless reinforced the conclusion that the claim was abusive.
6. Had the abuse finding failed, the court would have required clear amendment of the relief sought and payment into court of the full redemption sum, subject to adjustment for sums already paid. The threshold for security for costs was also met, but quantum and timing were unnecessary to determine after strike out. The Trustee was joined on the proposed terms.