AMANDA LEES v IVAN KAYE & ANOR.

Under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England & Wales) Regulations 2020, a moratorium prevents enforcement action concerning a moratorium debt, including enforcement of a judgment and sale of the debtor’s property. A pre-existing charging order remains valid as security, but it cannot be enforced during the moratorium. Damages for distress and anxiety, falling short of psychiatric injury, are not damages for personal injury. Further, a debt consisting of damages for personal injury must comprise entirely such damages. Action taken contrary to regulation 7 is null and void under regulation 7(12).

The Applicant’s leasehold flat secured judgment debts owed to the First Respondent following county court litigation concerning nuisance and harassment. Charging orders were made, followed by an order for sale and possession. A mental health crisis moratorium was registered before eviction. The First Respondent nevertheless obtained possession and subsequently contracted to sell the lease to the Second Respondent.

The Applicant sought declarations that the eviction and sale were null and void under regulation 7(12) of the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England & Wales) Regulations 2020. The issues included the effectiveness of the moratorium, whether the judgment debt was non-eligible, the effect of the charging orders, whether the sale constituted enforcement action, and the relief available.

1. The moratorium was effective. The electronic register established under regulations 35 and 36 was a matter of record. Its recorded commencement dates were to be taken at face value. No basis existed for challenging the moratorium because the creditor’s solicitors, rather than the First Respondent, were recorded as the creditor.
2. The judgment debt was not a non-eligible debt. Applying Brown v Commissioner of Police of the Metropolis [2019] EWCA Civ 1724 and Kimathi v Foreign and Commonwealth Office [2018] EWHC 1305 (QB), distress, anxiety and similar emotions falling short of psychiatric harm were not personal injury. The damages awarded in the underlying proceedings were for distress and anxiety, not psychiatric injury. In addition, regulation 5(4)(i) required the debt to consist entirely of damages for personal injury; an award merely including such an element would not qualify as non-eligible.
3. The charging orders did not exclude the debt from the moratorium. Regulation 7(13)(a) preserved a charging order made before the moratorium as security, but did not permit enforcement of the underlying debt during the moratorium. Regulation 5(4)(a) was inapplicable because the judgment debt was not a secured credit agreement, hire-purchase agreement or conditional sale agreement.
4. Eviction and sale were prohibited enforcement action. Obtaining possession and selling the lease were steps taken to enforce the judgment debt. The vesting of a term in the chargee was merely a mechanism enabling the sale and did not alter its enforcement purpose. The chargee’s powers existed only to obtain repayment: Co-Operative Bank Plc v Phillips [2014] EWHC 2862 (Ch), applying the principle stated in Quennell v Maltby [1979] 1 WLR 318.
5. Consequences and relief. Regulation 7(12) made both the eviction and the sale, including the contract and transfer, null and void. The actions did not bind the Applicant. Any restitutionary rights involving third parties were left open. The Respondent’s discretionary arguments did not justify withholding relief; exceptional circumstances would have been required to displace the Regulations’ protection. The Applicant was entitled to an order restoring the position before the eviction and sale.