Ivan Kaye v Amanda Lees

A creditor who pays a debtor’s mortgage debt under a mistake may be subrogated to the mortgagee’s rights where the debtor is thereby unjustly enriched. Under regulation 13 of the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium)(England and Wales) Regulations 2020, subrogation by operation of law does not create an additional debt for moratorium purposes.

The Regulations impose a prescriptive timetable for requesting a review and applying to court. The court has no power to extend that timetable. Permission to take enforcement action may be granted only where the step is reasonable and is neither detrimental to the debtor nor significantly undermining the moratorium’s protections. Removing a debtor from her home is ordinarily material detriment.

Mr Kaye obtained judgment and an order for sale against Ms Lees in relation to unpaid damages and costs. Following successive breathing space and mental health crisis moratoriums, the property was sold and the mortgage debt was discharged. In [2022] EWHC 1151 (QB), the eviction and sale were declared null and void.

Mr Kaye then sought declarations that he was subrogated to the mortgagee’s rights, that the subrogated debt was an additional qualifying debt, cancellation or review of the moratorium, and permission to retake possession and sell the property. The issues concerned subrogation, the operation of regulations 13, 15, 17 and 19, and permission under regulation 7(2)(b).

1. Subrogation. Mr Kaye’s payment of the mortgage balance discharged Ms Lees’ debt and unjustly enriched her. He acted under the mistake that he was complying with the order for sale. The fact that the order was later declared void did not remove the enrichment. Mr Kaye was therefore subrogated to the mortgagee’s rights as creditor. [16]-[19]
2. No additional debt. Regulation 13 treats a person who assumes the creditor’s rights by operation of law as a creditor by assignment. Mr Kaye was deemed to have been the relevant creditor for the purposes of the Regulations. Subrogation therefore did not create an additional debt under regulation 15 or restart the period for seeking a review. [20]-[21]
3. Review application out of time. Regulations 17 to 19 establish a rigid timetable: a review request within 20 days, completion of the review within 35 days, and an application to court within 50 days of the relevant start date. The Regulations contain no power to extend time. The reasoning in R Soneji was beside the point because that case concerned a different statutory scheme. [22]-[24]
4. Regulation 19 also requires a debt advice provider to have carried out a review following a timely request. Since the request was out of time and no review was undertaken, the statutory right to apply to court did not arise. [27]
5. Enforcement permission. Regulation 7(5) required the proposed possession and sale to be reasonable and not detrimental to Ms Lees or significantly to undermine the moratorium. Detriment bears its ordinary meaning and is not confined to mental-health detriment, although it must be more than de minimis. Eviction from the flat would be material detriment, so permission was refused. [28]-[31]
6. The court made observations that evidence supporting continuation of a mental health crisis moratorium, particularly under regulation 28(2)(e), should be clear, considered, reliable and cogent. Those observations were not determinative of the application. [25]-[26]

Mr Kaye succeeded on subrogation but failed on each application under the Regulations.

First-instance decision. The judgment records the earlier High Court decision in [2022] EWHC 1151 (QB), which declared the eviction and sale null and void.