Alister Allan Coutts-Lovie v Topaz Finance Limited (t/a Heliodor Mortgages)

A mortgage account is a discretionary remedy available where there is a genuine and real dispute about the state of the account, even if redemption is not immediately intended. The court must assess whether the evidence of error realistically indicates that a full account is required. A single cured and explained error will ordinarily be insufficient where it does not suggest further errors; proportionality may favour resolving discrete issues instead. A party who settles earlier proceedings concerning alleged overcharging, agreeing not to pursue those matters in return for valuable consideration, is precluded from reopening them in later proceedings and may be acting abusively.

The claimant sought an account of his mortgage with the defendant, declarations and payment of any balance in his favour, and removal of the defendant’s charge from the register. The defendant applied to strike out the claim as disclosing no reasonable grounds or as an abuse of process, or alternatively for summary judgment under CPR 24.

The claimant alleged that the mortgage had been discharged, that he had been overcharged, and that legal costs had been improperly added to the account. The court also considered the effect of an earlier settled application concerning alleged overcharging and the evidential basis for directing a full mortgage account.

1. Claim dismissed. The allegations that the mortgage had been discharged, that money was due to the claimant, or that the charge should be removed disclosed no reasonable grounds and had no realistic prospect of success. The unpaid principal remained outstanding and the alleged overcharges could not realistically extinguish the mortgage debt.
2. A mortgage account is discretionary. It may be ordered where there is a genuine and real dispute as to the state of the account, including where redemption is not immediately intended, if the dispute creates a real risk of overpayment or underpayment.
3. The court must assess whether established errors point to a likelihood of further errors requiring a full account. The traditional assumption that one error indicates others is not mechanistic. A single, cured and explained error, without other realistic evidence of overcharging, will not ordinarily justify a full account. Proportionality may instead favour determination of discrete issues.
4. The contractual terms required payment of the monthly payments until the offer debt was paid off, including unpaid interest, costs and fees. Post-term interest therefore remained chargeable at the contractual standard variable rate, subject to the agreed discount. The principal basis of one expert report was consequently false.
5. The mortgage terms entitled the mortgagee to recover costs incurred in recovering the debt or conducting mortgage-related legal proceedings. No serious evidential challenge was made to the particular costs charged.
6. The claimant’s earlier settlement did not create a settled account, but it precluded him from reopening alleged overcharges which he had agreed not to pursue for valuable consideration. That conclusion followed under the wider principle identified in Henderson v Henderson and as an abuse of process.
7. The dismissal of earlier applications concerning suspension of possession or eviction did not necessarily determine whether overcharging had occurred, because those applications engaged the separate jurisdiction and question under section 36 of the Administration of Justice Act 1970. That did not affect the present outcome.