Seculink Limited v David James Terence Forbes

The court considered whether the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the Regulations) confer an exclusive jurisdiction on debt advice providers (DAPs) to determine whether a debt is a "qualifying debt" (and thus a "moratorium debt") or whether the ordinary courts retain jurisdiction to decide that legal question. The judge concluded that the Regulations do not oust the court's jurisdiction to determine whether a debt is a qualifying debt and that the Reg 17/19 review route is not the sole avenue for challenge. The court also considered the interaction between Reg 7 and Reg 10 and held that a creditor does not need the court's permission to continue pending proceedings to judgment merely because a moratorium has been initiated. The court rejected the respondent's abuse of process argument on the facts and adjourned consideration of the discretionary exercise (whether proceedings should be permitted to continue where the debt is a moratorium debt) for later determination.

The appellant creditor (Seculink Limited) sought to enforce a Tomlin order and possession of properties charged as security for a bridging loan. The respondent (Mr Forbes) became subject to a mental health crisis moratorium under the Regulations and the creditor challenged whether the debt in issue was a "moratorium debt". The county court (HHJ Baucher) held the question whether a debt was a qualifying (moratorium) debt was a matter for the debt advice provider under the statutory scheme and that the court had no jurisdiction to decide the point in the enforcement proceedings. The creditor appealed.

The principal issues before the High Court were:

• whether the Reg 17/19 review mechanism under the Regulations is the exclusive route for determining whether a debt is a qualifying debt or whether the ordinary courts retain jurisdiction;
• whether it would be an abuse of process to decide that question in proceedings outside the Reg 17/19 route;
• how Reg 10 (existing proceedings at the start of a moratorium) and Reg 7 (effect of a moratorium) inter-relate, in particular whether court permission is required to continue pending proceedings to judgment;
• incidental: whether the county court below should have exercised its discretion to permit the enforcement action to proceed to judgment (adjourned).

The court analysed the text and structure of the Regulations with particular focus on Reg 6 (definition of "moratorium debt"), Reg 30 (DAP duties when considering a mental health crisis moratorium), Reg 15 (additional debts), Reg 17 (creditor review), Reg 18 (DAP review), Reg 19 (court application following a DAP review), Reg 7 (effect of a moratorium) and Reg 10 (existing proceedings). The judge concluded that Reg 6 defines a moratorium debt as a qualifying debt and that that definition supports the view that the legal status of a debt (qualifying or not) remains a legal question open to judicial determination. The Reg 17/19 mechanism provides a statutory, potentially quicker route for creditors to seek review and court intervention but does not, in the judge's view, exclude ordinary court jurisdiction where the question arises in existing proceedings. The court rejected a categorical implication into the definition that a DAP's identification of a debt as qualifying is determinative in law, finding that to read such a qualification into Reg 6 would be to introduce substantial and unwarranted subjective change to a clear statutory definition. The court also rejected the respondent's abuse of process argument on the facts (where the issue arose during ongoing enforcement proceedings and the creditor had not pursued a timely Reg 17 review) and concluded that deciding the point in the extant proceedings was not an abuse. On the interplay of Reg 10 and Reg 7 the court held that Reg 7(7)'s enumerated list of enforcement steps does not on its face include continuation of pending proceedings to judgment and that Reg 10(3) permits continuation of pending proceedings; accordingly the court's permission is not required simply to proceed to judgment in the pending action. The court allowed the appeal on jurisdiction and on the permission point, and adjourned consideration of the exercise of any discretion whether to permit or restrain enforcement pending determination of whether the debt is a moratorium debt.

Appeal allowed. The court held that the Reg 17/19 review route in the Regulations is not exclusive and does not oust the ordinary courts' jurisdiction to decide whether a debt is a qualifying (moratorium) debt; the definition in Reg 6 supports judicial determination of that legal point. The court further held that continuation of pending proceedings to judgment is not an "enforcement step" requiring the court's prior permission under Reg 7 and that Reg 10(3) permits such continuation. The abuse of process argument was rejected on the facts. The exercise of discretion whether to allow enforcement to proceed (if the debt is a moratorium debt) was adjourned for later determination.

Appeal from an order of HHJ Heather Baucher, Central London County Court, dated 2 January 2024 (Claim No F4PP1142). Permission to appeal was granted by Bacon J. See [2024] EWHC 3339 (Ch).