David Terence Forbes v Interbay Funding Limited

Under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Moratorium) (England and Wales) Regulations 2020, secured debt is generally non-eligible unless it amounts to arrears. In this context, arrears means unpaid instalments relating to the secured debt, subject to the requirements that they were due by the application date, unpaid in breach, and not capitalised mortgage arrears. The principal sum remains non-eligible whether or not it was called in before the moratorium. It is therefore neither a qualifying debt nor a moratorium debt, so the moratorium restrictions on interest and enforcement do not apply to it. A new, wide-ranging mixed-debt point that was not raised or adequately argued below should not be determined on appeal.

These combined appeals concerned two secured loans owed by Mr Forbes to Interbay Funding Limited and Seculink Limited. The principal balances had been demanded or otherwise fallen due before a mental health crisis moratorium began.

In the Interbay proceedings, the County Court made a possession order and HHJ Evans-Gordon dismissed Mr Forbes’s appeal. In the Seculink proceedings, HHJ Baucher initially declined jurisdiction; Sir Anthony Mann subsequently allowed an appeal on jurisdiction and held that the principal sum was not a moratorium debt in [2025] EWHC 524 (Ch). The central issue was whether called-in principal secured debt constituted arrears under Regulation 5(4)(a).

Lord Justice Zacaroli gave the leading judgment, with Lord Justices Males and Baker agreeing. Both appeals were dismissed.

1. Construction of the Regulations. The court must determine statutory meaning from the words used, read in the light of the legislation as a whole, its context and purpose. Secondary legislation must also be read in the light of its enabling Act. The court may consider the consequences of competing constructions.
2. Meaning of arrears. In the context of secured debt, the natural meaning of arrears is unpaid instalments, whether relating to capital, interest, fees or charges, rather than the principal sum itself. Arrears must have fallen due by the date of the moratorium application, remained unpaid in breach of the relevant agreement or applicable rules, and not be capitalised mortgage arrears.
3. Principal secured debt. Regulation 5(4)(a) distinguishes arrears from the secured debt to which they relate. That distinction is reinforced by Regulation 7(9), which preserves the creditor’s entitlement to interest on arrears only in the circumstances specified there. Treating called-in principal as arrears would create an unjustified distinction between a loan called in immediately before the moratorium and one called in immediately afterwards. It would also produce a marked departure from the treatment of secured creditors under other personal insolvency regimes. The principal sum was therefore non-eligible debt, and consequently neither a qualifying debt nor a moratorium debt.
4. Principle of legality. The principle that statutory interference with proprietary rights should go no further than the statutory language and purpose require provided additional support for resolving the ambiguity in favour of the secured creditors. The court stated that this principle was not necessary to its conclusion.
5. Unargued mixed-debt point. Mr Forbes’s new contention that enforcement of a non-moratorium principal debt could nevertheless constitute enforcement action in respect of moratorium arrears was not raised below and had received inadequate argument. Given its wider significance and the absence of submissions from parties affected by Bluestone Mortgages Limited v Stoute, the court declined to decide it. Ground 2 therefore fell away, and the remaining Interbay possession ground did not arise.

1. Court of Appeal (Civil Division) In [2025] EWCA Civ 690, the combined appeals were dismissed. Permission to appeal the jurisdiction and abuse of process issues in the Seculink proceedings was refused.
2. High Court, Chancery Appeals Sir Anthony Mann allowed the appeal on jurisdiction, rejected the abuse of process contention, and later held that the principal sum owed to Seculink was not a moratorium debt in [2025] EWHC 524 (Ch).
3. County Court In the Interbay proceedings, a possession order was made and HHJ Evans-Gordon dismissed Mr Forbes’s appeal. In the Seculink proceedings, HHJ Baucher dismissed an application on the basis that the court lacked jurisdiction to determine whether the debt was a moratorium debt.