STATE BANK OF NEW SOUTH WALES (T/A COLONIAL STATE BANK) v A CAREY HARRISON III (2002)

[2002] EWCA Civ 363

CA (Aldous LJ, Tuckey LJ, Jonathan Parker LJ) 8/3/2002

CIVIL PROCEDURE - CPR - GUARANTEE AND INDEMNITY - REAL PROPERTY

APPEAL FROM REFUSAL TO PERMIT AN APPEAL : PERMISSION TO APPEAL : FIRST APPEALS : SECOND APPEALS : REFUSAL TO GRANT A STAY OR SUSPENSION OF A POSSESSION ORDER : NO GROUNDS FOR GRANTING A STAY : GENERAL POWER : GENERAL DISCRETION : STAY OF EXECUTION : APPEAL IN SEPARATE PROCEEDINGS : GUARANTEE FACILITIES : LLOYD'S NAMES : MORTGAGE REPOSSESSION : POSSESSION OF PROPERTY : NEGLIGENT ADVICE : REAL PROSPECT OF SUCCESS : S.36 ADMINISTRATION OF JUSTICE ACT 1970 : CIVIL PROCEDURE RULES SI 1998/3132 : CPR 52.3 : PART 52 : CPR PD 52 : S.54(4) ACCESS TO JUSTICE ACT 1999

A judge did not have a general power or inherent jurisdiction to stay execution of a possession order pending the outcome of an appeal in separate proceedings. The only jurisdiction to stay execution was that under s.36 Administration of Justice Act 1970, the test in which had not been satisfied by the defendant.

Two related appeals, one by the claimant ('the bank') from the order of HH Judge Seymour QC on 3 October 2001 staying the execution of a judgment pending the hearing of the defendant's ('H') appeal on a preliminary issue in separate proceedings, namely Society of Lloyd's v Jaffray (2002) LTL 15/11/2000; and H's appeal from HH Judge Seymour QC's refusal to grant him permission to appeal from Master Bowman's order of 10 January 2001. In 1989 H procured the bank to provide guarantee facilities in respect of H's liabilities as a name to Lloyd's in the sum of £70,000 for which the bank took a second legal charge over H's property as security. H incurred losses and in August 1995 Lloyd's made a call under the guarantee upon the bank for £70,000, which the bank paid in February 1999. In May 1997 H issued a writ against Lloyd's and was joined as a defendant in the Jaffray (supra) action. In April 1999 the bank formally demanded repayment pursuant to H's personal covenant. In June 1999, as a result of H's failure to pay, the bank issued possession proceedings resulting in a money judgment and a possession order. Before the master, H asserted that the bank had given him negligent advice as to the risks of underwriting at Lloyd's and that the sums owed to him by the bank as damages for said negligent advice were more than sufficient to extinguish the sum claimed by the bank. The master refused to grant a stay or suspension of the possession order as he did not consider that the conditions of s.36 Administration of Justice Act 1970 had been satisfied, particularly that H "was likely to be able within a reasonable period to pay any sums due under the mortgage". H was refused permission to appeal. Subsequently H applied to the judge for permission to appeal, which was refused on the basis that any appeal would not have a real prospect of success. The judge then exercised his "general power to order a stay of execution of a judgment" pending the hearing of H's appeal in Jaffray (supra). The bank contended that: (i) under s.54(4) Access to Justice Act 1999 and CPR PD 52, H was unable to appeal the judge's refusal to grant him permission to appeal as the court had no jurisdiction to hear the appeal; (ii) a mortgagee was entitled, subject to any argument to the contrary, to take possession of the mortgaged property "before the ink was dry on the mortgage", even if the mortgagor was guilty of no default, per Four-Maids Ltd v Dudley Marshall (Properties) Ltd (1957) Ch 317; (iii) before the 1970 Act, the courts had a very limited jurisdiction to deny mortgagees possession, per Birmingham Citizens' Permanent Building Society v Caunt (1962) 1 Ch 883; (iv) both master and judge agreed that H was unable to satisfy the test in s.36 of the 1970 Act; and (v) whilst there was a very limited discretionary jurisdiction outlined in Cheltenham & Gloucester plc v Booker (1997) 1 FLR 311, that was not applicable to the present cases.

HELD: (1) The plain effect of s.54(4) of the 1999 Act was that there was no jurisdiction for this court to entertain an appeal from a refusal of the High Court to grant permission to appeal a master's order. (2) This court endorsed the view of Phillips LJ in Cheltenham & Gloucester v Krausz (1997) 1 WLR 1558 that the very specific delimitation of the power given by s.36 made it clear that the legislature did not intend that the court would have any wider jurisdiction to curtail the mortgagee's right to possession. (3) The court had no jurisdiction under the CPR or the inherent jurisdiction to grant a stay. (4) The only jurisdiction available was the statutory one in s.36 of the 1970 Act, which the judge had decided was not applicable in this case. The judge's decision to grant a stay pending the outcome of Jaffray was wrong. Whilst the judge had stated he knew very little about the Lloyd's litigation, if he had been aware of the "threshold fraud" point it would have been apparent that even if the names were successful it would be on a preliminary issue and further proceedings would be necessary. Any judgment in favour of H in the Jaffray litigation would only be forthcoming in some considerable time in the future. The only relevance of Jaffray was in the context of an application under s.36 but the judge had concluded that that was inapplicable.

Bank's appeal allowed. H's appeal dismissed. Permission to appeal refused.

Emily Windsor instructed by Allen & Overy for the bank. H in person

LTL 8/3/2002 EXTEMPORE (Unreported elsewhere)

Judgment Official

Document No. AC9200350

(Ed. note: A. Carey Harrison, descendant of U.S. President William Henry Harrison, died in early 2003. He had been a plaintiff in the Roby case in the Southern District of New York in 1992. His name is variously spelled in different cases as "Cary" and "Carey".)