Neutral Citation Number: [2013] EWHC 2497 (Ch)
Case No: HC10C02213

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM MASTER TEVERSON

Royal Courts of Justice
7 Rolls Building
Fetter Lane
London, EC4A 1NL

Date: 10 June 2013
BEFORE:

THE HONOURABLE MR JUSTICE DAVID RICHARDS

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BETWEEN:
	 
REDSTONE MORTGAGES LTD	Claimant	
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	(1) JAMES MERLIN WIEMER
(2) DEBRA ANN JULES
	Defendant	
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MR PETER DE VERNEUIL SMITH appeared on behalf of the Claimant

MR DUNCAN MACPHERSON appeared on behalf of the Defendant

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Judgment
MR JUSTICE DAVID RICHARDS:

1.	This is an appeal by the first defendant against that part of an order of Master Teverson dated 24 June 2011 by which he gave summary judgment on the claimant's claim in the sum of £287,697.78.  The appeal is brought, with permission granted by Roth J on a renewed oral application.
 
2.	The claim was in respect of a mortgage loan made to the first defendant in November 2006.  The largely uncontentious factual background is as follows.  The second defendant, Debra Ann Jules, was until April 2003 the tenant of Flat 19 Tolchurch, Dartmouth Close, London W11 1DT ("the property"),  her landlord being the City of Westminster Council.  Exercising her rights under the right to buy legislation, she purchased the property in April 2003, financed by a loan from Preferred Mortgages Limited which was secured by a legal charge over the property.  She became the registered proprietor of the property.
 
3.	On 1 June 2003 she agreed to sell the property to Orchard Properties (London) Limited, with delayed completion to prevent her losing the benefit of the discount on the purchase price paid by her for the  property under the right to buy legislation.
 
4.	In April 2004 the benefit of the contract was assigned by Orchard Properties to the first defendant, James Merlin Wiemer, an active property investor.  His intention was to buy the property in order to let it.
 
5.	In September 2006 Beacon Home Loans Limited ("Beacon") made an offer of an interest only mortgage to Mr Wiemer for the purpose of completing the purchase. On 10 November 2006 Beacon advanced £224,995 to Mr Wiemer for that purpose, the funds being paid to his solicitors and applied in the discharge of the existing charge over the property in favour of Preferred Mortgages Limited and in the payment of other sums required to complete the purchase.
 
6.	On 10 November 2006 Beacon and Mr Wiemer executed a deed of mortgage ("the mortgage") whereby Mr Wiemer was expressed to charge the property as legal owner by way of legal mortgage.  The terms of the Beacon Home Loans Mortgage Conditions (England and Wales) 2005 Edition 1 ("the Mortgage Conditions") were expressly incorporated into the mortgage and Mr Wiemer agreed to be bound them.
  
7.	By the terms of an arrangement already made between Beacon and the claimant, Redstone Mortgages Limited, the rights and remedies of Beacon under the mortgage were transferred to the claimant.
 
8.	An unexpected problem soon arose.  The claimant applied to HM Land Registry to discharge the previous mortgage in favour of Preferred Mortgages Limited and to register the transfer of the property to Mr Wiemer pursuant to a TR1 form.  Ms Jules objected to the registration on the grounds that she had not signed the TR1 form and that it was defective in other respects. This dispute was referred to the Adjudicator to HM Land Registry.  Following a hearing in January 2009 the Deputy Adjudicator in a decision dated 19 May 2009 ruled that Ms Jules had signed the TR1 form, but that it was ineffective to transfer title to Mr Wiemer because he had not been named as transferee when she signed it and a subsequent alteration did not cure this defect.
 
9.	In 2009 Mr Wiemer commenced proceedings in the Chancery Division against Ms Jules for an order that she sign a new TR1 form.  In due course, but after summary judgment was entered in the present proceedings, Mr Wiemer obtained such order with which, as I understand it, Ms Jules complied.  The transfer has yet to be registered for reasons which are not relevant to this appeal.
 
10.	Interest on the mortgage loan was payable monthly by Mr Wiemer with the first payment due on 1 December 2006.  He has, in fact, only ever made four payments of interest, each of £1,218.72 between April and July 2007. For at least some period or periods since its purchase Mr Wiemer has let the property, but he says that he has experienced difficulties because of interference by Ms Jules.
 
11.	Section B of the Mortgage Conditions under the heading "Main Subject Matter of your Mortgage" provides:
 
"1. We agree to lend you the amounts indicated in the applicable mortgage offer at the times indicated in that mortgage offer.
2. You agree to:
(a) charge the property by way of first priority legal mortgage to us and to assign the related rights to us in each case as security for the debt;
(b) repay the debt by no later than the end of the term;
(c) pay us interest on the debt at the interest rate at the times and in the manner indicated in your mortgage; and
(d) look after the property so that it keeps its value as our security." 
 
12.	Condition D6.3 provides:
 
"No matter what any other conditions say, the debt is payable at once on demand; if
(a) you fail to pay a monthly payment or any other money due under your mortgage;
(b) you break any of the terms of your mortgage;
(c) your title to the property is defective in any way or your mortgage does not have first priority or is in any way not perfected or alleged to be improperly perfected..." 
 
I need not read the rest of that condition.
 
13.	By a letter dated 17 March 2010 to Mr Wiemer, the claimant demanded payment of the principal sum of £224,995 and interest of £34,414.18 relying on the failures by Mr Wiemer to charge the property and to make monthly payments of interest as grounds to accelerate repayment of the loan under condition D6.3. Mr Wiemer denies that he received this letter and asserts that the first he knew of any alleged requirement to repay the loan was when the present proceedings were served on him.  This provides the basis of his first and principal ground of appeal as presented at the hearing before me and I shall return to it.
 
14.	The present proceedings were issued on 5 July 2010 and the claim form with particulars of claim attached were served on Mr Wiemer on or shortly after that date. The claim against Mr Wiemer was for the principal amount of the loan and interest and for an indemnity under the mortgage conditions in respect of the costs of the proceedings and the costs of the proceedings before the Adjudicator to HM Land Registry.  Claims were also made against Ms Jules. They included in the claim form an order for possession of the property, but this was not included in the particulars of claim and it was deleted from the claim form by an amendment made on 11 October 2010.
 
15.	Mr Wiemer served a defence dated 30 September 2010 and verified by a statement of truth signed by him. Although the facts set out above were for the most part admitted, much of the defence comprised non‑admissions.  While admitting that there may be some arrears of interest, he denied that they were as much as those claimed and he attached and relied on a statement of account sent by the claimant to him in March 2010 which showed further credits of monthly interest to his account.  In its reply the claimant averred that these credits had been made in error and that they in fact represented payments received by the claimant from its insurers for which it was not obliged to give credit to Mr Wiemer.  This is the basis for Mr Wiemer's second ground of appeal as presented at this hearing, as well as the basis of an application for permission to amend further the grounds of appeal to rely on a case of estoppel.
 
16.	The claimant's application for summary judgment was heard by Master Teverson on 24 June 2011.  Mr Wiemer was represented by counsel instructed on a Direct Access basis.  Counsel for Mr Wiemer sought permission to rely on two witness statements which had been served the previous day.  The Master refused permission to rely on the first of these statements on the grounds that it contained submissions not evidence, but he admitted the second, dated 23 June 2011.
 
17.	As regards the claim for the principal amount of the loan and accrued interest, Mr Wiemer did not dispute the claimant's right to accelerate payment of the loan, nor as appears from the judgment that it had validly done so.  The opposition was limited to the amount claimed for accrued interest.  Relying on the statement of account sent by the claimant in March 2010 showing monthly credits to the account which, as agreed, had been paid by insurers, it was submitted for Mr Wiemer that he should be given credit for these sums with a consequential recalculation of the accrued interest to eliminate interest on those sums.  It was also very briefly submitted that the claimant was estopped by the statements from asserting otherwise.
 
18.	The Master rejected these submissions in paragraphs 9 and 10 of his judgment, which read as follows:
 
"9. On behalf of the first defendant it was submitted that the account supplied to him is one in respect of which (a) he should be given the benefit of and (b) he could rely on in some way as containing representations which might be capable or are capable of giving rise to an estoppel.  First of all, it seems to me wholly unarguable that the first defendant should be given credit for payments that had been made by the claimant's insurers.  That is a matter as between the claimants and its insurers.
 
10.  Secondly, I do not consider the first defendant has any real prospect of being able to rely on some form of estoppel or representation by estoppel defence.  I do not think this was pleaded.  In any event, in my view it is clear that the error was pointed out in the reply and this is not a case where the first defendant has spent money that he has received.  It is simply a case of a statement having been supplied to him when to his knowledge he must have realised that it included payments that had not been made by him.  In my view, there is no scope for a defence of that kind to be raised or for any change of position defence to be established, nor was one pleaded." 
 
19.	The Master also gave summary judgment on the claim for an indemnity for the claimant's costs of the Land Registry proceedings and its costs of the present proceedings.  Permission to appeal on that part of the order was refused by Roth J and it is not therefore before me.
 
20.	Mr Wiemer filed an appellant's notice seeking permission to appeal.  New counsel was instructed by him on a Direct Access basis.  The grounds of appeal and a skeleton argument in support put forward a case that, in the light of the particular circumstances of the case and the injustice and prejudice to Mr Wiemer of summary judgment, it was contrary to the overriding objective of dealing with cases justly to enter judgment rather than adjourn the application until after his proceedings against Ms Jules had concluded, so allowing him on opportunity to create a valid legal charge over the property in favour of the claimant. A similar submission had been made to the Master who had rejected it and refused permission to appeal.
 
21.	The grounds of appeal also included reliance on the claimant's recovery of payments from its insurers in respect of unpaid interest, so that the court could not be satisfied as to the amount of accrued arrears of interest.  Draft amended grounds of appeal were filed on 26 August 2011 and sent to the claimants in early September 2011.  They additionally included a ground that in any event the amount of the judgment was too large as it exceeded the amount claimed in the particulars of claim without any proper basis.
 
22.	By an order made on the papers on 4 April 2012, Sales J refused permission to appeal on all the grounds set out in draft amended grounds of appeal.  At the renewed oral application for permission to appeal on 6 August 2012, Mr Wiemer was represented by the same counsel as had settled the draft amended grounds of appeal.  Roth J gave permission to appeal against the summary judgment for the principal amount of the loan and accrued interest. He did not do so on the basis of the main points advanced in the draft amended grounds of appeal, but he considered that there were two points which made it appropriate to grant permission, as appears from paragraphs 2-3 of his judgment:
 
2. "Before me Mr Kirk, who did not appear below, has argued strenuously that in fact the receipt of the letter of demand is disputed and it is not in evidence, but the Master does not appear to have considered that dispute and, further, that there is sufficient material  on which the first defendant, the present appellant, could argue that his understanding of the contractual arrangements was that by reason of his payment of insurance premiums the payments received by Beacon Home Loans from the insurers were to his benefit in all the circumstances.  If that is right or at least right to the extent of showing a reasonable argument, then the basis of breach found by the Master and more particularly the figure in the total amount due would not be susceptible to summary determination of it.
 
3.  I am just persuaded that the first defendant has a prospect and I put it no higher than that of raising an arguable defence such that permission should be granted, such that this can go forward to an appeal hearing.  Even if the claimant should succeed as a matter of summary judgment on the alternative ground, failure to register a charge, if the defendant’s ground that the insurance premium is properly standing to his credit is shown to be arguable, that would of course dramatically affect the amount of any judgment that would be awarded against him.  That aspect, it seems, was not really the basis of the Master's judgment.  As I am giving permission I shall say no more about those two matters."  
  
23.	On the hearing of the appeal, Mr Wiemer was represented by new counsel Mr MacPherson.  He applied to substitute new grounds of appeal in place of those previously relied on.  Paragraphs 1 and 2 reflect the two points to which Roth J referred in his judgment as providing reasons for giving permission to appeal. Permission to substitute new grounds of appeal limited to those two paragraphs is not opposed by the claimant.  Permission to add two further grounds raising the estoppel argument rejected by the Master and the quantum point previously raised in the draft amended grounds of appeal is opposed by the claimant. Mr MacPherson was clear that no reliance is now placed on the original or draft amended grounds of appeal previously before the court, which were accordingly not addressed by Mr De Verneuil Smith, counsel for the claimant, or considered by me.
 
24.	I will deal first with the grounds raised in paragraphs 1 and 2 of the new grounds of appeal.  Paragraph 1 reads as follows:
 
"The learned Master erred in fact and law by determining in paragraph 7 of his judgment that a demand was made by a demand letter of 17 March 2010. He should have (a) found that the claimant had failed to show that the first defendant had no real prospect of successfully defending the claim on the ground that the claimant had failed to serve a demand on the first defendant; (b) dismissed the application for summary judgment.  It will be recalled that under condition D6.3 if Mr Wiemer failed to pay interest or if the legal charge was not perfected, the principal amount of the loan 'is payable at once on demand'." 
 
25.	The claimant accepts that a demand was necessary before the loan became repayable immediately rather than at the end of the mortgage period: see Esso Petroleum Co Ltd v Alstonbridge Properties Ltd [1975] WLR 1474.  The demand on which the claimant relies is the letter dated 17 March 2010. There is no basis for doubting the claimant's case that this letter was sent by post to Mr Wiemer at the address appearing in the copy produced by the claimant.  Mr Wiemer denies that he received it.  As earlier mentioned, his defence pleaded non‑receipt of the letter and it has consistently been his case that he did not receive it.  This is an issue of fact that cannot be resolved on a summary judgment application and the claimant does not invite me to do so.  The claimant submits that under the terms of the Mortgage Conditions the debt was validly demanded by posting the letter and that non‑receipt by Mr Wiemer is irrelevant.
 
26.	The Conditions define notice as "any notice, demand or proceeding served or arising in connection with the conditions".  Condition H8.1 and H8.3 provide:
 
"8.1. We may give you notice in respect of anything in connection with your mortgage at your contact address.
 
8.3. Notice may be given by post or by hand delivery to your contact address.  If given by post it will be treated as having been given on the second working day after the date of posting, even if it never arrives or is returned undelivered.  If delivered by hand it will be treated as having been given the next day. Contact address is defined as "the property" or (if different) the latest address in England and Wales you have notified to us in writing as where you usually live."
 
27.	The letter dated 17 March 2010 was addressed to  Mr Wiemer at Orchard Cottage, Grange Farm, Bury St Edmonds, Suffolk IP28 6LX.  That is Mr Wiemer's address as stated in the deed of mortgage and it is accepted by him that it qualified as his contact address, as defined, at that time in November 2006.  It follows that posting the letter to him at that address was a valid demand, unless he had subsequently notified the claimant in writing of another address.
 
28.	At the start of the hearing of the appeal there was no evidence before the court that Mr Wiemer had ever given notice of a new address.  His defence did not plead that he had done so, although asserting that he had not received the letter.  Nor did the witness statement admitted by the Master nor, for good measure, did the witness statement which he refused to admit. The same is true of a witness statement made by Mr Wiemer on 11 January 2013, well after Roth J had given permission to appeal by reference to the alleged non‑receipt of the letter.
 
29.	Mr MacPherson first sought to overcome this difficulty by reference to statements of account in respect of the mortgage loan sent by the claimant to Mr Wiemer at the address of a property in London which he had also purchased with a loan from the claimant.  These statements were dated 18 July 2008, 31 March 2009 and 31 March 2010.  Mr MacPherson submitted that there was a real prospect of a successful defence on the basis of an inference that Mr Wiemer had notified the claimant of a new contact address at that London property and that disclosure by the defendant would or might make this good.
 
30.	Given that the claimant had addressed the letter dated 17 March 2010 to Orchard Cottage, the suggested basis for the inference appears very weak.  But in any event, as I made clear to Mr MacPherson, this was a matter within the knowledge of Mr Wiemer and should have been the subject of evidence from him and not, or not just, inference from documents sent by the claimant.
 
31.	After the conclusion of his submissions, Mr MacPherson sought permission to adduce a witness statement made by Mr Wiemer over the short adjournment.  In this statement he states that from around January 2007 he lived at the address in London to which the statements of account had been sent and that:
 
"I notified Redstone the claimant respondent in late December or early January 2007 that Hanwell House [that is the London address] was my new contact address and that I lived at Hanwell House.  I believe that I notified Redstone in writing by letter, but am not certain."
 
32.	I declined to give permission to adduce this evidence. The alleged non‑receipt of the letter dated 17 March 2010 has been Mr Wiemer's principal ground of appeal since Roth J gave permission to appeal on 6 August 2012.  Even if he would have been allowed to adduce this evidence following the grant of permission to appeal, there is no reason or plausible excuse for not doing so until the hearing of the appeal ten months later and even then only after observations made during his counsel's submissions.  To adduce the evidence now would require an adjournment to enable the claimant to search its records and provide evidence in answer.
 
33.	Moreover, the evidence given by Mr Wiemer is at best tentative.  He asserts that he notified the claimant in late December 2006 or January 2007 of a new contact address, but gives no basis for this recollection.  To be valid the notice would have to have been given in writing, as to which he only says that he believes that he notified the claimant “in writing by letter”.
 
34.	I conclude that Mr Wiemer has no real prospect of successfully defending the claim on the grounds that an effective demand was not made by sending the letter dated 17 March 2010.  It is regrettable that the provisions of the mortgage conditions relevant to service of the demand were not drawn to the attention of Roth J.  It appears from his judgment that he understood the defence to be simply that Mr Wiemer had not received the letter dated 17 March 2010 which, he was wrongly told, was not in evidence before the Master.  If Roth J had been referred to the relevant mortgage conditions, it may be doubtful that he would have given permission to appeal on this ground.
 
35.	Mr MacPherson accepted that it was only this first ground which could provide a complete answer to the claim.  The other grounds would at most reduce the amount of the judgment.  Paragraph 2 of the new grounds of appeal reads as follows:
 
"Further or alternatively the learned master erred in fact and in law by determining at paragraph 9 of his judgment that it was wholly unarguable that the first  defendant should be given credit for payments that had been made by the claimant's insurers.  He should have (a) found that the claimant had failed to show that the first defendant had no real prospect of successfully defending part of the claim on the ground that payments that had been made to the mortgage account were for the benefit of the first defendant; and (b) directed that the claimant was entitled to an account of the undisputed debt and that the remainder of the claim should proceed to trial."
 
36.	It is not in dispute that the claimant sent statements of account which showed interest payments credited to Mr Wiemer's account which had not been paid by him. It is also common ground that these were payments made by insurers under a policy taken out by the claimant and that the premium of £150 for the policy was charged to Mr Wiemer's account and hence is to be treated as paid by him.  The reference in the claimant's evidence to payments being made by "its insurers" indicates that the claimant was insured under the policy and there is no evidence to suggest the contrary.
 
37.	Mr MacPherson did not argue that, if the policy was simply a policy in favour of the claimant, payment by Mr Wiemer of the premium entitled him to the benefit of payments made by the insurers under the policy.  He was right not to do so: see the decision of the Court of Appeal in Leeds Building Society v Banfield [2007]   EWCA 1369.  He submitted that nonetheless the payments were for the credit of Mr Wiemer, either because they had been treated by the claimant as such in the statement sent to him, or because the terms of the policy might provide that Mr Wiemer was intended to be a beneficiary, a possibility made the more likely by the claimant's treatment of the payments in statements sent to Mr Wiemer, and judgment should not be given before disclosure of the policy.
 
38.	I see nothing in these points.  The claimant has explained in its pleadings and evidence that the insurer's payments were credited in error to Mr Wiemer's account and there is no basis in the evidence for considering that this might be wrong.  There is no reason to suppose that the policy contained some feature or provision which very unusually would entitle Mr Wiemer to the benefit of payments made under it.
 
39.	There remain the two further grounds of appeal which Mr Wiemer seeks permission to raise and rely on, an application opposed by the claimant.  Paragraph 3 of the new draft for amended grounds of appeal states that the Master should have found that Mr Wiemer had a real prospect of defending part of the claim for interest on the basis that he had reasonably relied on the implied representations made by the claimant in its statements of account that the insurance premiums were for the benefit of Mr Wiemer, with the result that the claimant was estopped from claiming interest on the missing interest payments.  Mr MacPherson accepted that the suggested estoppel was suspensory only, so that it would not relieve Mr Wiemer of an obligation to make the interest payments which had been shown as met by the insurer's payments.
 
40.	In my judgment it would not now be right to give permission to raise this ground.  It was argued before the Master and rejected by him.  It was not included in the original grounds of appeal or in the draft amended grounds of appeal which were before Roth J.  Roth J gave permission to appeal on the limited grounds which he indicated.  There is no good reason why it was not included in the earlier grounds and it would subvert the procedure for giving permission to appeal if permission were now given to raise it.  In any event,  it is without substance.  In order to have any prospect of making good the alleged estoppel, Mr Wiemer would have to show that but for the alleged representations he would have made the interest payments.  There is nothing in the evidence which he has at any stage put before the court which suggests that he could or would have done so.
 
41.	Paragraph 4 of the new draft amended grounds of appeal states that the judgment was for a larger sum than claimed in the particulars of claim and should have been for £274,701.59, not £287,697.78.  This was not raised before the Master, but was included in the draft amended grounds of appeal which were before Roth J.  He did not refer to it in his judgment, in which he gave permission to appeal by reference only to the two grounds dealt with above.  This may be because it was not pressed before him or because, although argued, he saw no substance in it.  Either way it would not in my view be right to give permission now to raise it, having earlier been either effectively abandoned or not held to have any substance.
 
42.	In any event, I do not consider that there is any substance to it.  The claim before the Master was, by some £10,000, larger than that in the particulars of claim.  The claimant showed in its evidence how that figure was calculated and the items included in it which were not included in the pleaded figure.  If there were any grounds for arguing against those additional items, they could have been raised before the Master.  No such grounds were raised, nor has any evidence been adduced to show why they are not payable by Mr Wiemer.
 
43.	Accordingly, I dismiss the appeal against the order for summary judgment in the sum of £287,697.78.  Mr Wiemer can have no grounds of complaint about this result.  He borrowed funds from the claimant to purchase the property on terms that he would create a first legal charge over it and would make monthly payments of interest.  He fulfilled neither of these basic terms. The fact that the actions of Ms Jules prevented him from performing the first of these terms is not the responsibility of the claimant.
 
44.	Mr MacPherson devoted a good part of his skeleton argument and his oral submissions to an attack on the claimant's conduct prior to the commencement of the proceedings.  I need not go into the details of this allegation or the matters relied on in support of it. Suffice it to say that I have examined each of those grounds and find that each of them is without substance.  None of these matters was raised or argued before the Master, nor had any of them been included in any of the grounds of appeal produced on behalf of Mr Wiemer.  None of them had any relevance to this appeal and I will say no more about them, save to repeat that there were no grounds for the attack made by Mr MacPherson on the claimant.