With friends like these…

Cheval Bridging Finance Ltd v Bhasin and others [2009] EWCA Civ 1613.

Mrs Bhasin had lived at 9 Long Acre Drive since May 1975. Initially, she was a tenant of the local authority but, in c.1988, she purchased the property under the “Right To Buy” scheme and it was registered in her sole name.

Some years later, she married Mr Bhasin, who moved in to the property and, in 2003, she took out a mortgage with I Group for some c.£210,000 in order to fund the development of an “granny flat” for her mother to live in.

In late 2003 or early 2004, Mr Bhasin left the family home and Mrs Bhasin feared that she would not be able to service the I Group mortgage. Her “friends”, Mr & Mrs Hastings offered to help. Mr Hastings told her that he was a solicitor and could not only assist financially, but could also draw up all necessary paperwork to ensure that her interests were protected. Mr Hastings had actually been struck off.

Mr & Mrs Hastings agreed to pay off the I Group mortgage and to take the legal title to the property, but they stated that they would hold the property on trust for Mrs Bhasin. She could live in the property rent free and purchase it back at a later date. Mr & Mrs Hastings funded this arrangement with the aid of a loan from GMAC and, subsequently, Cheval. The loans were secured on the property and, whilst Mr & Mrs Hastings were able to service the GMAC loan, they allowed the Cheval loan to fall into arrears.

In February 2006, Mrs Bhasin started the process of re-purchasing the property. This was proceeding normally until she discovered that Cheval had commenced possession proceedings in June 2006. Cheval had issued against Mr & Mrs Hastings. Mrs Bhasin applied to be joined as a defendant and then issued what appears to have been a fresh claim for damages for breach of fiduciary duty as against Mr & Mrs Hastings.

The possession proceedings came on for trial before HHJ Marcus Edwards in October 2007. He refused Mrs Bhasin’s application to adjourn the trial under s.36 Administration of Justice Act 1970 as there was no evidence that the mortgage arrears could be paid in a reasonable period of time. Mrs Bhasin contended that, when she was successful in her claim against Mr & Mrs Hastings, there would be sufficient funds available to her to discharge the mortgage.

Mrs Bhasin appealed to the Court of Appeal, who granted permission on 11 April 2008 on two points:

(a) did the court have the power to adjourn the possession proceedings (whether pursuant to s.36 or CPR 3.1) pending resolution of Mrs Bhasin’s claim against Mr & Mrs Hastings?

(b) was Mrs Bhasin entitled to rely on s.36 as against Cheval?

The Court of Appeal dismissed the appeal. As to question (a), the court had always had an inherent jurisdiction to adjourn any proceedings. However, in the instant case, the question of an adjournment had fallen away because (i) Mrs Bhasin had won her claim against Mr & Mrs Hastings on 1 August 2008 and (ii) any adjournment – whether under CPR 3.1, s.36 or the inherent jurisdiction – would only have been granted if there was a realistic prospect of the arrears being satisfied. There was (and never had been) any such prospect in the instant case.

Question (b) was also dealt with quite shortly. The Court of Appeal was confused as to why permission had even been granted on this point. Cheval had conceeded that s.36 applied to the present case and there was no reason for the court to go behind that concession.

The Court did express the hope that, despite all this, settlement might still be possible and Mrs Bhasin might be permitted to remain in her home.

About J

J is a barrister in London. He loves service charges and all things leasehold law related. He also likes beating rogue landlords and mortgage companies.
Posted in Housing law - All, Mortgage possession, Possession, right-to-buy and tagged , , .

One Comment

  1. Pretty big of the COA to express a ‘fervent hope’ , eh? I do so LOVE it when the the more Senior Courts of the Land Get Down With the (shortly to be lacking in)) Homies and really, REALLY embraces their difficulties.
    Where on EARTH is the Equity Fairy when you need her?!

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