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April 2019

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Contents
Grandison v Joseph [2019] EWHC 977 (Fam) Property adjustment order – mortgage – best endeavours – order for sale R v Gopee [2019] EWCA Crim 601 Criminal law – unlawful money lending in breach of CCA 1974 and FSMA 2000
Case name Neutral citation Legal points Case summary Facts Held Comment Grandison v Joseph [2019] EWHC 977 (Fam) Property adjustment order – mortgage - best endeavours – order for sale The High Court dismissed an appeal against an unless order in which the family court required a husband to use his best endeavours to procure the release of the wife from certain mortgages, or in default the properties would be sold. Mr & Mrs jointly owned 127 properties, subject to mortgages. Following divorce, the family court made a property adjustment order which required them to transfer certain properties into each other’s name, and to use their best endeavours to procure the release of the other from any liability under the mortgage over the properties transferred. Mrs complied by re-mortgaging the properties in her own name. Following default by Mr, the court made an order that unless he complied, the properties were to be sold. Mr appealed on various grounds, including that the obligation to use best endeavours did not require him to enter into an arrangement which would cause significant financial loss, relying on a letter from his mortgage advisers that a new mortgage rate would cost him a further £7,000 per month. Appeal dismissed. The High Court confirmed that the court has an unfettered statutory power to order the transfer of property pursuant to s 24 Matrimonial Causes Act 1973, and that power is not subject to the consent of mortgagees, who have a right to be notified of any application for transfer, and a right to be heard on the application, but not a right to veto it. Best endeavours does not fall to be construed differently in commercial and family cases. There was nothing to prevent the husband from approaching the mortgagees, and asking for their consent either independent of, or pursuant to the court order, to release the wife from her liability under the mortgages in exchange for the transfer of the properties into his sole name, or indeed simply effecting a transfer by means of an AP1, but he had not done either. Re-mortgaging was not the only way of removing her liability from the mortgages. Sales of property were plainly an option as well. Just a reminder, the family court has a statutory power to order the transfer of property, subject to mortgage, but it does not have a statutory power to order the release of any party from the mortgage. The best it can do to achieve a clean break property adjustment is to order the transferor to use his best endeavours to procure the release from the mortgage of the transferee. In a typical case involving a jointly owned matrimonial home, subject to a joint mortgage, with the court making a property adjustment order in favour of the wife, this invariably means that the husband will either have to discharge the mortgage, or obtain a re-mortgage secured on other property. If not, this case demonstrates that the default option is for the court to make an order for sale.
Case name Neutral citation Legal points Case summary Comment R v Gopee [2019] EWCA Crim 601 Criminal law – unlawful money lending in breach of CCA 1974 and FSMA 2000 This is a decision of the Court of Appeal, Criminal Division, to dismiss two sets of appeals (1) against an order for contempt of court, and (2) against conviction and sentence. The case involved a criminal prosecution for unregulated and illegal money lending in breach of the Consumer Credit Act 1974 and the Financial Services and Markets Act 2000. The appellant had acted as a lender of last resort, providing loans at high rates of interest (3 ½ % per month), secured by charges on the property of borrowers who were described as extremely vulnerable people in society who could not borrow money elsewhere. There were over 1000 charges. The appellant often took possession of the properties through proceedings in the civil courts, and then rented them back to the borrowers. He had amassed a portfolio of over 400 such properties. The appellant had been made subject to various Restraint Orders, and committal for contempt for failing to comply with them. His trial in relation to unregulated and illegal money lending took place over three weeks in the Southwark Crown Court. He was convicted and sentenced to a total of 3 ½ years imprisonment, and subject to a Serious Crime Prevention Order for 5 years. The transcript contains a fairly illuminating catalogue of misconduct by the appellant in carrying on his money lending business, and also a catalogue of complaints he made in seeking to appeal the various orders against him, including: • A complaint that the trial judge had remarked he had been pre-occupied with litigation. The court concluded that that was clearly correct. • A complaint that his sentence of imprisonment prevented him from attending the FCA offices by appointment to view his files. This had nothing to do with the correctness of his sentence for running an unlawful money lending business. • A complaint that by servicing his mortgage accounts without the knowledge or consent of the FCA he had in fact increased his assets. But he had done this with cash he had not disclosed to the FCA and he had deliberately ignored the order. In fact, it had been impossible to test the assertion that he was seeking to preserve his assets since the appellant had not disclosed all his assets. • A complaint that by imprisoning the appellant, he had been unable to discharge the securities held on properties belonging to borrowers who had repaid their loans and that this deprived the borrowers of their rights under the European Convention on Human Rights. But the point was that the appellant had been prohibited from exercising his rights as a lender since this would constitute an offence of contravening the general prohibition in s 23 FSMA 2000. In any event, the appellant’s imprisonment did not prevent borrowers making an application to the Court for an order discharging the security. The court dealt with numerous other grounds, including an ingenious argument that the effect of the trial judge’s findings that the loans were unenforceable and in breach of the general prohibition meant that the borrowers had been unjustly enriched, which was a breach of Article 1 Protocol 1 European Convention of Human Rights. As to this, Flaux LJ described the argument as elaborate but incoherent and wholly lacking in merit: “Quite apart from the fact that Parliament is entitled to enact legislation to protect vulnerable borrowers by requiring lenders to be licensed or authorised, that protective regime would be rendered ineffective if lenders in the position of this appellant could recover unlawful loans by claiming the borrowers were unjustly enriched. This argument is one that the appellant has run before the civil courts several times and failed. It has no more merit before this court.” We don’t often cover criminal cases, but this one merited attention. There are both civil and criminal consequences for breach of the general prohibition in s 19 FSMA 2000 – carrying on a regulated activity unless authorised or exempt. This case deals with the criminal consequences, and closes down a long list of potential grounds of appeal, including arguments about Human Rights and unjust enrichment.