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February 2019

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Azhar v Accord Mortgages Ltd (unrep) Bradford County Court 07 Dec 2018 Mortgage possession proceedings – money judgment – finality of order – res judicata Publications: Updated HM Land Registry Practice Guides 29 and 30
Case name Neutral citation Legal points Case summary Facts Held Comment Azhar v Accord Mortgages Limited (unrep) Bradford County Court 7 Dec 2018 (District Judge Hickinbottom) Mortgage possession proceedings – money judgment – finality of order – res judicata It was not open to a borrower to bring a claim in respect of overcharging on his mortgage account several years after the court had granted the lender a money judgment which had not been appealed. In 2008, a lender advanced £183,500 by way of interest-only mortgage to the borrower for a term of 24 years at an initial fixed rate of 8.25% and thereafter at a standard variable rate. Borrower defaulted, and in 2010 lender obtained a money judgment for £199,927.35 and an order for possession suspended on terms as to payment of the current monthly instalment plus a sum in respect of arrears. Borrower defaulted and in 2012 lender obtained possession, although in January 2013 the borrower managed to redeem the mortgage in full by paying 3203,429.20. In May 2018 the borrower commenced proceedings to recover overpaid interest, fees and charges in the sum of £17,476.65, relying on breach of contract and breach of statutory duty. The lender raised a defence of res judicata based on the money judgment it obtained in 2010 and applied for summary judgment against the borrower pursuant to CPR 24.2. A party relying on a res judicata as either a cause of action estoppel (which is absolute) or issue estoppel (which is absolute save for special circumstances where it would cause an injustice) (per Lord Sumption in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2014] AC 160) must establish its constituent elements: (1) There was a pronounced judicial decision by a tribunal with jurisdiction over the parties and the subject matter; (2) The decision was final on the merits; (3) It determined a question raised in the later litigation; (4) The parties are the same. The money judgment made in 2010 was a pronounced judicial decision which was final on the merits. The borrower attended the hearing by letter in which he acknowledged the debt. An admission can form the basis of a res judicata. The fact that the borrower’s claim is now based on breach of contract or breach of statutory duty is irrelevant since it inevitably involves a challenge to the figure for which judgment was given. There is thus a cause of action estoppel which admits of no possible challenge. Further, there were no special circumstances which might avoid an issue estoppel. The borrower’s evidence that he had limited experience of financial products and could not reasonably know that he had been overcharged is not sufficient and would have bizarre consequences since thousands of similar judgments made every year in mortgage possession cases would also be capable of challenge. The judgment debt was admitted or accepted and had not been appealed, in fact it had been paid. Borrower’s claim struck out (save for a concession in respect of an overpayment of £1,554.29). It is difficult to see how a borrower could bring a later claim which either directly or indirectly challenges the figure for which a money judgment had earlier been obtained by the lender. A borrower who is dissatisfied with the amounts claimed by a lender should either challenge any constituent elements of the claim, or require the lender to formally account for the same. If the court grants a money judgment, the only feasible option (if there are grounds) is to appeal
Publication On 4 February 2019 HM Land Registry updated: Practice Guide 29: Registration of legal charges and deeds of variation of charge Practice Guide 30: Approval of mortgage documentation

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