PROCEDURAL DEFECTS AND CPR 3.10: CONSIDERATION BY THE COURT

The judgment in Baxendale-Walker v APL Management Ltd [2018] EWHC 543 (Ch) covers several issues relating to procedure. Here I want to look at the assertions made in relation to procedural defects.  The judge held that some procedural errors by the claimant bringing an action for possession were remedied under CPR 3.10.

THE CASE

The claimant (APL) sought possession of a property on the basis that loans were overdue. The defendant (Mr Baxendale-Walker) sought a declaration that two loans to the claimant were void or voidable. (I have used these terms, although the judge was considering two actions, Mr Baxendale-Walker being the claimant in the second, with APIL the defendant).

THE ISSUES

Mr  Justice Henry Carr found that Mr Baxendale-Walker’s arguments in relation to the loans were barred by principles of action estoppel, issue estoppel and the principle in Henderson -v- Henderson.

THE ALLEGED PROCEDURAL DEFECTS AND THE COURT’S RESPONSE

1. 1. The defences to the Possession Claim which continue to be relied upon by Mr Baxendale-Walker are set out at paragraphs [116] – [128] of Mr Seitler’s skeleton argument. The primary defence relates to the invalidity of the Burleigh Loan. I reject that, as I have concluded that the Burleigh Loan is valid and enforceable.

   2. As Mr Seitler confirmed that Mr Baxendale-Walker no longer disputes the Possession Claim on the basis of res judicata, his defence to the Possession Claim now rests entirely on the alleged procedural defects. The alleged defects are:

i) that the Particulars of Claim ought to have been issued in form N120;

ii) that APL has not included a statement as to its own knowledge of who is in possession of the Property as required by paragraph 2.1(5) of Practice Direction 55A;

iii) that the Particulars of Claim do not exhibit the mortgage and/or loan agreements in accordance with paragraph 7.3(1) of Practice Direction 16;

iv) that the basis for possession has not been pleaded; and

v) that APL has not provided relevant details of Mr Baxendale-Walker’s circumstances as required by paragraph 2.3(5) of Practice Direction 55A.

Applicable legal principles

1. 1. CPR 3.10 provides that:

“3.10 Where there has been an error of procedure such as a failure to comply with a rule or practice direction –

(a) the error does not invalidate any step taken in the proceedings unless the court so orders; and

(b) the court may make an order to rectify the error.”

1. 1. The Court of Appeal in Steele v Mooney & Others [2005] EWCA Civ 96 gave the following guidance in relation to CPR 3.10:

“22. First, if the phrase “error of procedure” is given a narrow meaning, difficult questions of classification will arise. This will inevitably lead to uncertainty and sophisticated arguments as to how to characterise an error. This would be highly undesirable. It seems to us that a broad common sense approach is what is required.

23. Secondly, rule 3.10 gives the court a discretion. This must be exercised in accordance with the overriding objective of dealing with cases justly: rule 1.1(1) . If remedying one party’s error will cause injustice to the other party, then the court is unlikely to grant relief under the rule. This gives the court the necessary control to ensure that the apparently wide scope of rule 3.10 does not cause unfairness.

24. Thirdly, the general language of rule 3.10 cannot be used to achieve something that is prohibited under another rule. This is the principle established by Vinos.”

1. 1. In my judgment, the alleged errors complained of (to the extent they are errors) are errors of procedure. It has not been suggested that any other civil procedure rule prohibits the rectification of such errors. Whether to rectify any such errors is therefore an exercise of discretion in the light of the overriding objective set out at CPR 1.1, which is to deal with cases “justly and at proportionate cost”.

   2. Mr Seitler submits that I ought not to ignore the above defects because the formalities of CPR 55, “are more than a matter of convenience; they provide an essential framework, the rigidity of which enables justice to be done on critical matters in short order.” I agree that they should not be ignored. However, it would be wrong to apply a rigid framework which fetters the exercise of the court’s discretion.

Form N120

1. 1. Whilst form N120 must be used according to PD 55A paragraph 1.5, APL has provided all the relevant information required by N120, which it has placed in a different format with some additional material. Mr Baxendale-Walker has not pleaded specific information that would have been in form N120 was missing from APL’s Particulars. This defect is therefore clearly not substantive but technical in nature and its rectification would cause no injustice to Mr Baxendale-Walker.

Knowledge of who was in possession,

1. 1. APL has pleaded that:

“To the best of the Claimant’s knowledge the following persons are in possession of the property:

the Claimant has been informed, via the Defendant’s solicitors, that the Defendant is in possession of the property but this is not within the Claimant’s personal knowledge.”

1. 1. The requirements of PD 55A, paragraph 2.1(5) are to, “give details of every person who, to the best of the claimant’s knowledge, is in possession of the property”. In my judgment, APL has complied with this requirement. Even if there had been an error in this respect, the substantive information has been provided and its rectification would cause no injustice to Mr Baxendale-Walker.

Failure to exhibit mortgage and/or loan agreements

1. 1. PD 16 paragraph [7.3] states:

“Where a claim is based upon a written agreement:

(1) a copy of the contract or documents constituting the agreement should be attached to or served with the particulars of claim…” (emphasis added).

1. 1. The use of the word “should” clearly indicates that this is not a mandatory provision. I do not therefore consider that a failure to comply with PD 16 paragraph 7.3 constitutes a defence to the Possession Claim. Even if the provision was mandatory then the breach would have subsequently been cured by serving copies of those documents on Mr Baxendale-Walker in the exhibits to the witness statement of Mr Wood. In any event Mr Baxendale-Walker is clearly aware of the contents of those documents as he brought the County Court Proceedings in relation to them, and must have had copies before the Possession Proceedings were issued. Even if there had been an error, its rectification would cause no injustice to Mr Baxendale-Walker.

A failure to plead the basis of possession beyond just the sums owing

1. 1. Mr Crampin contends, and I accept that as form N120 makes no provision for the pleading of further details, there is no need to do so. Form N120 does allow for further details to be filled in, but does not mandate them. I do not regard this as a defect. Furthermore, as the mortgage was created by deed expressed to be by way of legal mortgage, section 87(1) of the Law of Property Act 1925 confers the right to take proceedings to obtain possession from the occupiers. Finally, in the circumstances of this case, even if there had been an error, its rectification would cause no injustice to Mr Baxendale-Walker.

Failure to provide details of Mr Baxendale-Walker’s circumstances:

1. 1. APL has provided information as to Mr Baxendale-Walker’s circumstances, However Mr Baxendale-Walker complains that APL did not refer to his “severe and degenerative neurological condition”. That condition has not prevented him from conducting substantial litigation in multiple jurisdictions. I do not consider that there has been any failure by APL in this regard, and in any event, Mr Baxendale-Walker has referred to his condition in his Defence. Even if there had been an error, its rectification would cause no injustice to Mr Baxendale-Walker.

Additional points

1. 1. Mr Crampin referred in his skeleton to two further objections raised by Mr Baxendale-Walker in his Defence. As they were not relied upon, either in Mr Seitler’s skeleton or submissions, it does not appear that they are pursued. In any event, I do not accept them:

i) that APL failed to explain its claim to enforce the debt while filing dormant accounts at Companies House. This point is irrelevant. There is a mortgage in place, which is enforceable. How APL’s accounts should be filed in the light of any such mortgage is not a matter for the Possession Proceedings; and

ii) that APL takes issue with the precise quantum of the sum said to be required to pay the mortgage and the quantum of APL’s costs. The amount owing to pay the mortgage (excluding any sum payable for solicitor’s costs and administration charges) is clear because it is set out in the order of HHJ Lamb in the County Court Proceedings:

a) as of 3 January 2017 £6,759,495; and

b) thereafter interest running on the sum of £3,722,998 at 2.8% per month. Mr Crampin stated, and it was not disputed, that this amounts to £3,427.19 per day.

I also accept Mr Crampin’s submissions that I do not need to determine APL’s costs at this stage. The only claim made in the Possession Proceedings is for possession of Burleigh House, a claim for the total amount outstanding under the mortgage has not been made.

1. 1. In my draft judgment circulated to the parties I expressed the view that Mr Baxendale-Walker’s defence to the Possession Claim disclosed no reasonable grounds for defending the claim, and had no reasonable prospect of success. I therefore proposed to grant an order for possession. Further submissions were then made to me on behalf of Mr Baxendale-Walker that:

i) only the County Court has jurisdiction to make an order for possession; and

ii) tMr Baxendale-Walker was willing to pay the sums owing under the mortgage to avoid a possession order being made.

1. I will therefore consider those submissions from Mr Baxendale-Walker at the consequentials hearing in respect of this judgment, together with any submissions APL wish to make in reply. Following that I will determine whether or not to make an order for possession.