The Court of Appeal has recently handed down a judgment in Notting Hill Finance Limited v Sheikh  EWCA Civ 1337. The judgment provides helpful clarification on the circumstances in which it is open to a party to take a new point on appeal when it was not raised in a lower court.
The background of the case concerns a loan agreement entered into in January 2018 under which Notting Hill Finance Limited (“Notting Hill”) advanced a sum of £50,000 to Mr Nadeem Sheikh (“Mr Sheikh”) for a term of 6 months at an interest rate of 30.04% per annum. The loan agreement provided that, in the event of default, the interest rate would rise to 12%, compounding monthly, meaning that it would accrue at the rate of 289.6% per annum. Mr Sheikh defaulted. By July 2018, the balance had increased to £71,000, comprising the principal sum, contractual interest, and charges.
In August 2018, Notting Hill commenced possession proceedings in the prescribed form using the procedure under CPR Part 55. They sought an order for possession together with a money judgment of £79,520, being the amount that was due at the date of the statement of case. The claim form and the particulars of claim made it clear that the interest rate increased from 30.04% to 289.60%.
The Possession Hearing
Mr Sheikh was a litigant in person. He attended the hearing but did not file a defence. He was represented by the duty solicitor at the hearing.
Notting Hill sought an order for possession and money judgment for the sum of £99,749.
After hearing submissions from both parties whereby it was understood that Mr Sheikh conceded that an order for possession was inevitable, the District Judge at the lower court granted an order that:-
- Possession to be given to Notting Hill within 28 days; and,
- Money Judgment against Mr Sheikh in the sum of £99,749, not to be enforced without permission of the Court.
Mr Sheikh engaged solicitors who lodged an appeal, within time, and a subsequent application to set aside the order, on the basis that:-
- The term concerning default interest of 289.6% per annum was a common law penalty clause and therefore unenforceable; and,
- It formed the basis of an “unfair relationship” under sections 140A to 140C of the Consumer Credit Act 1970 (“CCA”).
HHJ Godsmark QC allowed the appeal and varied the lower Court’s order to grant judgment limited to £71,000 with directions for the trial of the balance of the claim. In giving his judgment, HHJ Godsmark QC considered whether it was too late to raise a new point on appeal. In answering that question, he identified a number of features which he considered to be relevant, including:
- The hearing at the lower court was a summary hearing under CPR Part 55, not a full trial;
- Mr Sheikh was a litigant in person and he attended the hearing;
- The lower court’s order was challenged very promptly;
- There is a need for finality in litigation;
- Notting Hill acknowledged that, had the issue been raised at the hearing, it was probable that trial directions would have been given.
As such, HHJ Godsmark QC concluded that the case was “exceptional” and the failure of the lower court to identify the points was a serious procedural or other irregularity which justified him allowing the appeal under CPR Part 52.21(3)(b).
Notting Hill appealed to the Court of Appeal.
The Court of Appeal held that there is no general rule that a case needs to be “exceptional” before a new point will be allowed to be taken on appeal and agreed that HHJ Godsmark QC was correct in his identification of the factors to be taken into account. The appeal by Notting Hill was dismissed.
Snowden J commented that, whilst an appellate court will always be cautious before allowing new points to be taken, all circumstances will need to be considered including: (1) the nature of the proceedings in the lower court; (2) nature of the new point(s); and (3) any prejudice that would be caused to the opposing party. Essentially, there is a spectrum of cases and it was a matter for the court’s discretion. It was held that HHJ Godsmark QC was correct in allowing the new point to be taken on appeal in this case.
It is notable that the Court of Appeal considered the fact that Mr Sheikh was a litigant in person carried little weight in the equation.
For completeness, Mr Sheikh was only successful in challenging the balance of the money judgment and not the claim for possession. The Court of Appeal also allowed his application for a stay on the possession order for 14 days.
The judgment of the Court of Appeal provides clarification and helpful guidance as to when a party can take a new point when it was not raised at a lower court.
Due to the limited nature of Part 55 first hearings, it is not a surprise that the Court of Appeal allowed the new point to be taken in the instant case.
That said, it is the author’s view that, if a defendant feels that they have a potential defence and/or any objection to a Part 55 claim, they should immediately seek independent legal advice and, in any event, raise the objection or defence at the earliest opportunity to minimise any risks of the points not being allowed to be taken subsequently.