An assortment: Coastal; sharp practice; breathing space moratoria

This is going to be very much an assortment of different things which have been happening in the background (partly because I have just completed the Legal Action owner-occupier update and partly because we are gearing up to move, which is pretty stressful – so, no deep dive into the Homelessness etc Bill this week).  It’s late on a Thursday night, and so I hope it’s ok if I post below some of what is included in the owner-occupier update, which is (or may be) of relevance to Wales.  I’m also going to take a break next week.  Here we go then:

Coastal 2

I am reliably informed that Coastal 2 is now going to be heard in the High Court on 29-31st July.  See you there – it will be a humdinger.  In the unlikely even that anybody wants to share their gossip about it, or skeleton arguments, do send it/them my way :).

Coastal 1

There is nothing to report except that it has not been listed for a hearing yet.  I have heard vague stirrings but nothing to report.  Casetrack simply records “18-Mar-2025: Case passed to List Office”.

Sharp practice on possession

Quick Property Sale Limited v Solaja [2025] EWHC 1257 (Ch)

Although pursued successfully on the basis of undue influence and impossibility, this case is of broader significance as highlighting certain practices employed as well as a reminder, more technically, about the significance of s. 2, Law of Property (Miscellaneous Provisions) Act 1989.

Mr and Mrs Solaja’s property was re-possessed by their mortgagee.  Six days later, they entered into a written agreement with the Claimant to sell the property to it.  The agreement was procured by a Mr Essien.  The description of his “business model” is as follows:

Mr Essien’s business model is to access and use the information in County Court cause lists (published on CourtServe) to identify claims in which the claimant is a mortgage lender, and the defendant is an individual. He then uses people-tracing tools to find the owners and address of the property concerned, and, as he put it, start sending letters.

Following this model, he arranged a sale to the Claimant, introducing Mr and Mrs Solaja to a particular solicitor, while they were navigating the local authority temporary accommodation situation.  The deposit for the agreement was £231,000, which was to be held by the solicitor as stakeholder under the contract.  The solicitor sought to use that deposit to redeem the mortgage.  The mortgagee refused to accept those funds in the absence of the solicitor providing confirmation that those funds were a gift or loan to the Solajas.

Master Clark, taking a point not argued by the parties, held that the purported agreement was unenforceable under s. 2, Law of Property (Miscellaneous Provisions) Act 1989 because it did not contain the term that the deposit was to be used by way of loan to redeem the mortgage.  Indeed, the contract was inconsistent with what had been agreed between the parties.

Further, Master Clark held that the Defendants were entitled to set aside the transaction as a result of undue influence of which the Claimant had notice, and had failed to comply with the Etridge protocol.  Further, the agreement was impossible to perform because the deposit could not have been paid to the mortgagee, and, indeed, the Claimant’s director was very clear it was not their intention to make a loan of that money to the Solajas.

Note to duty solicitors: Beware what goes on outside court.

Breathing space and mental health moratoria

The obscurely drafted Debt Respite Scheme (Breathing Space Moratorium and Mental Health Moratorium) (England and Wales) Regulations 2020 continue to produce litigation despite the evident intention behind them.  The regulations have been described as “… leaving a lot to be desired, so Guidance from Court decisions is in demand”,[2] and the drafting “impossible to admire”.[3]

Bluestone Mortgages Limited v Stoute [2025] EWHC 755 (Ch)

This appeal concerned whether the enforcement of a debt that is outside a mental health moratorium requires the permission of the court when it is “mixed” with a debt that is within the moratorium.  In this case, the Claimant obtained a possession order on the mortgage they had granted to Mr and Mrs Stoute prior to Mr Stoute entering into a series of mental health moratoria, and a money judgment for around £315,000.  That was not a moratorium debt.  However, in the absence of the enforcement of the order (after a series of suspensions of warrant), there were further arrears of around £110,000.  Those arrears were a moratorium debt.

Prior to the hearing of the appeal, the moratorium was cancelled as having been materially irregular and unfairly prejudiced the Claimant.

Regulation 7 provides that a creditor is prevented, without the permission of the court, from taking any steps to take any enforcement action “in respect of” a moratorium debt.  Enforcement action includes taking a step to enforce a judgment or order issued by a court or tribunal before or during a moratorium period “regarding” a moratorium debt, or enforcing security held “in respect of” a moratorium debt.

The issue is whether the enforcement of the non-moratorium debt is taking a step regarding a moratorium debt or enforcing securing “in respect” of a moratorium debt.

Mellor J held that it was, dismissing the Claimant’s submissions.  In particular, agreeing with HHJ Parker, he considered that, if the Claimant were correct, the mortgagor would have the opportunity to seek a stay or suspension under s. 36, Administration of Justice Act 1970, but that would usually involve payment towards the arrears which would be towards a moratorium debt.

Considering the context of the Regulations, Mellor J found that the Claimant’s argument that it should be entitled to enforce the non-moratorium debt automatically (ie without the permission of the court) would effectively strip the Regulations of their purpose.  This was because the effect “would necessarily entail eviction from and then the sale of the family home. In my judgment, there are very few events which could be more detrimental to the debtor’s mental health than those”.[4]  Accordingly, the words “regarding” and “in respect of” took their natural meaning.

Forbes v Interplay Funding Limited [2025] EWCA Civ 690

The question in this appeal was whether a mortgage debt, where the principal has become due before the moratorium commences, is a “non-eligible debt”.  Reg 5(4)(a) provides that a non-eligible debt is a “secured debt which does not amount to arrears in respect of secured debt.”  By Reg 2, “arrears” means “any sum other than the capitalised mortgage arrears payable to a creditor by a debt which has fallen due” and not been paid.   Capitalised mortgage arrears is “any arrears in relation to a mortgage that have been added to the outstanding balance to be paid over the duration of the mortgage.”

Zacaroli LJ held that arrears did not include the principal sum of secured debt, whether or not called in prior to the commencement of the moratorium.[5]  Various reasons were given for that decision, including the artificiality of such a distinction between a debt called in before or after the commencement of a moratorium,[6] and the analogy with the Insolvency Act bankruptcy and IVA regimes.[7]  Arrears carries its natural meaning: “In order for something to be added to the outstanding balance it must be different from the outstanding balance itself”.[8]  Further,

[There are ] … three requirements before arrears are excluded from non-eligible secured debt: (1) the arrears must have been due as at the date of the application for the moratorium; (2) the arrears must be of instalments that the debtor failed to pay in breach of the agreement or applicable legislation or rules; and (3) the arrears cannot be those which have already been capitalised.[9]

The Court declined to consider a ground of appeal which would effectively have been an appeal of Mellor J’s decision in Stoute because it had not been fully argued before them.

Freemen of the land

On 3^rd April 2025, the Financial Conduct Authority issued a warning to borrowers in arrears about the so-called “Freemen of the Land”, identifying in relation to their arguments stemming from the Magna Carta that “none of these claims have succeeded as they’re not legally valid”.[10]  It has been reported that some of the videos produced have been viewed close to half a million times.[11]  Shelter now maintain a case law database of these issues (also covering council tax).[12]  There is currently a range of academic research under way on this philosophy.[13]

Ryan v LVR Capital Limited (In Administration) [2024] EWHC 1866

It is not proposed to detail the convoluted facts in this matter, but an extended civil restraint order was made against Mr Ryan, who had (in essence) sought to avoid issues arising from various loans made by his company through issuing promissory notes and a document described as an Omniversal Security Agreement, and various purported trusts and powers of attorney.

Joanne Wicks KC, sitting as a Deputy Judge struck out the Claimant’s claims, partly on the ground that they were incoherent and made no sense, and had been brought against the company in administration without the consent of the administrators or permission of the court (as required by Sch B1, para 43(6), Insolvency Act 1986).  The Deputy Judge commented that the Claimant’s communications and contentions comprised, “… legal gobbledegook, a stitching-together of legal-sounding phrases, quotes from cases and names of statutes without any solid basis in legal principle. Phil Ryan’s pseudolaw is drawn in part from the USA and contains references to both English and American statutory and other legal texts, particularly the Uniform Commercial Code, which is a set of laws governing commercial transactions in the USA, uniformly adopted into the law of each state”.[14]

[1] https://www.fca.org.uk/consumers/struggling-mortgage-avoid-risky-offers

[2] Bluestone Mortgages Limited v Stoute [2025] EWHC 755 (Ch), [28]

[3] Seculink Ltd v Forbes [2025] EWHC 524 (Ch), [21], Mann J.

[4] [62].

[5] [71]

[6] [60]-[61]

[7] [62]-[64]

[8] [53]

[9] [54]

[10] https://www.fca.org.uk/consumers/struggling-mortgage-avoid-risky-offers.

[11] https://www.theguardian.com/money/2025/jun/08/freemen-on-the-land-fotl-mortgages-fca

[12] https://england.shelter.org.uk/professional_resources/news_and_updates/freeman_on_the_land_case_law_round_up

[13] See, for example, T. Kochi, https://journaloflawandsociety.co.uk/blog/meet-the-jls-author-conspiracies-everywhere-sovereign-citizens-and-pseudolaw/ ; and the associated article, “Law and conspiracy theory: sovereign citizens, freemen on the land, and pseudolaw”, (2025) Journal of Law and Society forthcoming, available at https://onlinelibrary.wiley.com/doi/am-pdf/10.1111/jols.12523.

[14] [3].