High Court dismisses application to cancel mental health crisis moratorium

The High Court has handed down judgment in Kaye v Lees [2022] EWHC 3326 (KB), rejecting a creditor’s application for cancellation of a mental health crisis moratorium (“MHCM”), or alternatively for permission to enforce a debt despite the MHCM. The decision gives important guidance on the application of the relevant provisions of the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 ("the Regulations").

Mr Kaye obtained a judgment for damages against Ms Lees. The judgment debt was not paid and Mr Kaye obtained a charging order and an order for possession and sale of Ms Lees’ flat. Previously, Mr Kaye had proceeded to enforce the order for possession and sale, notwithstanding that Ms Lees had been granted an MHCM, but the High Court declared the enforcement null and void and Ms Lees was reinstated to the property (Lees v Kaye & Dixon [2022] EWHC 1151 (QB); DSC news post here).

Now, Mr Kaye applied for cancellation of the MHCM under reg. 19 of the Regulations, or alternatively for permission under reg. 7(2) to enforce the order for possession and sale of the flat despite the MHCM. Swift J dismissed both aspects of the application.

The application to cancel the MHCM was made outside the time limit in reg. 19(2)(a) (50 days from the start of the MHCM). The Court held that, despite the potential for harsh effects on creditors, there was no power to allow an application out of time (judgment, paras 23-25). In any event, because the debt advice provider had not carried out a review of the MHCM under reg. 17 (Mr Kaye’s request for a review having been made outside the 20-day time limit in reg. 17(3)) the precondition for an application under reg. 19 was not met (para 27).

In relation to the application under reg. 7(2), permission to enforce can only be granted if the enforcement step would “not … be detrimental to the debtor … or … significantly undermine the protections of the moratorium” (reg. 7(5)). The Court held that “detriment” is not limited to mental health detriment, and includes any detriment that is more than de minimis; “removing Ms Lees from the flat would, as a matter of ordinary language, be detrimental to her” and so permission was refused (paras 28-31).

Martin Westgate KC and Daniel Clarke represented Ms Lees, instructed by Katie Brown of TV Edwards LLP.