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Kaye v Lees [2023] EWHC 758 (KB) considers whether a creditor can seek continued injunctive relief to prevent a debtor from successfully applying for numerous breathing space moratoriums under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (“the Regulations”). 

In an earlier application made by Mr Kaye, the Court considered the eligibility of a debtor seeking a Mental Health Crisis Moratorium ("MHCM"). After initial success, this later application asked the Court to consider a continuation of injunctive relief. The Court was asked to consider the correct application of the Regulations, and the potential unfair prejudice to creditors in circumstances where debtors attempted to utilise the Regulations for ulterior motives.

The background to the case generally was that Mr Kaye, following judgments made in his favour against Ms Lees (finally resulting in a possession and order for the sale of her property), was seeking to enforce a judgment debt. Prior to the first application, Ms Lees obtained a series of MHCMs in accordance with the Regulations. The Debt Advice Provider ("the Advisor") was satisfied on each occasion, of which there were four, that Ms Lees was receiving mental health crisis treatment as defined in section 28 of the Regulations.  Mr Kaye sought to review the Advisor's fourth decision to allow Ms Lees a further MHCM under section 17 of the Regulations; however, following an unsuccessful review, Mr Kaye was forced to make an application to the Court in accordance with section 19 of the Regulations to consider Ms Lees' eligibility for a MHCM.

The Court cancelled the MHCM made in favour of Ms Lees following the first application. The Court found that it was not appropriate for the Advisor to approve a further MHCM for Ms Lees based on the medical evidence presented. In answer to the request for injunctive relief against Ms Lees, the Judge was persuaded that Ms Lees was not utilising the purpose of the scheme appropriately, in that she should have been attempting to negotiate a realistic payment plan during the moratoriums, as opposed to attempting to achieve any kind of cancellation of the debt through continued delays.

In the second application, Mr Kaye expressed concerns that Ms Lees may attempt to seek a further MHCM upon expiry of the injunctive relief ordered in the first application (the proposed enforcement unlikely to have completed prior to this expiry). Mr Kaye sought a continuation of the injunctive relief. Interestingly, in contrast to the injunctive relief allowed in the first application, the Judge hearing the second application found that a continuation of the injunction should not be allowed unless the debtor was seen to be abusing the Regulations which, based on the information before the Court at that time, the Judge was satisfied that Ms Lees was not. Whilst the Judge refused to continue the injunctive relief preventing Ms Lees from applying for a further MHCM, of which she was now free to do, the Judge did comment that a further application for a MHCM was "highly, highly unlikely" to meet the criteria of the appropriateness test.

Debt advisors reviewing applications made in accordance with the Regulations should take note of the Judges' comments regarding considerations to be made and the requirements of properly applying the tests set out within the Regulations. The case has made clear that the threshold for achieving injunctive relief for an abuse of the Regulations is a high one, and certainly something of note for creditors when considering a challenge to a MHCM.

Case details:

  • Court: High Court, King's Bench Division
  • Judge: Deputy Judge of the High Court Locke KC
  • Date: 31 March 2023

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