Mental Health Crisis Moratorium Revisited

The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England & Wales) Regulations 2020 came into force on 4th May 2021. The Regulations introduced two types of moratoria: the standard breathing space (which may last for up to 60 days) and the mental health crisis breathing space, which endures for the duration of mental health treatment, plus an additional 30 days.

A moratorium essentially freezes most debt enforcement action – hence giving the debtor ‘breathing space’. A debtor can only benefit from a standard breathing space once every 12 months, whereas mental health crisis breathing spaces are unlimited.

In the recent case of Kaye v Lees (2023) EWHC 758 (KB) the High Court considered an application by Mr Kaye to extend the period of an Injunction which had been previously obtained to prevent Ms Lees from making an application for a further mental health crisis moratorium (MHCM).


The Background

Ms Lees and Mr Kaye had been neighbours for several years. Following a dispute, Mr Kaye was awarded damages for nuisance and harassment (plus costs), which were secured by way of charging orders over Ms Lees’ long leasehold interest in her flat. An Order for Sale was made which required Ms Lees to either pay the sum due to Kaye, or to deliver up possession of her flat to him by 3rd April 2020.

Protracted proceedings followed, during which a MHCM was awarded to Ms Lees. Possession of the flat was taken on 13th January 2022 pursuant to a writ of possession and Ms Lees was required to leave despite the MHCM. Ms Lees sought a declaration that the Writ of Possession was null and void as she ought not to have been evicted due to the protection of the MHCM. Her application was successful, and she was readmitted to the Property.

Mr Kaye in November 2022 applied to set aside the MHSM. No medical evidence was provided to show that Ms Lees was suffering from a mental health crisis at the time and the MHCM was cancelled. An Injunction was granted to prevent Ms Lees from seeking a further MHCM without permission of the court. The injunction was to remain in place until 31 March 2023.

Mr Kaye obtained possession of the property on 23 February 2023 and was proceeding with a sale. He applied to the court to extend the period of the injunction to prevent Ms Lees from making a further application for a MHCM.

The Court’s Decision

Mr David Lock KC refused to extend the injunction making the following key findings:

  • Given that parliament has given an unfettered right to a debtor to apply for a BSM or MHCM and has allocated primary decision making to a debt advisor, it would not be right to grant an injunction which sets up a different decision-making structure.
  • A creditor cannot properly ask the court to remove the statutory rights from the debtor for a period of time or to subject the exercise of those rights to judicial supervision when that is not part of the statutory scheme.
  • If parliament had wanted to give the court the right to suspend the right of the debtor to make applications in defined circumstances or had wanted to give the court the power to vet applications before they are made, it could have included that power within the Regulations. It is of significance that it did not do so.
  • In the case of MHCM the debt advice provider is required to decide whether ‘an approved mental health professional has provided evidence that the debtor is received mental health crisis treatment’ … The fact that an individual has a long-standing mental health condition or is in receipt of regular mental health treatment in an acute or community setting will not usually be sufficient of itself to amount to evidence that the debtor is receiving mental health crisis treatment.
  • Under Regulation 17(a) the creditor is entitled to ask the debt adviser to cancel the MHCM on the basis that its continuing existence ‘unfairly prejudices the interests of the creditor’. If an application is made to the debt advisor on that basis the debt advisor has a legal duty as a quasi-judicial decision maker to make a decision on that issue. It is not open to a debt advisor to refuse to decide on whether there is unfair prejudice when the regulations require him or her to do so.

Although in this case MHCM may have been granted inappropriately in the past, the judge could not find that the court should make an injunction to prevent further applications. Injunctive relief would only be appropriate where a debtor abuses their rights under the Regulations.

The case highlights the importance of the decisions made by the debt advisors as they are being asked to perform a quasi-judicial function and the ability of creditors to challenge those decisions.

If you have any concerns about the Regulations and how they may affect you, please do not hesitate to contact MSB for further assistance.

Law is correct as of 14th June 2023

Whilst every effort has been taken to ensure that the law in this article is correct, it is intended to give a general overview of the law for educational purposes. You are respectfully reminded that it is not intended to be a substitute for specific legal advice and should not be relied upon as legal advice. No liability is accepted for any error or omission contained herein.

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