Two cases in the High Court of Chancery in Northern Ireland highlight the activities of those who attempt to introduce into argument, concepts which have no place or efficacy in the legal system.

In Santander UK PLC v Scullion and Scullion 2020 NICh 1, McBride J was required to adjudicate on an Order 88 application for possession.

The first defendant made an application for the case to be heard in private. This was rejected by the court which said:

[27] After hearing his submissions and looking at the material provided I refused the application. I was satisfied the documents produced were not new material as they were in existence for some time and therefore the defendant could have produced them on the first day of hearing. Secondly, having read and considered the documents which consisted of a “Deed of Trust ‘Blu4 private Trust’”, “Memorandum of Trust” and “equitable asset”, I am satisfied that they consist of legal nonsense and do not provide any basis upon which the court should hear the present proceedings in chambers. 

The first defendant argued:

[49] Although the first named defendant did not give evidence he submitted to the court that he had tendered payment by way of an equitable asset. He further submitted that the plaintiff was not the correct plaintiff as Santander with brackets around UK was not a party to any mortgage which he and his wife had entered into. He further submitted that he had not received any money from the plaintiff and that in fact he had paid money to the plaintiff. 

In reply, McBride J said:

I am satisfied that the defendants each entered into the standard mortgage deed and this is a valid deed. I am further satisfied that the plaintiff provided the loan which was secured by way of a mortgage over the defendants’ property, and the mortgage was subject to the lender’s standard terms and conditions, which included an obligation to repay the loan by way of instalment payments and provided that in the event of default, the mortgagee had the right to repossess the property. I find that the defendants defaulted in paying the instalments when due and owing as appears from the evidence of Ms Serin and the defendants’ bank account statements. I further find that the defendants have not, as the first defendant alleged, tendered payment. The ‘equitable asset’ document handed into court, which the first defendant relied on as evidence of repayment of the debt, consists of legal mumbo jumbo. I am therefore satisfied on the basis of the evidence of Ms Serin that no payments have been made by the defendants since 21 March 2011. Accordingly they are in default of the mortgage conditions.

The proponents of the “mumbo jumbo” have a wide range of wacky arguments, which they unfold before the courts. From arguments that they are immune from the legal system , to styling themselves by their first name only, to flourishing documents which magically neutralise the amount they owe, to arguing that money is ‘created’ in some way, they have occupied court time to no discernible effect and , in my view , they have misled gullible people into believing that you can borrow money but make the debt disappear.

In Santander UK PLC v Carlin and Carlin 2020 NICh 11 , another application by a lender for possession, Huddleston J was faced with the ‘money’ argument.

B. The money/no money argument 

[27] I deal next with the Defendants’ alternative argument (as it is put). In context it is a wider and more esoteric argument to deny “indebtedness” or indeed loss on the part of the Plaintiff. The first Defendant asserts (variously and in no particular order) that: 

1. (i)  The Plaintiff’s actions were limited to facilitating credit and that what it did was to create a “bank deposit” or “cash” on the back of the Defendants’ promise to pay which the Defendants categorise as a promissory note – the “money creation argument”. The Defendants allege that the money which was advanced was not Abbey National’s funds but “created out of thin air” (to use the first Defendant’s language). 
2. (ii)  That the Plaintiff did not lend money but misrepresented the “entire nature of the alleged loan in order to induce the Defendants into signing a deed and implied contract” rendering it “void”; 
3. (iii)  That the money which was advanced to the Defendants did not “belong” to the Plaintiff but rather to its savers; that one of the savers, in this case, was the first Defendant and that the Plaintiff was, therefore, in reality lending the first Defendant his own funds [Para 13 et seq of first Defendant’s affidavit, 18th June 2015]; or 
4. (iv)  That the promissory note given by the Defendants underpinned the entire transaction and constituted the originating source of funds and that the Defendants “were wilfully misled and induced by the Plaintiff into believing they were actually borrowing money that pre-existed [the mortgage application]”. [Defendants’ final Closing Submissions at Para 47.] 

[28] In support of these various strands of argument the court was invited to have regard to the academic writings and an affidavit of Professor Richard Werner, a commentator on the issue of quantitative easing within the banking sector. This, the Defendants assert (and I quote), is empirical evidence to show: 

“how all money circulating in the United Kingdom, including mortgage monies, is created when a bank deposits a loan agreement [also known as a promissory note] in its own account. The credit created is then transferred to the borrower’s account, as if it had been loaned by the bank, when in fact it has been created by the alleged debtor’s signed promise to pay.” 

[The Defendants’ Closing Submissions at Para 29.] 

[29] The court was also referred to the Bank of England Quarterly Bulletin (2014) which also refers to the deposit of loan agreements as a form of Promissory Note and the “creation” of money on the back of them. The suggestion is that in this instance the Plaintiff did not lend existing money but “created” new money and has sustained no loss and/or were misrepresenting the source of funds and therefore the nature of the transaction. 

[30] It is not the first time that such arguments have been advanced to these courts but they remain singularly unattractive. This is so not least because the question of “loss” upon which the argument is ultimately based is not actually the point at issue in Order 88 proceedings seeking possession of the Property. [See Herron v Bank of Scotland Plc [2018] NICA 11 and, in particular, McCloskey J (as he then was) at Paragraph [57]]. 

The Court roundly rejected this argument on the simple basis that the money was received and used to make various payments.

Another argument employed in this case was the “promissory note” suggestion. The Court had a simple riposte to that. You may have tendered a promissory note but you have failed to pay out on it.

Many other equally fantastical arguments were set up in Carlin and swiftly , and rightly, disposed of by the Judge.

One might hope, though with little enthusiasm , that we might have seen the end of this nonsense.

The legal system, with its many flaws is one that enjoys the tacit support of the great mass of the populace. To invent mumbo jumbo may be to some great sport. But to mislead people to the extent that they acquire a criminal record, for example, having believed that the Road Traffic Orders don’t apply to them, is grossly negligent by the purveyors of this rubbish.