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Mental health crisis moratorium challenges revisited

Posted on 15 May 2023

Following its judgment earlier this year in Kaye v Lees [2023] EWHC 152 (KB) (the January Decision), the High Court has handed down a further judgment in this long-running litigation. This time, the court revisited the injunction preventing the Defendant from seeking a mental health crisis moratorium under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the "Regulations") granted in the January Decision.

The January Decision

The January Decision was discussed in our previous article on this case (found here).

In summary, HHJ Dight CBE found that Ms Lees had abused the Regulations. As well as cancelling an existing mental health crisis moratorium, he held that she should be prevented from obtaining further moratoria in order to allow the Applicant (Mr Kaye) to complete the sale of Ms Lees' property in satisfaction of her outstanding judgment debt to him.

HHJ Dight CBE therefore granted injunctive relief preventing Ms Lees from making an application to a debt advisor under the Regulations for two months. However, the order permitted Ms Lees to apply to vary or discharge the injunction, provided that she provided evidence in support of a further moratorium.

Kaye v Lees [2023] EWHC 758 (KB)

Shortly before the end of the two month injunctive period, Mr Kaye applied to extend the injunction for a further period in order to allow him to fully complete the sale of Ms Lees' property before the injunction expired.


Mr David Lock KC, sitting as a Deputy High Court Judge, noted that the purpose behind any moratorium granted under the Regulations should be to protect debtors from enforcement whilst they devise a realistic plan for repayment of some or all of their debt, not to achieve a permanent or semi-permanent cancellation. He agreed that the Regulations exist to protect those in a mental health crisis, and the mere 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" is not sufficient. He also acknowledged the importance of debt advisors under Regulations, describing their role as "quasi-judicial" and suggesting that they should assess medical evidence provided by a debtor to determine whether they are suffering from a crisis which requires the urgent protection of a moratorium.

However, David Lock KC held that:

  1. Parliament clearly intended the Regulations to confer a "complete and unfettered" right on debtors to apply to debt advisors for the moratoria. He noted that the statutory scheme contained sufficient mechanisms for review of moratoriums (Regulations 17, 18 and 19) which allow creditors to apply for a review by the relevant debt advisor and, if they decline to cancel the moratorium, to apply to the court for cancellation.
  2. It is not appropriate for the court to exercise its injunctive powers to prevent a debtor from applying for a moratorium, as the "primary decision maker on this matter under the Regulations is the debt advisor, not the court." Whilst Parliament could have restrained a debtor's ability to apply for a new moratorium after the cancellation of a previous one, it did not do so.
  3. Debt advisors must make a fresh decision based on the evidence put before them by debtors for each application for a moratorium. It is not for the court to pre-judge those decisions. Whilst the Judge agreed that Ms Lees should not have been granted the previous moratorium (or, in all likelihood, the preceding moratoria), he considered that this was the fault of previous the debt advisors, and not the fault of Ms Lees, who may have thought she was properly exercising her rights under the Regulations as she understood them.
  4. The fact that the previous moratoriums should not have been granted did not mean that Ms Lees should be prevented from seeking a further one. Mr Kaye could not say that there was no possibility that she might now meet the necessary eligibility criteria and it is in any case for the debt advisor to make such a determination.


Therefore, despite agreeing that in the facts of the case Ms Lees had likely abused her rights under the Regulations and expressing sympathy for Mr Kaye's position throughout the judgment, the Judge held that he could not extend the injunction. He went as far as to indicate that the injunction should not have been granted in the first place.

He indicated that should Ms Lees enter into a further moratorium which Mr Kaye believes has been wrongfully granted, Mr Kaye may be entitled to challenge the debt advisor's decision by way of judicial review rather than via the regime set out in the Regulations. In these circumstances, the Administrative Court would be able to deal with the issue on an expedited basis and/or grant appropriate interim relief to allow Mr Kaye to proceed with the sale of Ms Lees property.

Impact of Kaye v Lees on debt respite regulations

Kaye v Lees is one of several cases heard in the County Court and High Court involving entries into debt respite moratoria by debtors who appear to be using the Regulations to avoid paying their debts. They do not appear to be using the 'breathing space' afforded by them to seek appropriate debt repayment advice.

This judgment proposes judicial review as an alternative method of redress to the lengthy process contained in the Regulations. Creditors should therefore follow the below process when seeking to appeal a moratorium:

  1. Under Regulation 17, the creditor's first step should be to request a review of the moratorium by the relevant debt advisor. Under Regulation 18, the debt advisor must conduct the review within 35 days, beginning on the day on which the moratorium began.
  2. Under Regulation 19, should the debt advisor refuse to cancel the moratorium, the creditor may apply to court to cancel it. The application should be made to the County Court unless there are ongoing, related proceedings in the High Court.
  3. The process described in points 1 and 2 above are likely to be lengthy (debt advisors have up to 35 days to consider a review and a court application is unlikely to be heard promptly given the backlog faced by many County Courts). Therefore a creditor may apply for judicial review of the debt advisor's decision not to cancel the moratorium, if the need for an urgent judicial decision can be shown by the creditor – for instance, because a sale of property is likely to fall through if the moratoria remains (wrongly) in place.


It is likely that creditors who are facing the challenge of enforcement in circumstances where a debtor is abusing the protections afforded by the Regulations will be frustrated by this judgment. The costs of mounting a judicial review are considerable and may prove too much for a creditor who has already inevitably spent time, money and effort reaching the enforcement stage of proceedings. 

Creditors can hope, however, that if debt advisors continue to fail to properly exercise their quasi-judicial functions, they will be subject to further judicial criticism which may, in turn, result in them taking a more critical view of the evidence placed before them before granting the moratoria. 

Please see Kaye v Lees [2023] EWHC 758 (KB) for the full Judgment.

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