In mortgage possession proceedings the defendant disputed the mortgage arrears and in particular the basis on which interest had been calculated. In December 1998 the bank claimed arrears of £82,032, whereas the defendant said that they were no more than £40,000. The agreement between the bank and the borrower was contained in four separate agreements which were not easy to reconcile.

 

As soon as a mortgage is executed, a mortgagee has a right to go into possession unless the mortgage expressly or impliedly provides otherwise. The mere existence of a subcharge does not, regardless of the construction of the relevant contractual documents divest a principal mortgagee of that right to possession or suspend that right during the currency of the subcharge. There is no reason why both a mortgagee and a submortgagee should not both have rights to possession

 

The bank lent money under an all moneys charge. After the borrowers had failed to make agreed payments, the bank made an arrangement whereby it would accept payments of £700 per week. However, nine weeks later, with no further correspondence, the bank wrote requiring the full balance of £259,000 within two days. The borrowers brought proceedings relying on promissory estoppel. The bank applied to strike out those proceedings on the ground that they were frivolous and vexatious.

 

In a mortgage possession claim where no procedural guarantees or indulgences could save a party from an inevitable conclusion on the merits that his case was truly hopeless, the court was not required by the Civil Procedure Rules to allow him to go back into the fray because there had been some failure of fairness along the way, nor did Article 6 ECHR require it do so.

 

The plaintiff defaulted on his mortgage with the defendant bank. The bank demanded repayment of the monies owed and wrote to the plaintiff at the property to inform him that it was taking steps to sell the property. However, he was not living there. The property was empty and in the process of being renovated. It was sold at auction on 26 November 1996 and the sale was completed. On 6 January 1997, the plaintiff issued an originating summons for the determination of the question whether the defendant as mortgagee was entitled by law to take possession without having an order of the court. The application was dismissed and the plaintiff appealed.

(See also: Horsham Properties Group Ltd v Clark (Horsham Properties Group Ltd v Clark), in which the High Court held that the power of receivers to exercise a sale without first obtaining a court order was found not to be a breach of the Human Rights Act 1998.

 

Before there was any statutory power to adjourn or postpone possession, a district registrar adjourned mortgage possession proceedings on terms that the borrower make weekly payments of 30 shillings (£1.50) towards arrears of £71. Russell J, allowing the building society’s appeal, held that:

 

 

Sterling claimed possession for failure to make payments on a secured loan. The original counterclaim contended that the loan agreement was an extortionate credit bargain. The Rahmans were refused permission to amend their pleadings to include a claim that there was an implied term that the company had a positive obligation to reduce the interest rate on the loan as the prevailing market rate fell.

 

Mr and Mrs Thakker borrowed £501,000 from Northern Rock. The sums were secured against their home by way of a charge. Mr and Mrs Thakker failed to keep up with their payments and accrued arrears of £53,000. Northern Rock issued a claim for possession of their home. The claim was defended on the basis that their counterclaim would set-off their arrears. The counterclaim alleged that they were negligently advanced sums under the mortgage in breach of provisions of the Mortgage Conduct of Business Rules. Northern Rock applied for the defence to be struck out. A judge did not strike out the defence but rather made a declaration that the counterclaim did not found a defence to Northern Rock’s claim for possession. Mr and Mrs Thakker appealed against that decision.

 

In all three cases the borrowers were in arrears. The Bank of Scotland had a power in the mortgage contract to consolidate the arrears with the outstanding balance. The effect of this was to spread the arrears over the remainder of the mortgage thereby increasing the outstanding balance and the contractual monthly instalments. In all three cases the Bank of Scotland exercised this power unilaterally. The Bank of Scotland, however, contended that the arrears were still outstanding as a separate debt and could be relied upon for the purposes of section 36.

 

The plaintiffs obtained a money judgment for £133,000.

 

After the issue of possession proceedings, the borrower paid the outstanding arrears and a district judge ordered that the claim should be adjourned generally with liberty to restore. The defendant again fell into arrears and a district judge made an order for possession. The defendant appealed, contending that on payment of the arrears the case should not have been adjourned generally.

 

The bank brought proceedings claiming possession, repayment of the debt and interest. The proceedings were not opposed and a possession order was made, although no money judgment was obtained. After the borrower moved out, the lender issued new proceedings for the recovery of the debt. An order was made. The borrower argued that the lender was prevented from raising the money claim again because it had been part of the previous proceedings.

 

County Courts Act 1984 s21(3) gives county courts outside London exclusive jurisdiction to hear mortgage possession cases.

 

After a preliminary ruling in a mortgage possession claim, the defence rested entirely on alleged procedural defects, namely:

After referring to CPR 3.10 (error of procedure does not invalidate any step taken in proceedings unless the court so orders) and Steele v Mooney [2005] EWCA Civ 96, Henry Carr J found that the alleged errors (to the extent they were errors) were errors of procedure. Although they should not be ignored, it would be wrong to apply a rigid framework which fettered the exercise of the court’s discretion. Whilst form N120 must be used according to PD 55A para 1.5, the claimant had provided all the relevant information required by N120. The defendant had not pleaded specific information which was missing from the Particulars. This defect was clearly not substantive but technical in nature. Its rectification would cause no injustice to the defendant. As the claimant had pleaded that ‘To the best of the claimant’s knowledge the following persons are in possession of the property … the defendant is in possession of the property, but this is not within the claimant’s personal knowledge,’ the claimant had complied with that requirement. Even if there had been an error, the substantive information had been provided and its rectification would cause no injustice. The requirement to attach the written agreement to the claim form was not a mandatory provision. There was no failure to comply with PD 16. Even if the provision was mandatory, the breach was subsequently cured by serving copies of the documents. The defendant was clearly aware of the contents of them. Even if there was an error, its rectification would cause no injustice. As form N120 made no provision for the pleading of further details as to the basis of the possession claim, there was no need to do so. Finally, the claimant had provided information as to the defendant’s circumstances. There was no failure in this regard. In his draft judgment, the judge expressed the view that the defence disclosed no reasonable grounds for defending the claim and had no reasonable prospect of success. He therefore proposed to grant an order for possession. However, in the light of further submissions, he indicated that he would consider the claim further at a later hearing.

 

The claimant brought proceedings claiming possession, sale and foreclosure. The defendants applied to strike out the action on the basis that the cause of action was subject to a six-year limitation period or on the ground that the action was an abuse of process.

 

The defendant bought a new house with a National House Builders’ Council (NHBC) guarantee. Structural problems appeared, which made it difficult to sell the house in 1990. In 1991 an order for possession was obtained, suspended on terms. In 1992 the lender’s application to vary the terms of the order on the ground that the arrears were increasing was refused. A further application by the lender in 1994 to vary the order for possession under Administration of Justice Act 1970 s36 was dismissed, as the judge considered that he had no jurisdiction to do so because the application was in the same terms as the 1992 application.

 

Administration of Justice Act 1973 s8 extends the possibility of relief under Administration of Justice Act 1970 s36 to mortgagors with endowment mortgages from banks as well as to instalment mortgages from building societies.

 

The bank obtained a possession order in respect of mortgaged property which comprised a main house and a cottage. In the first instance hearing, Hart J rejected the defendants’ contention that Administration of Justice Act 1970 s36 should be interpreted in such a way as to allow them to remain in the cottage. The evidence indicated that there would be insufficient funds realisable from the sale of the main property alone to repay the claimant. Second, an order under section 36 could not apply in respect of part only of the property. A literal reading of the statute indicated that section 36 conferred a power only in relation to the whole of a mortgaged property. The bank entered into possession of the main house but Mr and Mrs Alcorn continued to reside in the cottage. Mrs Alcorn sought permission to appeal, arguing that the Court of Appeal could consider (1) the interaction between Article 8 and Article 1 of Protocol No 1 ECHR and section 36; (2) the existence and extent of any obligation on a mortgagee to repair the mortgaged property in order to maximise its return from the property; and (3) whether section 36 could be invoked where the possession order had already been executed in part.

 

Mr and Mrs Ellis borrowed £60,000 under an endowment mortgage. By August 1990 there were arrears of £8,449. In possession proceedings a suspended possession order was made, but Mr and Mrs Ellis did not comply with it. By January 1995 the arrears were over £16,000 and the balance outstanding under the mortgage was over £76,000. In April 1995 Mrs Ellis applied to suspend a warrant for possession. In an affidavit she stated that she was in receipt of income support, the DSS would make interest payments, she could make an immediate payment of £5,000, but thereafter could only pay £10 per month towards the arrears. She offered, however, to sell the property in approximately three to five years when her children would have finished university education. The warrant was suspended and the building society appealed.

 

The Cheltenham and Gloucester Building Society challenged the common practice of district judges who exercise their discretion under the Administration of Justice Act 1970 s36 on the basis of information given to them by defendants, without necessarily hearing sworn evidence from them.

 

 

 

In May 1990, when arrears of instalments and interest stood at £7,216, the building society obtained a possession order suspended for 28 days. The borrower had said that she was hoping to refinance the mortgage and the district judge indicated that, if the arrears were not paid within 28 days, she was at liberty to apply for a further suspension. In December 1990 the terms of the suspension were varied, but not complied with, and the building society obtained a warrant. The warrant was twice suspended on terms, but when the borrower failed to comply, the building society applied to reissue the warrant and the borrower cross-applied for a further suspension. A district judge gave leave to reissue the warrant and refused any further suspension. By the time the appeal came on before the circuit judge, the arrears were in the region of £20,000. He dismissed the borrower’s appeal and she appealed to the Court of Appeal.

 

It was held that the court’s power under Administration of Justice Act 1970 s36 to adjourn mortgage possession proceedings, stay or suspend execution or postpone the date for delivery of possession ceases after a warrant has been executed. The principles set out by the Court of Appeal in Hammersmith and Fulham LBC v Hill (Hammersmith and Fulham LBC v Hill) apply equally to mortgage possession proceedings.

 

The Court of Appeal held that, in mortgage possession proceedings, where the power to suspend execution under Administration of Justice Act 1970 s36 cannot be exercised because it is unlikely that the borrower can repay arrears within a reasonable period, the county court still has a residual inherent jurisdiction to defer the date of giving up possession in order to enable the lender to sell the property. The court may give conduct of the sale of premises to the lender while postponing execution of a warrant for possession until completion of the sale, thus allowing the borrower to remain in occupation. There is no reason in principle for the court to accede to a lender’s insistence on immediate possession if:

 

In mortgage possession proceedings, there was evidence that the borrower could pay off arrears of £142 by instalments of £3 per week. Such instalments would clear the arrears well within the outstanding term of the mortgage.

 

The bank allowed the defendant an overdraft of up to £6,000 on his current account. It was secured by a charge on his home. The charge contained a covenant in the usual bankers’ form by which he agreed to pay, on written demand, the balance due in respect of ‘all moneys’ owing to the bank. The bank made a written demand for repayment. Mr Taylor did not comply and the bank brought possession proceedings. A circuit judge held that section 36 applied and postponed the operation of the possession order for a reasonable time to enable the defendant to pay the amount by which the overdraft limit had been exceeded.

 

After a possession order was made in mortgage possession proceedings, a warrant for possession was issued, but suspended on eight occasions. The warrant was executed on 28 May 1998. By an application dated 4 June, the defendant applied for reinstatement. A district judge ordered that ‘a warrant of restitution be granted on payment of £4,000’.

 

The borrower was loaned £207,546 under the terms of a mortgage. Although the borrower received housing benefit, there was a shortfall of over £1,000 per month. Arrears of £24,000 accrued and a possession order was made. Nothing was said in the county court about the possibility of sale. The borrower sought leave to appeal, contending that he had found a buyer willing to pay £310,000. However, no details were given.

 

The Court of Appeal considered an appeal against a decision to suspend a possession order to give the borrower time to sell premises and so clear mortgage arrears. The building society argued that any such suspension should only be for a short period.

 

A bankrupt has locus standi to make an application to the court for relief under Administration of Justice Acts 1970 and 1973.

 

Ms Miller was the freeholder of a night club with living accommodation above. In 1993 she granted a legal charge in favour of the bank to secure her obligations to the bank. The loan agreement provided for repayment of the principal sum after ten years from the proceeds of personal equity plans. Arrears accrued and a district judge made a possession order. On appeal HHJ Appleton held that it was an all moneys charge and that he had no power to postpone possession (Birmingham Citizens Permanent Building Society v Caunt (Birmingham Citizens Permanent Building Society v Caunt)).

 

Where the court exercises its power under Administration of Justice Act 1970 s36 to stay or suspend execution for such period as the court thinks reasonable, that period must be defined or rendered ascertainable.

 

Borrowers paid no mortgage instalments for over 15 months and when possession proceedings came to court there were arrears of £46,000. The lenders sought an immediate possession order, but the district judge adjourned for 56 days under Administration of Justice Act 1970 s36. The lenders appealed to an assistant recorder against the decision to adjourn. By the time that the appeal was heard, no further payments had been made and the arrears were over £64,000. At the hearing of the appeal the borrowers produced a banker’s draft for £10,000, indicated that they were seeking planning permission and stated that, after the grant of planning permission, they would be able to sell part of the garden for £40,000. The assistant recorder adjourned the appeal for four months. The lenders appealed against that decision to the Court of Appeal.

 

The Court of Appeal held that, on its true construction, Administration of Justice Act 1970 s36 gave the court a discretion to delay for a reasonable period making an order in all cases where a lender was seeking possession of a dwelling-house, whether or not the borrower was in arrears or otherwise in default. In exercising that discretion, the judge was entitled to take into account all relevant surrounding circumstances, including the fact that the debt might be inadequately secured. Buckley LJ stated:

 

The defendant covenanted to repay a loan of £27,500, which was secured by a mortgage on his home, within six months. However, the mortgage deed also provided that he was ‘permitted to defer payment of [the principal sum] in whole or part’ and provision was made for earlier payment in default. He fell into arrears with interest payments and the lender brought possession proceedings.

 

The plaintiff lender brought mortgage possession proceedings. The defendants counterclaimed for damages for the cost of putting right defects (including dry rot), which were apparently referred to in a surveyor’s report obtained by the lender but not disclosed to them before purchase. Mervyn Davies J held that:

In January 2015, the court granted an order for possession but suspended enforcement for a period of seven months to enable the security to be sold. The mortgage term had expired in 2012. In September 2015, the borrower applied to extend the period of suspension.

 

A possession order was made against mortgage borrowers with arrears of approximately £18,000. They were described as having a ‘very poor payment history.’ It was also said that they had overstretched themselves financially and that they did not have the ability to maintain regular payments on the mortgage. In September 2006, they unsuccessfully applied to suspend the warrant. The following day they were evicted. In December 2006, they filed an appellants’ notice seeking to appeal the dismissal of their application, for an order to extend time for filing the appellants’ notice, for a stay of enforcement and for an order that they be reinstated into the property. The stay was granted by the court on the papers. The lender applied for an order lifting the stay.

 

In 1988 the defendants drew down £140,000 from an overdraft facility provided by Allied Irish to finance a business. The facility was secured by a second charge on a property. By 1992 the balance of the defendants’ account was £155,068.29 overdrawn. Agreements were made for the payment of monthly instalments, but these were broken. The debt was assigned to the claimant who sought an order for possession of the property. At a hearing before a master, an order for possession was made but suspended, purportedly under Administration of Justice Act 1970 s36 and Administration of Justice Act 1973 s8. He held that the agreements came within s8 because payment of the principal sum secured could be made by instalments or could otherwise be deferred, but earlier payment was required in the event of default.

 

See Housing Law Casebook 5th edition, R2.28.

 

Mortgagees were granted a possession order. Later they obtained a warrant. On the morning of the proposed eviction the borrower applied to a district judge to suspend the warrant. That application was dismissed and the borrower was evicted. The borrower appealed to a circuit judge. The lender contended that, as the warrant had been executed, the court no longer had jurisdiction to suspend under Administration of Justice Act 1970 s36.

 

After the claimant mortgage lender had obtained a possession order, the defendant mortgagor applied to suspend a warrant. The arrears were £14,000. A deputy district judge was not satisfied that Mr Jayashankar would be likely to discharge the arrears within in a reasonable time and so dismissed the application. The warrant was executed later the same day. Mr Jayashankar appealed.

 

A district judge suspended a warrant for possession for three months on terms that the defendant pay £250 one month and thereafter £500 per month for two months, whereupon the case would be further considered. The defendant could command a high salary and stood a good prospect of obtaining fresh employment in the three-month period. The lender appealed on the basis that the court had no power to suspend the warrant on terms of payments less than the current instalments.

 

In mortgage possession proceedings based on arrears, the defendant stated that she was completing a course of studies and that her employment prospects would be better once she had obtained qualifications. She sought an adjournment. A district judge held that, at the time of the request for an adjournment, it was not likely that the arrears would be cleared within a reasonable period, but adjourned the case for six months, stating that it was likely that at the adjourned hearing the defendant would be able to pay off the arrears within a reasonable period. The plaintiff appealed, contending that the district judge had erred in law and that under Administration of Justice Act 1970 s36 the court did not have power to ‘wait and see’.

 

The claimant granted a loan to the defendants. The claimant registered a legal charge against the property. The claimant sent various documents to the defendants including a concessionary letter providing that, in the absence of default, the lenders would accept a reduced monthly sum instead of the contractual amount and also a loan agreement. The annual percentage rate (APR) on the loan was 29.78 per cent. The total of the loan was £4,840 repayable by 180 monthly instalments. The defendants later borrowed further sums of money from another finance company. The benefit of the second company’s legal charge was transferred to the claimant. The defendants defaulted and the claimant issued possession proceedings. The defendants contended that the agreement could not be enforced as it had not been properly executed in accordance with Consumer Credit Act 1974 Part V. They sought to reopen the agreement and the legal charge as extortionate credit agreements under ss137–140. The judge granted the possession order and the defendants appealed.

 

The plaintiffs were second mortgagees. A loan of £5,000 was granted to the defendants. It was a regulated agreement under the Consumer Credit Act 1974. Arrears accrued and possession proceedings were begun. A district judge made a possession order suspended on condition that the defendants paid the arrears within 28 days, a sum which the Court of Appeal found ‘was manifestly beyond the means of the defendants, who were living on supplementary benefit’. The plaintiffs appealed to the circuit judge and then to the Court of Appeal, which considered whether or not a time order should be made under section 129.

Mr McAdam and Ms Hartley borrowed £30,000 from NRAM PLC’s predecessor (Northern Rock) as an unsecured loan in addition to a larger loan secured as a mortgage over their home. At the time, the unsecured loan, as it was in excess of £25,000, was not protected by the Consumer Credit Act 1974. The unsecured loan agreement stated, however, that the loan was regulated by the Consumer Credit Act 1974 Mr McAdam and Ms Hartley argued successfully at first instance that the provisions of the Consumer Credit Act 1974 had been incorporated into the agreement and the Consumer Credit Act 1974 was to be treated as applying.

 

Mortgages granted to the defendants contained variable interest rates. Throughout the term of the mortgage the bank’s interest rate had significantly exceeded the Bank of England base rate and prevailing market rates. The defendants fell into arrears and the bank brought possession proceedings.

 

Sterling were the assignees of a legal charge on Mr and Mrs Rahman’s matrimonial home. The initial amount loaned was £5,000 to be repaid by monthly instalments of capital and interest at a rate of 32.1 per cent. Mr and Mrs Rahman defaulted and Sterling obtained a possession order. The order remained unexecuted. Eight years later Mr Rahman applied to set aside the order and the warrant for possession and for leave to file a defence and counterclaim alleging for the first time that the loan was an extortionate credit bargain under Consumer Credit Act 1974 s139(2).

 

The Court of Appeal considered three appeals relating to time orders which had been made in county courts. Dismissing one appeal by a lender and allowing two appeals by borrowers, the Court of Appeal stated that:

 

The bank issued High Court proceedings to enforce an overdraft agreement which was a regulated agreement. The borrower sought to have the proceedings transferred to the county court but the district judge of his own motion struck out the claim, referring to Consumer Credit Act 1974 s141(1), which provides that proceedings to enforce a regulated agreement should not be brought in any court other than a county court.

 

Mr Jenkins borrowed £2,258 from the plaintiffs. The loan was secured as a second mortgage. Monthly repayments were £52.56. The monthly interest rate was 1.9 per cent, the equivalent of an APR of 25.34 per cent. Some payments were missed and possession proceedings brought. Mr Jenkins applied for a time order under Consumer Credit Act 1974 s129. The registrar ordered that the monthly repayments should be reduced to £45 per month and the interest rate to 1.45 per cent per month. The lender appealed.

 

In mortgage possession proceedings, the borrower defended and counterclaimed, seeking under Consumer Credit Act 1974 ss137–140 to reopen the agreement as an extortionate credit bargain. A district judge made an order for possession and directed that the counterclaim be heard within six weeks. The defendant appealed.

On 5 November 2010, Mr Dickinson borrowed £630,000 from Acorn Finance. The loan was secured by way of a mortgage against his home. The term of the loan was six months after which time the full loan amount and interest fell due. Acorn Finance was not an authorised lender within the meaning of the Financial Services and Markets Act 2000. Mr Dickinson was unable to repay the loan and Acorn Finance obtained an order for possession. Mr Dickinson sought to set the possession order aside. He did not seek to argue that the loan was unenforceable because Acorn Finance was an unauthorised lender. His application was dismissed. Shortly afterwards Mr Dickinson issued proceedings contending that the loan was unenforceable. Acorn Finance argued that this constituted an abuse of process. The claim was dismissed and Mr Dickinson appealed to the Court of Appeal.

 

On 8 April 1992 a suspended possession order was made in mortgage possession proceedings. The defendant failed to comply with the terms and on 31 January 1996 the lenders applied for a warrant, which was executed on 12 March 1996. The defendant subsequently applied to set it aside on the ground that the request for the warrant failed to specify the amount remaining due under the judgment or order. HHJ Graham dismissed this application. The defendant appealed to the Court of Appeal, but subsequently attempted to withdraw his appeal. However, the appeal proceeded, without him being present or addressing the court.

 

The defendant in mortgage possession proceedings successfully applied to set aside judgment, then for possession to be suspended, and then on two occasions for the possession warrant to be suspended. On each occasion, he failed to make payments which he had promised. On a further application to suspend the warrant, the district judge dismissed his application and ordered that he make no further application to suspend in any circumstances.

 

Possession proceedings were brought against Mr and Mrs Massey, who were joint borrowers. Mr Massey defended, alleging that he had a claim for wrongful dismissal by an associated company of the lender. A district judge found that Mr Massey had no defence and the Court of Appeal, although not required to rule on whether his case was arguable, noted that Mr Massey’s counsel did not produce to the court any material on which it appeared that he would recover the outstanding amount. However, the district judge did find that Mrs Massey had an arguable defence on the ground that the mortgage should be set aside for undue influence. The claim against her was listed for trial, but a possession order was made against Mr Massey. By the time of the hearing of the appeal, no order had been made against Mrs Massey. Mr Massey appealed, arguing that the court had no power to make a possession order against one of two joint mortgagors.

In June 2006, Mr Munday and his mother, Mrs Munday, borrowed £1.3m on security of their farm house and a further £1m on security of some barns which had been converted into holiday cottages. Both charges were ‘all monies’ charges, ie the debt was payable on demand. They provided that each property was charged with all monies now or at any future time due to the borrower under each and every loan agreement made between the lender and borrower, now or at any time. By September 2007, the borrowers had fallen into arrears and the lender obtained two possession orders and two money judgments in respect of the farm house and the holiday cottages. In 2008, however, two warrants of possession were suspended on condition that the arrears of both loans be repaid by monthly instalments. To reduce the arrears, the borrowers sold some of the land adjoining the farm house. As a result, the borrower withdrew its warrant in respect of the farm house. In 2009, the lenders obtained possession of the cottages after the borrowers failed to keep to the terms of the suspended warrant. For various reasons the borrowers did not sell the cottages and so the money judgment in respect of the cottages remained outstanding. By 2011, the amount outstanding under the farm house loan had fallen to around £100,000. In contrast, over a £1m remained outstanding in respect of the loan secured against the holiday cottages. In September 2011, the lender applied for charging order over the farm house in order to secure the money judgment for the loan originally secured against the cottages. The application for a charging order was later abandoned. Instead, the borrowers contended that the all monies charge secured over the farm house was security for both loans and they applied for a warrant of possession in respect of the farm house. The borrowers applied to set aside the warrant for possession on the basis that they had never been advised that the charge over the farm house was security for both loans. Deputy District judge Hall refused the application, but his judgment was set aside by HHJ Cotter on the basis that the lenders were estopped from contending that the all monies charge over the farmhouse was security for the holiday cottages loan. The lenders appealed to the Court of Appeal.

 

Ms Jameer borrowed £202,000 from Paratus. The loan was secured against her home. Ms Jameer fell into arrears and Paratus issued a claim for possession against her. The court made a suspended possession order. Her arrears continued to rise and Paratus sought to execute the order. Ms Jameer applied to suspend the warrant. In support of her application she contended that her monthly income from her tenants was £2,555 per month and had the prospect realising a further £1,000 a month from a partnership in a firm of solicitors. The judge found that her income was insufficient to pay the mortgage and a sum towards the arrears. Ms Jameer appealed.

 

Mr Zinda borrowed a sum of money from the Bank of Soctland. It was secured against his property by way of a mortgage. Mr Zinda defaulted on payments and fell into arrear. The Bank issued a claim for possession. A court made a suspended possession order requiring that Mr Zinda pay a monthly sum of £96.02 towards the arrears in addition to the contractual monthly instalments. Several years after the order was made the Bank agreed to consolidate the arrears to the outstanding balance. This resulted in a new higher CMI. Mr Zinda fell into arrears again and the Bank applied for a warrant. Mr Zinda applied to suspend the warrant. His application was not supported by a promise to pay a sum towards the arrears. His application was dismissed and Mr Zinda appealed against that decision on the basis that the original possession order had ceased to be enforceable once the arrears had been consolidated.

 

Bradford and Bingley were mortgagees under a legal mortgage granted to Mr Rashid to secure repayment of a sum of £50,300 advanced towards its purchase. Payments fell into arrears. The last payment was made in January 1991. In October 1991, after Bradford and Bingley had obtained a possession order, the property was sold for £47,000 leaving a shortfall of £15,583. Bradford and Bingley then had difficulty in tracing Mr Rashid. In 2001 they asked him to make an offer of repayment. In September 2001, an advice centre wrote on his behalf stating ‘… at present, he is not in a position to repay the outstanding balance, owed to you.’ In October 2001 they wrote, ‘He is willing to pay approximately £500 towards the outstanding amount as a final settlement.’ None of the correspondence was marked ‘without prejudice’. In June 2003, Bradford and Bingley began county court proceedings claiming £15,583 and statutory interest. The sole defence was that the limitation period had expired (Limitation Act 1980 s20(1) and (5)). Bradford and Bingley relied on the letters written in September and October 2001 as acknowledgments of the debt under section 29(5).

 

Bradford and Bingley issued proceedings for the recovery of a shortfall on the sale of the security. On appeal, the defendant argued that evidence had come to light which showed that the lender had sold the property to a connected company and that the claimant had failed to disclose this to the trial judge.

 

Mr and Mrs Bartlett borrowed £89,750 from Bristol and West to assist in the purchase of their home. It was secured by a mortgage. The mortgage deed provided that the debt would become repayable immediately if arrears exceeded three monthly payments. Mr and Mrs Bartlett defaulted on repayments in 1993. The lenders obtained possession in March 1994 and sold the property in July 1994 for £63,000. There was a mortgage shortfall of £64,961. Bristol and West began court proceedings to recover that sum in May 2001. The defendants argued that the claim was statute barred by the Limitation Act 1980. Section 5 provides that an action brought on a simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued. Section 8 provides that the limitation period for an action on a specialty is 12 years. Section 20 provides that the limitation period for an action to recover any principal sum of money secured by a mortgage is 12 years, but six years for the recovery of interest on any sum secured by a mortgage. HHJ Havelock-Allan QC held that the claim fell within section 8. The defendants appealed.

 

A district judge in possession proceedings based on mortgage arrears made a suspended possession order. The building society also sought a money judgment but the judge made no order in respect of the money claim. The building society appealed.

 

In mortgage possession proceedings, a district judge made a suspended possession order and adjourned the money claim generally with liberty to restore. The building society successfully appealed to the Court of Appeal. Mortgagees are entitled as of right to money judgments for whatever sum of money is due and payable under the terms of the mortgage (see Cheltenham and Gloucester Building Society v Grattidge (Cheltenham and Gloucester Building Society v Grattidge). The Court of Appeal stated, however, that there may be special circumstances which would justify a departure from the practice set out in Grattidge, eg, where there is evidence that a sale will take place within a reasonable time. In the usual course of events, if a judge thinks it right to suspend a possession order, then the proper exercise of the discretion given by County Courts Act 1984 s71(2) would require suspension of the money judgment on the same terms. The court also followed National and Provincial Building Society v Lloyd (National and Provincial Building Society v Lloyd) in holding that there is no rule of law that mortgage possession claims can be adjourned or orders suspended only if a sale will take place within a short period of time.

 

The claimant company obtained a possession order after the defendant failed to meet his mortgage repayments. It obtained three valuations of the property and placed it on the market for three months. A single offer was made but that sale fell through. The claimant then sold the property to an associated company for £68,000 and sought the shortfall from the defendant. The defendant counterclaimed, alleging that the property had been sold at an undervalue. A jointly appointed expert valued the property at a figure higher than that which the claimant had obtained. The judge found that the claimant had not discharged its duty to obtain the best price reasonably obtainable and dismissed its claim. The claimant appealed.

 

The Court of Appeal held that a borrowers’ counterclaim against the lender was available as a set-off against the money claim. Applying dicta in Ashley Guarantee plc v Zacaria [1993] 1 WLR 62, CA, although a counterclaim is no defence to a possession claim, it can be a defence to a money claim. If the borrowers applied under Administration of Justice Act 1970 s36, the court could take into account that there might be a valid counterclaim which would be sufficient to satisfy the money judgment. In those circumstances, the court could use its s36 discretion to deny or stay the possession order. The borrowers’ appeal was allowed and directions were given for the defence to be argued in the county court.

 

Scottish Equitable lent £15,000, secured by a second legal charge. The mortgage deed contained an express covenant to pay the interest, but not the principal. Arrears accrued. The first mortgagee obtained possession in 1991 and sold the property, but Scottish Equitable did not receive any of the proceeds. In March 1999 it began proceedings claiming the principal and interest owing.

 

The Barretts remortgaged their house for £189,000 but subsequently fell into arrears. By the time of the court proceedings, there was negative equity with an outstanding balance of over £300,000. The mortgagors found a purchaser who would pay £252,000, more than an independent valuation, but the building society refused to allow the sale to proceed. In court, the mortgagors argued that the building society would not obtain such a high price under a forced sale.

 

The duty of a mortgagee to obtain a proper price after recovering possession of a mortgaged property does not arise under the deed of charge, but in equity. A claim for damages for breach of duty in equity corresponds with the remedy for breach of duty of care in tort and accordingly the limitation period is the six-year period in Limitation Act 1980 s2.

 

The defendants obtained a mortgage of £160,000 but fell into arrears. In October 1993 they agreed to pay the plaintiff £160,000 by direct debit of £1,000 per month in settlement of all liability for principal and interest. That agreement was never reduced to writing. The plaintiffs brought proceedings for all outstanding sums, claiming that the agreement was void because it failed to comply with the requirements of Law of Property (Miscellaneous Provisions) Act 1989 s2.

 

In an action by a lender for the shortfall on sale of the security, the court held that the borrower was not entitled to claim a credit for the amount which the lender had received from an insurance company under a mortgage indemnity policy. The lender was entitled to recoup the full sum from the borrower. The indemnity insurance policy was not for the benefit of the borrower but for the benefit of the lender.

 

The claimant building society was the mortgagee of a house owned by the defendants. The mortgage deed expressly provided for repayment of the advance by monthly instalments, but did not include any covenant that the borrowers would repay the balance of the advance on a specified date or on a specified event (eg, default in payment of the instalments). The defendants fell into arrears. The claimant obtained possession and sold the house on 14 November 1990. On 12 November 2002 it began proceedings to recover the shortfall. The defendants claimed that the proceedings were statute barred on the basis that time started to run on the date of the last repayment of a monthly instalment (31 July 1989). The building society claimed that time started to run when the amount of the shortfall was actually ascertained, ie, on sale of the house (14 November 1990).

 

On 25 July 1991 a possession order was made as a result of mortgage arrears. Four warrants for possession were issued and on each occasion agreement was reached, with the result that the warrant was not enforced. A fifth warrant was due to be executed on 12 June 1995. The borrowers’ valuer estimated that the property was worth £65,000. On 9 June 1995 the borrowers applied to suspend the warrant so that they could apply in the High Court for an order for sale under Law of Property Act 1925 s91(2). By this time the mortgage debt amounted to £83,000. A district judge dismissed their application, but a circuit judge allowed their appeal. The building society appealed to the Court of Appeal, contending that the district judge had no jurisdiction to suspend in these circumstances.

 

 

Mr Palk obtained an advance of £300,000 secured on the matrimonial home. He made three monthly payments, but then his business started to founder and he was unable to make any further payments. He negotiated to sell the house and received an offer of £283,000. By this time the balance outstanding under the mortgage was £358,587. The finance company obtained a possession order which was suspended to enable Mrs Palk to apply for an order, under Law of Property Act 1925 s91(2) for sale of the property.

 

Mr Clark and Ms Beech owned property subject to a mortgage granted by GMAC RFC Limited (GMAC). They fell into arrears. In 2006 GMAC appointed receivers over the property, purporting to do so pursuant to a power to that effect contained both in Law of Property Act 1925 s101(1)(iii) and in the mortgage conditions. The receivers sold the property at auction to a company which in turn transferred their interest to Horsham Properties Group Ltd (Horsham). Horsham then issued these proceedings for possession of the Property, claiming that Mr Clark and Ms Beech were trespassing. Counsel for the defendants conceded that, subject to Human Rights Act 1998, the relationship between section 101 and Administration of Justice Act 1970 s36 enabled a mortgagee to sell without seeking a court order, and enabled a purchaser from the mortgagee to obtain possession without thereby triggering the court’s powers under section 36. However, she argued that that traditional approach was incompatible with Article 1 of Protocol No 1.

 

The plaintiff owned a property in a run-down area in Mitcham. Her partner left her with two young children. She was in receipt of income support. Although there was no suggestion that she had been financially irresponsible, mortgage arrears accrued. By the date of the hearing there was a negative equity of approximately £12,000. She sought an order for sale at a proper value (not an undervalue) to a housing association because she wanted to move to Salisbury for strong social reasons. Her affidavit gave graphic accounts of the neighbourhood in Mitcham where she lived, including problem families, drug dealers, violence nearby and condoms and spirit bottles being thrown into her back yard. She believed that schooling would be better in Salisbury and that she stood some chance of gaining employment there. The bank, however, took the view that if she stayed in Mitcham, with state benefits meeting her mortgage payments, the arrears would remain fairly constant and, in time, the increase in house prices would take the property out of negative equity.

The sellers were the registered owners of residential properties, which they occupied as their homes. They agreed to sell their homes to a nominee purchaser, North East Property Buyers (‘NEPB’). In most cases the price paid by the purchaser was the market value, but in every case the seller agreed to pay back NEPB a significant part of the proceeds from the sale on the basis of a promise that they could continue to occupy their homes under assured shorthold tenancies. The purchases were all funded by mortgages supplied by the mortgagees. The contracts of sale, the transfers of the properties and the mortgages were all completed on the same day. The contracts of sale stated incorrectly that the respective properties were being sold with vacant possession and were not subject to any leases or tenancies. NEPB granted assured shorthold tenancies before the mortgages were registered. Subsequently, each purchaser disappeared and defaulted on the mortgage resulting in the mortgagees seeking possession from the sellers. The sellers argued that they had an overriding interest, which bound the mortgagee, because they had an equitable interest and were in actual occupation of their homes which existed before the charges were registered. The defences, and subsequent appeal to the Court of Appeal, failed.

 

Mr Street mortgaged a property to the Nationwide Building Society. Then in 1992 he granted a tenancy to the second defendants. In 1996, Mr Street entered into a second mortgage to the plaintiffs’ predecessor in title. It was a term of the second mortgage that Mr Street was prohibited from granting any tenancy of the property without the plaintiffs’ prior consent. Later he fell into arrears on both mortgages. Possession proceedings were brought by the plaintiffs against him. District Judge Hughes decided that he had no jurisdiction to make an order for possession where there was a superior mortgagee in possession. The plaintiffs appealed on the grounds that they were not bound by the tenancy entered into by Nationwide with the tenants, the second defendants, since Law of Property Act 1925 section 99(2) bound only prior incumbrancers and not subsequent mortgagees.

 

After taking out a mortgage, a flat owner granted a nine-month fixed-term protected tenancy, in breach of the terms of the mortgage and without obtaining the building society’s consent. When the building society brought possession proceedings, the tenants contended that, since they had become statutory tenants, irrespective of whether proceedings were brought by the landlord or the building society, a possession order could only be made in accordance with Rent Act 1977.

 

A covenant in a mortgage deed that a borrower would not, without the prior written consent of the mortgagee, lease the whole or any part of the property is not incompatible with Article 48 of the European Community Treaty (see now the Consolidated Treaty Establishing the European Community Article 49, which guarantees the freedom of movement of workers).

 

In 1985 and 1987 the first defendant bought two adjacent properties which were already let to tenants and contained many bedsits and small flats. Each of the properties was subject to a mortgage in favour of the plaintiffs, containing the standard clause precluding the granting of tenancies without the written consent of the bank. No consent was ever sought or given. After the issue of possession proceedings on the first defendant’s default, ten of the occupiers who had taken tenancies after the mortgages were joined as defendants and sought leave to defend. Evidence was available that the bank knew at the time of the mortgage advances that the building was to continue to be used for letting and the generation of rental income from a flow of different occupiers.

 

Mrs Caine bought a property with the aid of a mortgage from the National Westminster Bank. It was a term of the mortgage not to grant a tenancy of the property without the prior written consent of the bank. Despite this, she granted the plaintiff an assured tenancy of a flat in the building. Later Mrs Caine fell into arrears with the mortgage repayments, handed over the keys and surrendered the property to the bank. Receivers were appointed who collected rent and paid it to the bank. The property was offered for sale by the bank. It was bought by the defendants who disconnected the electricity and water supplies. The plaintiff then found that his flat was occupied by the defendant’s builders and that his furniture and possessions had been removed. He successfully claimed damages under Housing Act 1988 ss27 and 28.

 

In 2008, Paratus AMC Ltd lent £425,000 to the purchaser of a property. The loan was secured by a mortgage. In 2009, someone purporting to be the purchaser’s agent granted a five-year tenancy to Ms Fosuhene. The borrower did not make the payments required under the terms of the mortgage, but Ms Fosuhene did make some payments to Paratus by a combination of cash and electronic bank transfers. Paratus issued possession proceedings and Ms Fosuhene contended that her tenancy was binding on Paratus by virtue of the payments she had made. A master granted a possession order. Ms Fosuhene appealed.

 

The Court of Appeal held that a lease granted after a property had been mortgaged and in breach of a covenant in the mortgage not to lease or part with possession without consent was void unless the mortgagee waived the illegality.

 

Mr Davies let premises in breach of the terms of his mortgage and without the consent of the building society. Subsequently, the building society found that the charge executed was defective and arranged for him to execute a second mortgage. The tenants argued that there was a moment in time between the discharge of the first mortgage and the grant of the second mortgage during which they were in lawful occupation against the building society.

 

The building society made it a requirement of a mortgage advance that tenants of the proposed borrower who were already living in the property should sign written consents to their rights of occupation being subordinated to the rights and powers of the lender. The borrower subsequently defaulted and did not defend possession proceedings. However, the tenants defended, arguing that their tenancy was binding on the building society.

 

See Housing Law Casebook 4th edition, R5.4.

The claimant advanced money to Utocroft Ltd for the purchase of commercial premises that in part consisted of 62 student rooms and flats. The legal charge contained a standard clause that the borrower would not, without prior written consent from the claimant, exercise the power of leasing conferred by Law of Property Act 1925 s99. Following correspondence between the claimant and the company, an endorsement ‘OK’ was scribbled by a representative of the claimant on a letter from the company requesting permission to the grant of a lease to Utocroft 2 Ltd. A seven-year lease was then granted to Utocroft 2 Ltd by Utocroft Ltd. At the trial of the lender’s possession claim, it was agreed by the parties that the rent under the lease was below normal commercial rates for properties such as the security and that, accordingly, the grant of the lease constituted an impairment on the property’s proper value on the open market. The lender denied that the ‘OK’ endorsement constituted written consent to the lease. The defendant argued that the lender was bound by the lease.

 

See Housing Law Casebook 4th edition, R5.11.

 

See Housing Law Casebook 5th edition, R5.11.

 

A possession warrant was suspended to enable a tenant of the borrower to pursue a claim to redeem the mortgage herself (Law of Property Act 1925 s91(2)).