mortgagee's right to repossess :fire: (Cheltenham an Gloucester…
mortgagee's right to repossess :fire:
normally happens before sale with vacant possession
possession is sought almost invariably as a preliminary to realisation of the security through a sale with vacant possession
Four Maids Ltd v. Dudley Marshall Ltd. 
'... the right of the mortgagee to possession in the absense of some contract has nothing to do with default on the part of the mortgagor. the mortgagee may go into possession before the ink is dry on the mortgage unless there is something in the mortgage, express or by implication, whereby he has contracted out of that right' -
hence, there is no need for the mortgagor to have fallen into arrears
Birmingham Citizens Permanent Building Society v. Caunt 
- the court has an inherent discretion to allow a stay of the order for a short time in order to
"afford the mortgagor a limited opportunity to find a means to pay off the mortgagee or otherwise satisfy him"
assumed that no responsible mortgagee would ever assume possession without a court order except where the mortgaged property had already been vacated by the mortgagor and, correspondingly, that repossession without a court order would never be enforced while a mortgagor and his family were still living in the premises
this assumption tested in
Ropaigealach v. Barclays Bank plc 
- H and W charged home to their bank and fell into financial difficulties. Bank notified them at their home that their house would be sold at auction 3 weeks later, H and W temporarily absent so did not receive the notification. Court of Appeal held that the bank was entitled to take possession of the house without first obtaining a court order for possession.
at  commented,
"many mortgagors would be surprised to discover that a bank which had lent them money to buy a property for them to live in could take possession of it the next day"
CA contemplated that, on default by a mortgagor, a mortgagee may be able to exercise power of sale without taking possession at all (sale serving to extinguish equity of redemption and effectively leaving purchaser to evict mortgagor as a trespasser
Gray and Gray
argue that if such an outcome truly represents the law of mortgage, it is highly likely that Parliament will have to legislate more forthrightly to protect the interests of residential mortgagors.
in 2009, the
Ministry of Justice
issued a consultation paper
Mortgages: Power of Sale and Residential Property
proposing that, in most cases, the mortgagee of residential premises should not be entitled to exercise a power of sale except by consent of the mortgagor or following a court order approving a sale
is afforded to the mortgagor
courts able to grant relief to residential mortgagors in a similar way in which relief is granted in landlord:tenant relationship
ADMINISTRATION OF JUSTICE ACT 1970 s. 36
confers on the court a far reaching power, in certain circumstances to
"stop the mortgagee from taking possession" - Clarke LJ in Ropaigealach
in recent years, particularly during high interest rates of 1990s, this statutory discretion began to assume pivotal importance in relieving the financial crisis engulfing thousands of mortgagors
the court has no discretion to adjourn proceeding indefinitely but only for such a period as is reasonable :
Royal Trust Co of Canada v Markham 
ADMINISTRATION OF JUSTICE ACT 1970 s. 8
these powers may be exercised if it appears to the court that the mortgagor is likely to be able to pay any sums due under the mortgage or to remedy a default consisting of any breach of any other obligation arising under or by virtue of the mortgage within a reasonable period of time
sums due : s.8(1) AJA
clarifies that the court could only treat arrears of instalments or interest as 'sums due'. The court may exercise its jurisdiction under the section if it appears that the borrower is likely to be able within a reasonable period of time to bring their payments up to date by paying off all arrears
reasonable time : s.8(2) AJA
: prior to
Cheltenham an Gloucester Building Society v. Norgan
this was interpreted in practice to be 2 years
Cheltenham an Gloucester Building Society v. Norgan 
created a strong presumption for the court that the starting point (though not an automatic right) is the remainder of the mortgage - court will exercise discretion on the facts
Mrs Norgan had experienced constant difficulty in meeting mortgage payments and on several occasions, actions for possession had been brought and orders postponed under the exercise of statutory discretion
finally, an action for repossession was sought and granted
Norgan appealed and CA adopted new policy: would it be possible for the mortgagor to maintain payment-off of the arrears by instalments over that period
to obtain relief, the mortgagor should present a detailed financial plan which, if implemented, would result in the loan itself, including the arrears, being paid off by the term date of the mortgage
Evans LJ summarised considerations that are likely to be relevant when a 'reasonable period' has to be established for the purposes of s.36 AJA
a. how much can the borrower reasonably afford to pay, both now and in the future?
b. if the borrower has temporary difficulty in meeting their obligations, how long is the difficulty likely to last?
c. what was the reason for the arrears which have accumulated?
d. how much remains of the original term?
e. what are relevant contractual terms, and what type of mortgage is it, i.e. when is the principal due to be repaid
f. is it a case where the Court should exercise its power to disregard accelerated payment provisions (s.8 AJA)
g. is it reasonable to expect the lender, in the circumstances, to recoup the arrears of interest
i. over the whole of the original terms; or
ii. within a shorter period, or
iii. within a longer period, i.e. by extending the repayment period? is it reasonable to expect the lender to capitalise the interest, or not?
h. are there any reasons affecting the security which should influence the length of the period for payment?
the period of time must be fixed and the date when the reasonable period ends must be specified
Hastings and Thanet Building Society v Goddard
- the mortgagee is under no obligation to notify the spouse or civil partner of the mortgagor's default - Mrs G found out about her husband's arrears only when it was far too late for her to do anything about them.
Town and Country Building Society v. Julien
regard should not be had, at some time in the future, of securing highly paid employment
more recent evidence indicates, however, that courts today tend to suspend possession orders for rather shorter periods than envisaged by Norgan
HUMAN RIGHTS CLAIM
there is a potential claim for the mortgagor who faces repossession from a mortgagor to claim their right to peaceful enjoyment of their property under
Article 1 Protocol 1 Human Rights Act
as well as
Article 8 HRA
- a right to respect for family life
Wood v. UK 
an applicant challenged a repossession order, the courts commented that the mortgagee's claim to possession was necessary for the protection of the rights and freedoms of others, namely the mortgagee
Horsham Properties Group v. Clark 
The court was asked whether section 101 of the 1925 Act infringes the Convention rights of residential mortgagors by allowing mortgagees to overreach the mortgagor by selling the property out of court, without first obtaining a court order either for possession or sale
the loss of equity of redemption on sale by transfer of property. section 101 was not infringing since it serves to implement rather than override the private bargain between mortgagor and mortgagee. Any deprivation of possession constituted by the exercise by a mortgagee of its powers under section 101 of the Law of Property Act after a relevant default by the mortgagor is justified in the public interest, and requires no case-by-case exercise of a proportionality discretion by the court
Nield and Hopkins, 'Human Rights and Mortgage Repossession: Beyond Property Law Using Article 8' (2013)
while the home is the subject of a canvas of regulation in which the rights-based approach of property law is sometimes displaced, it nevertheless remains the case that critical issues relating to the home fall to be determined through the property paradigm of rights and priorities
in this property rights-based approach, occupiers without such rights are frequently invisible. By contrast, the focus on protection under Article 8 is the individual's home, which is not defined by or limited to proprietary interests in the home but looks at sufficient and continuing links that a person develops with the accommodation in which they live.