Mortgage – Possession – Tenancy – Respondent induced by fraud to advance mortgage loan to finance purchase of residential property – Appellant entering into tenancy agreement and moving into the property – Respondent obtaining possession order – Whether entitled to possession on grounds that tenancy a breach of mortgage terms and consequently not binding on respondent – Whether appellant having arguable case that respondent consenting to treat her as its tenant – Appeal dismissed
In early 2008, the respondent lender advanced a mortgage loan of £425,000 to finance the purchase of a residential property. A mortgage deed was executed and a legal charge registered against the property. The mortgage contained the usual terms excluding the mortgagor’s statutory power to let and prohibiting the grant of a lease of the property without the respondent’s consent. Shortly thereafter, the direct debit mandate for repayments was cancelled and arrears began to build up. The person in whose name the mortgage had been taken out informed the respondent that the mortgage had nothing to do with him and that his identity had been stolen for the purpose by a third party from whom he had once rented a property. That third party was eventually convicted of mortgage fraud.
Meanwhile, in August 2009 the appellant entered into a residential tenancy agreement in respect of the property with a party who purported to act for undisclosed landlords. The agreement was for a term of five years at a rent of £1,000 per month. The appellant made her rent payments into the respondent’s account and, in late 2009, reached an arrangement with it under which she increased those payments to £1,110.
In December 2009, an agent of the respondent visited the property and was informed that a family was renting the property and living there. In August 2010, the respondent wrote to the “tenants or occupiers” of the property asserting that it was not bound by any tenancy. In July 2011, it obtained an order for the sale of the property; that order was stayed pending the outcome of a claim for possession against the appellant.
The appellant contended that the respondent was not entitled to possession, notwithstanding that her tenancy was a breach of the mortgage terms, since the respondent must have known that she was making her payments as the tenant and should accordingly be taken to have consented to the tenancy. The appellant asserted that it had thought the payments were being made on behalf of the borrower and had been unaware that they were made by the occupier of the property. A possession order was granted by a deputy master and upheld by a deputy judge on appeal. The appellant appealed.
Held: The appeal was dismissed.
The tenancy agreement that the appellant had entered into did not, on its face, bind the respondent because it was not a party to that agreement, the agreement had been entered into after the respondent’s charge was registered and was made in breach of the terms of the mortgage, which prevented the grant of a tenancy to a third party without the respondent’s consent. The appellant had no arguable case that the respondent was bound by the tenancy on the ground that it had consented to treat her as its tenant. There was nothing to connect the payments that the respondent was receiving with the person in possession of the property. The appellant had adduced no evidence from which it could be inferred that the respondent knew the payments were coming from the occupier. When the money was being paid into its account, it could have had no knowledge of who was paying. Although it could have instigated a range of enquiries which might have uncovered more information, there was no reason why it should have done so. There was no evidence that the appellant had identified herself as the occupier when reaching the arrangement with the respondent to increase the payments. A discussion or agreement about the levels of payment of mortgage and arrears would be significant only if the appellant had identified herself as a tenant, as opposed to someone speaking on behalf of the mortgagor. In those circumstances, there was no evidence to support the appellant’s defence to the possession claim. An essential element of her defence was entirely missing: Parker v Braithwaite [1952] All ER 837; (1952) 160 EG 413, Stroud Building Society v Delamont [1960] 1 WLR 431; (1960) 175 EG 317 and Mann v Nijar (1998) 32 HLR 223; [1998] EGCS 188 applied.
The appellant appeared in person; Sarah Lawrenson (instructed by Optima Legal, of Bradford) appeared for the respondent.
Sally Dobson, barrister
Mortgage – Possession – Tenancy – Respondent induced by fraud to advance mortgage loan to finance purchase of residential property – Appellant entering into tenancy agreement and moving into the property – Respondent obtaining possession order – Whether entitled to possession on grounds that tenancy a breach of mortgage terms and consequently not binding on respondent – Whether appellant having arguable case that respondent consenting to treat her as its tenant – Appeal dismissed In early 2008, the respondent lender advanced a mortgage loan of £425,000 to finance the purchase of a residential property. A mortgage deed was executed and a legal charge registered against the property. The mortgage contained the usual terms excluding the mortgagor’s statutory power to let and prohibiting the grant of a lease of the property without the respondent’s consent. Shortly thereafter, the direct debit mandate for repayments was cancelled and arrears began to build up. The person in whose name the mortgage had been taken out informed the respondent that the mortgage had nothing to do with him and that his identity had been stolen for the purpose by a third party from whom he had once rented a property. That third party was eventually convicted of mortgage fraud.Meanwhile, in August 2009 the appellant entered into a residential tenancy agreement in respect of the property with a party who purported to act for undisclosed landlords. The agreement was for a term of five years at a rent of £1,000 per month. The appellant made her rent payments into the respondent’s account and, in late 2009, reached an arrangement with it under which she increased those payments to £1,110.In December 2009, an agent of the respondent visited the property and was informed that a family was renting the property and living there. In August 2010, the respondent wrote to the “tenants or occupiers” of the property asserting that it was not bound by any tenancy. In July 2011, it obtained an order for the sale of the property; that order was stayed pending the outcome of a claim for possession against the appellant.The appellant contended that the respondent was not entitled to possession, notwithstanding that her tenancy was a breach of the mortgage terms, since the respondent must have known that she was making her payments as the tenant and should accordingly be taken to have consented to the tenancy. The appellant asserted that it had thought the payments were being made on behalf of the borrower and had been unaware that they were made by the occupier of the property. A possession order was granted by a deputy master and upheld by a deputy judge on appeal. The appellant appealed.Held: The appeal was dismissed. The tenancy agreement that the appellant had entered into did not, on its face, bind the respondent because it was not a party to that agreement, the agreement had been entered into after the respondent’s charge was registered and was made in breach of the terms of the mortgage, which prevented the grant of a tenancy to a third party without the respondent’s consent. The appellant had no arguable case that the respondent was bound by the tenancy on the ground that it had consented to treat her as its tenant. There was nothing to connect the payments that the respondent was receiving with the person in possession of the property. The appellant had adduced no evidence from which it could be inferred that the respondent knew the payments were coming from the occupier. When the money was being paid into its account, it could have had no knowledge of who was paying. Although it could have instigated a range of enquiries which might have uncovered more information, there was no reason why it should have done so. There was no evidence that the appellant had identified herself as the occupier when reaching the arrangement with the respondent to increase the payments. A discussion or agreement about the levels of payment of mortgage and arrears would be significant only if the appellant had identified herself as a tenant, as opposed to someone speaking on behalf of the mortgagor. In those circumstances, there was no evidence to support the appellant’s defence to the possession claim. An essential element of her defence was entirely missing: Parker v Braithwaite [1952] All ER 837; (1952) 160 EG 413, Stroud Building Society v Delamont [1960] 1 WLR 431; (1960) 175 EG 317 and Mann v Nijar (1998) 32 HLR 223; [1998] EGCS 188 applied.The appellant appeared in person; Sarah Lawrenson (instructed by Optima Legal, of Bradford) appeared for the respondent.Sally Dobson, barrister