Mortgage – Possession – Involuntary bailee – Defendant mortgagee obtaining possession order in respect of claimant’s property – Claimant seeking to set aside mortgage and damages – Whether claimant entitled to set aside mortgage – Whether defendant liable in damages for disposal of chattels – Claim dismissed
In 2006, the claimant mortgagor executed a mortgage deed over her property known as Milkup Bank Farm, Willington, Crook, County Durham. The mortgage was a re-mortgage of an existing debt of approximately £500,000 secured on the property in favour of a building society. The claimant’s signature on the mortgage was purportedly witnessed by a third party, although the claimant said that the witness was not present when she signed the mortgage. Shortly after the mortgage was executed, it was assigned to the defendant.
The claimant fell into arrears and possession proceedings were issued by the defendant in 2007. It was six years before a possession order was granted in the defendant’s favour. Immediately following the hearing, the claimant issued her own injunction application seeking an order that the defendant should not remove/destroy or otherwise any of the chattels what so ever lying upon the property.
This was the trial of a preliminary issue of liability, namely, whether the claimant as mortgagor had a claim for damages against the defendant as mortgagee in respect of chattels which the claimant had left behind at the property following the execution by the defendant of the warrant for possession. As mortgagee in possession, the defendant became an involuntary bailee of those chattels. The issues for the court were: (i) whether the claimant was entitled to have the mortgage set aside on the basis that it was procured by fraud or that it did not comply with section 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989; and (ii) whether the defendant was liable to the claimant in damages as a result of the steps it took to dispose of her chattels.
Held: The claim was dismissed.
(1) The claimant’s claim in respect of the mortgage issue was hopeless. It represented a misconceived and vexatious attempt by the claimant to challenge the decision granting the possession order in respect of which the Court of Appeal had refused permission to appeal. The claimant had not established the special grounds for admitting fresh evidence set out in Ladd v Marshall [1954] 1 WLR 1489. In particular, whatever fresh evidence she might wish to rely upon (as to which her position was unclear) could have been obtained with reasonable diligence for use in the possession proceedings before the possession order was made. On its face the mortgage had been executed by the claimant in the presence of a witness and she had produced no proper evidence to the contrary. Further, the allegation that the mortgage deed was forged or somehow failed to comply with section 1(3) of the 1989 Act had been raised too late. Even if that was wrong, the claim constituted an abuse of process as it sought to attack a final decision of the court in the original possession proceedings, a tribunal of competent jurisdiction. The claimant was, in any event, estopped from asserting that the mortgage was procured by fraud or executed as a deed when the defendant had throughout the original possession proceedings accepted the payment of mortgage arrears by the claimant, resulting in the dismissal or suspension of numerous warrants of possession. Accordingly the claimant had no grounds for setting aside the mortgage: Shah v Shah [2002] QB 35 considered. Briggs v Gleeds [2014] EWHC (Ch) 1178 and Bank of Scotland Plc v Waugh [2014] EWHC 2117 (Ch); [2014] PLSCS 266 distinguished.
(2) A mortgagor was subject to an obligation to deliver up vacant possession of the property on the execution of a warrant for possession. A mortgagee who found himself in possession of chattels on the execution of a warrant for possession was in law an involuntary bailee. The duty of an involuntary bailee was to do what was right and reasonable which depended upon the findings of fact in each case. The relevant conditions of the mortgage provided a framework within which the common law duty of care, which was imposed on an involuntary bailee, was to operate. Further, any of the trigger events in the mortgage conditions was merely a starting point. The court had to go on and ask whether what the mortgagee did was, in the particular circumstances of the case, what was right and reasonable: Da Rocha-Afodu v Mortgage Express Ltd [2014] EWCA Civ 454 applied.
(3) In the present case, not only had the claimant made no attempt to clear the property with a view to complying with her obligation to the defendant to give vacant possession upon the execution of the warrant for possession, she subsequently sought to undermine the original possession order and prevent the defendant proceeding to a sale of the property. On the evidence, the tactic of leaving her goods at the property was deliberate, designed to prevent the defendant from being able to give vacant possession of the property, and thus impeded its attempt to market and sell the property to apply the sale proceeds against the claimant’s debt. Despite three court orders, the claimant had not removed her chattels from the property and neither the defendant nor its agents had taken any steps to hinder the exercise of her right to do so. Accordingly, the defendant was entirely justified in clearing the property and disposing of the goods, as opposed to putting them into storage or selling them. The goods appeared to have no intrinsic value and, given the substantial mortgage account in excess of £730,000, that was the most sensible and cost effective way of dealing with them. Accordingly, the defendant’s actions were right and reasonable and it had no liability in damages to the claimant.
The claimant appeared in person; Wilson Horne (instructed by TLT LLP) appeared for the defendant.
Eileen O’Grady, barrister
