Mortgagor failing to respond to formal demand for repayment – Mortgagee selling house without first obtaining court order for possession – Mortgagor claiming that obtaining possession by self-help impliedly prohibited by section 36 of the Administration of Justice Act 1970 – Mortgagor’s appeal dismissed
On September 27 1995 the defendant bank made a formal demand for the repayment of £63,873 secured by a legal charge on a house in Cardiff owned by the plaintiff (R) and his wife. By a letter dated November 7 1996 the bank informed the owners that, since no proposals had been received for repayment, the property would be entered for sale by auction. On November 26 1996 the property was sold for £77,000 with completion taking place on December 17 1996. Neither owner was in occupation on those dates. In January 1997 R, who did not dispute that a power of sale had arisen under the terms of the mortgage, took out a summons for the court to determine, inter alia, whether, having regard to section 36 of the Administration of Justice Act 1970, as amended, the bank was legally entitled to take possession of the house without first obtaining a court order. The application was dismissed on the ground that the statutory power to stay or suspend execution or to postpone the date of delivery of possession was only exercisable where, in the words of the section, ” . . . the mortgagee . . . brings an action in which he claims possession of the mortgaged property”.
R appealed, contending that, since parliament could not have intended that a measure designed to protect the mortgagor’s home should be capable of being frustrated by a resort to self-help, the section should be construed as outlawing all modes of taking possession otherwise than under a court order. In aid of that contention, R relied, inter alia, on Remon v City of London Real Property Co [1921] 1 KB 49 and Cruise v Terrell [1922] 1 KB 664 where an early Rent Act, the Increase of Rent and Mortgage Interest (Restrictions) Act 1920, had been so construed even though the operative words were that: “No order or judgment for the recovery of possession . . . shall be made”. For the purpose of narrowing the issue to be taken on appeal, it was assumed that the bank had in fact taken possession.
Held The appeal was dismissed.
1. The 1970 Act had done no more than supply, as a procedural measure, the judicial discretion that had been recommended by the Payne Committee in its 1986 report (Cmnd 3909) after considering the implications of Birmingham Citizens’ Permanent Building Society v Caunt [1962] Ch 833. Substantively, there had been no abrogation of the mortgagee’s common law right to take possession: see Western Bank v Schindler [1977] Ch 1 per Buckley LJ at p12. If parliament had wished to provide that a mortgagee should not be entitled to take possession save by order of the court, there was no reason why it should not have done so expressly: cf section 2 of the Protection from Eviction Act 1977 and section 126 of the Consumer Credit Act 1974.
2. R derived no assistance from Remon (supra) and Cruise (supra), as those decisions proceeded on the footing that the 1920 Act, there under consideration, had expressly conferred upon a former contractual tenant the right to continue in occupation (as a statutory tenant) on the same terms as before, thus giving him, inter alia, the benefit of the landlord’s covenant of quiet enjoyment: see Lavender v Betts [1942] 2 All ER 72 per Atkinson J at p73.
Anthony Scrivener QC and Norman Joss (instructed by Phoenix Walters, of Cardiff) appeared for the appellant plaintiff; Elizabeth Gloster QC and Michael Sullivan (instructed by Eversheds, of Cardiff) appeared for the respondent defendant.
Alan Cooklin, barrister