Source: http://www.legalmortgage.co.uk/apr-18/4594301098
Timestamp: 2018-08-14 10:27:46
Document Index: 637271798

Matched Legal Cases: ['EWCA ', 'EWCA ', 'EWCA ', 'Art 8', 'UKHL ', 'Art 8', 'EWCA ', 'UKHL ', 'EWCA ', 'EWCA ']

Apr 18 - www.legalmortgage.co.uk
Green v Southern Pacific Mortgage Ltd [2018] EWCA Civ 854 Mortgage possession claim – disabled borrower in arrears – whether refusal to switch to interest-only loan amounted to unlawful discrimination Scott v The Mortgage Business Plc [2018] EWHC 668 (Ch) Sale at an undervalue – strike-out – litigant in person – application for relief from sanction Armstrong v Ashfield District Council [2018] EWCA Civ 873 Order for possession – terms of suspension providing for automatic discharge – jurisdiction Watson v Eyre [2018] EWHC 500 (Ch) All-monies charge – rectification – rescission for misrepresentation – principles to be applied
Case name Neutral citation Legal points Case summary Facts Held Green v Southern Pacific Mortgage Ltd [2018] EWCA Civ 854 Mortgage possession claim – disabled borrower in arrears – whether refusal to switch to interest-only loan amounted to unlawful discrimination A lender’s refusal to switch a repayment mortgage to interest-only did not amount to unlawful discrimination against a disabled borrower. In 2006 G remortgaged her residential property with a 20-year repayment loan from S for £96,000. G ran into financial difficulties and was signed off sick with depression, which it was accepted was a protected characteristic for the purposes of the Disability Discrimination Act 1995 and subsequently the Equality Act 2010. Notwithstanding this, S commenced possession proceedings after which G requested a transfer to an interest-only mortgage which S refused. D pleaded a defence in which she alleged that the failure to convert amounted to unlawful discrimination within ss 19-20 DDA 1995 and ss 15, 19, 21 EA 2010. She also relied on Art 8 European Convention on Human Rights or sought to suspend any order for possession under s 36 Administration of Justice Act 1970. S did not seek to justify its conduct but simply relied on its legal right to possession. At trial, the Recorder accepted that a claim for possession could be defeated by discriminatory conduct which is unlawful under DDA 1995 (applying London Borough of Lewisham v Malcolm [2008] UKHL 43) and that G’s disability was causative of the arrears, but held that: (1) S did not discriminate unlawfully against G when it started possession proceedings; (2) The refusal to transfer to interest-only did not make it impossible or unreasonably difficult for a disabled person to make use of the mortgage service (the service being over the whole of the life of the mortgage from offer to redemption). Although a switch would have enabled G to service some mortgage repayments, it would have no impact on her ability to redeem the mortgage at the end of the term. In any event, such a step was not a reasonable adjustment to services provided by S, who was entitled to rely on its security; (3) Proceeding to trial was not a discriminatory action. The court also rejected G’s argument that the refusal to switch caused indirect discrimination because a borrower who became disabled and unable to work was less likely to be able to find work once unemployed. It was a legitimate aim for S to want to protect its security and it was proportionate to refuse the switch. Looking ahead, it would not be responsible lending to take the risk for G to be left without a repayment vehicle. Art 8 ECHR did not offer a defence to a claim for possession. The mortgage lender was not a public authority (applying McDonald v McDonald [2014] EWCA Civ 1049). As to s 36 AJA 1970, G’s proposal was to remain in the property until the expiry of the term and then sell it but the court was not prepared to embark upon a course of conduct which involved a long period of speculation (applying Bristol & West Building Society v Ellis (1997) 29 HLR 282). There was a shortfall in DWP payments which G was unable to make up. The court made a 28-day order for possession, stayed, and with an extension of time for filing Notice of Appeal, until 28 days after judgment had been handed down by the Supreme Court in McDonald v McDonald, so long as G paid the monthly interest due on the mortgage. G appealed. Permission was granted to the Equality and Human Rights Commission to intervene. The appeal was argued almost exclusively by reference to the DDA 1995. S 22 DDA 1995 and s 35(1) EA 2010 provide an express statutory defence to a claim by a landlord for possession if the tenant can show that the claim is discriminatory so as to be unlawful: Lewisham LBC v Malcolm [2008] UKHL 43. There is no equivalent statutory provision in relation to a mortgagee’s possession claim. There is no legislation which expressly limits a mortgagee’s rights either at common law or under the Law of Property Act 1925. This was the first case in which the Equalities legislation has been raised as a defence to a mortgagee’s claim for possession. As to the points taken by G: (1) What is the ‘service’? Under s 19(1) DDA 1995 it was unlawful of the provider of services to discriminate against a person in a number of specified ways. The ‘service’ that is under consideration is that which was actually provided by SP to G. It should not ne defined too broadly, otherwise the ‘reasonable adjustment’ mechanism becomes too general. The service provided was the provision of a repayment mortgage which involved a single loan of a fixed sum, with the property as security, and no facility to increase the amount of the loan. The essence of G’s complaint was that she should have been offered an interest-only mortgage, but that would have been a different service, with a different loan and a different and uncertain security.
Comment Held Comment (2) Should there have been a ‘reasonable adjustment’? Did the refusal to switch to interest-only make it impossible or unreasonably difficult to access or make use of the service? No. An interest-only mortgage was not the service being provided. In any event, there is no evidence that it was impossible or unreasonably difficult for disabled people to access the service compared to the access offered to other members of the public. Further, it would be unreasonable to require SP to adjust its ‘no conversion’ policy generally so as to offer it to disabled persons. G could not rely on ‘forbearance’ policies, or MCOB. The regulatory framework does not say that interest-only mortgages would amount to imprudent lending. (3) Was the interest-only mortgage which G says she should have been offered fundamentally different to the mortgage that she had originally agreed? Yes. If G had switched to interest-only, all the guarantees that would have been available with a repayment mortgage would have been absent. Appeal dismissed. Although this will come as a relief to lenders, the outcome is not particularly surprising. The key issue on a discrimination claim is whether a provider of services has a practice, policy or procedure which makes it impossible or unreasonably difficult for a disabled person to make use of a service he provides to other members of the public. It is difficult to see how a borrower, who contracts for a repayment loan, can allege that it is impossible or unreasonably difficult for him to access the service he contracted for, or that a lender should make a reasonable adjustment by offering to switch to interest-only, which is a fundamentally different service.
Case name Neutral citation Legal points Case summary Facts Held Comment Scott v The Mortgage Business Plc [2018] EWHC 668 (Ch) Sale at an undervalue – strike-out – litigant in person - application for relief from sanction The High Court set out the approach to be adopted on an application for relief from sanction by a litigant in person in a case involving an alleged sale at an undervalue. Following default by S, a borrower, TMB, as lender, exercised a power of sale and sold the mortgaged property for £255,000. S brought a counterclaim that TMB had sold the property at an undervalue. The counterclaim was struck out by the circuit judge who had before him single joint valuation evidence (which had not been challenged) which valued the property at £255,000, so that S had suffered no loss. S’s application for permission to appeal was initially struck out for breach of various orders. His Appellant’s Notice did not contain any grounds of appeal, and he had failed to file an appeal bundle or a transcript of the judgment under appeal. The court subsequently treated his further application as an application for relief from sanction. The court summarised the guidance given in Denton v TH White [2014] 1 WLR 3296 and the attitude the court should adopt to a litigant in person set out in R (Hysaj) v Secretary of State for the Home Department [2015] 1 WLR 2472. The fact that a party is unrepresented is of no significance to the first stage of the Denton test, when the court is being asked to consider the seriousness and significance of the failure to comply with the rules. Here, the court orders were clear and were not complied with, even the unless order which led to his application being struck out. The failure to comply had been both serious and significant. The second stage of the Denton test is to consider why the default occurred. The mere fact that a party is unrepresented does not provide a good explanation for not adhering to the rules. A good explanation is different from an explanation. The fact that a party is not clear as to what is required is not a good explanation. The third stage is to evaluate all the circumstances of the case so as to enable the court to deal justly with the application. A serious non-compliance with the rules, accompanied by no good explanation normally points to a refusal of relief from sanctions. The underlying merits suggest that S would have had an extremely uphill climb. Application for relief from sanction refused. The court also refused to order a transcript at public expense. This is a not uncommon scenario. The court makes an order against a litigant in person which he does not understand, and does not like, so he seeks permission to appeal without identifying any grounds and without complying with any of the directions given by the court. This decision helpfully reminds litigants in person what they can expect. On the merits, it is difficult at the best of times to challenge a sale at an undervalue, particularly where, as here, the evidence of a single joint expert valuer coincides with the sale price. Ordinarily, it will require clear and compelling evidence of a sale at a price which falls outside the ‘bracket’ and/or other compelling evidence of breach of duty. Incidentally, although the transcript refers to a claim for damages, the claim is of course for an account, to adjust the mortgage account by the price which ought to have been achieved had the lender discharged its duty to obtain the best price reasonably obtainable.
Case name Neutral citation Legal points Case summary Facts Held Comment Armstrong v Ashfield District Council [2018] EWCA Civ 873 Order for possession – terms of suspension providing for automatic discharge - jurisdiction The court has jurisdiction to determine whether the terms for suspension of an order for possession had been breached, notwithstanding a provision that the order be automatically discharged after a certain date, and the court was asked to deal with the application after that date. On 5 June 2013 the Council obtained a suspended order for possession against a secure tenant on terms requiring him to comply with certain terms of his tenancy agreement. The order provided that it be discharged on 4 June 2014. Following default, the Council obtained a warrant of possession in October 2014 which the tenant applied to suspend. An interim order was made on 18 November 2013 and at trial on 25 June 2014 the Circuit Judge dismissed the application. The tenant appealed, contending that by the time the matter came before the Circuit Judge, there was no extant order for possession. The High Court dismissed the appeal. The tenant appealed (with permission – a second appeal). The order for possession was predicated on the absence of some relevant event occurring before the date specified for discharge. In any event, under s 85(4) Housing Act 1985, a proleptic order for discharge of an order for possession ought only to take effect if the conditions specified under s 85(3) (the conditions for stay, suspension or postponement) are complied with during the period of suspension of the order. To construe the order otherwise would be to deprive the Council of the benefit of the protection of the order whenever a court was not immediately in a position to determine the issues. In any event, an appeal court has power to exercise the powers of the court below (CPR 52.20) and the power to extend or shorten the time for compliance with any rule under CPR 3.1(2)(a). The court has jurisdiction to extend the time limit, even though the time for compliance has expired. It would be unduly formalistic and potentially productive of injustice to preclude an application after the deadline for an extension of time retrospectively. This is not a mortgage case, but it involves an automatic discharge provision which is occasionally attached to suspended orders for possession in mortgage cases.
Case name Neutral citation Legal points Case summary Facts Held Watson v Eyre [2018] EWHC 500 (Ch) All-monies charge – rectification – rescission for misrepresentation – principles to be applied The court determined two preliminary issues on a claim involving rectification of an all-monies legal charge or alternatively rescission based on misrepresentation. In 2010 Mr & Mrs W entered into an all monies charge over their home to secure monies advanced by E in which they were described as “the borrowers”. They subsequently contended that this did not reflect the common intention of the parties which was that the charge would only secure separate guarantees given by them in respect of monies advanced to their company and sought rectification of the charge or alternatively rescission on the ground that the charge was procured by misrepresentation that E would advance further monies to the company. The court ordered these to be tried as preliminary issues. The case contains a detailed review of the financial arrangements entered into between the parties, and the application of the relevant legal principles. In respect of rectification, the requirements were summarised by Arden LJ in Scottish Widows Fund and Life Assurance Society v BGC International [2012] EWCA Civ 607 at para 43, and applied the test laid down by Peter Gibson LJ in Swainland Builders Ltd v Freehold Properties Ltd [2002] 2 EGLR 71, approved by Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101. The court also referred to other authorities. Held: It could not be said that the effect of the charge was buried deep in an obscure document couched in impenetrable legalease. Bearing in mind that convincing proof was required, W could not establish a common continuing intention that the charge would extend only to securing the company’s debts; nor has there been an outward expression of accord. In respect of rescission for misrepresentation, on the authority of Edgington v Fitzmaurice [1881-85] All ER Rep 856, for W to succeed they must satisfy the court that, on the balance of probabilities, E’s statement that he would advance monies was made at a time when he did not intend to do so or knew that he did not have the ability to put that intention into effect. Held: Although W were not required to provide the same convincing proof as with their claim for rectification, they had not established their claim on the balance of probabilities. At the time the relevant documents were signed, there was sufficient evidence to suggest that E was intending to make funds available for W’s company. Claim for rectification and rescission dismissed.