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England and Wales High Court (Chancery Division) Decisions

You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Ashe v National Westminster Bank Plc [2007] EWHC 494 (Ch) (13 March 2007)
Cite as: [2007] 2 P & CR 27, [2007] EWHC 494 (Ch), [2007] 12 EG 155, [2007] NPC 36, [2007] BPIR 988, [2007] 2 EGLR 137

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Neutral Citation Number: [2007] EWHC 494 (Ch)
Case No: HC06C03468


Royal Courts of Justice
Strand, London, WC2A 2LL
13 March 2007

B e f o r e :

(Sitting as a Deputy High Court Judge)


- and -



Peter Shaw (instructed by Moon Beever) for the Claimant
Michael Bowmer (instructed by Addleshaw Goddard LLP) for the Defendant
Hearing date: 1 March 2007



Crown Copyright ©



  1. The Claimant claims a declaration that the Defendant's charge over the property at 43 Valley Road, Heaton Mersey, Stockport ("the Property") has been extinguished and consequential relief. The Claimant is the trustee in bankruptcy of Djabar Babai who is registered as the owner of the Property together with his wife Zinat Babai. The basis for the claim is sections 15 and 17 of the Limitation Act 1980. The Defendant resists the claim on the two grounds considered below. A third ground raised in the skeleton argument of counsel for the Defendant was not in the end pursued at the hearing.
  2. The facts

  3. The claim was made by the Part 8 procedure. There is no dispute as to the primary facts established by the evidence, which is purely documentary, so far as it goes. These are as follows.
  4. On 8 June 1989 Mr and Mrs Babai charged the Property by way of legal mortgage ("the Mortgage"), in the words of clause 1(a) of the Mortgage "as a continuing security for the discharge on demand of all present, future, actual and/or contingent liabilities of" Mr Babai. Clauses 3 and 6 of the Mortgage provided:
  5. "3. Section 103 of the Law of Property Act 1925 shall not apply to this Mortgage and the statutory power of sale and other powers shall be exercisable at any time after demand.
    6. At any time after the power of sale has become exercisable the Bank or any Receiver appointed hereunder may enter and manage the Mortgaged Property or any part thereof…"
  6. The Mortgage secured various facilities obtained by Mr Babai, including an overdraft on his current account, a loan account and a business development loan. The Mortgage was registered on 23 August 1989. The Mortgage was a second charge on the Property, the first charge being a mortgage in favour of the Leeds Permanent Building Society (now Halifax plc) which it appears secured a loan that Mr and Mrs Babai used to purchase the Property.
  7. On 21 January 1992 the Defendant wrote to Mr Babai demanding payment of £62,887.96 representing the balance then due to the Defendant under the facilities. On 28 February 1992, Mr Babai having failed to discharge his liability, the Defendant wrote again to Mr Babai. In this letter the Defendant indicated that it believed Mr Babai to be unemployed, but that it wanted him to commence some form of reduction programme, even if initially by nominal amounts. To that end, the Defendant enclosed a response form to be completed by Mr Babai.
  8. Mr Babai responded in a letter dated 24 March 1992. There is no surviving copy of that letter, but it appears from the Defendant's reply that it contained an offer to pay £10 per week alternatively £40 monthly. On 10 April 1992 the Defendant wrote to say that this offer was acceptable for the time being. On 20 April 1992 Mr Babai wrote to say that he preferred to pay monthly.
  9. On 4 June 1992 the Defendant wrote to Mr Babai to say that, in the absence of the repayments promised by Mr Babai, it intended to enforce its security and enclosed a formal demand for payment of the sum of £66,730.22 then owing. A similar formal demand was sent to Mrs Babai on the same date. Both formal demands expressly invoked the Mortgage. In the letter to Mr Babai the Defendant said that "as a prerequisite to an enforced sale of the property … we require a report and valuation to be prepared…". It went on to say that, even at that late stage, it might be willing to withhold further enforcement proceedings upon receipt of firm and realistic proposals for the discharge of Mr Babai's liability. It concluded by stating that, in the absence of Mr Babai's full co-operation for the voluntary discharge of his liability, "we are concurrently instructing the Bank's solicitors to apply for a Possession Order in respect of the mortgaged property". It seems clear, however, that the Defendant did not in fact instruct solicitors at that juncture.
  10. On 11 August 1992 the Defendant wrote again to Mr Babai stating that it was disappointed not to have received a response to its letter dated 4 June 1992. The Defendant stated that it might be willing to accept a lump sum payment in settlement, but that this was his final opportunity to avoid the matter being placed in the hands of the Defendant's solicitors with a view to legal proceedings.
  11. Mr Babai responded in a letter dated 25 August 1992. He claimed that he had not received a paying-in book pursuant to the arrangement made in April and promising to pay on the April agreement. The Defendant replied to this letter on 14 September 1992 asking Mr Babai for a remittance of £40. Mr Babai wrote on 6 November 1992 to say that he was sending £40. This sum was received by the Bank on 10 November 1992 and credited to Mr Babai's account.
  12. On 7 January 1993 the Defendant wrote to Mr Babai to complain that no further payment had been made. The letter stated that the Bank's patience was almost exhausted and giving him (again) a final opportunity to deal voluntarily with his commitments. In fact, a payment of £40 had been credited to Mr Babai's account on 4 January 1993. There does not appear to have been any reply to the letter dated 7 January 1993 from Mr Babai.
  13. On 22 March 1993 Mr Babai was adjudged bankrupt in the Stockport County Court. On 8 June 1993 the Insolvency Service on behalf of the Official Receiver wrote to the Defendant, presumably asking for details of Mr Babai's indebtedness and the security held by the Defendant. The Defendant replied giving this information on 23 June 1993.
  14. On 8 January 1994 the Defendant wrote to Mr Babai reminding Mr Babai that he remained liable to the Defendant and suggesting that the Defendant would be prepared to accept repayment by way of monthly instalments over a term of 10 years. The letter stated that, if Mr Babai felt unable to provide realistic repayments on a regular basis, "then we confirm that the Bank will continue to await an eventual sale of your property to repay your liabilities".
  15. In 1999 the Defendant instructed solicitors, Restons, who wrote to Mr Babai. Restons' letter has not survived, but what has survived is a letter from Restons to the Defendant dated 1 September 1999 in respect of which the Defendant has waived privilege. This states:
  16. "Mr Babai has responded to our first letter. His letter in reply together with the enclosures is attached.
    There does look to be a fair amount of equity in the property and possible [sic] three times the amount of the amount [sic] minimum payment acceptable to the Bank. I can see that there is an indication that litigation would not be considered but it would appear to be the only way that the Bank is going to make any recovery in the short-term. Unless Mr Babai gains employment (and there seems to have been little sign of him doing so in the past six years) he will not be able to obtain a further mortgage and the chances of there being any dealing in the property appears remote. As I say, possession would appear to be the only prospect that the Bank has of making a cash recovery in the foreseeable future.
    Please let me have your instructions in due course."
  17. No reply from the Defendant to Restons is in evidence, but Restons' letter was annotated in manuscript by someone at the Defendant "only realistic way forward is P/O – legal i v o Budget constraints instruct in new year".
  18. There is also in evidence a letter from Mr Babai to Restons dated 25 September 1999 stating:
  19. "I received your letter and I was shocked. Approximately 10 years ago I lost everything and unfortunately I did not recover at all. I shall enclose all my details to you as I am on the dole as I do not have a job."

    The letter enclosed a copy of a letter from Wellesley Jobcentre dated 9 August 1999 detailing the amount of Jobseeker's Allowance Mr Babai was entitled to.

  20. Given the contents of the two letters and the manuscript annotation, I conclude on the balance of probabilities that either Restons' letter dated 1 September 1999 or Mr Babai's letter dated 25 September 1999 is misdated and that the latter preceded the former in time.
  21. On 15 February 2001 the Defendant wrote to Mr Babai and Mrs Babai enclosing formal demands for payment of the outstanding balance of £100,513.94. Once again the formal demands invoked the Mortgage. The covering letter threatened to refer the matter to Restons again unless proposals were made within 14 days.
  22. On 23 February 2001 solicitors retained by Mr and Mrs Babai, Mace & Jones, wrote to the Defendant stating:
  23. "Our clients have provided us with a copy of your letter dated 15 February 2001 enclosing a formal demand in respect of a Legal Mortgage purportedly entered into by Mr Babai on 8 June 1989.
    To enable us to consider our clients' position further, we would be grateful if you could provide use with the following documentation:
    We would be grateful if you could confirm that you will refrain from taking any enforcement action until we have had the opportunity of considering these documents further with our clients."
  24. On 15 March 2001 the Defendant sent Mace & Jones a copy of the Mortgage and statements of the accounts covered by it. Messrs Mace & Jones acknowledged receipt the following day.
  25. On 23 April 2001 the Defendant wrote to Mace & Jones asking to be advised as to their clients' position. On 27 April 2001 Mace & Jones replied as follows:
  26. "Unfortunately, we have been unable to take our client's instructions upon the information provided under cover of your letter of 15 March 2001 as our client has been in hospital since 17 March 2001. Our client has suffered double kidney failure and is seriously ill. As you may appreciate, it has not been possible to obtain any further instructions.
    Accordingly, we would be grateful if you would put a hold on any further action you intend to commence which will enable us to properly assess our client's state of health and, hopefully, obtain further instructions."
  27. It appears that the Defendant wrote again on 1 June 2001. On 7 June 2001 Mace & Jones replied stating:
  28. "We understand that our client has now undergone further surgery but is still in hospital being monitored closely. We have been advised that she is currently in no position to provide instructions although we are hopeful that her condition will improve sufficiently to enable us to do so.
    We will keep you fully advised as to her condition."
  29. It appears that the Defendant wrote again on 5 September 2001. On 28 September 2001 Mace & Jones replied stating that Mrs Babai was still in hospital, although allowed home for the weekend, and too ill to give any instructions. In support of this statement Mace & Jones enclosed a copy of a letter from a nurse in the renal unit of North Manchester General Hospital. As a result the Defendant decided that there should be no enforcement at that stage.
  30. It appears that the Protracted Realisations Unit of the Insolvency Service wrote to the Defendant to enquire about the position regarding the Mortgage on 10 October 2003. The Defendant replied on 27 October 2003, stating that the Defendant was not currently taking any action in respect of its security and that the outstanding balance due was £121,637.61.
  31. The Claimant was appointed as Mr Babai's trustee in bankruptcy with effect from 20 October 2004.
  32. On 4 January 2006 the Defendant wrote to Mr and Mrs Babai reminding them that the Bank was continuing to rely on the Mortgage over the Property and stating that the Defendant would require full repayment when the next dealing in the Property took place.
  33. The Property was valued in October 2004 at around £200,000. As at 9 November 2004 the amount owed by Mr and Mrs Babai to Halifax plc was £39,044.50. As at 20 October 2006 the amount outstanding from Mr Babai to the Defendant was £165,323.87. The Claimant's evidence is that to date Mr Babai's creditors have not received any dividend and that the only asset of value in the estate is Mr Babai's share in the Property. The evidence does not disclose the amounts due to the creditors.
  34. Relevant provisions of the Limitation Act 1980

  35. Sections 15, 17, 20, 29, 30 and 38 of the Limitation Act 1980 (as amended) provide in relevant part as follows:
  36. 15. Time limit for actions to recover land
    (1) No action shall be brought by any person to recover any land after the expiration of twelve years from the date on which the right to action accrued to him or, if it first accrued to some person through whom he claims, to that person
    (6) Part I of Schedule 1 to this Act contains provisions for determining the date of accrual of rights of action to recover land in the cases there mentioned.
    17. Extinction of title to land after expiration of time limit
    Subject to section 18 of this Act, at the expiration of the period prescribed by this Act for any person to bring an action to recover land (including a redemption action) the title of that person to the land shall be extinguished.
    20. Time limit for actions to recover money secured on a mortgage or charge or to recover proceeds of the sale of land
    (1) No action shall be brought to recover-
    (a) any principal sum of money secured by a mortgage or other charge on property (whether real or personal); or
    (b) proceeds of the sale of land;
    after the expiration of twelve years from the date on which the right to receive the money accrued.
    (4) Nothing in this section shall apply to a foreclosure action in respect of mortgaged land, but the provisions of this Act relating to actions to recover land shall apply to such an action.
    29. Fresh accrual of action on acknowledgment or part payment.
    (1) Subsections (2) and (3) below apply where any right of action (including a foreclosure action) to recover land or an advowson or any right of a mortgagee of personal property to being a foreclosure in respect of the property has accrued.
    (2) If the person in possession of the land, benefice or personal property in question acknowledges the title of the person to whom the right of action has accrued –
    (a) the right shall be treated as having accrued on and not before the date of the acknowledgment;
    (5) Subject to subsection (6) below, where any right of action has accrued to recover-
    (a) any debt or other liquidated pecuniary claim; or
    (b) any claim to the personal estate of a deceased person or to any share or interest in any such estate;
    and the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it the right shall be treated as having accrued on and not before the date of the acknowledgment or payment.
    30. Formal provisions as to acknowledgments and part payments
    (1) To be effective for the purposes of section 29 of this Act, an acknowledgment must be in writing and signed by the person making it.
    (2) For the purposes of section 29, any acknowledgement or payment-
    (a) may be made by the agent of the person by whom it is required to be made under that section; and
    (b) shall be made to the person, or to the agent of the person, whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is being made.
    38. Interpretation
    (1) In this Act, unless the context otherwise requires-
    "land" includes corporeal hereditaments, tithes and rentcharges and any legal or equitable estate or interest therein but except as provided above in this definition does not include any incorporeal hereditament;
    (7) References in this Act to a right of action to recover land shall include references to a right to enter into possession of the land or, in the case of rentcharges and tithes, to distrain for arrears of rent or tithe, and references to the bringing of such an action shall include references to the making of such an entry or distress.
  37. Part I of Schedule I to the 1980 Act includes the following provisions:
  38. Accrual of rights of action in case of present interests in land
    1. Where the person bringing an action to recover land, or some person through whom he claims, has been in possession of the land, and has while entitled to the land been disposed or discontinued his possession, the right of action shall be treated as having accrued on the date of the dispossession or discontinuance.
    Right of action not to accrue or continue unless there is adverse possession
    8.(1) No right of action to recover land shall be treated as accruing unless the land is in the possession of some person in whose favour the period of limitation can run (referred to below in this paragraph as "adverse possession"); and where under the preceding provisions of this Schedule any such right of action is treated as accruing on a certain date and no person is in adverse possession on that date, the right of action shall not be treated as accruing unless and until adverse possession is taken of the land.
    (4) For the purpose of determining whether a person occupying any land is in adverse possession of the land it shall not be assumed by implication of law that his occupation is by permission of the person entitled to the land merely by virtue of the fact that his occupation is not inconsistent with the latter's present or future enjoyment of the land.
    This provision shall not be taken as prejudicing a finding to the effect that a person's occupation of land is by implied permission of the person entitled to the land in any case where such a finding is justified on the actual facts of the case.

    The Claimant's claim

  39. The Claimant's claim may be simply stated. The Claimant contends that: (1) the Defendant's right of action to recover the Property accrued either on 21 January 1992 when the Defendant demanded repayment from Mr Babai or on 4 June 1992 when it made formal demand relying upon the Mortgage; (2) either way, the right of action accrued more than twelve years ago; (3) accordingly, the right of action is statute-barred by virtue of section 15(1) of the 1980 Act; and (4) it follows that the Defendant's charge has been extinguished by section 17 of the 1980 Act.
  40. Undisputed points

  41. Before turning to the grounds on which the Defendant resists the claim, it is convenient to set out four points which were not disputed before me.
  42. The first is that the Defendant's personal claim against Mr Babai for the debt he owes is statute-barred by virtue of section 20(1) of the 1980 Act. This does not in itself affect the Defendant's security under the Mortgage, however. The debt remains owing, and unless the charge has been extinguished by section 17, the Defendant can enforce its security against the Property and thereby recover the outstanding amount.
  43. The second is that section 96 of the Land Registration Act 2002 disapplies sections 15 and 17 of the 1980 Act against persons other than chargees. Since the Defendant is a chargee, however, sections 15 and 17 remain potentially applicable.
  44. The third is that a claim by the Defendant for possession of the Property would be an action to recover land within section 15(1) of the 1980 Act by virtue of section 38(1) and (7), and foreclosure would fall to be treated in the same way by virtue of section 20(4). The argument before me concentrated on the claim to possession, and it was not suggested by either party that foreclosure would lead to a different result.
  45. The fourth is that the general rule is that a mortgagee has a right to possession from the date of the mortgage: Four-Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317, 320. Where the mortgage provides that the mortgagee is not entitled to possession until the mortgagor defaults, however, time for claiming possession does not run until there is a default: Wilkinson v Hall (1837) 3 Bing NC 508. In the present case I understand it to be common ground that the Defendant was entitled to possession at the latest from the date of the formal demand on 4 June 1992.
  46. Adverse possession

  47. The first ground on which the Defendant resists the Claimant's claim is that the Defendant's right of action to recover the Property has not yet accrued. The Defendant contends that: (1) the date on which the right of action accrued is to be determined in accordance with paragraph 8 of Part I of Schedule I of the 1980 Act; (2) under that paragraph time does not run unless the occupier of the land is in adverse possession of it; and (3) Mr and Mrs Babai have not been in adverse possession of the Property since repayment was demanded from Mr Babai, but on the contrary have occupied it with the implied permission of the Defendant, no unequivocal demand for possession having been made by the Defendant.
  48. The Claimant disputes that propositions (1) and (2) set out in the preceding paragraph are correct as a matter of law. In relation to proposition (1) the Claimant contends that Part I of Schedule I is not an exhaustive code and only applies to the cases there mentioned, which do not include a claim by a mortgagee. As to proposition (2), the Claimant contends that there is no requirement for adverse possession by a mortgagor in order for time to run in his favour under section 15 (or paragraph 8 of Schedule I, if applicable).
  49. Construction of section 15(6)

  50. I accept the Claimant's contention that section 15(6) of the 1980 Act is not to be construed as meaning that Schedule I Part I is an exhaustive code for determining when rights of action to recover land accrue. This is simply not what it says, which is that Schedule I Part I applies "in the cases there mentioned". I also accept that a claim by a mortgagee is not one of the cases explicitly mentioned in Schedule Part I, but that in itself does not exclude the possibility that it falls within one of the classes of case mentioned in Schedule Part I and in particular paragraph 8.
  51. The meaning of "adverse possession"

  52. In order to decide whether a claim by a mortgagee falls within paragraph 8, it is necessary to be clear as to what is meant by "adverse possession". The law with regard to adverse possession was reviewed by Lord Browne-Wilkinson in his speech in J A Pye (Oxford) Ltd v Graham [2002] UKHL 30, [2003] 1 AC 419. He pointed out at [33]-[34] that sections 2 and 3 of the Real Property Limitation Act 1833, which were to substantially the same effect as section 15(1) and Schedule I paragraph 1 of the 1980 Act, had done away with the doctrine of non-adverse possession which had been developed by the courts before then. He continued:
  53. "[35] From 1833 onwards, therefore, old notions of adverse possession, disseisin or ouster from possession should not have formed part of judicial decisions. From 1833 onwards the only question was whether the squatter had been in possession in the ordinary sense of the word. That is still the law, as Slade J rightly said [in Powell v McFarlane (1977) 38 P & CPR 452]. After 1833 the phrase 'adverse possession' did not appear in the statutes until, to my mind unfortunately, it was reintroduced by the Limitation Act 1939, section 10 of which is in virtually the same words as para 8(1) of Schedule 1 to the 1980 Act. In my judgment the references to 'adverse possession' in the 1939 and 1980 Acts did not reintroduce by a side wind after over 100 years the old notions of adverse possession in force before 1833. Paragraph 8(1) of Schedule 1 to the 1980 Act defines what is meant by adverse possession in that paragraph as being the case where land is in the possession of a person in whose favour time 'can run'. It is directed not to the nature of the possession but to the capacity of the squatter. Thus a trustee who is unable to acquire a title by lapse of time against the trust estate (see section 21) is not in adverse possession for the purposes of paragraph 8. Although it is convenient to refer to possession by a squatter without the consent of the true owner as being 'adverse possession' the convenience of this must not be allowed to reintroduce by the back door that which for so long has not formed part of the law.
    [36] Many of the difficulties with these sections which I will have to consider are due to a conscious or subconscious feeling that in order for a squatter to gain title by lapse of time he has to act adversely to the paper title owner. It is said that he has to 'oust' the true owner in order to dispossess him; that he has to intend to exclude the whole world including the true owner; that the squatter's use of the land has to be inconsistent with any present or future use by the true owner. In my judgment much confusion and complication would be avoided if reference to adverse possession were to be avoided so far as possible and effect given to the clear words of the Acts. The question is simply whether the defendant squatter has dispossessed the paper owner by going into ordinary possession of the land for the requisite period without the consent of the owner.
    [37] It is clearly established that the taking or continuation of possession by a squatter with the actual consent of the paper title owner does not constitute dispossession or possession by the squatter for the purposes of the Act. Beyond that, as Slade J said, the words possess and dispossess are to be given their ordinary meaning."
  54. Lord Browne-Wilkinson went on to say at [40] that two elements were necessary for legal possession:
  55. "(1) a sufficient degree of physical custody and control ('factual possession'); (2) an intention to exercise such custody and control on one's own behalf and for one's own benefit ('intention to possess')."
  56. At [32] and [44]-[45] Lord Browne-Wilkinson disapproved a line of cases which held that possession by a squatter was not sufficient for the purposes of limitation unless the squatter's use of the land conflicted with the intentions of the paper title owner as to his present or future use of the disputed land. In those cases it was held that the use of the land by the squatter was, as a matter of law, to be treated as enjoyed with the implied consent of the paper owner. In this connection Lord Browne-Wilkinson said at [32]:
  57. "It is hard to see how the intentions of the paper title owner (unless known to the squatter) can affect the intention of the squatter to possess the land. … In any event Parliament (on the advice of the Law Reform Committee) has intervened to reverse the principle of implied licence: see the 1980 Act, Schedule I, paragraph 8(4)."
  58. In the light of this exposition of the law, I have considerable difficulty in seeing how there can be a requirement for adverse possession by a mortgagor in order for time to run in his favour under section 15 if by "adverse possession" is meant possession without the consent of the mortgagee. The mortgagor is the owner of the land and is in possession of it both prior to and after executing the mortgage. True it is that the mortgagee has a legal interest in the land which entitles the mortgagee to possession in certain circumstances; but the mortgagee's right to possession does not arise because he has been dispossessed by the mortgagor. On the contrary, when the right arises and is enforced it is the mortgagee who (lawfully) dispossesses the mortgagor.
  59. Moreover, the difficulty is compounded if there are two mortgages. What if the mortgagor defaults on both: must it be shown that he is in "adverse possession" as against both mortgagees? And what if the first mortgagee enters into possession: must the mortgagor show adverse possession against the second mortgagee for time to run, and if so how?
  60. Approaching the matter as if it were free from authority, it seems to me that the error in the Defendant's approach is that it treats paragraph 8 of Schedule I as a freestanding provision, whereas I read it as a provision which qualifies the preceding paragraphs of Schedule I, and in particular paragraph 1. Accordingly I consider that a claim by mortgagee does not fall within paragraph 8.
  61. Even if, contrary to the view that I have just expressed, a claim by a mortgagee does fall within paragraph 8, I consider that a mortgagor is a person in whose favour time can run so far as his capacity is concerned, and in that sense is in "adverse possession" as that expression is defined in paragraph 8(1). I see no reason in principle why time should not run from the date on which the mortgagee is entitled to possession, whether the mortgagee unequivocally demands possession on that date or forbears from doing so while attempting to persuade the mortgagor to pay up.
  62. Turning to the authorities which were cited to me (and a few that were not), these support the second answer I have given if not the first.
  63. Secondary authorities

  64. Megarry and Wade, The Law of Real Property (6th ed, 2000) states in the chapter on "Adverse Possession and Limitation" under the heading "Mortgages" (omitting footnotes):
  65. "21-036 (b) Mortgagee's right to enforce the mortgage. The mortgagee's rights to foreclose, to sue for possession, and to sue for the principal all become barred 12 years from the day when repayment became due under the mortgage; and his title is then extinguished. But time begins to run afresh if the mortgagor makes any written acknowledgment or if he or the person in possession of the land makes any payment of interest of capital which complies with the Act."
  66. The Law Commission Report, Limitation of Actions (LAW COM No 270, 2001) states in the section on "Claims relating to mortgages and other charges" (again omitting footnotes):
  67. "(2) Claims by a mortgagee or chargee
    (a) Claims to enforce a mortgage or charge over land
    4.160 Under the present law, no claim may be brought to recover any principal sum of money secured by a mortgage or charge over land after the expiry of twelve years from the date on which the right to recover the money accrues. A claim to recover arrears of interest payable in respect of any sum of money secured by a mortgage or charge over land, or to recover damages in respect of such arrears, is subject to a limitation period of six years from the date on which the interest becomes due. Foreclosure claims are treated as claims to recover land, and are subject to a limitation period of twelve years from the date on which the right of action accrues to the claimant, or a person through whom he claims. Similarly, clams for possession of land are claims to recover land, and are subject to a limitation period of twelve years from the date on which the right of action accrues to the claimant, or a person through whom he claims."

    A footnote to the last sentence states that "Generally, the mortgage's right to possession accrues immediately the mortgage is executed", but "where the mortgage provides for quiet enjoyment by the mortgagor until default, the mortgagee's right to possession accrues on the date of default", citing the authorities referred to in paragraph 34 above.

  68. The Law Commission Report, Land Registration Bill and Commentary (LAW COM No 271, 2001), which led to the 2002 Act, states in the section on "Adverse Possession" (again omitting footnotes):
  69. "Mortgagors in possession
    14.12 Where a mortgagor is in possession, the right of the mortgagee to recover possession or to foreclose remain subject to the provisions of the Limitation Act 1980. The reason for this is simple. A mortgagee has two sets of remedies, its personal remedies against the mortgagor for the moneys due under the mortgage, and its remedies against the property to enforce its security. In essence, the assertion of the mortgagee's proprietary rights is linked to its personal remedies to recover the moneys that are secured by the charge. Once the latter are barred then so too are the former. As a mortgage is no more than a security for moneys owed, it would be very strange if, after the mortgagee's directs of enforcement were time-barred, it could still enforce them against the property. The present law achieves the necessary linkage between the mortgagee's personal and proprietary rights and may be summarised as follows.
    14.13 Under the Limitation Act, a 12 year limitation period applies to the mortgagee's rights to recover the moneys due under the mortgage, to possession and to foreclose. The right of action accrues-
    (1) as regards the right to possession, on the date of the mortgage [I would interpolate that this is not necessarily correct for the reason given in paragraph 34 above];
    (2) as regards the rights to recover the moneys due under the mortgage and to foreclose, on the date when the right to receive the money accrued, which will be the legal date for redemption.
    However, in relation to each of these limitation periods, if (as normally happens) the mortgagor pays any instalments under the mortgage, the 12 year period runs afresh from that payment. It follows that, in the typical case where the mortgagor pays instalments, the limitation period will run from the date of the last instalment that he or she has paid."
    A footnote to the penultimate sentence states:
    "The mortgagor is in adverse possession for the purposes of the Limitation Act 1980, because the land subject to the charge is in the possession of 'some person in whose favour the period of limitation can run': see Schedule I, Part I, para 8(1). The mortgagor does not in any sense have to be a 'trespasser' for these purposes."
  70. Jourdan, Adverse Possession (2003) states under the heading "Time limits on claims by mortgagees" (again omitting footnotes):
  71. "The right to take possession
    26-24 The right to take possession is a 'right of action to recover land' as that expression is defined in the Limitation Act 1980, s 38(7). It is accordingly subject to the 12-year time limit imposed by the Limitation Act 1980, s 15(1)….
    26-25 Mortgagors normally remain in possession after the grant of the mortgage. It might be thought that the possession of a mortgagor, which is by virtue of the mortgagor's equity of redemption, and with the implicit assent of the mortgagee, was not adverse under the Limitation Act 1980, Sch. I, para 8. While the mortgagor remains in possession he is, substantially, the owner of the land and the mortgagee is a mere encumbrancer. The mortgagor's status while in possession is sui generis….
    26-27 That was the position before the Real Property Limitation Act 1833. Under the old law, the possession of a mortgagor was not adverse unless the jury, from renunciation by the mortgagor, or some other circumstances, were induced to find the fact of adverse possession.
    26-28 The courts held, however, that the Real Property Limitation Act 1833 has changed the position, and that time did run against a mortgagee where no payment of principal or interest is made for the limitation period. It is now clearly established that time for recovering possession will run against a mortgagee where a mortgagor or prior mortgagee is in possession and no payments are made under the mortgage.
    26-29 The courts have, then, treated a mortgagor, who is in lawful possession with the assent of the mortgagee, as being a person in whose favour the period of limitation can run, and so in 'adverse possession' for the purposes of the Limitation Act 1980, Sch. I, para 8. Unlike the position of a mortgagee in possession or an oral periodic tenant in possession, this is not by virtue of an express statutory provision directing that time should run in favour of the mortgagor in possession. Rather, it is the result of decisions by the courts, treating the possession of a mortgagor as adverse. That approach conflicts with the principle also developed by courts that a gratuitous licensee allowed into possession by the true owner is not in adverse possession. However, the treatment of both mortgagors and licensees is very well established by authority at the level of the Court of Appeal, and could only be changed by a decision of the House of Lords or legislation."
  72. Fisher and Lightwood's Law of Mortgage (12th ed, 2006) states under the general heading "Limitation of claims" (again omitting footnotes):
  73. "Possession
    Period of limitation
    26.40 Section 15(1) of the Limitation Act 1980 provides that no claim shall be brought by any person to recover land after the expiration of 12 years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person. By s 38(7), a right of action to recover land includes a right to enter into possession of land. Accordingly the right of a mortgagee to enter upon the mortgaged land or to bring a claim for possession will be barred 12 years after the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person.
    Date from which time runs
    26.41 Since a legal mortgagee prima facie has a right of entry on the execution of the mortgage, time prima facie begins to run from the execution of the mortgage. However, the mortgage's right to possession will frequently be qualified. Thus there may be a provision that the mortgage shall be not be called in until the expiration of a given term and that until default in payment it shall be lawful for the mortgagor peaceably to enjoy and receive the rents. This amounts to a re-demise by the mortgagee to the mortgagor during the term fixed. In that case, the mortgagee's right to possession arises upon default in payment on the date fixed for payment and time will begin to run from the date of default...."
  74. None of these authorities support the existence of a requirement of adverse possession by the mortgagor, in the sense of possession without the mortgagee's consent, and Jourdan and Law Commission Report No 271 clearly support the opposite conclusion.
  75. Primary authorities

  76. In Kibble v Fairthorne [1895] 1 Ch 219 the property was subject to various mortgages including one in favour of one Pain made in 1874. In 1893 a subsequent mortgagee commenced proceedings for a declaration that he had a first charge. The plaintiff successfully contended that the 1874 mortgage had been extinguished.
  77. Romer J said at 225:
  78. "In this case it is admitted and established that those claiming under the mortgage to Pain never, during any part of the statutory period, received any principal or interest, and that no acknowledgment was given by the mortgagor. That being so, not only was the mortgage's remedy against the land extinguished, but the charge itself was extinguished. Those claming under the mortgage of 1874 have, therefore, no right to the land, and cannot set up the mortgage, or any title under it, in priority to the Plaintiff.
    It has been suggested that the statutory period did not so operate because there was a prior outstanding legal mortgage which was in existence until 1886. But the mortgagees under that mortgage were never in possession of the land. The mortgagor was, throughout the statutory period, in possession of the mortgaged property, and throughout this period the equitable mortgagee could have taken proceedings to enforce his right to the land, For instance he could have brought a foreclosure action. That is an action for the recovery of land… Therefore, as between the mortgagor and those claiming under the mortgage of 1874, the statutory period began to run from the day fixed by that deed for the redemption of the property, and on the expiration of twelve years from that date the mortgagee under that deed, who up to the end of that time could have taken proceedings, was barred, not only as to his remedy, but as to his right to land, and his charge was gone."
  79. In Samuel Johnson & Sons Ltd v Brock [1907] 2 Ch 533 the mortgagor mortgaged the property in 1889 and again in 1892. In 1901 the first mortgagee entered into possession. In 1906 the second mortgagee commenced an action for foreclosure. Parker J upheld the mortgagor's defence that the claim was statute-barred because no payment in respect of the mortgage since 1892 and that it made no difference that the first mortgagee was in possession. He said at 536:
  80. "… the right of action is to be deemed to have accrued when [the second mortgagee] became entitled to possession or receipt of the rents and profits; and that, as has been held in many cases, is when his estate became absolute at law, namely, at the time fixed for payment of the mortgage money, after which the mortgagor has only an equity of redemption."
  81. In In re Hazeldine's Trust [1908] 1 Ch 304 the mortgagors mortgaged their interest in a property in 1889. In 1896 and 1905 certain sums representing the shares of the mortgagors in the rents and profits of the property were paid into court by trustees. Up to this time no part of the principal or interest had been repaid by the mortgagors, nor had any acknowledgment been given, nor had the mortgagees taken any steps to enforce the mortgage. In 1905 the mortgagees applied for the payment out of the fund in court to them, but their application was dismissed. The mortgagors then applied for payment out of the fund to them, and the Court of Appeal held that they were entitled to have it paid out without satisfying the mortgage debt since (1) the mortgagees were precluded from asserting any claim against the fund by the dismissal of their application and (2) the mortgagees' title to the mortgage had been extinguished by limitation.
  82. Cozens-Hardy MR, with whom Fletcher Moulton and Farwell LJJ concurred, said at 38-39:
  83. "[The mortgagee's] summons was dismissed with costs, and against that there was no appeal. It proceeded on the footing that under s. 34 of the Real Property Limitation Act 1833, as amended by the Act of 1874, the title of the mortgagees against the mortgaged property, of which this fund in Court was part, was extinguished at the end of twelve years. That was decided, and that is not open to appeal, and in saying that I do not wish to suggest that I have any doubt as to the propriety of that decision. … Warrington J seems to have thought that this case was governed by the principle of In re Lloyd, and that, although it might be that no action on the covenant could be maintained, yet when the mortgagors asked for payment out the mortgagees were entitled to say, 'You cannot apply to a Court of Equity for payment out of this fund unless you do equity'. There was, however, this difference at the outset between the two cases which does not appear to have been present to the mind of Warrington J, viz, that in In re Lloyd the title of the mortgagees was not extinguished whereas in this case it was. The suggestion that a mortgagee whose title to the mortgaged property is extinguished can have any right to say as against the mortgagor, 'Give me part of this property, to which I have no title except under the extinguished mortgage', is really a proposition which I think does not require many words to refute."
  84. In Wakefield & Barnsley Union Bank Ltd v Yates [1916] 1 Ch 452 the property was mortgaged in 1897. After 1903 no payment was made or acknowledgement given in respect of the mortgage. In 1916 the mortgagees commenced foreclosure proceedings. The Court of Appeal held that the claim was statute-barred and that it made no difference that there was a prior lease the rent under which had been paid in advance.
  85. Warrington LJ, concurring with Lord Cozens-Hardy MR and Phillimore LJ, said at 460:
  86. "Sec. 1 of the Real Property Limitation Act, 1874, provides no person shall bring an action to recover any land but within twelve years next after the time at which the right to bring such action shall have accrued to him.
    The action in the present case is an action of foreclosure, and the effect of the judgment when obtained is finally to deprive the mortgagor of the right which he has in equity to redeem his property on payment notwithstanding that the period fixed for this by the mortgage has expired. The right to bring this action accrues at the expiration of the last-mentioned period. In the present case there is no such period, for the money is payable in demand, and the right accrued immediately on the execution of the deed.
    Prima facie, then, an action could not be brought more than twelve years after that date, but the period is lengthened in the cases to which they are applicable by the provisions which make acknowledgment or payment the starting point of the period of limitation."
  87. In Lewis v Plunket the plaintiff mortgaged her house to the defendant in 1921 and handed the title deeds to the defendant. Later the same year she made a payment of interest. After that she neither paid interest nor acknowledged the debt. In 1936 she wrote to the defendant asking for the deeds back. The defendant failed to return them and the plaintiff brought proceedings for delivery up of the deeds. According to the reports of the arguments, counsel for the defendant acknowledged that the limitation period had expired, but argued that the 1936 letter was an acknowledgement.
  88. Farwell J said at [1937] 1 All ER 530, 534 (in a passage omitted from the report at [1937] 1 Ch 307):
  89. "It is, I think, quite plain that by virtue of the Real Property Limitation Act 1833, s. 34, and the Real Property Limitation Act 1874, s. 1, on the expiration of 12 years from 1921 the mortgagee, the defendant, ceased to have any estate or interest whatsoever in the land. In my judgment, it is plain on the authorities that, even had there been an acknowledgment of any kind since that date, it would not have been sufficient to restore to the mortgagee the estate or interest which she had as a mortgagee under the mortgage, but in that letter there is not any sort of acknowledgment at all."
  90. In Young v Cleary [1948] Ch 191 the first two defendants were the first mortgagees of a property under a mortgage of 1923 while the plaintiff was the second mortgagee under a mortgage of 1926. The first two defendants went into possession in 1933. Later that year the last payment of interest was made to them. Thereafter they continued to be mortgagees in possession without receiving any sum in respect of principal or interest and without acknowledging the title of the mortgagor. In 1946 the first two defendants agreed to sell the property and in 1947 they conveyed it to the purchaser. The plaintiff claimed a declaration to the effect that the first two defendants held the proceeds on trust for the plaintiff under section 105 of the Law of Property Act 1925.
  91. Harman J said at 194-197:
  92. "[Counsel for the plaintiff] says it does not matter, though it be a fact, that the first mortgagees might make a title absolute under the Statute of Limitations. They have not chosen to do, but they have chosen to exercise their powers of sale as mortgagees, and, therefore, they must be taken to be mortgagees for all purposes. The usual result ensues he says…
    It is necessary, in order to test that contention to see what is the position under the statutes of a mortgage who, having been in possession for twelve years, has given no acknowledgment to anybody in respect of the property. That depends on the Limitation Act, 1939 [ss. 12 and 16] … Therefore the position here is that in the year 1945 the period of twelve years had expired and the title of the persons whose interest it was to redeem was extinguished.
    The plaintiff, therefore, as second mortgagee, from that date on had no right, title or interest in the land….
    In my judgment the answer to this summons depends on who is the person entitled to the mortgaged property, and, whoever else may be, I cannot see how the plaintiff can possibly say that it is he, because under ss. 12 and 16 of the Limitation Act, 1939, all his title has been extinguished and he has no interest in the property."
  93. In Wright v Pepin [1954] 1 WLR 635 the property was mortgaged in 1928. The mortgagor paid the interest due until 1940. In 1953 the mortgagees applied for an order for possession. The mortgagor resisted the order on the ground that more than 12 years had elapsed since the last payment of interest and the mortgagees' claim was statute-barred. The mortgagees overcame this defence by reliance upon an acknowledgment (as to which, see below).
  94. Harman J said at 639:
  95. "Section 4 of the Act of 1939 seems at first sight unsuitable to apply to an action by a mortgagee for possession, because the mortgagee always has the right to go into possession at any moment, and in a sense, therefore, that right first accrued when the mortgage was made. So long, however, as the mortgagor paid the interest that prevented the statute from running, and the right of action would be deemed to have accrued when payment was due, but was not made, that was November 1, 1940. As there has been no payment for 12 years from that time, unless there has been an acknowledgment in the meantime, section 4 applies after the expiration of the 12 years from the date on which the right of action accrued.
    The question is, therefore, has there been an acknowledgment?"
  96. In Cotterrell v Price [1960] 1 WLR 1097 the mortgagor executed two mortgages of the property in 1930. All interest due on the first mortgage was paid down to 1959, but no part of the principal or interest on the second mortgage was ever paid. In 1959 the plaintiff, who was entitled to the benefit of the second mortgage, applied for a declaration that his right to redeem the first mortgage still subsisted. The plaintiff conceded that, as against the mortgagor, his remedies were statute-barred.
  97. Buckley J said at 1102:
  98. "In my judgment, on the second mortgagee's right against the mortgagors becoming statute barred, the second mortgagee lost all estate and interest in the mortgaged property. He could no longer foreclose as against the mortgagor; he could no longer sue for possession, and a result of the provisions of section 16 … his estate in the land had come to an end."
  99. There is no hint in any of these judgments of any requirement of adverse possession on the part of the mortgagor, in the sense of possession without the mortgagee's consent. The general tenor of them is to the opposite effect. Nor is there any suggestion in the later cases that the passage of the 1939 Act made any difference to the law which had been established before then.
  100. A contrary decision was reached by the Hong Court of Final Appeal in Common Luck Investment Ltd v Cheung Kam Chuen (1999) 2 HKCFAR 229, [1999] 2 HKLRD 417, but it appears that the cases reviewed above were not cited. The decision was criticised by the Law Commission in Report No. 271 as "wrong in principle", and counsel for the Defendant told me that he did not feel able to rely upon it.
  101. Conclusion

  102. I conclude that, in a case such as the present, time starts to run for the purposes of section 15(1) on the date on which the mortgagee becomes entitled to possession, and that it is not necessary in order for time to run that the mortgagor be in possession without the consent of the mortgagee. Accordingly, the Defendant's first ground of opposition to the claim fails.
  103. Acknowledgment

  104. The second ground on which the Defendant resists the Claimant's claim is that, even if its right of action to recover land accrued more than 12 years ago, Mr Babai acknowledged its title in his letter dated 25 September 1999 and/or Mace & Jones did so in their letter dated 27 April 2001, and accordingly there was a fresh accrual of its right of action on those dates by virtue of section 29(2) of the 1980 Act. The Claimant disputes that either of those letters amounted to an acknowledgment.
  105. The test

  106. In order to resolve this dispute, it is first necessary to ascertain what the correct test is to be applied when determining whether a person has "acknowledge[d] the title of the person to whom the right of action has accrued" within section 29(2).
  107. It was common ground before me that the correct test to be applied when determining whether a person has "acknowledge[d] the claim" within section 29(5) was that stated after a review of the authorities by Kerr J in Surrendra Overseas Ltd v Government of Sri Lanka [1977] 1 WLR 565 at 575:
  108. "What I draw from these authorities, and from the ordinary meaning of 'acknowledges the claim' is that the debtor must acknowledge his indebtedness and legal liability to pay the claim in question. There is now no need to go further to seek for any implied promise to pay it. That artificiality has been swept away. But, taking the debtor's statement as a whole, as it must be, he can only be held to have acknowledged the claim if he has in effect admitted his legal liability to pay that which the plaintiff seeks to recover. … In effect, 'acknowledges the claim' means that the statement in question must be an acknowledgement of that indebtedness which the plaintiff seeks to recover notwithstanding the expiry of the period of limitation.
    In my judgment this analysis is supported by three considerations. First, I think that the statement relief upon as an acknowledgment must be taken as a whole; the creditor is not entitled to pick out parts and ignore others. Secondly, I think that an acknowledgment of indebtedness is the ordinary meaning of 'acknowledges the claim' and that the pre-1939 authorities do no preclude [sic] any other conclusion. Thirdly, I think that this construction of the statute is in accordance with good sense and justice."
  109. Surrendra was conceded to be a correct statement of the law in National Westminster Bank plc v Powney [1991] Ch 339: see the judgment of the Court delivered by Slade LJ at 358. It was approved obiter, although distinguished, by Simon Brown LJ, with whom Mummery and Mantell LJJ agreed, in Mahomed v Bank of Baroda [1998] EWCA Civ 1776. It was also referred to with approval by Lord Hope of Craighead and Lord Brown of Eaton-under-Heywood in Bradford & Bingley plc v Rashid [2006] UKHL 37, [2006] 1 WLR 2066 at [21] and [58].
  110. The Claimant contends that the same test applies under section 29(2). The Defendant contends, however, that a different test applies under section 29(2). Counsel for the Defendant submitted that the law under section 29(2) was correctly stated by Jourdan as follows (omitting footnotes):
  111. "16-60 In construing correspondence relating to mortgages, the courts have treated any letter which does not deny the existence of the mortgage as implicitly acknowledging its existence. Thus in Trulock v Robey, a letter from a mortgagee expressing his willingness to settle was held to be an acknowledgement. And in Stansfield v Hobson, the mortgagor's solicitor wrote to the mortgagee in possession asking when the mortgagee would see him on the mortgagor's claims. The mortgagee wrote back, stating:
    'I do not see the use of meeting either here or at Manchester, unless some party is ready with the money to pay me off.'
    The Lords Justices held that that was a sufficient acknowledgement to start the limitation period running afresh from the date of the letter.
    16-61 In Wright v Pepin, Harman J held that a letter written by a mortgagor's solicitor had acknowledged the mortgage. The letter was in reply to correspondence from the mortgagee's solicitors, asking for information about what was happening to the mortgaged property, which had almost been destroyed in the war, stating that the mortgagee wanted the mortgage paid off, and threatening proceedings. The letter from the solicitor for the mortgagor, Mrs Pepin, stated:
    'I understand that Mrs Pepin will shortly be making a appointment to see you with regard to her accounts with you for some time past. She has several questions which she wishes to raise. Steps are being taken to rebuild 101, Mountview Road. Plans have been prepared and submitted to the local authority, and as soon as the work is in hand I will let you know, when Mrs Pepin's position can again be reviewed.'
    Harman J held that letter was an acknowledgment of the mortgagee's title. He said:
    'Her solicitors was approached by the mortgagees' solicitors, the time not having then run, and under pressure from them Mrs Pepin's solicitor, as she is well authorised to do, says "Please hold your hand until the property has been re-built, and then Mrs Pepin's position can be reviewed." What is that but an acknowledgment in respect of the property and a request for forbearance?'."
  112. In my judgment the test to be applied under section 29(2) is the same mutatis mutandis as that under section 29(5): viewed as a whole, the statement in question must be an admission of the title of the person having the right of action. My reasons are as follows.
  113. First, the issue is one of construction of the same word, "acknowledges", in the same section of the same statute. While it is not impossible that the word should mean different things in the different subsections, it is unlikely. Moreover, in the present situation it is difficult to discern any rational reason why it should mean something different. On the contrary, each of the three considerations mentioned by Kerr J is equally applicable here.
  114. Secondly, the decisions discussed in the extract from Jourdan set out above all appear to be decisions on the particular facts of those cases, rather than establishing any particular principle. Furthermore, Stansfield v Hobson (1853) 3 De CG & G 620 is of doubtful authority since (as Jourdan acknowledges) it was overruled in Sanders v Sanders (1881) 19 ChD 373, albeit on a different ground. Still further, both Trulock v Robey (1841) 12 Sim 402 and Stansfield v Hobson were decided before the enactment of section 23(4) of the Limitation Act 1939, which, as Kerr J explained in Surrendra, changed the law in this area. Yet further, in the only post-1939 authority, Wright v Pepin, Harman J applied Stansfield v Hobson. In any event, Harman J appears to have regarded the test under what is now section 29(2) as the same as that under what is now section 29(5), and he stated it in terms not greatly different to those employed in Surrendra at 640:
  115. "All that is necessary for an acknowledgement to take the case out of the statute is that the debtor should recognise the existence of the debt…"
  116. Thirdly, all these cases were decided not only before Surrendra but also before some of the cases reviewed by Kerr J in Surrendra, such as the decisions of the Court of Appeal in Good v Parry [1963] 2 QB 418 and Dungate v Dungate [1965] 1 WLR 1477 and the decision of Buckley J in In re Flynn (No 2) [1969] 2 Ch 403.
  117. Fourthly, in NatWest v Powney the Court of Appeal applied the Surrendra test to a case under section 29(2): see Slade LJ at 359.
  118. Fifthly, the conclusion set out above is supported by McGee, Limitation Periods (5th ed, 2006), which states at 18.019:
  119. "An acknowledgment must contain a sufficiently clear admission of the title or claim being acknowledged."
  120. I should say that counsel for the Defendant also relied upon the decision of the Court of Appeal in Edginton v Clark [1964] 1 QB 367, but in my judgment that case does not assist the Defendant. As Upjohn LJ said about the letters in question when delivering the judgment of the Court at 376:
  121. "… it would seem to be a very clear case, and it so appeared to the county court judge. If a man makes an offer to purchase freehold property, even though the offer be subject to contract, he is quite clearly saying that as between himself and the person to whom he makes the offer he realises that the latter has a better title, and that would seem to be the plainest possible form of acknowledgment."

    Application to the present case

  122. It remains to apply this test to the facts of the present case. It is convenient to take the two letters relied on in reverse chronological order.
  123. In my judgment the letter dated 27 April 2001 does not begin to amount to an acknowledgment of anything. In that letter Mace & Jones state that they have been unable to take instructions on the documents sent by the Defendant due to their client's illness and ask for more time in order to do so. Not having obtained instructions, they cannot be said to have acknowledged anything on behalf of their client. The facts that, as emerges from the subsequent correspondence, it was Mrs Babai who was ill and that nothing at all is said about the position of Mr Babai do not alter this.
  124. The Defendant has a better case on the letter dated 25 September 1999. Nevertheless I am not persuaded that it amounts to an acknowledgment of the Mortgage. There is an initial difficulty in that one does not know what the letter from Restons to Mr Babai said. Even if one assumes that it said that Mr Babai still owed the Defendant money and threatened to enforce the Mortgage, however, I consider that Mr Babai's response is too ambiguous to amount to an acknowledgment of the Mortgage. He says he is "shocked" – but shocked by what precisely he does not say. He may have been shocked to receive a demand at all after such a passage of time. He may have thought that he was no longer liable. The fact that he stated, and enclosed evidence to show, that he was unemployed does not amount to an acknowledgment, since it could have been put forward simply to show that he was not worth pursuing whether or not he was liable. In any event, if the letter was an acknowledgment at all, it would be more natural to take it as an acknowledgment of the debt than of the Defendant's title under the Mortgage. The Mortgage is not referred to at all, even by implication.
  125. Conclusion

  126. I conclude that neither of the grounds relied upon the Defendant for resisting the claim is made out. I will grant a declaration that the Mortgage has been extinguished by the operation of sections 15 and 17 of the 1980 Act.
  127. Postscript

  128. For the avoidance of doubt, I should record that no argument was presented to me based upon the Human Rights Act 1998.

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