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||Neutral Citation Number:  EWHC 2327 (Ch)
||Case No: HC 07C0150
IN THE HIGH COURT OF JUSTICE
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
MR JUSTICE BRIGGS
|| HORSHAM PROPERTIES GROUP LTD
||PAUL JAMES CLARK
CAROL ANN BEECH
GMAC RFC LIMITED
THE SECRETARY OF STATE FOR JUSTICE
Mr Tom Poole (instructed by S J Newman, 100 College Road, Harrow NA1 1EN) for the Claimant
Miss Victoria Williams (instructed by Neves Scott, Trinity House, 82 High Street, Dartford, DA1 1DE) for the Second Defendant
Mr Sam Grodzinski (instructed by Treasury Solicitors, One Kemble Street, London WC2B 4TS) for the Secretary of State
Hearing date: 19th September 2008
HTML VERSION OF JUDGMENT
Crown Copyright ©
Mr Justice Briggs:
- This judgment follows the trial of a claim by Horsham Properties Group Ltd ("Horsham") of a claim for possession of premises known as 119 Walderslade Road, Chatham, Kent, of which the claimant is the present registered proprietor. The main issue which I have to decide, which has potentially wide-ranging implications, is whether section 101 of the Law of Property Act 1925 ("the LPA"), construed as it and its predecessors have been since 1860, infringes the Convention rights of mortgagors (and residential mortgagors in particular) by permitting mortgagees to overreach the mortgagor's rights in relation to the mortgaged property by selling it out of court, without first obtaining a court order for possession, or an order for sale.
- The claim is made against the defendants Paul James Clark and Carol Ann Beech who, as former registered proprietors of the Property, charged it to GMAC RFC Limited ("GMAC") by a deed of mortgage dated 23rd January 2004 (" the Mortgage") as security for a loan.
- It is not in dispute that the defendants fell into arrears with payments due under the Mortgage and on 24th April 2006 GMAC appointed Jon Gershinson and Louisa Brooks as joint receivers over the Property, purporting to do so pursuant to a power to that effect contained both in section 101(1)(iii) of the LPA and clause 12 of the Mortgage Conditions to which the Mortgage was subject.
- On 14th September 2006 the receivers contracted to sell the Property at auction, relying for that purpose upon their power to do so conferred by clause 12 of the Mortgage Conditions, there being no equivalent power in the LPA. The purchaser was Coastal Estates Ltd ("Coastal") and completion took place on 28th September 2006. The purchase price was £123,000, and was sufficient to pay off the whole of the debt secured by the Mortgage.
- The property was transferred by the receivers as agents for GMAC, pursuant to its powers of sale, conferred both by the Mortgage and by section 101. On the same day Coastal transferred the Property to Horsham, which became the registered proprietor of the Property in succession to the defendants.
- Thereafter, Horsham issued these proceedings for possession of the Property on 20th October 2006, claiming that the defendants were trespassing in the Property, on the basis that all their rights in relation to the Property had been overreached by the receivers' sale to Coastal.
- There is no relevant dispute of fact. In particular, Miss Beech accepts that she and Mr Clark were in arrears with their mortgage payments, that the mortgage money had become due within the meaning of section 101(1)(iii) of the LPA, that the Mortgage contained the requisite power, in addition to section 101, for GMAC to appoint receivers and that the Mortgage contained the requisite power enabling the receivers to sell the Property free from the rights of the defendants as mortgagors.
- Yet further, Miss Beech acknowledges that, prior to the coming into force of the Human Rights Act 1998, she would have had no defence to Horsham's claim for possession. In particular, and having regard to the implications of the decision of the Court of Appeal in Ropaigealach v. Barclays Bank  QB 263, Miss Williams who appeared for Miss Beech sensibly acknowledged that the traditional (pre-Human Rights Act) understanding of the relationship between section 101 of the LPA and section 36 of the Administration of Justice Act 1970 ("section 36") enabled a mortgagee to sell without seeking a court order permitting him to do so, and enabled a purchaser from the mortgagee to obtain possession without thereby triggering the court's powers to adjourn the proceedings to stay or suspend execution of a judgment for possession or to postpone the date for the delivery of possession in circumstances where it appears that the mortgagor is likely to be able within a reasonable period to pay any sums due under the mortgage or remedy any other default or breach of obligation.
- The essence of Miss Beech's defence is that the traditional understanding which I have described is not compatible with the Convention rights of residential mortgagors. The statutory framework would, so Miss Williams submits, only be compatible if either:
i) Section 101 was construed as requiring a mortgagee first to obtain a court order for possession or to make an application for an order permitting sale, and giving the court on such an application a discretion similar to that conferred by section 36; or
ii) Section 36 was construed so as to confer upon the court the discretionary powers to adjourn or suspend the making of a possession order where the application was made, not by the mortgagee, but by the mortgagee's purchaser.
- Alternatively, if the statutory framework cannot be so construed, Miss Beech seeks a declaration of incompatibility in relation to section 101.
- The unusual nature and potentially far reaching consequences of Miss Beech's defence led H. H. Judge Cox to order these proceedings to be transferred from the Medway County Court to the Chancery Division, on 24th May 2007, and in due course led to the intervention of the Secretary of State for Justice and to the joinder of GMAC as third party. GMAC took no active part in the trial.
- Since I was concerned when the matter came first before me that the relief sought by the claimant fell within the exclusive jurisdiction of the county court, I arranged for myself to be appointed as a judge of the Medway County Court by the Lord Chief Justice with the concurrence of the Lord Chancellor pursuant to section 5 of the County Courts Act 1984, so as to enable at one and the same time a hearing both of the claim for possession and the application, in the alternative, for a declaration of incompatibility.
- Although Miss Beech's defence was originally based upon Articles 6 and 8 of the Convention and upon Article 1 of the First Protocol ("A1FP") Miss Williams both in her supplemental skeleton argument and her oral submissions very sensibly in my judgment confined her case to an alleged infringement of A1FP, conceding that her case under Art 6 was parasitic upon her main case, and that her case under Art 8 could not succeed if her main case failed.
- Miss Williams usefully identified four issues or, as she put it, hurdles for her client to surmount. They are as follows:
i) Did the sale of the Property by the receivers deprive Miss Beech of one of her possessions in such a way as to engage A1FP?
ii) If so, can the conditions imposed for a lawful deprivation of possessions by A1FP be satisfied otherwise than by subjecting the mortgagee's power of sale in section 101 to a prior application to the court for permission, at which the court is vested with a discretion to adjourn or stay broadly equivalent to that conferred in possession cases by section 36;
iii) if not, is it possible for section 101 to be read and/or given effect in such a way as to require the mortgagee to make such an application before selling the mortgaged property;
iv) if not, should there be a declaration of incompatibility.
- Without much enthusiasm Miss Williams advanced an alternative case that compatibility with A1FP might be achieved if section 36 was construed so as to impose upon any purchaser from a mortgagee an obligation to seek a court order for possession, and to confer upon the court in such circumstances the same discretion as it plainly has on an application for possession by the mortgagee itself.
- Before addressing those issues in turn, it is necessary in my judgment to address with some precision the nature of Miss Beech's rights in relation to the Property following the grant of the Mortgage by her and Mr Clark to GMAC. A useful general description of the consequences of the grant of a legal mortgage since 1925 is set out in the following passage in the judgment of Chadwick LJ in Ropaigealach (supra) at page 271g to 272b:
"The genesis of section 36 of the Administration of Justice Act 1970 is not in dispute. Since 1925 a mortgage of freehold land has taken effect as a demise for a term of years absolute, subject to proviso for redemption - see section 85 of the Law of Property Act 1925. A charge by deed expressed to be by way of legal mortgage takes effect as if a mortgage term of 3,000 years had been created in favour of the mortgagee - see section 87(1) of that Act and, where the land is registered land, section 27(1) of the Land Registration Act 1925. The effect, as a matter of legal analysis, is that the mortgagor demises his immediate estate to the mortgagee; who thereupon becomes entitled to possession by virtue of the estate which he has acquired. The position is described in Halsbury's Laws of England, 4th ed., vol 32 (1980), p. 308, para. 672:
"Where a legal [mortgage] has been created, whether by demise or by legal charge, and no provision is made for retention of possession by the mortgagor, the mortgagee is entitled to immediate possession or receipt of the rents and profits at any time after the execution of the mortgage, and equity does not interfere, notwithstanding that there has been no default on the mortgagor's part …"
See, also, the comparable passage in Fisher and Lightwood's Law of Mortgage, 10th ed. (1988), p. 331, and the observations of Harman J. in Four-Maids Ltd v. Dudley Marshall (Properties) Ltd.  Ch 317, 321-322, and of Russell J. in Birmingham Citizens Permanent Building Society v. Caunt  Ch 883, 887."
- That description was necessarily focussed upon the mortgagee's immediate right of possession, because of the issues raised in that case. The position in relation to sale is different. The deemed demise does not of itself confer upon the mortgagee an immediate power to sell the mortgaged property free from the mortgagor's rights, otherwise than with the mortgagor's concurrence. Nonetheless, from the early 19th century it became common for the parties to legal mortgages to insert an express power of sale, until it was rendered unnecessary to do so by the creation of a statutory power of sale in Lord Cranworth's Act 1860, repeated in section 19(1) of the Conveyancing Act 1881 and now to be found in section 101(1)(i) of the Law of Property Act 1925. The exercise of that power overreaches any interest of the mortgagor: see section 2(1)(iii) of the LPA. I shall refer to it as the statutory power of sale. It becomes exercisable only when the mortgage money has become due, subject (like everything else in section 101) to any contrary intention in the mortgage deed: see section 101(4)).
- Although an important purpose of section 101 and its statutory predecessors was to streamline conveyancing by removing the need for typical mortgagee's powers to be spelt out in every mortgage, it is still common for modern legal mortgages to contain express powers overlapping with those to be found in section 101, and the Mortgage in the present case is no exception. Clause 11 of the Mortgage Conditions (to which the Mortgage was expressly made subject) provides that:
"For the purposes of the Law of Property Act 1925, the mortgage debt will be treated as due one month after the mortgage has been completed."
Clause 11.2 sets out a series of events of default giving rise to an immediate obligation on the borrower to repay the mortgage debt immediately. Those events include:
i) If the borrower fails to make one monthly payment or more when it is due;
ii) If the borrower fails to pay any other part of the mortgage debt within one month of it becoming due.
- By clause 11.5:
"Once any of the events specified in Condition 11.2 has occurred, the Company may do any of the following things:
(a) require the borrower to leave the property so that the Company may take possession of the property or, if the property is let, collect the rent;
(b) sell the property using the power of sale conferred by the Law of Property Act 1925…. Section 103 of the Law of Property Act 1925 imposes certain restrictions on the power of sale of a mortgagee (the Company in this case), but these restrictions do not apply to the mortgage;
(c) Appoint a receiver of the property….
(d) Exercise all the other powers conferred on mortgagees by the Law of Property Act 1925."
- Clause 12 headed "Appointment of Receivers" gave GMAC the power to appoint receivers:
"at any time after the company shall have demanded payment of any of the mortgage debt or after any breach by the borrower(s) of any of the provisions of the mortgage".
The receivers were to be the agents of the borrower and by sub-clause (f) were given an express power of sale in relation to the Property. By sub-clause (o), the receivers were given power:
"To exercise all powers which the company has by statute or under this mortgage."
- By the express terms of the Mortgage therefore, Miss Beech's rights in relation to the Property were all made subject to being overridden by a sale of the Property by GMAC or by receivers appointed by GMAC at any time after a default in paying sums due under the Mortgage. Furthermore, her enjoyment of occupation of the Property was expressed to be subject to a contractual obligation to vacate on demand after any default (including failure to make payments when due). Accordingly, her enjoyment of occupation of the Property as her home was at all times after the grant of the Mortgage expressly subject as a matter of contract to her compliance with the terms of the Mortgage. In that respect she may be said to have enjoyed a greater right of occupation of the Property than that inherent in the status of a legal mortgagor (as set out in Ropaigealach) since the terms of the Mortgage Deed in substance afforded to her a right of occupation pending default.
- No description of Miss Beech's rights as mortgagor would be complete without mention of the mortgagor's inherent right to redeem, that is, to recover full legal and beneficial ownership of the mortgaged property, and a discharge of the mortgage, on payment of all that is due to the mortgagee. Leaving aside the technical differences between legal and equitable rights to redeem (which do not matter for present purposes) I shall refer to it as the mortgagor's equity of redemption. It constitutes an interest in the mortgaged property and, in terms of value, is the principal element of that which the mortgagor retains after the grant of the mortgage. Thus when a house owner describes herself as having an equity of £300,000 in a property worth £500,000 mortgaged to secure a debt of £200,000, it is strictly the equity of redemption to which the owner refers. While it is true that the mortgagor of registered land remains the registered proprietor during the subsistence of the mortgage, it is wrong in substance to describe the rights of such a mortgagor as tantamount to freehold ownership. For example, the equity of redemption is overridden once the mortgagee contracts to sell the mortgaged property in exercise of the statutory power of sale, or when a receiver, duly appointed under the mortgage contracts to sell the mortgaged property, whether on behalf of the mortgagor or mortgagee, pursuant to powers given by the mortgage itself. In the present case Miss Beech's share in the equity of redemption was lost when the receivers contracted to sell to Coastal pursuant to their powers contained in the Mortgage, rather than when, as agents for GMAC, they later transferred the Property to Coastal on completion.
- Turning directly to issue one, A1FP in its English translation is as follows:
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."
- Miss Williams submitted that Miss Beech's loss of her rights as co-owner of the Property or, as I would prefer to put it, her share in the equity of redemption, amounted to being deprived of a possession of hers within the meaning of the second sentence of the first paragraph of A1FP. She acknowledged, in the light of relevant authority, that it was incumbent upon Miss Beech to show first that the rights that she lost fell within the meaning of "possessions" and secondly that she lost them by virtue of some form of State intervention, rather than purely as the result of the terms of her private bargain with GMAC.
- I have no difficulty in concluding that Miss Beech's share in the equity of redemption in relation to the Property was a "possession", a widely defined expression which may include purely statutory rights in relation to property, such as the result to renew a business tenancy under Part II of the Landlord and Tenant Act 1954: see Pennycook v. Shaws (EAL) Ltd  Ch 296 at 310-311 per Arden LJ at paragraph 35. It is the second of those requirements which constituted the issue most keenly debated before me.
- It is well settled that the necessary State intervention may lie in legislation, rather than in the taking of steps by a government body. Thus in Wilson v. First County Trust Ltd (No 2)  1 AC 816, A1FP was engaged by provisions in the Consumer Credit Act 1974, which rendered unenforceable a private bargain pursuant to which Miss Wilson pawned her car in connection with a borrowing of £5,000 from a pawnbroker. That was a case in which the sum total of the relevant State intervention was the enactment of the Consumer Credit Act itself, in connection with a dispute which, like the present, otherwise only involved private parties. As Lord Nicholls put it on page 837 at paragraph 44:
"The lender's rights were extinguished in favour of the borrower by legislation for which the state is responsible. This was a deprivation of possessions within the meaning of article 1…."
Earlier, at paragraph 41, he said:
"Clearly, the expiry of a limited interest such as a licence in accordance with its terms does not engage article 1. That is not this case. Here the transaction between the parties provided for repayment of the loan and for the car to be held as security. What is in issue is the "lawfulness" of overriding legislation."
- Miss Williams submitted that the application of that analysis to the present case engaged A1FP because Miss Beech's rights in relation to the Property had been taken away by the exercise of GMAC's statutory power of sale, conferred not by private contract, but by section 101. She relied in particular upon section 101(3), which provides:
"The provisions of this Act relating to the foregoing powers, comprised either in this section, or in any other section regulating the exercise of those powers, may be varied or extended by the mortgage deed, and, as so varied or extended, shall, as far as may be, operate in the like manner and with all the like incidents, effects, and consequences, as if such variation or extensions were contained in this Act."
It mattered not, she therefore submitted, that GMAC's power of sale was referred to in the mortgage deed, or that GMAC enjoyed a contractual power of sale in different terms from the statutory power of sale. All such contractual powers were deemed by section 101(3) to be contained in the Act, and therefore to be statutory powers for the purposes of analysis of the State intervention question. In the same context, she relied upon section 104(3) of the LPA which provides that:
"A conveyance on sale by a mortgagee, made after the commencement of this Act, shall be deemed to have been made in exercise of the power of sale conferred by this Act unless a contrary intention appears."
Miss Williams submitted that, regardless whether the sale of the Property might be capable of being analysed as a sale pursuant to GMAC's contractual rights in the Mortgage, section 104(3) required it to be analysed as a sale pursuant to statutory power in the absence of any contrary intention.
- Recognising that her opponents might argue that the speeches of Lords Hope, Scott and Hobhouse in Wilson v. First County Trust Ltd (supra), meant that there could be no deprivation under A1FP if the overriding legislation governed the relationship creating the contractual rights as from the outset, Miss Williams took me to Pennycook v. Shaws (supra) to demonstrate that this was not inevitably an answer to an alleged case of deprivation of possessions under A1FP. That was a case in which a tenant of business premises lost the right to renew the tenancy by serving notice within the allowed two month period, by notifying the landlord before the expiry of the two month period that the tenant would be willing to give up possession of the property (called a "positive counter-notice"). The Court of Appeal held that the statutory effect of a positive counter-notice, in barring the exercise of the right to renew thereafter if the tenant had a change of mind, was a relevant deprivation of possessions within A1FP, albeit that, on the merits, it was justified in the public interest so as to afford certainty to the landlord.
- At paragraph 35 (on page 310) Arden LJ said this:
"… the court must look at the substance of the claimed rights to see whether the bar in this case to the exercise of the tenant's rights is a delimitation of the right or whether it represents a deprivation of right. A relevant circumstance is that the bar is rigid, arbitrary or discriminatory."
In this respect Arden LJ followed the observations of Lord Nicholls, who at paragraph 44 of Wilson v. First County Trust Ltd described the relevant provisions of the Consumer Credit Act as:
"… more readily and appropriately characterised as a statutory deprivation of the lender's rights of property in the broadest sense of that expression than as a mere delimitation of the extent of the rights granted by a transaction. The rigid ban on enforcement of security and contractual rights prescribed by section 127(3) alone and in conjunction with sections 106 and 113 engages article 1 of the First Protocol."
- Later at paragraph 38 in Pennycook v. Shaws, Arden LJ said this:
"Returning to the statutory scheme in the present case, I consider that the correct analysis is that the tenant had a right to apply to the court for a continuation of a tenancy if he served the requisite notice at any time within the period of two months from service of the landlord's notice: section 25(5). The bar that arises if he first served a positive counter-notice is not apparent on the face of section 25(5) or section 29(2). In those circumstances I consider that it is more accurately analysed as a deprivation of a right rather than a delineation of a right."
- Attractively though Miss Williams' submissions were presented, I have not been persuaded by them. In my judgment the correct analysis is as follows.
- First, Miss Beech lost her equity of redemption in the Property by virtue of the contract for sale which ensued from the receivers' placing of the Property in the auction. In this respect, they enjoyed no statutory power to sell the Property free from the mortgage. Although section 101(1)(iii) confers on a mortgagee a statutory power to appoint receivers, such receivers are given no statutory power of sale.
- The result is that Miss Beech lost her equity of redemption by virtue of the exercise of powers conferred purely by contract. By the time the receivers transferred the Property to Coastal on completion as agents for GMAC, which may well have been, or been deemed to be, the exercise of a statutory power, Miss Beech had already lost her equity of redemption. It follows that, on a strict analysis of the particular facts of the present case, Miss Beech lost her equity of redemption without any State intervention at all.
- I do not however rest my conclusion upon that narrow ground, not least because it would leave open at least the possibility that on only slightly different facts, such as for example a contract for sale by the receivers expressly as agents for GMAC under its statutory powers, a different result might have ensued. That the outcome of this important question should turn on such technicalities is both unattractive and in my judgment unrealistic. Even if GMAC had sold (both by way of contract and on completion) purely in exercise of its statutory powers, I consider that there would still have been no relevant deprivation of possessions within the meaning of A1FP.
- My primary reason for that conclusion is that section 101 serves to implement rather than override the private bargain between mortgagor and mortgagee. As I have described, its history, going back to 1860, is that it supplies a convenient power of sale out of court to mortgagees in substitution for the parties having (as they routinely did before 1860) to spell out such a power in every legal mortgage. It is in substance a form of conveyancing shorthand designed to implement the ordinary expectations of mortgagors and mortgagees while reducing the costs and delays of conveyancing. Far from overriding the parties' private bargain, as in the case of the Consumer Credit Act reviewed in Wilson v. First County Trust Ltd, it implements and gives effect to it. It is in that respect nothing to the point that the modern facilities of photocopiers and word processors enable the parties to modern mortgages to spell out private powers which overlap or replace the convenient statutory powers in section 101.
- Furthermore, all the statutory powers in section 101 are expressed to be subject to contrary intention. Section 101(4) provides that:
"This section applies only if and as far as a contrary intention is not expressed in the mortgage deed, and has effect subject to the terms of the mortgage deed and to the provisions therein contained."
That sub-section on its own demonstrates that section 101 serves rather than overrides the parties' bargain. It is in my judgment as far removed from the concept of State intervention into private rights through overriding legislation, which lies behind A1FP, as it is possible for legislation to get. It is neither rigid, arbitrary or discriminatory, and its effect is not only apparent on the face of section 101, but (in the present case) spelt out in terms in the Mortgage itself. It therefore has none of the characteristics which led to the Court of Appeal in Pennycook v. Shaws, or for that matter Lord Nicholls (albeit without the support of his brethren) in Wilson v. First County Trust, to characterise the relevant statutory provisions as giving rise to a deprivation of possessions within the meaning of A1FP.
- Furthermore, the case that section 101 engages A1FP gains nothing from the undoubted fact that the exercise by a mortgagee of a power of sale under section 101, without first obtaining possession, will probably be a necessary and sufficient preliminary to the easy obtaining of possession by the purchaser, who will after the sale properly be able to characterise the mortgagor, if still in possession, as a trespasser. As was pointed out in Ropaigealach (supra) the continued occupation of mortgaged property by the mortgagor once the ink is dry on the mortgage is, subject to statutory intervention or contractual restraint, at the mercy of the mortgagee, who has an immediate right to possession by virtue of his estate in the property. In the present case, as is typical with most modern residential mortgages, the mortgagor's right of occupation is better than that, because the taking of possession by the mortgagee is usually expressed contractually to be dependent upon the mortgagor's prior default.
- That analysis, fully applicable to the present case as I have described above, shows that by contrast with the facts of Pennycook v. Shaws, the liability of the mortgagor to lose possession upon default is fully spelt out in the same mortgage conditions as give rise to that enhanced right of continued possession in the first place. Continued possession is, by the terms of the Mortgage Conditions, conferred only upon the mortgagors for as long as they abide by the terms of the Mortgage. Thereafter they are contractually obliged to give up possession on demand.
- There is, finally, nothing in my judgment in Miss Williams' point that section 101(3) requires privately created powers of sale to be treated as if contained in the Act. That piece of unusual statutory ingenuity was no doubt designed to ensure that the provisions in section 104 designed to protect the title of purchasers from mortgagees could not be circumvented by nit-picking arguments that a particular sale was achieved by the exercise by a contractual rather than a statutory power. It does not however begin to detract from the substance of the statutory power as the servant rather than the overriding master of the parties' bargain.
- It follows in my judgment that Miss Beech's case under A1FP falls at the first of Miss Williams' hurdles. The exercise of a statutory power of sale under section 101 after a relevant default by the mortgagor is not a deprivation of possessions within the meaning of A1FP and, a fortiori, the exercise by receivers appointed and acting under purely contractual powers in overriding Miss Beech's equity of redemption by contracting to sell the Property cannot be either.
- I leave for another occasion the more difficult question whether a sale in breach of the terms of a mortgage (for example in the absence of any default by the mortgagor), relied upon by the purchaser under section 104(2)(a) might engage A1FP. In such a case the sale would overreach the mortgagor's equity of redemption without any justification, as between the parties to the mortgage, and leave the mortgagor to a remedy in damages against the mortgagee. If the need for the purchaser to rely upon section 104 engaged A1FP, then the question might arise whether it was justified by the public interest in affording certainty of title in real property transactions. In the present case, by contrast, it is common ground that Miss Beech was in default, so that, as between her and GMAC, the latter was entitled to sell, and the claimant therefore has no need to rely upon section 104.
- That is, on Miss Williams' eminently sensible concessions, sufficient to determine the case against Miss Beech. Nonetheless, for completeness, and because a higher court might take a different view as to the interpretation of A1FP on the meaning of deprivation of possessions, I shall briefly state what my conclusions would have been on the remaining issues, had Miss Beech surmounted the first hurdle of demonstrating that A1FP was engaged.
- The second question is whether any supposed deprivation of possessions constituted by a mortgagee's sale out of court without first obtaining a court order for possession is justified in the public interest. In this respect Miss Williams relied with some force upon the way in which in practice such a sale circumvents the court's discretion to relieve the mortgagor from having to give up possession of a dwelling house under section 36 of the Administration of Justice Act 1970. She submitted that the court's discretion under section 36 was typically responsive (albeit before the event) to the requirement imposed by A1FP for a proportionate balance to be struck as between private property and public interest, as indeed Hart J. observed in Barclays Bank plc v. Alcorn (unrep)  EWHC 498 (Ch), where he said:
" It seems to me however, that her general submission on the effect of the Human Rights Act in relationship to a mortgagee's action for possession is correct, namely, that the matter is regulated by s.36 of the Administration of Justice Act 1970 in a way which draws a balance which Parliament was entitled to draw between the interests of occupants of dwelling houses and the interests of mortgagees, and does so in a manner which is proportionate and reasonable, and allows the court, in the exercise of its discretion, to apply criteria of reasonableness and proportionality in either granting or denying the mortgagee its remedy."
- In my judgment, any deprivation of possession constituted by the exercise by a mortgagee of its powers under section 101 of the Law of Property Act after a relevant default by the mortgagor is justified in the public interest, and requires no case-by-case exercise of a proportionality discretion by the court, for the following reasons. First, it reflects the bargain habitually drawn between mortgagors and mortgagees for nearly 200 years, in which the ability of a mortgagee to sell the property offered as a security without having to go to court has been identified as a central and essential aspect of the security necessarily to be provided if substantial property based secured lending is to be available at affordable rates of interest. That it is in the public interest that property buyers and owners should be able to obtain lending for that purpose can hardly be open to doubt, even if the loan-to-value ratios at which it has recently become possible have now become a matter of controversy.
- Secondly, I am bound by the decision of the Court of Appeal in Ropaigealach (supra) to conclude that there was no wider policy behind section 36 of the Administration of Justice Act 1970 than to put back what the courts had shortly before taken away, namely a discretion to stay or adjourn proceedings for possession, triggered only where the mortgagee considered it necessary or appropriate to go to court in the first place. The question whether any wider policy ought to be implemented wherever steps taken by a mortgagee to realise its security are likely to lead to the obtaining of possession is a matter for Parliament, and upon which Parliament has yet, so far as I can ascertain, to form any view. It would be quite wrong for the courts in a vigorous and imaginative interpretation of the Human Rights Convention to make that policy, as it were, on the hoof. In that respect the following observations of Lord Scott in Harrow LBC v. Qazi  1 AC 983 at 1024-5 are, albeit expressed in relation to Article 8 rather than A1FP, applicable by analogy:
"... social housing legislation of this character is well justifiable on public interest grounds provided for by the article: James v. United Kingdom (1986) 8 EHRR 123. If, on the other hand, the tenant has no right to remain in possession as against the landlord he cannot claim such right under article 8. To hold otherwise, to hold that Article 8 can vest property rights in the tenant and diminish the landlord's contractual and property rights, would be to attribute to Article 8 an effect that it was never intended to have. Article 8 was intended to deal with arbitrary intrusion by State or public authorities into a citizen's home life. It was not intended to operate as an amendment or improvement of whatever social housing legislation the signatory state had chosen to enact. There is nothing in Strasbourg case law to suggest the contrary."
- To the same effect, but in relation to a complaint both under Article 8 and A1FP, is the following observation of the Commission in Wood v. United Kingdom (1997) 24 EHRR 69, at 70-71:
"In so far as the repossession constituted an interference with the applicant's home, the Commission finds that this was in accordance with the terms of the loan and the domestic law and was necessary for the protection of the rights and freedoms of others, namely the lender. To the extent that the applicant is deprived of her possessions by the repossession, the Commission considers that this deprivation is in the public interest, that is the public interest in ensuring the payment of contractual debts, and is also in accordance with the rules provided for by law."
- As to issues three and four, if I had concluded that the ability of a mortgagee to sell the mortgaged property without first obtaining possession, or an order of the court, both engaged and contravened A1FP, I would not have concluded that any construction of section 101, however purposive, could have led to the recognition of a statutory requirement first to seek a court order permitting sale. That would override the central purpose of section 101 and its statutory predecessors, namely to give the mortgagee the ability to realise its security over the mortgaged property without having to go to court. It would apply to all forms of mortgage by deed, regardless of the nature of the property offered as security, an enormous class of which mortgages of residential homes form only a sub-set. I would have accordingly had been obliged to make a declaration of incompatibility which would not, incidentally, have afforded any practical assistance to Miss Beech.
- I need only briefly mention the alternative cases under Articles 6 and 8. It is well established, for example by Wilson v First County Trust (supra) that Article 6 creates no new substantive civil rights, but merely guarantees the procedural right to have a claim in respect of civil rights and obligations adjudicated by an independent tribunal. It is for that reason that Miss Williams sensibly conceded that she would have a case under Article 6 only if her case under A1FP (or perhaps Article 8) succeeded.
- As for Article 8, it is equally well established, for example by Harrow LBC v. Qazi (supra) that although the loss of the right to possession of a dwelling house does not automatically lead that house to cease to be the former owner's home, Article 8 was not intended to interfere with the legal rights of the person entitled to possession against the occupier such that, if a claimant had an unqualified right to possession (as in the present case), there was nothing in Article 8 to prevent the enforcement of that right.
- As for Miss Williams' alternative case, that section 36 of the Administration of Justice Act 1970 could be triggered on an application by a purchaser from a mortgagee, that case failed first because of the non-engagement of A1FP, Article 6 or Article 8 at the stage of the sale overreaching the mortgagor's equity of redemption, and secondly because in any event it is in practice impossible to apply section 36 in the context of a claim by the purchaser.
- The effect of the sale in the present case was not merely to overreach Miss Beech's share in the equity of redemption, but to discharge the mortgage, since the net proceeds of sale were sufficient for that purpose. There was therefore, by the time the claimant applied for possession in the present case, no subsisting mortgage, no continuing obligation to pay instalments, let alone discharge arrears, and therefore, nothing upon which the court could focus in concluding, as the condition for the exercise of a discretion to adjourn or stay, that there was something which could be paid by the mortgagor within a reasonable time.
- In my judgment, although the definition of mortgagee in section 36 includes successors in title to an original mortgagee, it necessarily refers only to successors in title to the mortgage, claiming under the mortgage, rather than to successors in title to the mortgaged property, taking free of the mortgage. Miss Williams did not with any vigour resist that analysis.
- In conclusion therefore, it follows that the claimant is entitled to possession of the Property as against Miss Beech, the Human Rights Act defence having entirely failed.
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