In the case of Campbell v Redstone Mortgages Ltd [2014] EWHC 3081 (Ch) the court considered the responsibilities of a mortgagee in possession in relation to chattels remaining at a property following repossession.

Background

The borrower had entered into a mortgage with the lender in 2006. The mortgage terms and conditions included a condition which provided that in the event of repossession, the borrower would be required to remove her belongings from the property within seven days. In the event that the items were not removed, the lender would be entitled to remove them.

The borrower fell into arrears in 2007, and an order for possession was originally granted on 3 June 2008. A warrant for possession was ultimately executed on 29 January 2014. On the day of the eviction, notices were placed at the property stating that if the borrower did not collect the chattels within seven days, the lender would dispose of them. The lender’s agents also explained the effect of the notice to two of the borrower’s adult children (who were present at the time).

The borrower applied to the court to extend the period of time for her to collect chattels from the property. Three orders were made which extended the time for collection of the chattels. On the third occasion the borrower attended the property, but barricaded herself in for six days. When the borrower vacated the property, she did not take the chattels with her. The lender then disposed of the chattels.

The court was asked to decide whether the lender was liable to the borrower in damages as a result of the steps taken whilst the lender was “involuntary bailee”.

Held

The Court held that the borrower was obliged to give vacant possession of the property to the lender upon execution of the warrant for possession. Following enforcement of the order, the lender had become “involuntary bailee” of the chattels as a result of the borrower’s failure to clear the property. The lender’s legal obligation as “involuntary bailee” was to take whatever actions were right and reasonable bearing in mind the circumstances of the case. The court held that the lender had given the borrower every opportunity to remove her chattels, and was therefore justified in taking action to clear the items from the property and dispose of them following the borrower’s failure to do so. The court also confirmed that the lender’s right to remove the chattels included a right to dispose of them. Disposal of the chattels was the most straightforward and cost-effective way for the lender to deal with the chattels. As the borrower had not taken any action to remove the items from the property (despite being given every opportunity to do so) the lender was not liable to the borrower as a result of disposal of the chattels.

Comment

This decision highlights the importance of ensuring that sufficient notice is given to borrower/interested third parties, before chattels are removed from a property. The decision in this case suggests that, provided that sufficient notice has been given and there is no evidence/information to suggest that there may be valuable items at the property, a lender will be entitled to take steps to remove chattels from a repossessed property. Where the lender has been given information to suggest that valuable items may be at the property, further steps (e.g. storage of the chattels) might then be necessary.