Key Points

  • Mortgagee in possession is an "involuntary bailee" in respect of non-charged chattels left on premises. 
  • Duty on the mortgagee in relation to such chattels is to do what is "right and reasonable".
  • In the circumstances, the mortgagee acted reasonably in disposing of goods.

The Facts

The mortgagee ("M") obtained a warrant for possession against an individual borrower ("C"). C did not deliver up vacant possession and despite being sent various notices/warnings regarding the removal of the chattels and being granted numerous opportunities to enter the property to remove chattels did not do so. Consequently, M disposed of C's chattels.

The Decision

The court confirmed that in such circumstances, M was to be treated as an involuntary bailee and confirmed that the duty on an involuntary bailee in relation to chattels left at the premises was to do what was "right and reasonable" – the analysis of which would depend on the facts of the particular case. The court held that given C had been provided with numerous opportunities to remove her possessions but had deliberately chosen not to do so, that the mortgagee was acting appropriately in disposing of the chattels rather than storing or selling them.

Comment

This decision reflects a sensible approach of the courts in considering a mortgagee's conduct in light of the behaviour of the mortgagor when assessing what is "right and reasonable".

Campbell v Redstone Mortgages Limited