The Olympics – delays in listing hearings and evictions

Several London courts have suggested that they will not be listing evictions and/or hearings during the Olympics although they have suggested backlogs will be cleared during September.

Complaints about mortgages and arrears

The June/July edition (issue 103) of the Financial Ombudsman News sets out a useful summary of examples of complaints received about “mortgages arrears and hardship” (and inevitably arrears charges) and whether those complaints have been upheld.

Abandoning claims for possession

The Court of Appeal in Spicer v Tulli [2012] EWCA Civ 845 has given guidance on the correct procedure for lenders and LPA receivers wishing to abandon claims for possession. It is not possible, as is commonly requested, for claims to be “withdrawn” and instead claims must be either discontinued or dismissed.

The differences are potentially significant. If a claim is dismissed a fresh claim cannot be brought on the same grounds (i.e the lender would have to wait for fresh arrears or another basis for possession to arise). That is not the case where a claim is discontinued (although permission may in some cases be required) but by serving notice of discontinuance technically the Claimant does become liable for the Defendant’s legal costs (if any) – which may include their costs of representing themselves.

The right to respect for private and family life

In Birmingham City Council v Richard Lloyd [4 July 2012] EWCA Civ 969 the Court of Appeal has ruled that a person who has no right to remain in a property cannot invoke Article 8 of the European Convention on Human Rights to defend a claim for possession except in exceptional circumstances. In this case, the person involved was a trespasser but the court commented that the position would have been no different if the person had been an ex tenant.

This was a local authority housing case where a Mr Lloyd had moved into a property rented by his brother from the council. The brother’s tenancy was determined and Mr Lloyd became a trespasser. Despite that, the Judge at first instance refused to grant a possession order, finding that it would be a disproportionate interference in Mr Lloyd’s right to respect for his home under Article 8 of the European Convention on Human Rights. The grounds for that included:

  1. Mr Lloyd had a history of depression which would be exacerbated by being homeless;
  2. His history meant it would be difficult for him to find a new home;
  3. He had been given a loan and other assistance to start a business which would be wasted;
  4. There was some confusion as to the circumstances under which he had surrendered another council tenancy.

In over-turning the first instance decision, the Court of Appeal relied heavily on the Supreme Court decision of Manchester City Council v. Pinnock [2010] UKSC 45, reiterating that:

  1. In principle Article 8 can be invoked to defeat a claim for possession by a public authority but only in “very highly exceptional circumstances” would it be appropriate for the court to consider a proportionality argument.
  2. In practice the procedure should be that a District Judge when confronted by an Article 8 defence should (a) identify the facts supporting the grounds on which it is based, (b) assume those facts are correct and on that basis identify whether there is a real prospect of the defence succeeding and (c) if there is such a real prospect allocate the claim to the multi-track for trial, and if there is no real prospect, and all other things being equal, make a possession order.

It is important to highlight that this case, and the earlier decision in Pinnock, only directly apply to public sector Landlords. However, lenders cannot afford to ignore developments in this area as it was highlighted in Pinnock that conflicting views have been expressed both in the UK appeal courts and in Strasbourg as to whether proportionality under Article 8 should be considered in private possession claims. Whilst Article 8 only directly binds public authorities the argument in favour of admissability to private possession claims is that the court making the order is itself a public authority.

Routes of appeal from a possession claim

In London Borough of Southwark v Ofogba [2012] EWHC 1620 (QB) the High Court considered the correct route of appeal for possession claims under Part 55, governed by the Access to Justice Act 1999 (Destination of Appeals) Order 2000. The Judgment is a useful summary and on the particular facts the Defendant had erred because they had not appreciated that a final decision in a possession claim that has been allocated to the multi-track must be appealed to the Court of Appeal. It is too long to replicate here but the table at CPR PD 52 2A.1 is a comprehensive summary of the appropriate routes of appeal.  The most common appeal routes in residential mortgage possession claims are:

Please click here to view table.

Determining terms of a constructive trust

In Gallarotti v Sebastianelli [2012] EWCA Civ 865 the Court of Appeal provided an illustration of the operation of constructive trusts in a “not uncommon factual paradigm”.

The case makes no new law but reinforces the need to properly understand the intention of the parties where their beneficial ownership falls under a common intention constructive trust. Two friends, Mr Sebastianelli and Mr Gallarotti, purchased a flat together. The flat was registered in Mr Sebastianelli’s sole name. Mr Sebastianelli contributed significantly more to the purchase price than did Mr Galarotti, the shares being circa 75:25. They did not create a written trust but did reach an oral agreement that each would have a 50% share. However, there was a further rider to the agreement that as a result of the unequal contributions to the purchase price Mr Galarotti would pay a larger proportion of the mortgage repayments.

In fact Mr Galarotti did not pay more towards the mortgage repayments. At first instance the Judge found that “the express agreement between the parties was that they would each have a 50% interest in the Flat, despite the unequal amounts contributed by each” and accordingly awarded each a 50% share. The Court of Appeal disagreed. It considers that the parties intended the agreement (that they share 50:50) only to apply if there was a slight imbalance in contributions between the party - as would have been the case if Mr Galarotti had indeed contributed more to the mortgage repayments. Where in fact the contributions were very different the Court of appeal considered the 50:50 agreement no longer applied. It therefore found their respective shares to be 75:25 in line with their financial contributions to the purchase price.

Court statistics 2011

Court statistics have been published for quarter 1 2012 by the Ministry of Justice. General headlines include a further drop in county court claims and predictably, less cases issued actually reaching trial. See link for further information. Justice: Judicial and Court statistics (28 June 2012). In relation to possessions:

  • 6,077 of warrants enforced were on behalf of mortgage lenders, seven per cent less than in the first quarter of 2011.
  • The figures for possession claims issued are not broken down between mortgage and landlord – however during the first quarter of 2012, there were 55,527 mortgage and landlord possession claims, a decrease of two per cent compared to the same period a year ago.

Of More General Interest:

  • Building Societies - The Treasury has published a document entitled ‘The future of building societies’ in which the government has set out its aspirations for the building societies sector, noting that it sees it as having a key role in the future of UK financial services. This document gives details of “how the Government proposes to address the legislative framework for the sector, in accordance with its vision. First, it sets out how it proposes to apply the principles behind the ICB reforms to the building societies. Second, it explains the Government’s current attitude to other potential legislative developments of relevance to the sector”.
  • Equality Act – financial services exception for age discrimination confirmed - the ban on age discrimination in the provision of goods and services will now come into force on 1 October 2012. See full response from the Government Equalities Office. The exemption for financial services received the most responses in the consultation document but the government has decided to continue the exemption given that there was insufficient evidence of harmful age discrimination. This is primarily directed at front end processes to allow for example, financial services providers to continue to use age as a factor when assessing risk and deciding prices.