Albany Home Loans Ltd v Massey

Introduction

This is a mortgagor's appeal against an order for possession of a house made by HH Judge Hammond on 4.4.95. He was hearing an appeal from an order made by DJ Brazier. Mr Massey is the mortgagor. Albany Home Loans whom I shall call Home Loans is the mortgagee. There is no doubt that Mr Massey was in arrears in a substantial amount. He says that the reason that he is in arrears is because of actions taken by associate companies of Home Loans by whom he was employed as a mortgage provider. He says that they wrongfully dismissed him and that this left him without enough assets to pay the instalments on his mortgage. He says that he has a good claim against the associate companies for a sum in excess of what is owing on the mortgage. He submits that those factors should have led the judge not to make the order for possession or, at the least, not to make it enforceable before the hearing of the dismissal claim. This part of the submissions (which I shall call the dismissal submissions) was rejected by the judge. Rightly so, for reasons which I shall give. While important to Mr Massey, the dismissal submissions raise no point of general interest.

However, Mr Berkin who appears for Mr Massey, also made submissions (which I shall call the wife submissions) which raise a point of general interest upon which counsel tell us there is no authority and a variety of practice. What is to be done in the following situation:

joint owners of property jointly mortgage it, they get into arrears on the instalments on their mortgage

The mortgagee applies for a possession order one of the mortgagors has an arguable defence to the application but the other has as such no arguable defence to that application ?

In particular, what is the answer to that question in circumstances such as the present where the two mortgagors are husband and wife living together in the mortgaged property and the possession action has been brought in the County Court?

II

The Dismissal Submissions

The question whether or no Mr Massey was wrongfully dismissed by the associate companies was not decided by the judge and is not before us. The judge was dealing with an appeal against the decision by the district Judge to strike out Mr Massey's defence to the possession proceedings. Both judges, relying on Ashley Guarantee Plc v Zacaria [1993] 1 WLR 62, decided that even if Mr Massey was bound to succeed in the dismissal claim, that did not provide a defence to the possession claim brought by the mortgagee. That part of the judge's decision is not challenged.

Both judges also decided that they should not exercise their powers under s. 36 of the Administration of Justice Act 1970 to adjourn the proceedings or to stay or suspend the execution of the judgment or to postpone the date for the delivery of possession. Their reasoning, so far as one can gather it from counsel's notes of the judgments, was essentially that the dismissal claim was unlikely to be heard before 1997 and that, from the material brought to their attention it did not, in the words of s.36 of the Administration of Justice Act 1970:

"appear to the court that in the event of its exercising the power [to adjourn the proceedings, suspend execution of the judgment or postpone the date for delivery of possession] the mortgagor is likely to be able within a reasonable period to pay any sums due under the mortgage."

Their assumption that it would take till 1997 until the dismissal claim was heard was a fair one and has in fact proved to be justified. It was well within the judge's discretion to take the view that this was not a reasonable period. Further, the judge was entitled to take the view that the prospects of discharging the outstandings were not realistic. Despite several requests to Mr Berkin to show us the material upon which it could appear to us, let alone the judge, that it was likely that Mr Massey would recover the appropriate amount to enable him to pay the amounts outstanding he did not do so. He just produced draft pleadings and some contracts between Mr Massey and the associated companies. It was by no means obvious that Mr Massey will have a viable case based on those contracts although we are not required to rule upon whether his case is arguable. We did not call upon Mr Edwards, who appeared for the Respondent, to address us on the dismissal submissions because it was clear to us that the judge was amply justified in his refusal to exercise his powers under s.36.

Before the judge an alternative submission was put forward by Mr Berkin to the effect that the rule in the Ashley Guarantee case was inapplicable when the potential defendants to a mortgagor's claim were associated companies of the mortgagee. This point was not pressed in front of us and indeed could not be.

III

The wife submissions

The mortgage on which the mortgagee sues was made not only with Mr Massey but also with his wife as joint mortgagor since they own the house jointly. However, the plaintiffs have not, as yet anyway, obtained judgment for possession against her. They have brought proceedings but she, relying on the decision in Barclay's Bank plc v O'Brien[1994] AC 180, has pleaded that as against her the mortgage ought to be set aside on the basis of undue influence. The wife's proceedings also await trial on...