Bank of Scotland PLC v Rosemarie Rea; Bank of Scotland PLC v Terence McGready and Ann McGready; Bank of Scotland PLC v Frank Patrick Laverty and Mary Christine Laverty
| Jurisdiction | Northern Ireland |
| Neutral Citation | [2014] NIMaster 11 |
| Court | High Court (Northern Ireland) |
| Date | 04 August 2014 |
1
Neutral Citation No: [2014] NIMaster 11
Ref:
Judgment: approved by the Court for handing down Delivered:
04/08/2014
(subject to editorial corrections)
IN THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND
CHANCERY DIVISION
Record No 13/16477
Between:
BANK OF SCOTLAND PLC
Plaintiff
and
ROSEMARIE REA
Defendant
- and -
Record No 11/006165
Between:
BANK OF SCOTLAND PLC
Plaintiff
and
1. TERENCE McGREADY
2. ANN McGREADY
Defendants
- and -
Record No 09/108433
Between:
BANK OF SCOTLAND PLC
Plaintiff
and
1. FRANK PATRICK LAVERTY
2. MARY CHRISTINE LAVERTY
Defendants
2
MASTER ELLISON
Background
[1] These are claims for (a) possession in the first intituled action (“Rea”), (b) a
stay of enforcement of an order for possession in the second intituled action
(“McGready”), and (c) leave to enforce a suspended order for possession in the third
intituled action (“Laverty”). In each case the plaintiff’s claim to possession arose
pursuant to a charge over a dwelling. The dwellings are occupied by, respectively,
Ms Rea in the first action (her later partner and co-mortgagor Mr Donnelly having
died in 2012), both Mr and Mrs McGready in the second action and Mr Laverty the
first defendant in the third action. Significant arrears of monthly instalments have
arisen in each of the cases. However, in the first and second actions significant and
regular monthly payments have been made by the defendant borrowers for some
time now. In the normal course of such proceedings arrangements for payment of
arrears might have been agreed between the parties or imposed by the court in the
form of orders for possession suspended on terms that the defendants pay the
ongoing monthly instalments and a monthly sum towards the arrears to address
their default. Those observations do not however apply to the third action in
which the first defendant, Mr Laverty, as the only defendant in occupation of the
dwelling following a relationship breakdown with Mrs Laverty some years ago,
was stated by his Counsel at hearing to be unable to afford to put a proposal to
address the arrears.
[2] All three cases raise a point of some importance, namely whether the lender
may both (a) consolidate (or, as it is often called, “capitalise”) arrears of monthly
instalments with the mortgage balance upon which the instalments are calculated
with the effect of increasing the contractual monthly instalments to spread those
arrears over the residue of the mortgage term and also (b) rely on the arrears so
consolidated as outstanding arrears for the purpose of possession proceedings.
3
[3] Broadly, the plaintiff insists that it can do exactly that. It argues that the
consolidated arrears were not extinguished qua arrears (which is normally what
happens when arrears are consolidated) because the plaintiff took the step of
consolidation unilaterally, ie without the consent of the borrower specific to that
step save insomuch as consent had been given to such a step in the mortgage
contract. Indeed the plaintiff does not accept that the relevant restructuring of the
mortgage accounts that I have just described is either capitalisation or
consolidation, and avoids the use of either word when referring to it. However for
the purpose of this judgment (and without doing so by way of prejudgment) I will
refer mostly to the practice of the plaintiff which I have just described as “unilateral
consolidation”.
[4] The defendants (save Mrs Laverty who has not engaged in these proceedings)
contend that, for reasons I shall explain, the practice is an unconscionable one
because it prevents them from putting a proposal to repay the arrears to the court
and prevents the court from exercising, or exercising properly, its discretion to
defer possession. That discretion arises under the Administration of Justice
Act 1970 (“the 1970 Act”) section 36 and the Administration of Justice Act 1973 (“the
1973 Act”) section 8 and, if exercised, allows the court to make either an order
adjourning the proceedings or a suspended order for possession on terms which
would allow the defendants to pay the arrears within a defined or ascertained time
which the court regards as reasonable. The defendants also argue that the
plaintiff’s practice compromises the affordability of payments towards arrears
under pre-existing and future suspended orders for possession.
[5] The plaintiff’s practice came to light at hearings in each of these cases in the
Spring of 2013 in the context of what the plaintiff describes as the “migration” of the
relevant mortgage accounts by reason of the fact that the lenders (save Birmingham
Midshires), comprised in the Lloyds Banking Group were adopting the same
To continue reading
Request your trial
1 cases
-
Santander UK PLC and Thomas Anthony Carlin and Maxine Karon Hughes
...circa £48,000 that was not part of the alleged loan. They cite, in support of that argument, The Bank of Scotland v Rea and others [2014] NIMaster 11. [44] The issue of capitalisation is dealt with in Mr Williams’ second affidavit. The starting point, as Mr Williams points out, is that the ......