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 |
| Judgment Date | 04 August 2014 |
| Neutral Citation | [2014] NIMaster 11 |
| Court | High Court (Northern Ireland) |
| Date | 04 August 2014 |
1
NeutralCitationNo: [2014] NIMaster 11
Ref:
Judgment: approved by the Court for handing downDelivered:
04/08/2014
(subjecttoeditorialcorrections)
INTHEHIGHCOURTOFJUSTICEINNORTHERNIRELAND
CHANCERYDIVISION
RecordNo 13/16477
Between:
BANKOFSCOTLANDPLC
Plaintiff
and
ROSEMARIEREA
Defendant
- and -
RecordNo 11/006165
Between:
BANKOFSCOTLANDPLC
Plaintiff
and
1.TERENCEMcGREADY
2.ANNMcGREADY
Defendants
- and -
RecordNo 09/108433
Between:
BANKOFSCOTLANDPLC
Plaintiff
and
1. FRANKPATRICKLAVERTY
2. MARYCHRISTINELAVERTY
Defendants
2
MASTERELLISON
Background
[1]These are claimsfor(a)possessioninthefirstintituledaction (“Rea”),(b) a
stayofenforcementof an orderforpossessioninthesecondintituledaction
(“McGready”),and(c) leave toenforce a suspendedorderforpossessioninthethird
intituledaction (“Laverty”).Ineachcasetheplaintiff’s claimtopossessionarose
pursuantto a chargeover a dwelling.Thedwellings are occupiedby,respectively,
MsReainthefirstaction(herlaterpartnerandco-mortgagorMrDonnellyhaving
diedin 2012), bothMrandMrsMcGreadyinthesecondactionandMrLavertythe
firstdefendantinthethirdaction.Significantarrearsofmonthlyinstalmentshave
arisenineachofthecases.However,inthefirstandsecondactionssignificantand
regularmonthlypaymentshavebeenmadebythedefendantborrowersforsome
timenow.Inthenormalcourseofsuchproceedingsarrangementsforpaymentof
arrearsmighthavebeen agreedbetweenthepartiesorimposedbythecourtinthe
formofordersforpossessionsuspendedontermsthatthedefendantspaythe
ongoingmonthlyinstalmentsand amonthlysumtowardsthearrears toaddress
theirdefault.Thoseobservationsdonothoweverapplytothethirdactionin
whichthefirstdefendant,MrLaverty,as theonlydefendantinoccupationofthe
dwellingfollowing a relationshipbreakdownwithMrsLavertysomeyearsago,
wasstatedbyhisCounselat hearingtobeunabletoaffordtoput a proposalto
addressthearrears.
[2]Allthreecasesraise a pointofsomeimportance,namelywhetherthelender
mayboth(a)consolidate(or,as itisoftencalled,“capitalise”) arrearsofmonthly
instalmentswiththemortgagebalance uponwhich theinstalmentsare calculated
withtheeffectofincreasingthecontractualmonthlyinstalmentstospreadthose
arrearsovertheresidueofthemortgagetermandalso(b)relyonthearrearsso
consolidated as outstandingarrearsforthepurposeofpossessionproceedings.
3
[3]Broadly,theplaintiffinsiststhatitcandoexactlythat.Itarguesthatthe
consolidatedarrearswerenotextinguishedqua arrears (whichisnormallywhat
happenswhen arrears are consolidated)becausetheplaintifftookthe stepof
consolidationunilaterally,iewithouttheconsentoftheborrowerspecifictothat
stepsaveinsomuch as consenthadbeengiventosuch astepinthemortgage
contract.Indeedtheplaintiffdoesnotacceptthattherelevantrestructuringofthe
mortgageaccountsthat Ihavejustdescribediseithercapitalisationor
consolidation,andavoidstheuseofeitherwordwhenreferringtoit.Howeverfor
thepurposeofthisjudgment(andwithoutdoingsobywayofprejudgment) I will
refermostlytothepracticeoftheplaintiffwhich I havejustdescribed as “unilateral
consolidation”.
[4]Thedefendants(saveMrsLavertywhohasnotengagedintheseproceedings)
contendthat,forreasons Ishallexplain,thepracticeis an unconscionableone
becauseitpreventsthemfromputting a proposaltorepaythearrears tothecourt
andpreventsthecourtfromexercising,orexercisingproperly,itsdiscretionto
deferpossession.ThatdiscretionarisesundertheAdministrationofJustice
Act1970 (“the 1970 Act”) section 36 andtheAdministrationofJusticeAct 1973 (“the
1973 Act”) section 8and,ifexercised,allowsthecourttomakeeither an order
adjourningtheproceedingsor a suspendedorderforpossessionontermswhich
wouldallowthedefendantstopaythearrearswithin a definedorascertainedtime
whichthecourtregardsas reasonable.Thedefendantsalsoarguethatthe
plaintiff’s practicecompromisestheaffordabilityofpaymentstowardsarrears
underpre-existingandfuturesuspendedordersforpossession.
[5]Theplaintiff’s practicecametolight at hearingsineach ofthesecasesinthe
Springof 2013 inthecontextofwhattheplaintiffdescribes as the“migration”ofthe
relevantmortgageaccountsbyreasonofthefactthatthelenders(saveBirmingham
Midshires),comprisedintheLloydsBankingGroupwereadoptingthesame
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