Firstplus Financial Group Plc V. Mr Khalid Pervez
| Jurisdiction | Scotland |
| Judge | Sheriff Stuart Reid |
| Court | Sheriff Court |
| Date | 22 March 2013 |
| Docket Number | B3388/11 |
| Published date | 08 April 2013 |
SHERIFFDOM OF GLASGOW AND STRATHKELVIN AT GLASGOW
B3388/11
JUDGMENT OF SHERIFF S. REID, Esquire, Sheriff of Glasgow and Strathkelvin
in the cause
FIRSTPLUS FINANCIAL GROUP PLC
PURSUER
against
MR KHALID PERVEZ
DEFENDER
______________________________
Act: Gannon, Solicitor, Optima Legal, Glasgow
Alt: Dailly, Solicitor, Dailly & Co, Glasgow
GLASGOW, 22 March 2013. The sheriff, having resumed consideration of the cause, sustains the first plea-in-law for the defender, repels the pursuer's pleas, and dismisses the action; reserves the issue of expenses meantime, and appoints parties to be heard thereon at 9.30am on 12 April 2013.
NOTE:
[1] In this summary application the pursuer seeks inter alia declarator of the right to enter into possession of, and to sell, residential heritable property at 289 Kingspark Avenue, Rutherglen, Glasgow G73 2AF ("the subjects"), and a warrant summarily to eject the defender and his family from the subjects.
[2] The defender is the owner of the subjects. The pursuer holds a standard security over them.
[3] In craves 1 & 2, the pursuer seeks remedies under the Conveyancing and Feudal Reform (Scotland) Act 1970 ("the 1970 Act"); in crave 3 the pursuer seeks a remedy under the Heritable Securities (Scotland) Act 1894 ("the 1894 Act").
[4] Creditors in securities over residential property are required (by virtue of the 1970 Act, section 24(1C), and the 1894 Act, section 5(3)) to comply with certain "pre-action requirements" before making an application to the court to exercise remedies on default (s.24(1B), 1970 Act) or to eject a debtor from the property (section 5(1), 1894 Act). One of those pre-action requirements is for the creditor to provide certain specified "pre-action information" to the debtor.
[5] The Applications by Creditors (Pre-Action Requirements) (Scotland) Order 2010 (SSI 2010/317) ("the PAR Order 2010") makes "further provision" in relation to those pre-action requirements. Specifically, the PAR Order 2010 states that the pre-action information that requires to be given to a debtor by a creditor "must be provided as soon as is reasonably practicable upon the debtor entering into default".
[6] The principal issue before me is a narrow one, namely whether the pursuer has complied with the pre-action requirements contained within the PAR Order 2010, specifically whether the required pre-action information has been provided timeously.
Procedural history
[7] The action was warranted on 6 October 2011, served on 13 October 2011, and first called on 25 November 2011.
[8] On 16 March 2012, after sundry procedure, the action was sisted pending the outcome of a then subsisting appeal to the Inner House of the Court of Session against the decision of Sheriff A.F. Deutsch in Northern Rock (Asset Management) plc v Millar (28 February 2011, Glasgow Sheriff Court, unreported). I am told that the appeal in the Millar case was abandoned in September 2012. On 1 November 2012, the sist was recalled.
[9] On 4 February 2013, the action called before me at a hearing in the nature of a debate. The hearing proceeded by way of submissions only on the defender's first plea-in law (as inserted by amendment at the bar). No evidence was heard.
The pleadings
[10] The summary application bears to have been presented under section 24 of the 1970 Act.
[11] The pursuer seeks three principal remedies: (i) warrant to enter into possession of the subjects and to sell them (Crave 1); (ii) declarator of the right to enter into possession of, and to sell, the subjects; to receive and recover rents; and to exercise all powers competent to a heritable creditor in lawful possession of the subjects (Crave 2); and (iii) warrant summarily to eject the defender and his family, dependents, tenants and others from the subjects (Crave 3).
[12] The pursuer avers that the defender has "failed to repay the monthly instalments of sums borrowed as they fall due"; that the pursuer served a calling-up notice on the defender on 19 July 2011 in terms of section 19 of the 1970 Act (item 5/1 of process); that the defender has failed to comply with the terms of the calling-up notice; and that, accordingly, the defender is in default within the meaning of the standard condition 9(1)(a) in Schedule 3 to the 1970 Act (Article 3 of Condescendence).
[13] The pursuer also avers that it has complied with the statutory pre-action requirements. In this respect, reference is made to a Form 11C lodged in process (item 5/3). The pursuer avers, and the Form 11C (paragraph 1, page 2) bears to record, that the pursuer provided the statutory pre-action information to the defender by means of a letter dated 26 May 2011 (a copy of which is lodged as item 5/4 of process). The pursuer avers that it has made reasonable efforts to agree with the defender proposals in respect future payments and the accrued arrears by reference to letters dated between 15 March 2011 and 11 April 2011, and by reference to telephone calls between 15 March 2011 and 25 April 2011 (Article 4 of Condescendence).
[14] The pursuers' pleas-in-law are as follows:-
"1 The defender being in default in terms of paragraph 9(1)(a) of Schedule 3 of the said 1970 Act, the pursuers are entitled to seek decree as first and second craved in terms of section 20 of the said Act.
2 The defender has failed punctually to repay the sum due to the pursuers and being still in occupation of and resident in the said subjects, decree as third craved should be granted in terms of section 5 of the Heritable Securities (Scotland) Act 1894".
[15] The pursuer's letter to the defender dated 26 May 2011 (item 5/4 of process), which bears to be a "default notice", states, so far as material:-
"THIS IS A DEFAULT NOTICE SENT BECAUSE YOU HAVE BREACHED THE TERMS OF YOUR AGREEMENT.
In respect of the Loan Agreement ('the agreement'), reference number [x] made between [the defender] and [the pursuer],
Provision of Agreement breached: Clause 2 requires you to make monthly payments of £863.94 on the 12th day of each month
Nature of the breach: failure to make the monthly payment(s) due under the Agreement.
Action required to remedy: payment of monthly arrears of £6,595.52 within 14 working days of receipt of this letter....
If you do not take the action required by this notice before the date shown, then the further action set out below may be taken against you.
Further action: [the pursuer] will serve notice in writing demanding payment of the outstanding balance less any applicable rebate under the terms of the Agreement... If nothing is received, [the pursuer] will bring proceedings against you for the outstanding balance and, if this results in it obtaining payment before the sum would have become due under the Agreement, [the pursuer] will allow any appropriate rebate of charges.
These proceedings will include an application for possession of the property of 289 Kingspark Avenue, Rutherglen, Glasgow G73 2AF under the terms of the legal charge (standard security in Scotland) registered in the accordance with the Agreement. [The pursuer] will enforce any possession order granted and seek to sell the property to settle the outstanding balance plus costs....."
[16] The pursuer's calling-up notice to the defender (item 5/1 of process) is dated 21 June 2011. It was served on 19 July 2011. The period of notice expired on 20 September 2011. It states, so far as material:-
"TAKE notice that [the pursuer]...requires payment of the principal sum of £92,172.72 with interests thereon at the rate of 11.20 per cent per annum from 27 May 2011...secured by a standard security by you [the defender] over 289 Kingspark Avenue, Rutherglen, Glasgow G73 2AF ('the property') in favour of [the pursuer]...and that failing full payment of the said sum and interest thereon...within two months after the date of service of this demand...[the pursuer] may apply to the sheriff court for warrant to exercise the remedies available to a creditor on default for example to repossess and sell the property..."
Submissions for the defender
[17] The defender's agent submitted that the action was incompetent et separatim that the pursuer's averments were irrelevant because ex facie of the pleadings the pursuer had failed timeously to provide to the defender the "pre-action information" prescribed by the PAR Order 2010. The defender's agent tendered a detailed written Note of Arguments, for which I am grateful. It can be summarised as follows.
[18] Firstly, the defender's agent submitted that the present action was explicitly founded upon the expiry of a calling-up notice. This meant that the definition of "default" in standard condition 9(1)(a) of Schedule 3 to the 1970 Act required to be applied. In terms of standard condition 9(1)(a), "default" occurred only after expiry of the calling-up notice, where the debtor had failed to comply with that notice. Besides, since, in substance, prior to commencing the present action, the pursuer was intending to require the discharge by the debtor of a "debt" secured by the standard security, under threat of repossession and sale, it followed that the pursuer had no option but to serve a calling-up notice under section 19 of the 1970 Act. The pursuer could not rely upon the separate "default notice" procedure prescribed by section 21 of the 1970 Act (The Royal Bank of Scotland plc v Wilson [2010] UKSC 50).
[19] Secondly, he argued that the word "default" in the PAR Order 2010 must have the same meaning as "default" in the 1970 Act. That was because of the PAR Order 2010 was subject to, and interpreted by reference to, section 11 of the Interpretation Act 1978. The 1978 Act applied to the PAR Order 2010 because the latter was issued or "made under" an Act of the Westminster Parliament (namely, s.24A of the 1970 Act), and not an under an Act of the Scottish Parliament. In terms of the 1978 Act, section 11, where an Act of the Westminster Parliament confers power to make subordinate...
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