Western Bank Ltd v Schindler
| Jurisdiction | England & Wales |
| Date | 1976 |
| Court | Court of Appeal (Civil Division) |
Mortgage - Possession - Suspension of order - Mortgagees exercising right to possession of dwelling house - Mortgagor not in default - Court's discretion to defer order for possession - Whether term to be implied abrogating or restricting mortgagees' common law right to possession -
The defendant mortgagor entered into a contract with the plaintiff mortgagees for a loan of £32,000 in order to purchase a dwelling house; interest was to be payable monthly in advance and the capital sum to be repaid in 10 years' time. The loan was to be secured both by the grant to the mortgagees of a legal charge on the property and by the mortgagor taking out an endowment policy to mature for the sum of the loan on the date when the loan became repayable. On January 4, 1974, the purchase of the house was completed, the mortgagor assigned an endowment policy to the mortgagees and executed a mortgage deed, which provided for the repayment of capital and accrued interest on January 4, 1983. The mortgagor paid three monthly instalments of interest and three premiums under the policy and thereafter made no further payments with the result that the endowment policy lapsed.
On the mortgagees' summons for the payment of interest due and an order for possession, Goulding J. held that the obligation to pay interest under the mortgage deed could not be varied or supplemented by reference to the loan agreement and, therefore, the mortgagor was not liable to pay interest until the mortgage was redeemed and, in the exercise of his discretion under section 36 of the Administration of Justice Act 1970, he deferred the mortgagees' common law right to possession by making an order for possession to take effect in one month's time. The mortgagor appealed.
On the questions whether a term abrogating or restricting the mortgagees' common law right to possession should be implied from the terms of the mortgage deed and whether section 36 of the Act applied in a case where there was no default on the part of the mortgagor: —
Held, dismissing the appeal, (1) that, in the absence of an express term, an inference could never be lightly drawn that there was an implied term abrogating or restricting a mortgagee's right to possession at any time and such an inference was more difficult to draw where both payment of capital and interest was deferred; that, there being no grounds for drawing the inference in the present case, there was no implied term restricting the mortgagees' right to possession (post, pp. 348C–E, 349A, B, 354E–355B, 361A).
(2) (Goff L.J. dubitante) that where a mortgagee sought possession of a dwelling house, section 36 of the Administration of Justice Act 1970 applied whether or not the mortgagor was in arrears or otherwise in default but, if the mortgagor was in default, the court could only exercise its discretion to defer the mortgagee taking possession under subsection (1) where it appeared to the court that the mortgagor could remedy the default within a reasonable time; that the court's power in subsection (2) to hold the matter in abeyance for a reasonable time was not limited by subsection (1) to a case where the mortgagor was in default and, accordingly, the judge had jurisdiction and had rightly exercised his discretion to defer the mortgagees taking possession for a limited time (post, pp. 350E–351F, 352G, 356F, G, H–357A, 363C, D).
Per Goff L.J. The wording of section 36 (1) made it clear that the purpose of the section is to enable the court in any of the ways specified in subsection (2) to grant a limited time for the mortgagor to remedy his default. Any doubt about that construction is removed by section 8 (1) of the Administration of Justice Act 1973 and, therefore, section 36 of the Act of 1970 does not apply where there is no money due or other default (post, pp. 361E, 363C).
Per Buckley L.J. If on the true interpretation of section 36 an adjournment, suspension or postponement must be for a defined or ascertainable period, the court might, if it thought it reasonable to do so, keep control of the matter by holding it in abeyance for a specified period with liberty to apply in the meantime. In a suitable case the specified period might even be the whole of the remaining prospective life of the mortgage. I would not dissent from the view that the court could, if it thought it reasonable to do so, grant an adjournment, suspension or postponement for an indefinite period with liberty for either party to apply (post, p. 352B–D).
The following cases are referred to in the judgment:
Birmingham Citizens Permanent Building Society v. Caunt [
Bovill v. Endle [
Braithwaite v. Winwood [
Esso Petroleum Co. Ltd. v. Alstonbridge Properties Ltd. [
Four-Maids Ltd. v. Dudley Marshall (Properties) Ltd. [
Luke v. Inland Revenue Commissioners [
Maryon-Wilson's Will Trusts, In re [
Prenn v. Simmonds [
Royal Trust Co. of Canada v. Markham [
Trollope & Colls Ltd. v. North West Metropolitan Regional Hospital Board [
Wickens, Ex parte [
The following additional cases were cited in argument:
Eddis v. Chichester Constable [
First Middlesborough Trading and Mortgage Co. Ltd. v. Cunningham (
Halifax Building Society v. Clark [
Reg. v. Judge Dutton Briant, Ex parte Abbey National Building Society [
West Penwith Rural District Council v. Gunnell [
APPEAL from Goulding J.
On December 22, 1972, the mortgagor, Herbert Kurt Schindler, entered into a loan contract with the mortgagees, Western Bank Ltd., 19 Hanover Square, London W.1, for the sum of £32,000 in order to purchase a dwelling house, 56 Queen's Gate Mews, W.1. The contract provided for monthly payments of interest of £346.88, to begin on February 3, 1973, and to end on December 3, 1982. On January 4, 1973, the mortgagor completed the purchase of the house and on the same date executed a mortgage deed and endowment policy in favour of the mortgagees.
Clause 1 of the mortgage deed provided for the repayment of the principal moneys, namely £32,000, together with the accrued interest on the legal redemption date, January 4, 1983. The rate of interest payable was to be such as the mortgagees should from time to time resolve, and made no provision for earlier payments of interest. Clause 2 provided that time should be of the essence of the covenant for repayment. Clause 4 provided:
“(A) The statutory power of sale and of appointing a receiver Conferred on mortgagees by the said
shall apply to this security but without the restrictions contained therein as to giving notice or otherwise so that the whole of the moneys hereby secured shall notwithstanding anything herein contained be deemed to become due immediately upon execution hereof but the said power shall not be exercised save upon the occurrence of one or more of the following events. (i) If the borrower shall fail to make payment in full of the said money upon the date of repayment. (ii) If the borrower shall fail to observe any obligations hereunder other than in regard to the payment of any sums due hereunder. (iii) If the borrower shall commit any act of bankruptcy or a receiving order is made against the borrower. (iv) If any execution is issued against the borrower or if any distress is levied on the chattels of the borrower upon the said land or elsewhere. (v) If the borrower executes any bill of sale over any chattels and effects whether upon the said property or elsewhere. (vi) If the borrower shall commit a breach of any covenant or condition contained in any prior charge (or in the registered lease) or otherwise affecting the land. (vii) If the borrower shall die. (B) All costs fees disbursements and other payments I incurred by or due to the lender hereunder and all moneys paid by the lender on behalf of the borrower shall be payable to the lender upon demand and shall be charged upon the security hereinbefore given …” Law of Property Act 1925
The endowment policy in favour of the mortgagees was to replace the capital sum borrowed in 1983 or earlier in the event of the death of the mortgagor. One month's instalment of interest under the mortgage deed was deducted in advance and the mortgagor paid a second instalment on February 3,1973, £1,250 in May in respect of three months' interest and £164 in part payment of the interest due in July. On August 2, 1973, all payments of interest ceased. The mortgagor also paid the first three monthly premiums on the endowment policy but after March 1, 1973, the payments ceased and the policy lapsed.
On January 25, 1974, the...
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