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Secured recoveries litigation update - January 2017

Secured recoveries litigation update - January 2017

  • United Kingdom
  • Financial institutions - Secured recoveries



Enforcement of possession orders

October 2016 brought with it the Court of Appeal decision in Cardiff County Council v Lee (Flowers) [2016] EWCA Civ 1034. This was a social housing case in which the tenant appealed against the decision of the Court to retrospectively grant permission to enforce a possession order against him. The appeal was dismissed, however, the commentary provided within the Judgment can be applied equally to mortgage repossession actions and suggests that a warrant of possession must not be issued without the permission of the court where the order sought to be enforced is subject to the fulfilment of a condition. Such orders arguably include an order for possession suspended upon payments and an order suspending a warrant upon payments even where the original order was an outright order.

What is the position then, three months on? Formal guidance from the Civil Procedure Rule Committee is still awaited. However, in the intervening period a new form N325A (Request for warrant of possession of land following a suspended order for possession) is available on the Justice website. This requires claimants to attach ‘a statement of payments due and made under the judgment or order’ to the warrant request. A copy of the form can be found here.

It is understood that the request to issue a warrant on form N325A must be made manually (not via PCOL) and that on receipt it will be referred to a District Judge to approve before the warrant is issued, thus complying with the requirement to seek permission pursuant to CPR 83.2(3) as highlighted by the Lee decision. The good news is that this suggests the Court will not require a formal application for permission to be made on every case involving a suspended order/warrant, before the warrant is issued, which would be unduly burdensome and expensive for claimants.

For outright possession orders, where there has been no subsequent suspension of the order/warrant, form N325 should be used instead and this does not require a statement to be attached. These requests can also be issued via PCOL rather than manually as permission is not required under CPR 83.2(3) and so there is no requirement for them to be considered by a District Judge prior to issue.


What then if you are applying to reissue a warrant? There is still only one form to use (Form N445 - Request for Reissue of Warrant) whether the possession order is an outright or a suspended order. However, this has been amended to also require a statement of sums due and paid under the order to be attached where the order/warrant has been suspended. The amended form N445 can be found here. It will again need to be issued manually and, we understand, will be referred to a District Judge prior to issue.

Again, for outright possession orders, where there has been no subsequent suspension of the order/warrant, there is no requirement to attach a statement and, where the facility is available, it can be issued via PCOL.

A flowchart to assist lenders in identifying which form should be used when, can be found here. It remains to be seen whether District Judges will expect lenders to produce bespoke statements detailing the sums due and paid under the order suspending the possession order/ warrant or whether a more typical arrears statement will suffice.

Case law updates

Birmingham City Council v Stephenson [2016] EWCA Civ 1029


The Council, as landlord, commenced a claim for possession of a flat, from its tenant due to repeated instances of noise nuisance. The tenant was disabled for the purposes of the Equality Act 2010. At the initial possession hearing the claim was adjourned for the tenant to file a defence. No defence was served and at the adjourned hearing the tenant sought a further adjournment. This was refused by the Court and a possession order was granted.

The tenant appealed the decision. In the Court’s Judgment, the case of Aster Communities Ltd v Akerman-Livingstone [2015] UKSC 15 (another social housing matter) was cited as outlining the correct approach to a case in which the defendant seeks to resist an order for possession on the grounds that he is disabled. The Court found that it was at least arguable that there was a sufficient causal link between his mental disability and the conduct on which the decision to evict him was based and that was enough to raise a prima facie case of discrimination on the ground of disability. The burden would then shift to the council to establish that evicting the tenant was a proportionate means of achieving a legitimate aim.


The appeal was successful on the grounds that the Deputy District Judge at the adjourned hearing did not consider the question of proportionality adequately or at all.

Relevance to mortgage lenders

It appears that the Deputy District Judge took the view at the second hearing that the tenant had already had ample time in which to consult solicitors and give them instructions so that a defence could be served, hence the decision to refuse a further adjournment and grant a possession order. On appeal, the Court stated that if the tenant had been a well-resourced individual with no mental disability, that view might well have been sustainable but on the circumstances of this case, apparently not.


Whilst this matter involved landlord and tenant possession proceedings in a social housing context, it is possible that it might be cited as grounds for an adjournment, despite the absence of a defence, in mortgage possession cases against vulnerable customers.

Popovic v Santander UK Plc (unreported) 15 November 2016 Chancery Division


The Lender obtained possession of the borrower’s property due to mortgage arrears. The borrower subsequently re-entered the property as a trespasser necessitating the lender pursuing further litigation to obtain possession. Various other applications were made by the borrower in the course of the litigation. All of the borrower’s applications and defences were found to be totally without merit.

The borrower then brought a part 8 claim against the Lender seeking disclosure of documents pertaining to his mortgage and alleging fraud by the Lender.


The part 8 claim was held to be vexatious and was struck out by the Court on the basis that the matters raised by the borrower in this latest claim had been raised by him in previous applications to court. The part 8 claim was an abuse as it was an attempt to re-litigate the same issues. The borrower should have appealed against those decisions not sought to bring fresh proceedings.

The Court also determined that it was appropriate to make an extended civil restraint order against the borrower.

Civil restraint orders – quick summary

CPR 3.4 (6)(b) states “If the court strikes out a claimant’s statement of case and it considers that the claim is totally without merit (a) the court’s order must record that fact; and (b) the court must at the same time consider whether it is appropriate to make a civil restraint order”.

Civil restraint orders are orders which prevent a party from issuing claims or making applications without permission and are governed by CPR 3.11 and practice direction 3C. There are three types of civil restraint orders:

  • A limited civil restraint order prevents a party from making any further applications in the proceedings in which the order is made without first obtaining the permission of a judge identified in the order. It may be made where a party has made two or more applications which are totally without merit.
  • An extended civil restraint order prevents a party from issuing claims or making applications in certain courts concerning any matter involving or relating to or touching upon or leading to the proceedings in which the order is made without first obtaining the permission of a judge identified in the order. It may be made when a party has persistently issued claims or made applications which are totally without merit. It should be made for a period not exceeding two years.
  • A general civil restraint order prevents a party from issuing any claims or making any application in certain courts without first obtaining the permission of a judge identified in the order. It may be made against a party who persists in issuing claims or making applications which are totally without merit in circumstances where an extended civil restraint order would not be sufficient or appropriate.

The guidance that has been given by the courts in relation to such orders can be found in two Court of Appeal decisions, Bhamhee v Forsdick [2004] 1 WLR 88 and Mahajan and Department for Constitutional Affairs [2004] EWCA Civ 946.


A civil restraint order is one of the few tools available to lenders faced with vexatious litigants. Where a borrower makes an application or claim which is wholly without merit, consider whether to ask the court to record the lack of merit in the order. If two or more such orders have been made, it may be worth reminding the court that they are obliged by CPR 3.4 (6)(b) to consider whether it is appropriate to make a civil restraint order and if they are reluctant to do so, you may wish to remind them that vexatious litigants are a drain on the courts’ already stretched resources.

Smith v Black [2016] NICh 16


The Lender granted a buy to let loan to a company, secured against a residential property in Belfast. The borrower company defaulted in payment and receivers were appointed by the Lender. The property was occupied by the Defendant who purported to be a tenant pursuant to a tenancy agreement dated January 2014 but who was also the sole shareholder and director of the borrower company.

The receivers commenced proceedings for possession of the property from the Defendant and there ensued contested litigation between the receivers and the Defendant in which the Court was required to determine (1) whether the Defendant had a written tenancy agreement with the borrower company dated January 2014; and (2) whether the Plaintiffs had the necessary standing and title to institute the proceedings as receivers, to eject the Defendant from the Property.


The Court held that the Defendant had no tenancy of the property, written or otherwise, and that the borrower company was in breach of the terms of the mortgage - but that the receivers right to act had not been proved to the court’s satisfaction. However, the Court added that the Lender or such receivers as they could prove to have been validly appointed, had the right to seek summary possession of the property as the Defendant had no tenancy agreement with the borrower Company.

Relevance to mortgage lenders

This decision of the High Court in Northern Ireland is likely to be of interest to all mortgage lenders due to the comments made by the Judge regarding litigants in person. In particular, the Judge stated:

‘The demands placed by personal litigants on the litigation process are considerable. The common law system being an adversarial one, with the judge having to choose which side has better argument on the evidence and/or the law is ill-equipped to deal with the litigants who do not know the law and do not understand the court process. The greater numbers of personal litigants place an increased pressure on precious court resources, on the court administration and on the court itself, because quite understandably these personal litigants very often have neither legal training nor any legal background. Consequently cases last much longer and other cases which should be heard are unable to secure a court hearing.’

The Judge also cited the case of Magill (Mary Bernadette) v Ulster Independent Clinic & others [2010] NICA 33 in which Girvan LJ stated:

‘A personal litigant cannot have an unfair advantage against represented parties by seeking to rely on inexperience or a lack of proper appreciation of what the law requires. The application of legal principles poses a duty on the court to examine cases objectively without fear or favour to any party, represented or unrepresented. While courts are conscious of the difficulties faced by a personal litigant representing herself and will strive to enable that person to present her case as well as they can, the dictates of objective fairness and justice preclude the court from in any way distorting the rules or the requirements of due process because one party is unrepresented’.


It is worth mortgage lenders and their solicitors keeping this case up their sleeves in case you are faced with a litigant in person attempting to take advantage of their unrepresented status.

Barclays Bank Plc (t/a The Woolwich) v Boyd [2015 NICh 16]


The borrowers failed to maintain repayments due to their lender under a residential mortgage. The borrowers also had a current account facility with the Lender up to £100,000.

The Lender obtained an Order for possession on 18 June 2010. The Order was suspended on condition that the Defendants paid the monthly mortgage payment plus a further £500 per month in respect of their current account liability.

The borrowers made some repayments, but these ceased in mid-2011 when they became concerned that there was a structural defect in the property. In late 2014 the borrowers issued proceedings against the Lender claiming the Lender had withheld part of the original survey which indicated that there was some structural movement in the property.

In the meantime, on 30 June 2014 the Lender issued proceedings against the borrowers by way of Notice of Motion in effect seeking to lift the stay and obtain possession of the property. Liberty to do so was obtained.

The Defendants applied to stay the proceedings under:-

  • Section 86(3) of the Judicature (Northern Ireland) Act 1978 on the basis that they had a cause of action ie. their claim against the Bank regarding the alleged structural defect, which had the potential to relieve them of the debt; and/or
  • Section 36 of the Administration of Justice Act 1970 on the basis that they were likely to be able to repay the sums due under the mortgage within a reasonable time.


The borrowers’ application was dismissed. Whilst the Court had a discretion under Section 86(3) of the Judicature Act (Northern Ireland) 1978 to stay proceedings on equitable grounds it should only be exercised in rare and compelling circumstances which did not exist in this case. The basis upon which the Defendants were applying, namely that they had a cause of action which had the potential to relieve them of the debt, was not considered to be a rare or compelling circumstance. There was also doubt as to whether or not the Defendants’ claim had been brought in time.

Furthermore, the borrowers’ offer of repayment was insufficient to allow the Court to exercise its discretion under Section 36 of the Administration of Justice Act 1970.

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