Royal Bank of Scotland plc v Miller

For the purposes of Administration of Justice Act 1970, section 36, whether mortgaged land consists of or includes a dwellinghouse is determined when the mortgagee brings possession proceedings. The provision may apply even where the mortgage was originally granted for business purposes. Occupation in breach of a mortgage condition does not prevent premises from being a dwellinghouse, although the breach may be a default which must be capable of remedy within a reasonable period. Under section 8(1) of the Administration of Justice Act 1973, repayment of capital at the end of a fixed loan term may constitute deferred payment where earlier repayment is permitted upon default.

The bank obtained a possession order against the freehold owner of premises comprising a nightclub and substantial living accommodation. The County Court held that the charge secured all sums owed to the bank and that the court had no power to postpone possession. It also treated the date of the charge as decisive in determining whether the property included a dwellinghouse.

The applicant appealed. The Court of Appeal considered the proper timing under section 36(1) of the Administration of Justice Act 1970, the effect of occupation by a manageress, and whether section 8(1) of the Administration of Justice Act 1973 applied to the fixed-term loan.

1. Appeal allowed. The possession order was set aside and the matter was remitted to the District Judge for rehearing. Extension of time and permission to appeal were granted.
2. Per Lord Justice Dyson, with whom Lord Justice Kennedy agreed, section 36(1) of the Administration of Justice Act 1970 requires the dwellinghouse question to be determined when the mortgagee brings the action claiming possession. The present tense in the provision gives it that temporal meaning. The purpose of section 36 is to protect mortgagors of dwellinghouses from the consequences identified in Birmingham Citizens Permanent Building Society v Caunt [1962] 2 WLR 233.
3. Whether the premises included a dwellinghouse was a question of fact at the relevant time. Occupation by a manageress without the bank’s consent could constitute a breach of the mortgage conditions, but it would not prevent the premises from being a dwellinghouse under section 39(1). The breach would instead be relevant to whether it was likely to be remedied within a reasonable period.
4. Section 8(1) of the Administration of Justice Act 1973 applied if section 36(1) was otherwise satisfied. The fixed-term repayment arrangement constituted deferred payment where the capital was not payable before the end of the stated term and earlier payment could arise on default. The court followed Governor and Company of the Bank of Scotland v Grimes [1985] 1 QB 1179, which had considered Habib Bank Limited v Tailor [1982] 1 WLR 1218 and applied a purposive construction.
5. The lower court had not determined whether the premises included a dwellinghouse on 19 May 1998 or whether any relevant default was remediable. Those issues were remitted for determination.

• Court of Appeal: Appeal from the decision of His Honour Judge Appleton in the Accrington County Court allowed. The possession order was set aside and the matter remitted to the District Judge.
• Accrington County Court: On 14 July 1999, the judge dismissed the appeal from the possession order and held that section 36 did not apply.
• District Judge: A possession order had been made on 15 March 1999, with the money claim adjourned generally.