Barclays Bank Plc v Alcorn

In mortgage possession proceedings, Administration of Justice Act 1970, section 36 requires the court to assess whether repayment of the mortgage debt or remedy of default is likely within a reasonable period. That statutory balance between the mortgagor’s home and the mortgagee’s right to repayment is compatible with Convention rights. A mortgagee in possession must undertake economically justified repairs, but need not spend more on repairs than the resulting increase in sale value. On a second appeal, permission requires an important point of principle or practice, another compelling reason, or a real prospect of interference with a discretionary decision.

A mortgagee sought possession of a property comprising a main house and cottage. The County Court made a possession order requiring both defendants to yield up possession. The bank entered the main house, but Mrs Alcorn and her husband remained in the cottage.

After a later application to stay execution, Hart J made an order on 11 March 2002. Mrs Alcorn renewed her application for permission to appeal. The issues included the interaction between mortgage possession rights, section 36 of the Administration of Justice Act 1970 and Convention rights; the availability of section 36 after partial execution; and the mortgagee’s duty to repair. The central question was whether the evidence showed that the mortgage debt was likely to be repaid within a reasonable period from selling the main house alone.

Per Lord Justice Chadwick: the renewed application for permission to appeal was refused.

1. Second appeal threshold. Section 55 of the Access to Justice Act 1999 applied because the proposed appeal was a second appeal. Permission therefore required an important point of principle or practice, or another compelling reason. The court assumed, without deciding, that an obviously wrong order causing injustice might constitute a compelling reason. In relation to a challenge to the exercise of discretion, the general permission test under rule 52.3 of the Civil Procedure Rules 1998 required a real prospect that the Court of Appeal would interfere.
2. Mortgage possession and Convention rights. The mortgagee’s common-law right to possession derived from the estate in the land granted by the mortgagor, as illustrated by Birmingham Citizens Permanent Building Society v Caunt [1962] Ch 883 and Ropaigealach v Barclays Bank Plc [2000] 1 QB 363. Section 36, as amended by section 8 of the Administration of Justice Act 1973, mitigated that right where repayment or remedy of default was likely within a reasonable period. The statutory balance was compatible with Article 8 and Article 1 of the First Protocol. No important Convention point therefore arose.
3. Repairs by a mortgagee in possession. A mortgagee in possession must undertake reasonable repairs where the cost is no greater than the diminution in value caused by the disrepair, or is otherwise recovered through the increased sale price. There is no obligation to undertake repairs where their cost exceeds the resulting increase in value. Insurance does not enlarge that general duty. The issue depended on valuation evidence and no mandatory repair order had been sought.
4. Exercise of discretion. Hart J had exercised his own section 36 discretion on the basis of changed facts, including the removal of a planning impediment to separate sales. He was not persuaded that sale of the main house alone was likely to discharge the mortgage debt. His evaluation of the evidence disclosed no real prospect of appellate interference. The question whether section 36 could operate after partial execution was therefore unnecessary to decide. Application refused.

1. Court of Appeal (Civil Division): refused the renewed application for permission to appeal from Hart J’s order of 11 March 2002.
2. High Court: Hart J dealt with an appeal from an order made by His Honour Judge O’Brien in the Cambridge County Court.
3. Cambridge County Court: made a possession order on 29 October 1999 and later considered an application to stay execution on 19 September 2001.