Campbell v Redstone Mortgages Ltd

A mortgagee who takes possession of property and finds chattels there becomes an involuntary bailee. Its duty is to do what is right and reasonable in all the circumstances. Mortgage conditions and contractual notices provide the framework, but a contractual trigger does not by itself determine whether disposal is lawful. The court must consider matters including the warnings given, opportunities to collect, court orders, the conduct of the owner, the nature and value of the goods, and the practicality and cost of storage. Where the owner has been given sufficient notice and repeated opportunities to collect the goods, and deliberately fails to do so, disposal may be right and reasonable.

The claimant challenged the validity of a mortgage and claimed damages after the defendant mortgagee took possession of her property and disposed of chattels left there. The mortgage conditions authorised removal, storage or sale of goods left after notice. Following execution of the possession warrant, the claimant received notices and several court-ordered opportunities to remove her possessions, but failed to clear them. The court also considered late attempts to reopen the mortgage and possession proceedings, including allegations of fraud and defective attestation. The preliminary issues were whether the mortgage could be challenged and whether the defendant was liable in damages as an involuntary bailee.

1. Mortgage issue. The challenges to the mortgage were struck out. The claimant could not use fresh evidence to reopen the earlier possession decision because the requirements in Ladd v Marshall [1954] 1 WLR 1489 were not satisfied. The challenge was also an abuse of process, since the validity of the mortgage should have been raised in the original possession proceedings: Secretary of State for Trade and Industry v Bairstow [2004] Ch 1. In addition, the claimant was estopped from denying the mortgage’s validity after repeatedly making payments under it: Shah v Shah [2002] QB 35.
2. The alleged failure to comply with section 1(3) of the Law of Property (Miscellaneous Provisions) Act 1989 did not justify setting aside the mortgage. The document appeared regular on its face. The case was distinguishable from Bank of Scotland Plc v Waugh & others [2014] EWHC 2117 (Ch) and Briggs v Gleeds [2014] EWHC (Ch) 1178, where there was no attestation clause.
3. Involuntary bailment. The mortgagee became an involuntary bailee when it took possession with the claimant’s goods present. The applicable duty was to do what was right and reasonable in all the circumstances. The Court of Appeal’s reasoning in Da Rocha-Afodu v Mortgage Express Ltd [2014] EWCA Civ 454; [2014] 2 P & C R DG10 was adopted, including the requirement to consider the mortgage conditions, warnings and all particular circumstances.
4. Redstone gave adequate notice, provided repeated opportunities under three court orders, and did not obstruct collection. The claimant deliberately failed to remove the goods and, on one occasion, barricaded herself in the property. The goods appeared to have no intrinsic or saleable value, and storage was impracticable and uneconomic. Disposal was therefore right and reasonable. The claim for damages was dismissed.

The remaining applications, including applications concerning the possession proceedings, security for damages and restraint of sale, were dismissed or struck out.