Green v Southern Pacific Mortgage Ltd & Anor

The Court of Appeal dismissed the appellant's challenge to a mortgagee's possession claim brought under the Disability Discrimination Act 1995 and the corresponding provisions of the Equality Act 2010. The court held that the "service" provided by the lender was the secured repayment mortgage actually entered into and maintained, and that an interest-only mortgage would have constituted a different service or a fundamental alteration of the service offered. The court further held that the lender's "no conversions" policy did not, on the facts, make it impossible or unreasonably difficult for disabled persons to make use of the lender's repayment-mortgage service because the policy applied equally to disabled and non-disabled borrowers. Even if the duty to make reasonable adjustments had been engaged, converting the loan to interest-only would not have been a reasonable adjustment because it would require the lender to accept a speculative and materially different security and to forgo the right of possession.

This case arises from possession proceedings brought by Southern Pacific Mortgage Ltd against Ms Jacqueline Vera Green following mortgage arrears. At first instance Recorder Rowlands (Bristol County Court) rejected Ms Green's defence that the lender had unlawfully discriminated against her by refusing to convert her repayment mortgage to interest-only as a reasonable adjustment under sections 19–21 of the Disability Discrimination Act 1995 (and the corresponding provisions in the Equality Act 2010). Permission to appeal to the Court of Appeal was granted; the Equality and Human Rights Commission intervened by written submissions.

The nature of the claim: the appellant defended possession proceedings by alleging disability discrimination in the lender's refusal (from April–August 2009) to convert her repayment mortgage to an interest-only basis as a reasonable adjustment under s.21(1) DDA (and like provisions in the 2010 Act). She relied on the lender's conduct in correspondence, the pre-action protocol and later regulatory guidance and an Ombudsman recommendation. The appellant sought to use the Equalities legislation to prevent possession and to require the lender to change the mortgage terms.

Procedural posture: Recorder Rowlands gave judgment for the lender on 19 November 2015 (possession ordered 2 December 2015), permission to appeal was given on 24 March 2017, and the appeal was heard in the Court of Appeal on 6–7 March 2018.

Issues framed by the court:

• How to define the "service" for the purposes of s.19 and s.21 of the DDA and the corresponding sections of the Equality Act 2010 (broad class of mortgage services or the particular repayment mortgage provided to the appellant).
• Whether the lender's policy refusing conversions to interest-only made it impossible or unreasonably difficult for disabled persons to use the lender's service and thus engaged the duty to make reasonable adjustments.
• Whether converting the mortgage to interest-only would have been a "reasonable step" or would have constituted a "fundamental alteration" to the nature of the service.

Court's reasoning: The court (Coulson LJ, with Parker and Patten LJJ concurring as to outcome) concluded that the service should be characterised by reference to the particular secured repayment mortgage provided to the appellant rather than by reference to a broad class of all mortgage products. An interest-only mortgage would have been a different service (and, in any event, a fundamental alteration). The lender's "no conversions" policy applied to all borrowers and therefore did not place disabled borrowers at a particular disadvantage compared to non-disabled borrowers. The court also held that, even if the duty to make reasonable adjustments had been engaged, the conversion sought would not have been reasonable because it would require the lender to accept a speculative and uncertain security and to forgo possession rights. The court noted the regulatory context (pre- and post‑2009 guidance), the Recorder's findings that the lender had been aware of the appellant's disability and had conducted itself poorly, and the Financial Ombudsman's recommendation which did not itself resolve the dispute. The appeal was dismissed.

Wider context: the court observed that this appears to be the first time Equalities legislation has been invoked as a defence to a mortgagee's possession claim and contrasted the absence of a statutory defence for mortgagees (as exists for certain landlords) with the fact-specific nature of the reasonable‑adjustment duty and the statutory "fundamental alteration" limitation.

The appeal is dismissed. The Court of Appeal held that the service provided by the lender was the secured repayment mortgage actually agreed, that an interest-only mortgage would have been a different service or a fundamental alteration, that the lender's policy did not make the service inaccessible or unreasonably difficult for disabled persons because it applied equally, and that, even if the duty to make reasonable adjustments had arisen, converting to interest-only would not have been a reasonable adjustment given the speculative reduction of security and regulatory and prudential considerations.

Recorder Rowlands, Bristol County Court: judgment rejecting the appellant's defence dated 19 November 2015 and possession order dated 2 December 2015. Permission to appeal granted 24 March 2017. Appeal to the Court of Appeal resulting in judgment [2018] EWCA Civ 854 (20 April 2018). Equality and Human Rights Commission granted permission to intervene (written submissions).