Bank of Scotland Plc v Peter Lisney Hoskins & Anor

A mortgagee’s prima facie right to possession is not defeated merely because the mortgagor may have a damages claim or cross-claim. A very late amendment requires the applicant to show both a strong case and why permitting it accords with the interests of justice. The statutory burden under section 140B(9) of the Consumer Credit Act 1974 arises only where unfairness is alleged in the proceedings, ordinarily by a statement of case. An acquisition mortgage subordinates any beneficial interest arising on purchase to the mortgage from the outset. Relief from sanctions requires application of the three-stage Denton approach. Under section 36 of the Administration of Justice Act 1970, a suspension requires evidence that payment is likely within a reasonable period, normally no longer than the remaining mortgage term.

The claimant mortgagee sought possession of a substantial residential property following persistent arrears. The defendant applied for relief from sanctions for late evidence and permission to amend his defence to introduce claims under the Consumer Credit Act 1974, the Financial Services and Markets Act 2000 and section 36 of the Administration of Justice Act 1970.

The defendant’s wife applied to be joined, alleging an equitable interest and undue influence in relation to her consent to the mortgage. The central issues were whether the proposed claims had sufficient merit and procedural justification, whether the wife had a viable claim requiring joinder, and whether any existing defence prevented possession.

1. Late evidence and amendment. Relief from sanctions was refused. The breach was serious and significant, there was no good explanation, and admission would prejudice the claimant by prolonging enforcement of its security. Applying Denton v TH White Ltd, the interests of justice required enforcement of the order. Permission to amend was also refused. The proposed amendments were served on the business day before the disposal hearing, nearly four years after issue, without good explanation. The claims might support separate financial relief but were not defences to possession.
2. Consumer credit claim. The mortgage was a regulated mortgage contract because the relevant use of the property had to be assessed when the contract was entered into and the statutory 40% dwelling-related test was satisfied. The claim under sections 140A and 140B of the Consumer Credit Act 1974 was therefore unavailable. In any event, section 140B(9) had not been engaged because the allegation of unfairness appeared only in a proposed amendment and had not yet been pleaded in the proceedings.
3. Joinder. The wife’s application failed under CPR rule 19.2(2)(b). The court preferred a summary-judgment threshold, although the result was the same under the lower strike-out threshold. Under Abbey National Building Society v Cann, an acquisition mortgage charged the property from inception, so any interest she might have had was subordinate to the mortgage. Further, the circumstances did not put the claimant on inquiry as to undue influence.
4. Possession. The arrears established the claimant’s contractual right to possession. A cross-claim or possible damages claim did not defeat that right. Section 36 relief was refused because the evidence did not show that payment was likely within a reasonable period. The remaining mortgage term was the appropriate starting point, and no longer period was justified.
5. The applications were dismissed. Possession was ordered by noon on 11 April 2023. The money claim was adjourned with liberty to restore.