Mortgage repossession
proceedings in England and
Wales and Northern Ireland – a
comparison
© Charles O’Neill
7 April 2011
Aim of the presentation

This presentation will consider the
themes in common in mortgage
repossession proceedings in England
and Wales and Northern Ireland and will
examine the differences in the case law
in the different jurisdictions in this
important area of law.
Similar provisions in England and
Wales and Northern Ireland
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There is a Pre-action protocol in each
jurisdiction
Mortgages are subject to the same
regulatory framework by the Financial
Services Authority
Same legislation applies in the form of
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Administration of Justice Acts 1970 and 1973
Consumer Credit Act 1974 (as amended)
Pre-action protocols
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Pre-action protocol for possession claims based
on mortgage or home purchase plan arrears in
respect of residential property – introduced in
England and Wales on 18 November 2008
Pre-action protocol for possession proceedings
based on mortgage arrears in respect of
residential property – introduced in Northern
Ireland on 5 October 2009.
Compliance with Pre-action Protocol


In England and Wales since October
2009 a lender has to confirm how it has
complied with the protocol (Form N123).
No such requirement in Northern Ireland
although there is a possibility of a
sanction in cost terms.
Regulation by the FSA
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Regulation of mortgages
Regulation of lifetime mortgages and
home reversion plans
Regulation of sale and rent back
agreements
Procedural differences
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England and Wales
Usual forum is
County Court
Use Civil Procedure
Rules Part 55
Enforcement through
a bailiff system
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Northern Ireland
Forum is the High
Court in Belfast
Use Order 88 of the
Rules of the Court of
Judicature 1981 (as
amended)
Enforcement through
the Enforcement of
Judgments Office
Differences in case law

However there are interesting differences
in the jurisdiction of the court in relation
to applications for possession of a
dwelling-house and in particular in the
case law involved in the interpretation of
the Administration of Justice Acts 1970
and 1973.
Differences
There have been different approaches of
the courts in England and Wales to those
in Northern Ireland in relation to
proposals
 to the discharge of arrears over a period
of time and
 to sell the property to discharge the
mortgage
The same legislation applies in
England and Wales and Northern
Ireland
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Administration of Justice Act 1970
Section 36
Administration of Justice Act 1973
Section 8
Section 36 of the Administration of
Justice Act 1970
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“(1)Where the mortgagee under a mortgage of land
which consists of or includes a dwelling-house brings an
action in which he claims possession of the mortgaged
property, not being an action for foreclosure in which a
claim for possession of the mortgaged property is also
being made, the court may exercise any of the powers
conferred on it by subsection (2) below if it appears to the
court that in the event of its exercising the power the
mortgagor is likely to be able within a reasonable period
to pay any sums due under the mortgage or to remedy a
default consisting of a breach of any other obligation
arising under or by virtue of the mortgage.”
overleaf
Section 36 of the Administration of
Justice Act 1970 continued
(2) The court –
(a) May adjourn the proceedings; or
(b) On giving judgment, or making an order, for
delivery of possession of the mortgaged
property, or at any time before the execution
of such judgment or order, may
(i) Stay or suspend execution of the judgment or order,
or
(ii) Postpone the date for delivery of possession for
such period or periods as the court thinks fit.
Administration of Justice Act 1973

“8(1)
Where by a mortgage of land which consists of or
includes a dwelling-house, or by an agreement between the
mortgagee under such a mortgage and the mortgagor, the
mortgagor is entitled or is to be permitted to pay the principal
sum secured by instalments or otherwise to defer payment of it
in whole or in part, but provision is made for earlier payment in
the event of any default by the mortgagor or of a demand by
the mortgagee or otherwise, then for the purposes of section
36 of the Administration of Justice Act 1970 (under which a
court has power to delay giving a mortgagee possession of the
mortgaged property so as to allow the mortgagor a reasonable
time to pay any sums due under the mortgage) a court may
treat as due under the mortgage on account of the principal
sum secured and of interest on it only such amounts as the
mortgagor would have been expected to be required to pay if
there had been no such provision for earlier repayment.
Administration of Justice Act 1973

8(2) A court shall not exercise by virtue of subsection (1)
above the powers conferred by section 36 of the
Administration of Justice Act 1970 unless it appears to
the court that the mortgagor is likely to be able to pay any
amounts regarded (in accordance with subsection (1)
above) as due on account of the principal sum secured,
but also that he is likely to be able by the end of the
period to pay any further amounts that he would have
expected to be required to pay by then on account of that
sum and of interest on it had there been no such
provision as is referred to in subsection (1) above for
earlier payment.”
Proposals to discharge the arrears over
a period of time
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Often borrowers in mortgage arrears make
proposals to the court to discharge the arrears
over a period of time
The question to be considered by the court is
how to exercise its discretion “if it appears to the
court that in the event of its exercising the
power the mortgagor is likely to be able within a
reasonable period to pay any sums due under
the mortgage or to remedy a default consisting
of a breach of any other obligation arising under
or by virtue of the mortgage”

Section 36(1) of the Administration of Justice Act 1970
The position before Cheltenham &
Gloucester Building Society v Norgan
[1996] 1 All ER 449.

Prior to Norgan, the practice in the English
courts was to consider a period of two years as
a reasonable period. In the Northern Irish courts
it was recognised that a reasonable period was
regarded as normally being a relatively limited
period with an outer limit of around four to five
years. However this kind of approach was
changed fundamentally with the decision of
Norgan in England and Wales
In Norgan the court said that the
following had to be considered
1.
2.
3.
4.
5.
6.
7.
8.
How much can the borrower reasonably afford to pay, both now and
in the future?
If the borrower has a temporary difficulty in meeting his obligations,
how long is the difficulty likely to last?
What was the reason for the arrears which have accumulated?
How much remained of the original term?
What are the relevant contractual terms, and what type of mortgage
is it, when is the principal due to be repaid?
Is it a case where the Court should exercise its power to disregard
accelerated payment provisions (section 8 of the 1973 Act)?
Is it reasonable to expect the lender, in the circumstances of the
particular case to recoup the arrears of interest (1) over the whole of
the original term, or (2) within a shorter period, or even, (3) within a
longer period ie by extending the repayment period? Is it reasonable
to expect the lender to capitalise the interest, or not?
Are there any reasons affecting security which should influence the
length of the period for payment?
Norgan
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The court stated that in establishing the
reasonable period the court should take
as its starting point the balance of the
term of the mortgage and ask could the
borrowers pay the arrears over that
period
Northern Ireland

In Northern Ireland the opportunity to
consider the decision in Norgan came in
National and Provincial Building Society v
Lynd [1996] NI 47 – a decision of the
Northern Ireland High Court
Lynd
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On appeal, in Lynd, Girvan J considered that if the Court of
Appeal in Norgan held that the life of the mortgage may be a
relevant factor then he agreed with it.
In so far as it required the court to start out with the strong
presumption that the remainder of the term represented the
reasonable period he disagreed with it.
In essence the judge respectfully submitted that to look at the term
of the mortgage was the wrong starting point. He considered that
“a determination of the facts set out by Evans J [in Norgan] without
any pre-disposition for or against the relevant period being the
balance of the term of the mortgage is in my respectful view the
proper approach”.
He also considered that Norgan could be distinguished from Lynd
in that in the latter case the mortgage debt was close to or
exceeded the value of the property whereas in Norgan it was clear
that the value of the property was such that the plaintiff’s security
was in no way at risk.
Lynd
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Girvan J (as he then was) stated
“A defaulting mortgagor who could reasonably pay off
arrears at £200.00 per month cannot be heard to argue
that he should be allowed to pay them off at £100.00 per
month because it would suit him to have a longer time
frame. By first focusing on how much the mortgagor can
afford to pay the Court will then arrive at the period it will
take to discharge the arrears at that rate. It can then ask
itself the question whether in all the circumstances of the
case, taking into account the factors set out by Evans LJ,
it is reasonable to allow the mortgagor the length of time
needed to discharge the arrears at the proposed rate.”
Comparison – Norgan and Lynd
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Lynd represents a situation where the
borrower’s capacity to pay is addressed
first to establish his or her best realistic
proposal then look at the period over
which the arrears will be addressed
Represents a fairer balance to the lender
and the borrower
Not preclude another chance for the
borrower if there is a further default
FSA MCOB
“The FSA takes the view that the
determination of a reasonable payment
period will depend upon the individual
cirumstances. In appropriate cases this
will mean that repayments are arranged
over the remaining term of the regulated
mortgage contract.”
MCOB 13.3.6
Proposals to sell the mortgaged
property
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Another proposal frequently put before
the court at a mortgage repossession
hearing is that the borrower intends to
sell the property.
What should the attitude of the court be
to such a proposal?
Proposals to discharge debt by selling
the property

If the borrower intends to sell the
mortgaged property it is crucial that he
will be in a position to discharge all sums
secured on the mortgage and indeed any
other loans secured on it. It is not just an
issue of discharging the arrears.
Royal Trust of Canada v Markham [1975] 3 All ER 433.

The lender often is anxious to ensure that the
borrowers undertake all reasonable measures
to market and sell the property as soon as
possible as there is a danger that the borrowers
will prevaricate in the sale as they are still in
possession of the property. Furthermore, if the
borrowers are not in a position to make even
the monthly instalments due on the mortgage
account never mind any contribution to the
arrears, the level of the arrears on the account
will increase during the period of adjournment or
stay of enforcement.
National and Provincial Building
Society v Lloyd

Neill LJ indicated that if there was clear
evidence that a completion of a sale of a
property, perhaps by piecemeal disposal, could
take place in six or nine months or even a year
then he could see no reason why a court could
not come to the conclusion that the borrower
was likely to be able within a reasonable period
to pay any sums due under the mortgage. The
question as to what is a reasonable time is a
matter for the court in each individual case.
[1996] All ER 630.
Bristol and West Building Society v
Ellis
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In Bristol and West Building Society v Ellis Auld LJ put forward
three propositions:
where the property is already on the market and there is some
indication of delay on the part of the borrower a short period of
suspension of only a few months would be reasonable
where there is likely to be considerable delay in selling the
property and/or its value is close to the total of the mortgage
debt so as to risk the adequacy of the security, immediate
possession or a short period of suspension might be
reasonable
where there has already been considerable delay in realising a
sale of the property and/or the likely sale proceeds are unlikely
to cover the mortgage debt and arrears or there is no sufficient
evidence as to sale value, the normal order would be for
immediate possession.
(1997) 2 HLR 282.
Cheltenham and Gloucester
Building Society v Krausz

This is authority for the proposition that the court can only
adjourn or suspend an order for possession to facilitate a
sale of the property by the borrower if the court is
satisfied that the proceeds of sale will be sufficient to
discharge the entirety of the mortgage debt. In other
words the court cannot do this if there is negative equity.
However the court must look at all the circumstances of
the case. Certainly if the only security afforded to the
lender was the property to be sold and there is a negative
equity the court has no power to adjourn or suspend
However the question will be different if the lender has
other security or if the borrower has the means to add to
the proceeds of sale, perhaps from the sale of another
property which is not mortgaged.
[1997] 1 All ER 21.
Barclays Bank plc v Alcorn

Even if the borrower indicated to the court that
he intended to sell part of the security to
discharge the arrears (by selling a building site
for instance) the practice of the court would be
to exercise the discretion over all the mortgaged
property and not part of it. To interpret the
legislation otherwise would be to place too
strenuous an interpretation of the discretion
under the legislation.
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[2002] All ER (D) 146
Judicial comment in Northern Ireland
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In Northern Bank Limited v Mallett, on appeal Girvan J
considered that the evidence which a borrower should produce
when seeking an adjournment or stay on an order for
possession pending sale by the borrower is a letter from a
reputable estate agent acting in the sale stating:
that the property is on the market for sale
what is the asking price
is the asking price realistic in the light of comparable prices in
the area
comment on the perceived ease or difficulty in the sale of the
property
whether offers have been received
likely timescale of the sale
[2001] NIJB 225
Northern Bank Limited v Jeffers
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In the Northern Ireland High Court Girvan J stated:
“Where there is a genuine proposal by a mortgagor to sell the
mortgaged property at arm’s length in the open market, a
mortgagee would normally be ill-advised to object to a short time
being granted to enable such a sale to be effected by the
mortgagors since such a sale is likely to enhance the sale value of
the property which is normally depreciated by the circumstance of
a forced sale. When a mortgagor makes an application for a stay in
such circumstances the court must exercise its discretion under s
36 [of the Administration of Justice Act 1970] and the fact that the
order for possession was previously made with or without a stay
does not preclude the court acceding to the application. The court
will have to take into account all the relevant circumstances which
may include the court’s view as to the genuineness of the proposal
to sell, the steps taken to enable the sale to be effected, the likely
value of the property if sold by the mortgagors as compared to the
value if sold by the mortgagee, the conduct by the mortgagor in the
past, at the time of the making of the order and since the making of
the order and the increase or decrease of the mortgage debt since
the making of the order.”
[1996] NI 497
Conclusion

While there are some similarities in the
approach to mortgage repossession
proceedings in Northern Ireland
compared to that in England and Wales
there are some important differences as
to what the court should take into
account when it receives proposals to
discharge arrears over time or to sell the
mortgaged property.
Note

Please note that the material in this
paper is given as general guidance only.
The law in this area is subject to change,
sometimes at very short notice. Therefore
before giving any advice to clients to take
a particular course of action or not to take
a particular course of action the exact
current legal position should be
investigated and confirmed.
Charles O’Neill
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Published work
The Law of Mortgages in Northern Ireland by SLS Legal
Publications (NI) 50 Lansdowne House, 50 Malone Road, Belfast,
BT9 5BS, 2008
The Law of Private Tenancies in Northern Ireland (pending)