• In the case of Horsham Properties group ltd v Clark 2009 1 WLR 1255 it was held that the Law of Property Act 1925 s.101 did not infringe the rights of mortgagors under the European Convention on Human Rights 1950 Protocol 1 art.1 by permitting mortgagees to sell properties without first obtaining a court order for possession.

Facts of the Case

  • C claimed possession of a property formerly belonging to the defendants.
  • D had fallen into mortgage arrears in respect of the property.
  • In accordance with the Law of Property Act 1925 s.101(1)(iii), the mortgagee appointed receivers over the property who contracted to sell it at auction.
  • On sale, the property was transferred to C, who became the registered proprietor.
  • D remained in possession of the property and C instigated the instant claim.
  • D submitted that the statutory power under the LPA would only be compatible with the Convention rights of residential mortgagors if it was construed as requiring a mortgagee first to obtain a court order for possession or to make an application for an order permitting sale.

Issues in Horsham Properties group ltd v Clark 2009 1 WLR 1255

  • Whether s.101 of the LPA, by permitting mortgagees to overreach their rights in relation to the mortgaged property by selling it out of court without first obtaining a court order for possession or sale, infringed the rights of mortgagers under the European Convention on Human Rights 1950.

Held by High Court

  • Order for possession grated
  • Judgment held in favour of C

Briggs LJ

  • D had lost the equity of redemption in the property without statutory intervention.
  • S.101 served to implement rather than override the private bargain between mortgagor and mortgagee.
  • “The effect of the sale in the present case was not merely to overreach Miss Beech’s share in the equity of redemption, but to discharge the mortgage, since the net proceeds of sale were sufficient for that purpose. There was therefore, by the time the claimant applied for possession in the present case, no subsisting mortgage, no continuing obligation to pay instalments, let alone discharge arrears, and therefore, nothing upon which the court could focus in concluding, as the condition for the exercise of a discretion to adjourn or stay, that there was something which could be paid by the mortgagor within a reasonable time.

In my judgment, although the definition of mortgagee in section 36 includes successors in title to an original mortgagee, it necessarily refers only to successors in title to the mortgage, claiming under the mortgage, rather than to successors in title to the mortgaged property, taking free of the mortgage. Miss Williams did not with any vigour resist that analysis.

In conclusion therefore, it follows that the claimant is entitled to possession of the Property as against Miss Beech, the Human Rights Act defence having entirely failed.” [51-53]

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