This article provides a detailed analysis of Bristol & West Building Society v Ellis [1996], focusing on key legal principles surrounding mortgage possession and repayment issues, crucial for law students studying property law.

Legal Principles and Key Points in Bristol & West Building Society v Ellis 

  • In the case of Bristol & West Building Society v Ellis [1996] 73 P&CR 158, the factors required to make a possession order were explored in the context of repayment solely through sale of the property.

Facts of Bristol & West Building Society v Ellis [1996] 

  • The mortgager, Mrs Ellis, defaulted on her payments
  • A suspended order by the Bristol County Court was made for the mortgager to pay however she did not comply with it and the mortgage went unpaid
  • After such, an order for repossession was postposed without a term imposed as to the sale of the property
  • There was an expectation that such would occur after Mrs Ellis’ children had completed university in 3-5 years

Issues in Bristol & West Building Society v Ellis 

  • Was it right of the district judge to order the postponement of the order of possession?

Held by the Court of Appeal

  • The postponement was inappropriate. Where there is no prospect of sale within 3-5 years, a mortgage repossession order should be made.

Lord Justice Auld

Factors the courts should consider in situations of possession orders

  • “The important factors in determining the reasonableness of the period are likely to be the extent to which the mortgage debt and arrears are secured by the value of the property and the effect of time on that security. There should be evidence, or at least some informal material, before the court of the likelihood of a sale, the proceeds of which will discharge the debt, and of the period within which such a sale is likely to be achieved.” [158]

If “the property is already on the market and there is some indication of delay on the part of the mortgagor, it may be that a short period of suspension of only a few months would be reasonable” [162]

In certain situations, a delay period (albeit a short one) is 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 and arrears so that the mortgagee is at risk as to the adequacy of the security, immediate possession or only a short period of suspension may be reasonable.” [163]

However, where there has already been delay and cost of sale would likely not cover the debt, Lord Justice Auld said immediate possession would be the most appropriate:

  • 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 simply no sufficient evidence as to sale value, the normal order would be for immediate possession.” [163]

Having looked at the debt totalling over the years, Lord Justice Auld believed such would not be repaid in the expectation provided by Mrs Ellis and did not think the district judge’s decision of postponement was therefore appropriate:

  • “In my view, the evidence was simply insufficient to entitle the district judge to contemplate, behind the order he made, a likelihood that the house would or could be sold at a price sufficient to discharge Mrs Ellis’s overall debt to Bristol & West within any reasonable period, and certainly not one of up to three to five years.” [163]

Significance of the Case on the Development of the Law

The decision in Bristol & West Building Society v Ellis [1996] has had significant implications on the law concerning mortgage possession orders. Its relevance can be contextualized through several key UK cases:

  • Comparison with Cheltenham & Gloucester Building Society v Norgan [1996]: This case, closely contemporaneous with Bristol & West, further defined the courts’ discretion in allowing time for mortgage repayment, emphasizing the potential for extended periods based on borrower circumstances, which contrasts with the stricter stance in Bristol & West.
  • Relation to Horsham Properties Group v Clark [2009]: Here, the court expanded on the principles laid out in Bristol & West, addressing the rights of possession against the backdrop of consumer protection, highlighting a more balanced approach between lender rights and borrower protections.
  • Echoes of Cuckmere Brick Co Ltd v Mutual Finance Ltd [1971]: In Cuckmere, the notion of a lender’s duty in realizing the security was first explored, which laid foundational principles that were echoed in Bristol & West, emphasizing the lender’s responsibility and the conditions under which possession orders can be reasonably postponed.

Exam Questions and Answers

Below you will find answers to questions that are most commonly asked based on this case.

How do current UK housing policies influence the court’s decisions in cases similar to Bristol & West Building Society v Ellis?

Current UK housing policies, such as those outlined in the Housing Act 2004, emphasize protecting vulnerable homeowners and promoting fairness in housing practices. These policies impact judicial decisions by encouraging courts to consider broader social and economic factors when adjudicating mortgage possession cases. The courts are more inclined to allow borrowers reasonable time to rectify their financial situations, akin to the discretion discussed in Cheltenham & Gloucester Building Society v Norgan [1996], where extended repayment terms were considered.

What are the ethical considerations for lenders when seeking possession orders in light of recent case law developments?

Lenders are expected to act ethically, taking into account both their commercial interests and the borrower’s circumstances. Recent case law, such as Horsham Properties Group v Clark [2008], suggests that lenders should make reasonable efforts to reach an agreement with the borrower before proceeding with possession orders. This includes exploring alternatives to possession, such as payment plans or temporary forbearance, reflecting a balance between recovering debts and avoiding undue hardship on borrowers.

How has the interpretation of “reasonable period” for repayment evolved in subsequent case law following Bristol & West Building Society v Ellis?

Following Bristol & West, the interpretation of “reasonable period” for mortgage repayment has evolved to more flexibly consider the borrower’s individual circumstances. This evolution was marked in cases like Cheltenham & Gloucester v Norgan, where courts were guided to consider the entire remaining term of the mortgage as a possible repayment period. This approach allows for a more tailored consideration of what constitutes a reasonable period, depending on factors like the borrower’s employment status, income stability, and other personal circumstances.