Britannia Building Society v Earl [1990] 1 WLR 422
Facts
D1 mortgaged a dwellinghouse to C, a building society. There was a term in the mortgage which prevented the owner of the property from letting the premises without the consent of C. D1 subsequently let the property to D2, without the consent of C. Therefore, D1 acted in breach of a term in the mortgage agreement with C. Following D1 breaching the mortgage agreement, C sought an order of possession of the premises. D2, the tenant, wished to remain living there and as such he brought a claim under s36 (2) Administration of Justice Act 1970.
Legal Issue
The issue for the Court of Appeal (CA) in the present case was whether s36 (2) AJA 1970 could be relied upon by D2.
Held
The Court of Appeal rejected the occupier’s attempt to obtain relief under section 36. His position as a statutory tenant did not make him the mortgagor for that purpose. In addition, the letting breached the mortgage obligation prohibiting an unauthorised tenancy, and continued occupation would leave that breach unremedied. Payment of arrears alone therefore did not answer the difficulty. The court declined to rewrite the statutory reference to other mortgage obligations as though it covered only obligations affecting the value of the security. The holding concerns that statutory route on those facts, not a proposition that tenants can never possess separate statutory protections against repossession.
⭐ Legal Principle
An unauthorised occupier cannot assume the mortgagor’s section 36 rights, and the court must consider non-monetary mortgage obligations as well as arrears. Where continued letting itself breaches the mortgage, paying arrears may not satisfy the statutory conditions for postponement.
Significance
Earl demonstrates that section 36 is not a free-standing hardship jurisdiction for everyone living in mortgaged premises. The applicant’s legal position and the particular default matter. A tenant’s contractual promise from the mortgagor does not automatically determine the lender’s position. Later legislation addressing unauthorised tenants must be considered in a modern possession problem, so the historical decision is best used to identify the limits of the statutory route then advanced rather than as a complete eviction guide.
Common exam questions about this case
Why could the tenant not simply invoke the borrower’s protection?
Section 36 addresses qualifying mortgage-possession proceedings and the mortgagor’s ability to remedy the default. The occupier’s statutory tenancy did not give him the relevant status in this case. His desire to remain could not by itself establish a jurisdiction that the statute did not confer.
Would paying all arrears necessarily have solved the problem?
No. There was also a breach of the promise not to let without consent. Continued unauthorised occupation maintained that breach. The court therefore had to consider the non-monetary obligation instead of treating repayment of arrears as the only possible default relevant to relief.
Does Earl settle every modern tenant’s repossession rights?
No. It concerns the specified section 36 arguments and mortgage terms. Separate statutory protection may apply to tenants under later legislation, depending on the tenancy and proceedings. A modern problem requires those provisions to be checked rather than relying solely on this historical decision.