• In the case of Britannia Building Society v Earl [1990] 1 WLR 422, the Court of Appeal held that a tenant may not claim under s36 Administration of Justice Act 1970, where the tenancy the tenant is under is barred by the terms of a mortgage.

Facts of the Case

  • 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.

Issues in the Case

  • The issue for the Court of Appeal (CA) in the present case was whether s36 (2) AJA 1970 could be relied upon by D2.

Court of Appeal Held

  • The CA held that D2 could not successfully claim under s36 (2) AJA 1970, as the present circumstances did not fall under s36’s jurisdiction. S36 applies to mortgagors, and as tenants, they were not the mortgagors of the property.
  • Moreover, the fact D2 was living there under a tenancy meant that by definition, there was a breach of an obligation under the mortgage.

McGowan LJ

  • [429] “It seems to me that, having regard to the characteristics of a statutory tenant (which is the foundation of Mr. Keith’s argument under his first point), a statutory tenant has not got an estate or interest in the land.”
  • [430] “The only ground for seeking possession here against the mortgagor was the arrears, but unknown to the mortgagee there was another perfectly good ground, namely, the breach of the covenant against leasing, of which breach the mortgagees were unaware.”
  • [430] “He submits that the power can only be exercised under section 36(1) if the breach can be remedied. The present default, he says, cannot be remedied save by the departure of the tenant. Mr. Keith seeks to counter this by submitting that the words in section 36(1) “any other obligation” should be construed as obligations Q “affecting the mortgagee’s security.” For my part, I see no justification for construing the phrase “any other obligation” as if those words were added. “Any other obligation,” in my judgment, means what it says. Consequently, in my judgment, Mr. Keith’s second point fails. I would therefore dismiss the appeal.”

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