• In the case of Western Bank Ltd v Schindler [1976] 2 All ER 394, the Court of Appeal held that the court can postpone possession under s36 (2) Administration of Justice Act 1970, even in circumstances where there has been no arrears or default on the behalf of the party in possession.

Facts of the case:

  • D entered into a contract with C for a loan of £32,000 in order to purchase a property. Interest was to be payable monthly in advance and the capital sum was to be repaid in 10 years time.
  • The loan was secured by, inter alia, a legal charge on the property.
  • The D mortgagor paid three monthly instalments of interest and three premiums under the policy and thereafter made no payments.
  • Goulding J held at first instance that the obligation to pay interest under the mortgage deed could not be varied or supplemented by the loan agreement and therefore that the mortgagor was not liable to pay interest until the mortgage had redeemed. He ordered under s36 (2) Administration of Justice Act 1970 for possession to take place in one month’s time.

Issues in the case

  • Whether s36 of the Act applied in a case where there was no default on the part of the mortgagor.

Court of Appeal held:

  • The CA held, dismissing the appeal, where a mortgagee sought possession of a dwelling house, s36 of the Administration of Justice Act 1970 applied whether or not the mortgagor was in arrears or otherwise in default, but if the mortgagor was in default, the court could only exercise its discretion to defer the mortgagee taking possession under subsection (1).

Buckley LJ:

  • [349] “In the present case, notwithstanding the loan contract, the mortgage and the policy charge must be treated as independent transactions. It is not disputed that the failure of the mortgagor to keep up the original policy, although it was of course a default under the policy charge, was not a default under the mortgage. So, on the evidence before the judge, there was no sum due and no outstanding default under the mortgage.
  • [350] “I think, however, that the section is capable of interpretation in a way which makes it applicable to a case in which a mortgagee seeks possession when no sum is due and no other default is subsisting under the mortgage. I can see no reason why the legislature should confer the discretionary power on the court when the mortgagor is in default but should not do so when he is not in default.”