Ropaigealach v Barclays Bank Plc [1998] EWCA Civ 1960 (18 December 1998)

1. This is an appeal from the order made on 30 July 1997 by Mr Justice Longmore, in the Cardiff District Registry, dismissing Mr Ropaigealach’s appeal from a decision of the District Judge to dismiss these proceedings. The appeal raises a point of some general importance as to the effect (if any) of section 36 of the Administration of Justice Act 1970 in a case where a mortgagee has taken possession of the mortgaged property by peaceable entry and without first obtaining an order of the court.

2. The proceedings concern a dwelling house known as 16 Windsor Esplanade, Butetown, Cardiff. The property is registered at HM Land Registry under title number WA 175003. On 30 September 1988 Seoirse Trebahr Ropaigealach and his wife Melini Savuciri Ropaigealach, as registered owners of the property, executed a legal charge to secure their indebtedness to Barclays Bank plc. The legal charge contained, in clause 1, a covenant by Mr and Mrs Ropaigealach that they would, on demand in writing, pay to the bank all monies which should from time to time be owing by them to the bank. Clause 5 excluded the provisions of section 103 of the Law of Property Act 1925. That clause went on to provide that, as between the bank and a purchaser from the bank, the statutory power of sale should arise on and be exercisable at any time after the execution of the legal charge; but that, as between the bank and the mortgagor, the bank should not exercise its power of sale until payment of the monies secured by the legal charge had been demanded. The legal charge made no express provision for the mortgagor to be or remain in possession of the property.

“4. The seller will transfer the property in exercise of the power given to it by section 101 of the Law of Property Act 1925 and in exercise of the power conferred on the seller by the legal mortgage. A copy of the legal mortgage together with evidence of the title to the property having been made available to the buyers or solicitors for the buyer prior to the date hereof, the buyer shall be deemed to have full knowledge of the contents of the same and shall not be entitled to raise any requisitions or make any objection with regard thereto.”

Special condition 5 expressly excluded the covenants for title on the part of the seller - thereby excluding the limited title guarantee that would otherwise have been implied under section 3 (3) of the Law of Property (Miscellaneous Provisions Act) 1994. It is clear that the bank was giving no warranty that the purchaser would obtain vacant possession or that he would take free from whatever rights of possession or occupation Mr and Mrs Ropaigealach, as mortgagors, might enjoy.

7. In the meantime, it appears that Mr Ropaigealach had discovered from a neighbour that the property had been sold. He confirmed this with the auctioneers. He consulted solicitors. On 30 December 1996 he swore an affidavit in support of an application ex parte for an injunction restraining the bank from proceeding with the sale. That application was refused; no doubt because it was too late for the relief sought by Mr Ropaigealach to be of any use. The sale had already been completed.

“Whether the defendant as mortgagee of the property named in this matter, or otherwise, was entitled by law [particularly, having regard to the provisions of section 126 and other provisions of the Consumer Credit Act 1974, and regulations made thereunder, and to the provisions of section 36 of the Administration of Justice Act 1970 as amended by (or affected by) section 8 of the Administration of Justice Act 1973] to take possession of the property, on a date unknown, and sell it by auction, to persons unknown, on or about 27 November 1996, without first having sought and obtained the order of the appropriate court.”

9. The District Judge took the view that the matter could be dealt with summarily. On 1 May 1997 he dismissed the application of 17 March 1997; dismissed the originating summons of 15 January 1997; and ordered that Mr Ropaigealach pay all the costs. Mr Ropaigealach appealed to the Judge. The appeal came before Mr Justice Longmore on 30 July 1997 in Swansea. He dismissed the appeal and refused leave to appeal.

“For my own part, I am unable to find any flaw in the reasoning contained in the judgment of Longmore J, but it is apparent that this is a question the answer to which is not universally agreed. Longmore J has the Law Commission on his side, but it does appear from an article written by Miss or Mrs Alison Clarke and published in The Conveyancer July/August 1983 that, by necessary implication, the effect of section 36 of the Administration of Justice Act is that a mortgagee must first obtain the leave of the Court before proceeding to enforce its right to possession or its power of sale under the mortgage deed in relation to a dwelling house.

11. So it is that the appeal comes before us. Mr Ropaigealach now has the benefit of legal representation and his notice of appeal has been resettled by counsel. There is now no reliance on the provisions of the Consumer Credit Act 1974. The grounds relied upon in the notice of appeal are (i) that the Judge was wrong to uphold the decision of the District Judge to dismiss the originating summons summarily and without a full hearing and (ii) that the Judge ought to have held that the provisions of section 36(1) and (2) of the Administration of Justice Act 1970 impose a restriction upon the powers of a mortgagee of residential property “whereby the mortgagee must apply to the County Court for an order for possession before exercising its power of sale and/or right of possession” with the consequence that the bank, not having applied to the court for any order for possession (as is common ground), did not at the time of sale of the property at auction have the right to exercise the power of sale or to take possession under the mortgage.

12. The question raised by the originating summons (insofar as now material) might have been thought to incorporate two distinct questions: (i) was the bank entitled to take possession of the mortgaged property without having obtained an order from the court; and (ii) was the bank entitled to sell and transfer the mortgaged property without first having obtained an order for possession or (in the alternative) an order for sale. In the event the second question was not pursued on this appeal. It was the appellant’s case at the hearing that the only issue for determination was that identified in paragraph 1 of the skeleton argument lodged on his behalf:

“It does not appear to me on the material with which I have been provided that it is a requirement of section [36] of the Administration of Justice Act 1970 or indeed of any other statute, that a bank which seeks to sell property at auction must first obtain a court order for possession. It therefore seems to me that the originating summons can only be answered in this respect by saying that the bank was not so bound.”

Secondly, the bank denies strenuously that it did go into possession of the mortgaged property either before the auction on 26 November 1996 or thereafter. On the basis upon which the matter was presented to the Judge, that was not a question which needed to be decided. It was common ground that the bank had not obtained an order for possession. It was immaterial, in the context of the question which the Judge thought that he was being asked to determine, whether or not the bank had gone into possession without a court order. But, of course, the question is central to the issue as presented to us. If the bank never went into possession of the mortgaged property at all, then the issue as formulated in paragraph 1 of the appellant’s skeleton argument simply does not arise.

14. These difficulties are, perhaps, compounded by the Judge’s observation that, after examining documents which he had required the bank to produce in the course of the hearing before him, he would have been prepared to infer as a matter of fact (if it had been necessary) that the bank did not in any event go into possession and that the originating summons, insofar as it asserted that the bank did take possession of the property, was based on a factual misconception.

15. Encouraged by those observations, Miss Gloster QC, who appeared for the bank on this appeal, urged us to dismiss the appeal in limine. We took the view that that course was not open to us. It seemed to us reasonably clear that the matter was argued before the District Judge on the basis that it could be disposed of in the bank’s favour without the need to investigate the question - which was plainly a question of fact - whether the bank did go into possession of the property. It is clear that the Judge himself approached the appeal on that basis. It is also clear that, if it were necessary to decide the question whether the bank did go into possession of the property, the matter could not be disposed of summarily. At the least Mr Ropaigealach would be entitled to discovery and to have the opportunity to test the bank’s evidence by cross-examination. It is understandable that, in a case in which the appellant was in person, the Judge thought it appropriate to make the informal investigation which led to the observations which he made; but it is clear that he could not have thought that he was engaged in the trial of a contested issue of fact. As he pointed out, on the view which he took on the law and having regard to the question which (as he thought) was actually before him, it was unnecessary for him to decide whether the bank did, in fact, go into possession. We must approach this appeal on the basis that that question of fact has not been resolved. If we are to decide the question of law which is now posed in the argument presented to us, it must be on the hypothesis (which might well prove to be unfounded) that the bank did take possession of the property.

16. We have considered whether we should decide the question of law which is now posed - notwithstanding the unsatisfactory way in which it has eventually emerged - or whether we should decline to do so on the ground that it is wholly academic or hypothetical. For my part, I am satisfied that it is right to decide the question. I am satisfied that the exercise is not wholly academic. If, as Mr Ropaigealach contends, the bank was not entitled to take possession of 16 Windsor Esplanade without obtaining a court order - and if (on the hypothesis to be adopted) it did so - then, as it seems to me, it could be argued that the bank was in possession as a trespasser against Mr Ropaigealach and could, in principle, be liable to damages. It is true that their originating summons, in its present form, is not an obvious vehicle on which to bring an action for trespass; but it was made clear to us in argument that such a claim would be added by amendment if we were to decide the question of law in the appellant’s favour. Having formed a clear view on the question of law, I think it would be wrong to put the parties to the expense and inconvenience of a trial on the facts.

“36(1) Where the mortgagee under a mortgage of land which consists of or includes a dwelling house brings an action in which he claims possession of the mortgaged property, not being an action for foreclosure in which a claim for possession of the mortgaged property is also made, the Court may exercise any of the powers conferred on it by subsection (2) below if it appears to the Court that in the event of its exercising the power the mortgagor is likely to be able within a reasonable period to pay any sums due under the mortgage or to remedy a default consisting of a breach of any other obligation arising under or by virtue of the mortgage.

19. The section is expressed to apply where a mortgagee brings an action in which he claims possession of the mortgaged property. Where the conditions in sub-section (1) are satisfied the court is given powers, by sub-section (2), which may fairly be described as procedural - in the sense that they are only capable of being exercised in the context of existing proceedings in which a claim for possession is made. But, it is said, Parliament could not have intended that the protection against ejectment which the section was plainly intended to give to mortgagors in respect of their homes should be capable of being frustrated by a mortgagee who resorted to self-help; that is to say, by a mortgagee who obtained possession by entry without the assistance of the court. Accordingly, so it is contended, the section must be construed in such a way as to make it unlawful for a mortgagee to take possession of a dwelling house except under an order of the court. It never became clear in argument how, by any interpretation of the words actually used, that result could be achieved; but that objection was brushed aside as unduly technical. What mattered, it was said, was that the court should give effect to the purpose for which the section was plainly enacted.

20. The genesis of section 36 of the Administration of Justice Act 1970 is not in dispute. Since 1925 a mortgage of freehold land has taken effect as a demise for a term of years absolute, subject to proviso for redemption - see section 85 of the Law of Property Act 1925. A charge by deed expressed to be by way of legal mortgage takes effect as if a mortgage term of 3000 years had been created in favour of the mortgagee - see section 87(1) of that Act and, where the land is registered land, section 27(1) of the Land Registration Act 1925. The effect, as a matter of legal analysis, is that the mortgagor demises his immediate estate to the mortgagee; who thereupon becomes entitled to possession by virtue of the estate which he has acquired. The position is described in Halsbury’s Laws of England (4th Edition) volume 32, page 308 at paragraph 672:

“. . . where (as here) the legal mortgagee under an instalment mortgage under which by reason of default the whole money has become payable, is entitled to possession, the Court has no jurisdiction to decline the order or to adjourn the hearing whether on terms of keeping up payments or paying arrears if the mortgagee cannot be persuaded to agree to this course. To this the sole exception is that the application may be adjourned for a short time to afford to the mortgagor the chance of paying off the mortgage in full or otherwise satisfying him; but this should not be done if there is no reasonable prospect of this occurring.”

22. The decision in Caunt put an end to a practice, which had been developed by the Chancery Masters since the introduction, in 1936, of what was then Order 55 rule 5A of the Rules of the Supreme Court (now Order 88 rule 2 RSC 1965), under which mortgage possession summonses were adjourned to give the mortgagor an opportunity to pay by instalments. Following the introduction of new Rules of the Supreme Court in 1965, the matter was considered by the Committee on the Enforcement of Judgment Debts under the chairmanship of Mr R W Payne. The Payne Committee recommended at paragraph 1390 of its Report (Cmnd. 3909), dated 21 November 1968, that:

“ . . . when possession is sought under a mortgage of a dwelling house having a rateable value which would bring it within the protection of the Rent Acts (whether with or without a concurrent claim for payment) and the defendant is in arrear with any instalments, and it appears to the Court that the defendant ought to be given opportunity to pay off the arrears of instalments or interest, or to have time to make arrangements to redeem the mortgage, or otherwise requires the protection of the Court, the Court should have a discretion to adjourn the application or, if an order or judgment for possession is, or has been, made, and not executed, to stay or suspend the execution of any such order or judgment or postpone the date of possession for such a period or periods as it thinks fit, subject to such conditions (if any) in regard to payment by the mortgagor of arrears as the Court thinks fit, and, if such conditions are complied with, the Court should have discretion to discharge or rescind any such order or judgment; . . .”

23. Section 36 of the Administration of Justice Act 1970 does, of course, go rather further than the Payne Committee had recommended; for it does not restrict the court’s powers to adjourn or suspend orders for possession to cases in which the rateable value of the dwelling house would bring it within the protection of the Rent Acts. Be that as it may, it is plain enough that the section was enacted in order to deal with problem which had arisen following Caunt; and which had been the subject of examination and recommendation by the Payne Committee - see the observation of Lord Justice Scarman in Western Bank Ltd v Schindler [1977] Ch 1, at page 17G. There is nothing in the circumstances leading to the enactment of section 36 of the 1970 Act which provides any foundation for a submission that it was intended to deal with a different problem - not then identified - arising from entry without an order of the court.

“6.16 One of the consequences of the relationship created by the mortgage by demise and by the charge by way of legal mortgage is that it is the mortgagee and not the mortgagor who is entitled to possession of the property. Unless the mortgage deed expressly restricts the exercise of the right it is exercisable at any time for any (or no) reason; its exercise is not dependent on any default by the mortgagor, nor on any threat to the security. If the mortgagee prefers to obtain a court order for possession rather than obtain possession extra judicially the Court has power, if the property is a dwelling house, to withhold or delay the order on condition that the mortgagor remedies any default. Otherwise, the Court has no power to regulate the exercise of the right: it is a matter in which equity has consistently refused to intervene.”

26. The view that the protection which section 36 affords to mortgagors of dwelling houses is limited to cases in which the mortgagee seeks an order for possession from the court was criticised in the article “Further Implications of Section 36 of the Administration of Justice 1970” published in the Conveyancing Journal (July/August 1983, at page 293) to which Lord Justice Mantell referred when giving leave for this appeal. The article, which may well have provided the inspiration for much of the argument advanced on behalf of Mr Ropaigealach on this appeal, contains a careful and scholarly analysis of the circumstances in which section 36 was enacted. The author recognises the force of the arguments in favour of what may be stigmatised as the literal construction of the section. But she goes on to say this, at pages 295-6:

“The Courts would therefore be faced with a difficult task in interpreting section 36 as removing the mortgagee’s right to take possession peacefully. Arguably, it is a task they should refuse to undertake: reading words into a statute in order to restrict a common law property right is not usually regarded as justifiable, and one would expect the courts to be particularly reluctant to do so where, as here, it is not at all clear either what the words should be or where in the section they should be inserted.

In spite of all this, however, it is submitted that the common-sense view must prevail. It is anomalous and undesirable to protect mortgagors against eviction by court process yet leave them open to eviction by self help, particularly if - as apparently would be the case - the mortgagee’s right to use self help continued notwithstanding that he had applied to the Court for immediate possession and been refused.”

27. In support of the contention that the court should give what he described as a purposive construction to section 36 of the Act of 1970, Mr Scrivener QC, counsel for Mr Ropaigealach, relied on two decisions of this Court on the effect of a comparable provision in section 5 of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920: Remon v City of London Real Property Co [1921] 1 KB 49 and Cruise v Terrell [1922] 1 KB 664. The Act was enacted shortly after the conclusion of the Great War for the purpose of consolidating and amending the law “with respect to the increase of rent and recovery of possession of premises in certain cases, and the increase of the rate of interest on, and the calling in of securities on such premises”. The Act applied to houses of low rateable value let as a separate dwelling. It was, of course, an early example of the social housing legislation which was to be developed and re-enacted in subsequent Rent Acts and in the Housing Acts. Section 5 of the Act of 1920 precluded the court from making an order for possession of any dwelling house to which the Act applied unless one or more of a now familiar list of conditions were satisfied:

It was held by this Court, in the two cases to which I have referred, that the effect of the Act of 1920 was to make it unlawful, in circumstances in which a former contractual tenant remained in occupation after the determination of the term, for a landlord to re-enter premises to which the Act applied without first obtaining an order for possession. So, it was argued, the same effect should be given to section 36 of the Administration of Justice Act 1970. That submission overlooks, as it seems to me, the basis upon which this Court reached its decision in those two cases.

28. The question for decision in Remon was whether the plaintiff, a tenant of rooms to which (once enacted) the Act of 1920 applied and who had been excluded from possession by the landlord’s re-entry on the day that the Act came into force following service of a notice to quit, was entitled to an injunction restraining the landlord from interfering with his quiet enjoyment of the premises. It is pertinent to keep in mind that re-entry had been obtained forcibly, by the landlord breaking the locks. It was held that, although the contractual tenancy had come to an end with expiry of the notice to quit, nevertheless, at the time of the re-entry, the plaintiff was to be treated as a tenant who by virtue of the provisions of the Act had retained possession for the purposes of section 15(1); and so was a person entitled to the benefit of the implied covenant for quiet enjoyment under that subsection. Section 15(1) was in these terms(so far as material).

“The object of the various Rent Restrictions Acts is clear. It was intended to prevent the tenant from having his rent raised against him or from being turned out, though his tenancy by agreement had expired, so long as he was willing to pay the rent authorised by statute. He was originally presented by Parliament with a statutory tenancy at the will of the tenant for so long as he liked and no longer. But Parliament did not in terms say that though his tenancy by agreement has expired, he had a statutory right to stay in on specified terms; it provided that no order for recovery of possession should be made, and omitted expressly to provide what sort of legal interest the person who stayed in by permission of Parliament and against the will of the landlord should have, nor did Parliament expressly provide for the case where the landlord by his own action and without obtaining the order of the Court, got into possession of his own premises.”

Lord Justice Scrutton then compared the provisions recently enacted in the Act of 1920 with those in earlier Rent Restrictions Acts. He pointed out that section 15 of the Act of 1920 was plainly intended to define the terms under which a person who had remained in possession after the determination of contractual tenancy was to continue in possession “under the new statutory tenancy”. The difficulty which he found in construing section 15(1) of the Act of 1920 was that the identification, in the opening words of the sub-section, of the person who was to have the benefit of its provisions as “a tenant” was not an apt description of a former tenant whose contractual tenancy had determined and who was holding over against the will of his landlord. He addressed that difficulty in a passage, at pages 58-9, on which Mr Scrivener relies strongly:

“Yet I think it is clear Parliament had intended to confirm these people in a statutory tenancy and speak of their position as “a letting”. Mr Romer [counsel for the landlords] argued very forcibly to us that though the policy were clear yet the courts ought not to give effect to it unless they could find words apt in their ordinary meaning to justify them in so doing, and that the case of landlord getting into possession of premises which under the agreement of tenancy he had a right to enter had not been dealt with by Parliament. I do think it has expressly; and I feel I am straining language in speaking of a person whose tenancy has expired and who stays in against the active protest of the landlord as “tenant”, and of the landlords’ relation to him as “letting”; but such a person appears to be within the clear intention of the legislature, and where the statute has forbidden any process of court to be used to eject him, I think it must have intended and be taken to forbid ejection by the private action of the landlords without the aid of the Court. ”

“It is however clear that in all the Rent Restrictions Acts the expression “tenant” has been used in a special, a peculiar sense, and as including a person who might be described as an ex-tenant, someone whose occupation had commenced as a tenant and who had continued in occupation without any legal right to do so except possibly such as the Acts themselves conferred upon him. The respondent therefore on the coming into operation of the new Act was a tenant within the meaning of that expression in the Act . . .”

“Section 15 is intended to supply something that was wanting in the previous Acts, namely, an indication as to the legal position of a person who continued in occupation of premises merely by reason of the protection afforded by those Acts. The opening words of section 15 are words of description of the person to whom the conditions of the statutory tenancy apply. He is described as a tenant who by virtue of the provisions of the Act retains possession of a dwelling house to which the Act applies. As pointed out by Mr Romer in his argument the Legislature in section 5 was apparently only contemplating eviction by legal process. A person therefore who is protected by the Act from eviction by legal process from his dwelling house may not inaccurately be described as a person who by virtue of the Act retains possession of his dwelling house. The respondent being obviously a person protected by section 5 from eviction by legal process, comes in my opinion within the description contained in section 15, and is therefore entitled to the benefit of the Act, assuming that his premises come within the Act.”

31. On a proper analysis of the passages which I have set out, the basis of the decision in Remon can be seen to be this: (i) a person holding over after the determination of a contractual tenancy to which the Act applied was protected by section 5 of the Act from eviction by legal process; (ii) it followed that he was a person who, by virtue of the provisions of the Act, retained possession of the dwelling house which had formerly been let to him; (iii) accordingly, he was a person to whom the provisions of section 15 of the Act were plainly intended to apply; (iv) so it was permissible, as a matter of construction, to treat him as a “tenant” for the purposes of section 15; (v) if he were a tenant for those purposes, he had the benefit of the landlord’s covenant for quiet enjoyment; and (vi) ejection by forcible re-entry was in breach of the covenant for quiet enjoyment and could be restrained by injunction. The plaintiff was able to bring himself within that analysis because re-entry had not been made before the day on which the Act came into force. The Court was able to reach the conclusion that the Act “must have intended and be taken to forbid ejection by the private action of the landlord without the aid of the Court” ( ibid, page 59) because, giving the word “tenant” a meaning for the purposes of section 15 which was wide enough to include a former contractual tenant holding over against the will of his landlord, “ejection” following forcible re-entry would constitute a breach of the covenant for quiet enjoyment to which, by virtue of that section, the “tenant” was entitled.

32. The point was before this Court again, some eighteen months later, in Cruise v Terrell [1922] 1 KB 664. The plaintiffs were “week-enders” to whom a cottage had been let for a fixed term of one year. The contractual term determined on 25 March 1921 and was not renewed. On 7 April, in the absence of the plaintiffs, the defendant sent the local blacksmith to the cottage, who broke into the premises and put a new lock upon the door and locked it. The plaintiffs sued in trespass. The defendant pleaded by way of defence that the tenancy had determined by effluxion of time; in the alternative he counterclaimed for possession of the cottage on one of the statutory grounds. The trial Judge awarded damages for trespass, but made an order for possession on the counterclaim. The defendant appealed. After rejecting the contention that the Act of 1920 had no application to a tenancy for a term certain, the Court went on to consider whether the effect of the Act was that the defendant’s forcible re-entry constituted a trespass. Lord Sterndale, Master of the Rolls, said this (at page 669):

“The next point is that assuming the Act does apply and that the plaintiffs are statutory tenants, the Act does not prevent a landlord from exercising a right of re-entry where he is entitled to an immediate order for possession under section 5 of the Act, which order it is contended when obtained relates back to the date of his entry. That point was, however, decided against the appellant in Remon v City of London Real Property Co. It is said that in the judgments in that case the point is dealt with by dicta only. In my opinion they are not dicta , but, even if they are, they are dicta from which we ought not to differ, and by which we are bound.”

“The second point, that on the date when the defendant entered the plaintiffs were mere trespassers, has been disposed of by the decision in Remon v City of London Real Property Co. There the landlords went into possession without an order in the same way as the landlord did in this case and the action was brought for an injunction to restrain them, and it is clear that there would have been no right of action unless the tenant were a statutory tenant under section 15.”

“As to the second point it was said that the Act did not destroy the common law right of the landlord to enter. It will not help him to enter, but if he gets in peaceably he is in his right. It is that argument that as a member of the Court in Remon v City of London Real Property Co I listened to from Mr Romer and in my view we decided against it. It is true that in that case the landlord had not obtained an order for possession under s. 5 of the Act, as he did here, but in my view the object of the Act was to fetter landlords and to take away their common law rights, and until an order was obtained against him, a tenant stayed on, not as a trespasser, but as a statutory tenant - even against the will of the landlord. If the words of Bankes LJ and myself in Remon’s case which cover this point were obiter , they are now affirmed.”

34. It is clear that Lord Justice Warrington, at least, took the view, in Cruise, that the tenants’ right of action depended on section 15 of the Act of 1920. As I have sought to explain, the true analysis of the decision in Remon is not that section 5 of the Act took away the landlord’s common law rights; the true analysis is that section 15(1) extended the landlord’s obligation to afford quiet enjoyment of the premises to his tenant (an obligation formerly subsisting under the contractual tenancy) to the period of holding over under the new statutory tenancy - so that re-entry, in the circumstances in which it was effected in both Remon and Cruise, was in breach of that covenant. I do not, myself, think that Lord Justice Scrutton intended his observations to have any wider application than that.

35. The view which I have expressed as to the true basis for the decisions in Remon and Cruise finds support in the decision of Mr Justice Atkinson in Lavender v Betts [1942] 2 All ER 72. The landlord, having served a notice to quit, obtained entry to the property without force and removed the doors and windows so that it could no longer be used as a dwelling. The plaintiff brought an action for trespass. After referring to the landlord’s right, at common law, to retake possession of the demised premises peaceably after the determination of the tenancy, Mr Justice Atkinson pointed out that, following the enactment of the Act of 1920, the position was regulated by section 15(1). He set out the provisions of that subsection - which he described as “quite clear” - and went on to say this (at page 73D-F):

“A statutory tenancy is created, and the terms of the statutory tenancy are to be the same as those which have prevailed during the contractual tenancy. At the expiration of the notice the plaintiffs were in possession. They retained possession, and they were there on the terms of their original tenancy. They were under a legal obligation to carry out the obligations which had rested on them, and the landlord was under the same obligation; and the plaintiffs had the benefit of any terms and conditions which formed part of the contract of tenancy. No one disputes that one of the obligations resting on the landlord, of which the plaintiffs had the benefit, was an undertaking for quiet enjoyment. It is perfectly clear from the two cases which have been cited to me - Remon v City of London Real Property Co Ltd and Cruise v Terrell - that the effect of the section is that a statutory tenancy is created on the terms which I have stated. The statutory tenant has the same rights and is subject to the same obligations as prevailed during the tenancy. Therefore the landlord has no conceivable right to interfere with their possession or to trespass on the premises occupied by them, unless he obtains an order giving him possession of the premises.”

36. For the reasons which I have set out, I am satisfied that the early decisions on the Increase of Rent and Mortgage Interest (Restrictions) Act 1920 provide no support for Mr Scrivener’s contention that section 36 of the Administration of Justice Act 1970 should be given a construction which, on the language used, it cannot bear. Remon and Cruise, properly understood, provide examples of the court construing statutory provisions to give effect to a clearly identifiable purpose by a legitimate process of interpretation. It was legitimate to consider whether the clear purpose of the Act of 1920 could be served by restricting the meaning of the word “tenant” in section 15(1) to its ordinary sense. To restrict the meaning of that word would, as the court held, be to frustrate the objective which the Act was clearly intended to achieve. So it was necessary to give a wider meaning to that word; but subject to the constraint that that wider meaning must be one which the word was capable of bearing in the context in which it fell to be construed. There is no comparable process of construction by which the words used by the legislature in section 36 of the Act of 1970 can be held to have the effect for which Mr Scrivener contends.

37. Mr Scrivener sought, also, to rely on Western Bank Ltd v Schindler [1977] Ch 1. In that case this Court found it possible to construe section 36 of the Act of 1970 in such a way as to avoid what the court perceived would be an obvious lacuna if the words were given a literal meaning. The mortgagee sought possession in circumstances in which the mortgagor had allowed a life policy, taken as collateral security, to lapse; but where there had been no default under the mortgage itself. The question arose whether the court could exercise the powers conferred by section 36(2) of the Act in a case where - no sums being due under the mortgage and there being no default - it was argued that the condition in sub-section (1) could not be satisfied. As it was put by Lord Justice Buckley, at page 12B:

“If sub-s (1) [of section 36] is read literally, the conditional clause introduced by the words ‘if it appears to the court’ (which I shall refer to as ‘the conditional clause’) appears to restrict the operation of the section to cases in which some sum is due or some default has taken place and remains unremedied when the application comes before the court. This, however, seems to me to lead to a ridiculous result.”

After explaining why the result to which he would be led by a literal reading of the words used would be so unfair and irrational that it could not have been intended by Parliament, the Lord Justice directed himself that he “must therefore investigate whether the section is capable of some other construction”. He found that it was. The conditional clause could be read as if the words were these: “but, if any sum is due under the mortgage or the mortgagor is in default in respect of any other obligation arising under or by virtue of the mortgage, only if it appears to the court . . . etc.” - see at page 13B-C. So construed the section “applies to any case in which a mortgagee seeks possession, whether the mortgagor be in arrear or otherwise in default under the mortgage or not, but where the mortgagor is in arrear or in default, the discretion is limited by the conditional clause.” - see at page 13E. Lord Justice Buckley rejected the submission that section 36 must be taken to have abrogated the mortgagee’s right to possession where there is no sum due and no subsisting default. He said this, at page 12F:

“The first is to treat the section as having a ‘casus omissus’ which only Parliament can fill. The second . . . is to treat the section as excluding the common law right to possession from mortgages of dwelling houses. The third is to treat the section as giving the court a power to delay making an order in all cases where, upon whatever ground, a mortgagee is seeking possession of a mortgaged dwelling house.”

“Judicial legislation is not an option open to an English judge. Our courts are not required, as are, for instance, the Swiss courts (see the Swiss Civil Code, arts 1 and 2), to declare and insert into legislation rules which the judge would have put there had he been the legislator. But our courts do have the duty of giving effect to the intention of Parliament, if it be possible, even though the process require a strained construction of the language used or the insertion of some words in order to do so; see Luke v Inland Revenue Commissioners [1963] AC 557, per Lord Reid at p.577. The line between judicial legislation, which our law does not permit, and judicial interpretation in a way best designed to give effect to the intention of Parliament is not an easy one to draw. Suffice it to say that before our courts can imply words into an Act the statutory intention must be plain and the insertion not too big, or too much at variance with the language in fact used by the legislature. The courts will strain against having to take the first of the three courses I mentioned; that is to say, leaving unfulfilled the ‘casus omissus’. In the case of this section, is there an acceptable reading which would enable us to give effect to Parliament’s intention within the principle which I think governs the problem?

He agreed that there were only two courses open to the court: to construe the section as conferring a discretion in all cases; or to construe the section literally and face whatever anomalies or absurdities that produced. He preferred the latter; on the ground that he could not see how any sensible effect could be given to the powers in subsection (2) if there was nothing to be done by the mortgagor which an adjournment, stay, suspension or postponement would enable to be done within a time which the court was required to decide was a reasonable time.

40. In my view, Mr Scrivener can derive no assistance from Western Bank Ltd v Schindler. It provides clear authority for the proposition that section 36 of the Administration of Justice Act 1970 has not abrogated the mortgagee’s common law right to take possession by virtue of his estate. It provides, also, a very good illustration of the principles on which the court acts when faced with the problem that a literal construction of the words used by the legislature would give rise to an obvious lacuna or absurdity. An English judge is not to indulge in judicial legislation. Before he can imply words into an Act, the statutory intention must be plain and the insertion not too big, or too much at variance with the language in fact used by the legislature. The case provides no support for a contention that Parliament must have intended that the mortgagee’s right to take possession should be exercisable only with the assistance of the court.

41. I find it impossible to be satisfied that Parliament must have intended, when enacting section 36 of the Act of 1970, that the mortgagee’s common law right to take possession by virtue of his estate should only be exercisable with the assistance of the court. In my view, the only conclusion as to Parliamentary intention that this Court can properly reach is that which can be derived from the circumstances in which the section was enacted, the statutory context in which it appears and the language which was used. All point in the same direction. Parliament was concerned with the problem which had arisen following the decision in Birmingham Citizens Permanent Building Society v Caunt [1962] Ch 883; it intended to restore the position to what it had been thought to be before that decision; and it did not address its mind to the question whether the mortgagor required protection against the mortgagee who took possession without the assistance of the court. It is impossible to be sure what course Parliament would have thought it appropriate to adopt, in 1970, if it had identified and addressed that question. It is impossible to be sure that Parliament did not intend (or would not have intended, if it had addressed its mind to the question) to leave the position as it was in that regard. It is not irrelevant that, at the date at which the Act of 1970 was enacted, the mortgagor who was in occupation had the protection - subsequently replaced in a different and, perhaps, more limited form by section 6 of the Criminal Law Act 1977 - afforded by the Statutes of Forcible Entry 1381-1623. It is because it is impossible to be sure that Parliament cannot have intended to leave the position as it was - but must have intended that the mortgagee should only be entitled to exercise his common law right to possession with the assistance of the court - that it cannot be appropriate to embark on an investigation whether the words which have been used are capable of some other construction than that which they naturally bear.

I agree, although I must confess that I do so with considerable reluctance. The effect of construing section 36 of the Administration of Justice Act 1970 (as amended) in the manner proposed is that there is what appears to me to be a curious anomaly in the powers of the court to afford relief to mortgagors against mortgagees who wish to take possession of mortgaged dwelling houses. It is not in dispute that, where a mortgagee takes proceedings for possession, the court has power under section 36 in some circumstances to stop the mortgagee from taking possession. Those circumstances are where it appears to the court that if it exercises its power the mortgagor is likely within a reasonable period to pay the sums due under the mortgage or to remedy a relevant default under the mortgage, as the case might be.

Chadwick LJ has explained the circumstances in which section 36 came to be enacted, namely as a result of recommendations of the Payne Committee which were made in order to deal with the problem which had arisen following the decision of this court in Birmingham Citizens Permanent Building Society v Caunt [1962] Ch 883. In that case the court was considering the powers of the court where the mortgagee brought an action for possession. Both the Payne Committee and subsequently Parliament took the view that mortgagors should be afforded limited protection in such a case. The nature of that protection was considered by this court in Cheltenham and Gloucester Plc v Krausz [1997] 1 WLR 1558. That decision shows that the protection is limited, but it is nevertheless of considerable value to mortgagors who are in default.

It is true to say that neither this court in Caunt nor the Payne Committee was considering whether the court should have similar powers in cases in which the mortgagee chooses not to take proceedings for possession but simply takes possession or perhaps sells the property under his power of sale and the purchaser takes possession. In these circumstances I agree that it cannot readily be inferred that Parliament intended to give protection to mortgagors in such a case. It does however strike me as very curious that mortgagors should only have protection in the case where the mortgagee chooses to take legal proceedings and not in the case where he chooses simply to enter the property. As Alison Clarke put it in her illuminating article in the Conveyancing Journal for July/August 1983 to which Chadwick LJ has referred, it is anomalous and undesirable to protect mortgagors against eviction by court process yet leave them open to eviction by self help.

We were referred to two cases which seem to me to highlight the problem. The first is Hemmings v The Stoke Poges Golf Club Limited [1920] 1 KB 720, where the defendant landlord entered the demised property, in which the plaintiff and his wife were living, and removed them and their furniture, using no more force than was reasonably necessary to do so. The landlord had an immediate right to possession because the tenant's right to live in the property depended upon his continuing to work for the landlord, which he no longer did. It was held by this court that the plaintiff had no right of action against the defendant even if the actions of the landlord were a crime under 5 Ric 2, stat 1 c 7.

So far as I can see the position is the same in the case of a mortgagee entitled to possession. As Chadwick LJ has pointed out, and as is made clear in paragraph 6.16 of the Law Commission report which he has quoted, in the absence of a provision to the contrary in the mortgage, a mortgagee has a right of immediate possession (as the ink dries on the document). Although I suspect that many mortgagors would be astonished to discover that a bank which had lent them money to buy a property for them to live in could take possession of it the next day, Mr Scrivener (as I understand it) accepts that in the absence of an express provision in the mortgage and subject to his argument as to the true construction of section 36 of the 1970 Act, that is the position. Thus a mortgagee has an immediate right of possession just like the defendant landlord in the Stoke Poges case. So far as I can see it follows from that decision that, subject to any relevant statutory provisions, if a mortgagee chooses to take possession and moreover to do so by using reasonable force to remove the mortgagor there is nothing that the mortgagor can do about it.

The second case which seems to me to highlight the potential problems is the decision of this court in National & Provincial Building Society v Ahmed [1995] 2 EGLR 127, where it was held that the mortgagor's equity of redemption is extinguished when the mortgagee, in the exercise of his power of sale, enters into a contract of sale of the mortgaged property. In the course of his judgment (with which Russell and Rose LJJ agreed) Millett LJ said (at p 129):

“The purpose of making an order under section 36 of the Administration Act 1970 is to enable a mortgagor who has fallen into arrears with the payment of the mortgage instalments to resume his payments and to pay off the arrears with a view to the ultimate redemption of the mortgage by instalments in the ordinary way. But that result can no longer be achieved once the mortgagor's equity of redemption has been extinguished by the exchange of contracts of sale of the mortgaged property by the mortgagee to a purchaser. Of course, if the order for possession had not been executed so that the court still retained jurisdiction to suspend it, and the mortgagor or his tenants were in possession at the date of the contract for sale so that the purchaser had notice of the mortgagor's rights, the mortgagee would not be able to rely upon the contract to defeat the mortgagor's application. But that is not the present case.”

The way in which section 36 might operate, as envisaged by Millett LJ in the second part of that passage, is undoubtedly desirable, although it is not easy to see how it works if the effect of the contract for sale is to extinguish the mortgagor's equity of redemption. In a Law Commission Working Paper (No 99), which was produced before the report and was expressly stated not to represent the final views of the Commission, the position was put thus with regard to the court's discretion under section 36:

“The discretion is to delay or withhold the possession order only, not any other remedy. In practice this usually prevents enforcement, but in theory it is still open to the mortgagee to proceed to exercise its power of sale notwithstanding the court's refusal to make a possession order. Since such a sale terminates the mortgagor's interest in the property, the purchaser presumably would have no difficulty in obtaining a possession order against the mortgagor after completion.”

In a written note sent to us after the conclusion of the hearing Miss Gloster says that the respondent mortgagee would not go so far as to submit that that view is correct. Miss Gloster correctly adds that this kind of issue does not to fall for determination on this appeal, and I express no view upon the solution to such problems, but such considerations do highlight the potential problems. Such problems would not arise (or would be much reduced) if it were held that the effect of section 36 were (as Mr Scrivener submits) to give the court the same power to inhibit the exercise by the mortgagee of its right to possession at common law whether it were exercised by simply entering possession or by doing so pursuant to an order of the court. Mr Scrivener submits that in the case of a sale the court would have the same power to prevent the purchaser from actually taking possession as it has to prevent the mortgagee himself from taking possession because by section 39(1) of the 1970 Act "mortgagee" includes "any person deriving title under the original ... mortgagee".

As Chadwick LJ has pointed out, the majority of this court in Western Bank Ltd v Schindler [1977] Ch 1, rejected the submission that the effect of section 36 was to abrogate the mortgagee's right of possession. However, as appears from the passage from the judgment of Buckley LJ (at p 12) which he has quoted, section 36 is an enabling section which empowers the court to inhibit the mortgagee's right to take possession. He might have added that it also inhibits the right of any person deriving title from the mortgagee to do so. As I see it, the question is whether the section can be construed so as to inhibit the mortgagee's right to take possession by self help.

I recognize that Miss Gloster says that responsible mortgagees do not in practice take possession of property in which the mortgagor and his family are living without an order of the court, and I accept that that is so, but in my judgment the problem should be approached by reference to the legal rights of the mortgagee and to the legitimate interests of the mortgagor in the light of the purpose of the Act. In these circumstances, if it were possible to construe section 36 by affording mortgagors protection whether or not the mortgagee chose to obtain possession by self-help or legal action, I for my part would do so. I have however been persuaded that it is not possible.

I agree that the section should be given a purposive construction: see eg Pepper v Hart [1993] AC 593 per Lord Griffiths at p 617. But the process remains one of construction and I have reluctantly reached the conclusion that where a section gives the court powers "where the mortgagee ... brings an action in which he claims possession of the mortgaged property" it is not permissible to hold that the effect of the section is to give the court such powers whether or not the mortgagee brings such an action.

The appellant's submission amounts to saying that the effect of the section is that a mortgagee is not entitled to take possession of mortgaged property save by order of the court. The problem is that the section does not say so. If Parliament had wished so to provide there is no reason why it should not have done so expressly, as it has in related circumstances. Thus it introduced legislation to protect tenants from eviction by landlords entitled to possession save by order of the court. Section 2 of the Protection from Eviction Act 1977 provides:

Chadwick LJ has also referred to various provisions of the Rent Acts to which we were referred in argument. Moreover Parliament has considered in what circumstances it should restrict the exercise of a mortgagee's right of possession. It did so in a very limited form in section 126 of the Consumer Credit Act 1974 which is quoted above. It could have so provided in the case of all mortgages of dwelling houses, but it did not.

In all the circumstances I respectfully agree with Chadwick LJ, essentially for the reasons which he gives. I accept Miss Gloster's submission that the question what, if any, restrictions to impose upon the exercise of a mortgagee's right of possession is essentially a matter of policy. In order to answer the question it would no doubt be necessary to consider what, if any, such restrictions should be imposed (a) in circumstances in which mortgaged property has been vacated by the mortgagor (which appears to be the case in the vast majority of cases in which mortgagees take possession without an order of the court) and (b) in circumstances in which the mortgagor is residing in the property. In these circumstances, although consideration of the policy behind section 36 supports the appellant's submissions, I do not feel able to accede to them as a matter of construction of the section. I have only added some observations of my own because of my reluctance to reach that conclusion. However, in the result I agree that the appeal must be dismissed.

Clarke LJ has drawn attention to the curious anomaly that mortgagors should have the protection afforded by section 36 of the Administration of Justice Act 1970 in cases in which the mortgagee chooses to take proceedings to enforce his right to possession but should have no such protection where he chooses (and is able) to enter without first obtaining an order from the court. He has pointed out, also, the problem which may exist if the court is asked to exercise the power conferred by section 36 in a case where the mortgagee has already exercised his power of sale, without having taken possession as against the mortgagor. But this anomaly, and this problem, are not identified for the first time in the present case. They have been the subject of academic comment in the past. Perhaps more pertinently, they were considered by the Law Commission in the Working Paper and the Report to which my Lords have referred. The Law Commission has made proposals to reform the law in this field. It is for Parliament to decide whether to accept those or other proposals.

	ROPAIGEALACH	Appellant
	- and -
	BARCLAYS BANK PLC	Respondent

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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ropaigealach v Barclays Bank Plc [1998] EWCA Civ 1960 (18 December 1998) URL: http://www.bailii.org/ew/cases/EWCA/Civ/1998/1960.html Cite as: [1999] 4 All ER 235, [2000] QB 263, [1998] EG 189, (2000) 32 HLR 234, [1998] EWCA Civ 1960, [1999] 3 WLR 17

England and Wales Court of Appeal (Civil Division) Decisions