In the House of Lords
Merchant v. Prylock plc
In 2005, Mr Antonio Merchant borrowed £240,000 from high street bank, Prylock plc, in order to assist in financing the purchase of a £240,000 house in Stratford-upon-Avon. The mortgage term was twenty years at the bank ’s standard variable rate. However, having paid instalments for the first two years on a capital repayment basis, Mr Merchant, an actor, found it virtually impossible to meet the monthly payments of £2,200 on his average annual income of £40,000. He decided to leave the country in search of better-paid work. He found well-paid employment in Venice where he remained for a whole year playing the lead in the movie “Lo Scricchiolio”. During his absence abroad, Prylock plc repossessed Mr Merchant’s house without seeking an order from the court.
Mr Merchant has since returned from Venice and claims that he is able within a reasonable time to meet all the arrears due under the mortgage and to meet future mortgage instalments as they fall due. He commenced the present proceedings against Prylock plc, seeking to regain possession of the house on the ground that informal repossession by the mortgagee was unlawful.
At first instance, Duke J held that a mortgagee is entitled peacefully to repossess land without a court order (applying Ropaigealach v Barclays Bank plc [1999] 3 WLR 17, Court of Appeal) and he held, further, that if the mortgagee had applied to court, immediate repossession would have been ordered on the ground that Mr Merchant could not reasonably be expected to repay the arrears within the remaining mortgage term (applying Cheltenham and Gloucester Building Society v Norgan [1996] 1 WLR 343, Court of Appeal).
The Court of Appeal upheld the decision of the judge at first instance and Mr Merchant now appeals to the House of Lords on the following grounds:
The first ground of appeal
Repossession of a dwelling house should not be permitted without the authority of a court order under the Administration of Justice Acts 1970 and 1973 and the decision of the court in Ropaigealach v Barclays Bank plc should, accordingly, be overruled.
The second ground of appeal
A mortgagee’s right to repossess the mortgaged estate may be suspended under the Administration of Justice Acts, 1970 and 1973 on the ground that the mortgagor is able to repay arrears within a reasonable time. In a case such as the present, where the mortgagee loaned a sum six-times the borrower’s average annual salary on a twenty year repayment term, a reasonable time for repayment may extend well beyond the term of the mortgage.
© Gary Watt 2008
