ON APPEAL FROM BRENTFORD COUNTY COURT
HIS HONOUR JUDGE OPPENHEIMER
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE MUNBY
MR JUSTICE HEDLEY
| JUSTIN OLIVER ZINDA
|- and -
|BANK OF SCOTLAND PLC
Mr Thomas Grant (instructed by Walker Morris) for the Respondent
Hearing date : 8 June 2011
Crown Copyright ©
Lord Justice Munby :
"1 The defendant give the claimant possession of [the property] on or before 21 November 2005.
2 This order is not to be enforced so long as the defendant pays the claimant the unpaid instalments under the mortgage of £11046.50 by the payments set out below in addition to the current instalments under the mortgage.
£96.02 per month the first payment being made on or before 21 November 2005."
A simple calculation shows that payment off of the arrears of £11,046.50 at the rate of £96.02 per month would take about 9½ years. In the bottom left-hand corner of the order the following words appeared:
"To the defendant
The court has ordered that unless you pay the arrears under the mortgage at the rate set out above in addition to your normal payments, you must leave the premises …"
In the bottom right-hand corner there was the following:
"If you do not make the payments or leave the premises, the claimant can ask the court, without a further hearing, to authorise a bailiff or High Court Enforcement Officer to evict you. (In that case, you can apply to the court to stay the eviction; a judge will decide if there are grounds for doing so.)"
It is to be noted that this was not some special form of order, or an order in a form unique to Brentford County Court. The order was in the standard form set out in Form N31.
"There are sometimes orders that say "on payment of arrears this order should be discharged." Yours says the opposite. Yours says unless you pay the current monthly instalments this order can be enforced.
… The terms of this order are quite clear, that the court can enforce the order if – whatever you do with regard to the original arrears – you do not pay your normal instalments and continue to do so."
"There are really two separate questions that I have been able to identify. One is whether there is an ambiguity in the order. I hold there is not and that the district judge was right about that. But, secondly, whether, as a matter of law, the order was ever discharged either expressly or by implication, or by operation of law as a result of the fact that there came a time when there were no arrears because of the March 2008 consolidation. That is an interesting point of law on which no authority has been cited to me by counsel acting for the respondent; nor any authority cited by Mr Zinda to me. It is to be remembered that he is a third year law student. I have to say that this is an interesting and very important point of law, which one day ought to be considered by the Court of Appeal if it has not already been so considered."
"I hold that the order was indeed unambiguous in its terms and continues in accordance with its terms until discharged. I have no authority before me to suggest that the order automatically was discharged upon consolidation of the arrears. For my part I am not prepared to say that there is any such rule of law. This court is not to invent one. In my judgment, therefore, the district judge was not wrong when she held that the order was unambiguous."
"Mr Zinda argues that the effect of the consolidation was to discharge the [order]. I am unable to see why or how … The order suspends enforcement so long as two criteria are fulfilled: payment of the existing arrears and payment of current instalments. Whilst I accept that the effect of the consolidation was arguably to wipe out the existing arrears (instead adding them to the capital owing) the second criterion – payment of current instalments – cannot have been discharged."
"I do not extend my permission to the other points raised by Mr Zinda, such as a factual point about estoppel as to what he was told by the bank at the time of the consolidation of the mortgage, or an argument that he is entitled to rescind the consolidation of the mortgage, or an argument based on human rights. It seems to me that those arguments have no merit, and in any event do not on the facts of this case give rise to anything that could be described as an important point of principle or practice."
The legal context
"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 a chance of paying off the mortgagee in full or otherwise satisfying him; but this should not be done if there is no reasonable prospect of this occurring."
"(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.
(2) The court –
(a) may adjourn the proceedings, or
(b) on giving judgment, or making an order, for delivery of possession of the mortgaged property, or at any time before the execution of such judgment or order, may –
(i) stay or suspend execution of the judgment or order, or
(ii) postpone the date for delivery of possession, for such period or periods as the court thinks reasonable.
(3) Any such adjournment, stay, suspension or postponement as is referred to in subsection (2) above may be made subject to such conditions with regard to payment by the mortgagor of any sum secured by the mortgage or the remedying of any default as the court thinks fit.
(4) The court may from time to time vary or revoke any condition imposed by virtue of this section."
"(1) Where by a mortgage of land which consists of or includes a dwelling house, or by any agreement between the mortgagee under such a mortgage and the mortgagor, the mortgagor is entitled or is to be permitted to pay the principal sum secured by instalments or otherwise to defer payment of it in whole or in part, but provision is also made for earlier payment in the event of any default by the mortgagor or of a demand by the mortgagee or otherwise, then for purposes of section 36 of the Administration of Justice Act 1970 … a court may treat as due under the mortgage on account of the principal sum secured and of interest on it only such amounts as the mortgagor would have expected to be required to pay if there had been no such provision for earlier payment.
(2) A court shall not exercise by virtue of subsection (1) above the powers conferred by section 36 of the Administration of Justice Act 1970 unless it appears to the court not only that the mortgagor is likely to be able within a reasonable period to pay any amounts regarded (in accordance with subsection (1) above) as due on account of the principal sum secured, together with the interest on those amounts, but also that he is likely to be able by the end of that period to pay any further amounts that he would have expected to be required to pay by then on account of that sum and of interest on it if there had been no such provision as is referred to in subsection (1) above for earlier payment."
i) The possession order is either ambiguous or its construction is fundamentally wrong "as it follows me throughout the entire life of the mortgage." As such, he says, the order is "too disproportionate and illegal."
ii) The consolidation in March 2008 discharged the possession order either expressly or by implication of law, because after the consolidation "the arrears were no longer there." A "new contract" was formed, setting aside any earlier agreements.
It is convenient to deal first with the effect of the consolidation.
The first issue: the effect of the consolidation
The second issue: the meaning and effect of the possession order
"so long as [Mr Zinda] pays the [bank] the unpaid instalments under the mortgage of £11046.50 by the payments set out below in addition to the current instalments under the mortgage."
i) first, he must pay off the arrears of £11,046.50 by monthly instalments of £96.02; and
ii) second, he must "in addition" pay what are described as "the current instalments under the mortgage".
Doing the one without the other will avail him nothing. So the fact that he complies with the first requirement, paying off the arrears as required, is not sufficient; he must also comply with the second requirement. It follows, as Jacob LJ observed, that the mere fact that the arrears may have been discharged in their entirety – as they were by reason of the consolidation in March 2008 – is not enough if there is nonetheless a failure to comply with the second limb of the condition.
Mr Justice Hedley :
Lord Justice Mummery :