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High Court of Justice in Northern Ireland Chancery Division Decisions
You are here: BAILII >> Databases >> High Court of Justice in Northern Ireland Chancery Division Decisions >> Northern Bank Ltd v Mallett & Anor [2001] NICh 7 (22 March 2001)
URL: http://www.bailii.org/nie/cases/NIHC/Ch/2001/7.html
Cite as: [2001] NICh 7
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Neutral Citation no.[2001] NICh 7
Ref:
GIRE3383
Judgment: approved by the Court for handing down
Delivered:
22.03.2001
(subject to editorial corrections)
2000 No. 2367
Between:
Plaintiff;
Defendants.
GIRVAN J
By originating summons issued on 22 August 2000 the plaintiff ("the Bank") sought an order for possession of the premises situate at and known as 207 Kings Road, Belfast ("the premises"). The premises were the subject of a second mortgage in favour of the Bank dated 19 November 1998 under which the defendants mortgaged the premises to the Bank as security for the repayment to the plaintiff of all monies due to the Bank. The mortgage secured the first and second defendants' current account and the number 1 and number 2 current account operated by the first defendant trading as Fire Protection and Marine Services NI.
It is not in issue in these proceedings that the defendants were in default in the payment of monies due under the said accounts and the Bank duly called in the monies due and closed the accounts. The second defendant was also liable on foot of a guarantee to the Bank in respect of the first defendant's liabilities in relation to Fire Protection and Marine Services NI up to a sum of £10,000. Although in the course of submissions it was suggested that the guarantee liability was a separate and additional debt due to the Bank it would appear that the guarantee related to the first defendant's indebtedness in respect of Fire Protection and Marine Services NI and accordingly the overall liability of the defendants' remains the total of the three accounts.
The relevant premises were subject to a first mortgage granted to the Nationwide Building Society to secure an advance of £65,000. The defendants defaulted in their obligations under that mortgage and the Nationwide obtained an order for possession against the defendants. The current amount due to the Nationwide appears to be £68,842.97 with costs of £745.75. I was informed by counsel that an application is pending before the Judgements Enforcement Office to enforce the order for possession. The amount due to the bank appears to amount to just under £16,000 assuming that the guarantee covers part of that debt.
The Master made an order on 20 December 2000 ordering the defendants to deliver up possession of the premises within 28 days after service of the order. The order then went on to provide that it was not to be enforced before 1 May 2001 without the leave of the court while the defendants used all reasonable endeavours to redeem the plaintiff's mortgage keeping the plaintiff's solicitors informed on demand of material developments.
Mr Devlin on behalf of the bank argued that the Master was in error in making the order in that form. When the matter was heard before the Master the defendants informed the court that the premises were for sale but there was no contract for the sale of the premises and no offer in place. The court accordingly had no evidence about the asking price, the value of the premises, the marketability of the property or the likely timescale of any sale. The terms of the stay were too vague to be capable of being enforced or policed. Mr Devlin argued that a mortgagor seeking a stay on the basis that he was selling the property needed to put material before the court to justify the court in coming to the conclusion that the premises would be realised within a reasonable time.
Mr Colmer for the first defendant and Mr McEwen for the second defendant referred the court to the fact that since the hearing before the Master an offer of £133,000 had been received for the property as shown in a letter from the selling agents acting for the defendants. The offer was made on 10 March subject to mortgage. There is no further information though the defendants are prepared to accept it. Their asking price was £135,000. In addition the defendants referred the court to a letter from PFM Associates stating that in principle the defendants' application to remortgage the premises had been agreed in principle by mortgage options subject to the information supplied by the defendants. It would take 8 to 10 weeks to process the application. Relying on these matters the defendants argued that there was the likelihood of the mortgage debt being paid off within a reasonable time and they contended that the Master was right to make the order which he did.
This matter comes before this court de novo and this court must determine the matter afresh giving such weight as it considers appropriate to the Master's order. The court must have regard to the present circumstances.
Where a defendant is seeking to stay an order for possession or to adjourn proceedings on the grounds that he proposes to sell the premises so as to pay off the debts secured, as pointed out by this court in National & Provincial Building Society v Williamson [1995] NI 366, it is for the defendant to put material before the court of sufficient weight to satisfy it of the likelihood that the arrears would be paid off within the reasonable period. In Northern Bank v Jeffers [1996] NI 497 at 504 I pointed out:
"Where there is a genuine proposal by a mortgagor to sell the mortgaged property at arms' length in the open market, a mortgagee would normally be ill-advised to object to a short time being granted to enable such a sale to be effected by the mortgagors since such a sale is likely to enhance the sale value of the property which is normally depreciated by the circumstances of a forced sale. When a mortgagor makes an application for a stay in such circumstances the court must exercise its discretion under section 36 (of the Administration of Justice Act 1970) and the fact that the order for possession was previously made with or without a stay does not preclude the court acceding to the application. The court will have to take into account all the relevant circumstances which may include the court's view as to the genuineness of the proposal to sell, the steps taken to enable the sale to be effected, the likely value of the property is sold by the mortgagors as compared to the value if sold by the mortgagee, the conduct of the mortgagor in the past, the time of the making of the order and since the making of the order and the increase or decrease of the mortgage debt since the making of the order."
A defendant seeking a stay or adjournment on the basis that he proposes to sell the property should normally be expected to produce evidence to satisfy the court or the matters referred to in Jeffers. This would normally consist of a letter from a reputable estate agent acting in the sale establishing that the premises are on the market, what the asking price is, whether that asking price is realistic in the light of comparable prices in the area, the perceived ease or difficulty envisaged in the sale of the property, whether offers have been received and the likely timescale of the sale. If a mortgagor has not yet put the premises on the market but is seeking to persuade the court to grant a stay on the basis that the premises are going to be marketed, the court might entertain a short adjournment to enable the mortgagor to adduce such material from the selling agent when appointed.
In this case the material before the court is somewhat thin but it does appear that the asking price is £135,000 and that an offer of £133,000 has been received which the defendants are agreeable to accept. The premises are located in a relatively high value area in Belfast. The premises provide more than adequate security for both the first and second mortgages if it has a value of the order of £130,000 to £135,000. The fact that an offer of £133,000 has been made on the open market is some indication that the premises do have a value in the region of that sum. Taking those matters into account the court considers that in the circumstances it is appropriate to stay the order for possession until 1 May 2001. If within that period an offer is accepted with completion to be affected after 1 May 2001 an application to further stay enforcement may be entertained by the court.
Rather than making an order in the form of the order of 20 December 2000 it is more desirable for the court, if satisfied on the material adduced by the defendant that the premises are being realistically marketed and are likely to be sold within a reasonable period, to stay the enforcement to a specified date thus giving the defendant a realistic time within which to sell the premises, reserving to the court the right to remove the stay if the plaintiff obtains evidence that the defendants are not genuinely marketing the premises and reserving to the court a power to extend the stay if it is clear that if the premises are going to be sold at a specified date subsequent to the original date of the stay.
Between:
Plaintiff;
Defendants.