With the house market stuttering, District Judge Peter Jolly takes a close look at the residential repossession process


Repossession proceedings take place in the county court and are governed by part 55 of the Civil Procedure Rules 1998 (CPR). The prescribed claim form, N.120, specifies the information to be given, but see rule 55.4 and paragraph 2.5 of the practice direction as to identifying 'matrimonial homes' rights, and serving the person with the benefit of such a charge. Good practice dictates enquiry of other chargees.


The claim form must also contain full details of the mortgage account, and a schedule of missing payments tracing what has gone wrong since the account was last in order. The particulars of claim should contain as much as possible of the trial evidence (paragraph 5.1 of practice direction 55), so if matters are omitted, and served on only two days' notice, expect an adjournment.


You'll be OK with this judge if you play your cards right!

The initial hearing must be 28 days or more from issue and at least 21 days after service. The claimant must separately serve on the property occupiers a notice informing them of the hearing and the nature of it (rule 55.10). Rule 55.8(4) provides that all evidence must be filed and served not less than two days before the hearing. Usually, a person with sufficient knowledge of the mortgage account makes a witness statement, exhibiting true copies of the rule 55.10 notice (and proving its service), the mortgage deed and all documents containing the mortgage agreement (if not attached to the claim form).

Importantly, the statement will update the arrears and outstanding balance, covering the likely situation at return date. It may be helpful to file a copy, bringing the original to court. Recent electronic office copies should be produced to show that there are no changes to interested persons (ownership, new chargees etcetera), together with an up-to-date matrimonial home rights search. In the rare unregistered land case, the original charge must be produced. Failure to comply with these requirements will often result in an adjournment. The time is often what a borrower wants, to advance sensible proposals, or for that lottery win.


The defendant need not file a defence before the hearing. The claimant's solicitor will usually confirm the figures. If the only difference is to the borrower's benefit, for example, a payment received, that needs no formality.



If the borrower has reduced the arrears to below two months' worth, expect a general adjournment. If not, what can the borrower do to keep his home? A significant dispute on the figures, and the case will be adjourned for investigations. If the dispute still remains, or the validity of the mortgage is impugned (see Barclays Bank plc v O'Brien [1993] 4 All ER 417), a formal defence must be filed and the case allocated to track. Borrowers should be wary of raising unnecessary arguments - they have agreed in the mortgage deed to pay the lender's costs. This can be overridden by a Gomba order (see Gomba Holdings UK Ltd v Minories Finance Ltd (No 2) [1992] 4 All ER 588), but only if the lender is culpable.



Unless the mortgage is governed by the Consumer Credit Act 1974, the court's powers are governed by section 36 of the Administration of Justice Act 1970, which says: 'If... the mortgagor is likely within a reasonable period to pay any sums due under the mortgage... the court may adjourn the proceedings on... making an order... for possession, or at any time before execution of such... order may stay or suspend execution... or postpone the date for delivery of possession.'


Conditions imposed may be varied or reviewed.


In applying the section 36 discretion, the court may take account of the guidance issued by the Council of Mortgage Lenders that possession should be a last resort. Adjournments may be granted for prompt resolution of re-mortgage applications, damages or benefits claims. The larger the equity, the less prejudice there is to a lender.



Equally, if a borrower can satisfy the court of his ability to pay off the arrears in a reasonable time, any possession order will be suspended on terms. The conventional approach is current instalment plus so much monthly off arrears. 'Reasonable' can extend to the contractual term of the mortgage (Cheltenham & Gloucester Building Society v Norgan [1996] 1 All ER 449), but if arrears are spread over the whole term, there is little room for slippage.



Suppose the borrower has a short-term liquidity crisis? Norgan does not prohibit orders with a mortgage holiday, with arrears increasing slightly initially (equity permitting, and the court being satisfied of the borrower's good faith). Both stepped orders and those subject to review in a few months may bring a borrower with reduced present income within Norgan, as a probable financial change will get the arrears paid within the term.



Is a sale the answer? How advanced is the transaction? Lenders often refer to Mortgage Service Funding plc v Steele (1996) 72 P&CR D40. Steele held that firm evidence of imminent completion was needed to prevent a lender from taking possession and exercising its power of sale. But this decision was on an application for leave to appeal, where scanty details of a very belated proposed sale were available. Courts may now take notice that mortgagee sales achieve lower prices than could a borrower in possession. If at a first hearing there is equity, anticipate a short adjournment to assess progress.



How, ultimately, is the court to be satisfied? Past non-payment of the monthly instalments is not usually a good indicator of future ability to keep up regular instalments plus something off the arrears. In Cheltenham & Gloucester Building Society v Grant (1994) 26 HLR 703, the Court of Appeal, upholding a suspended order, declined to lay down rigid guidelines as to how busy district judges should satisfy themselves as to section 36. Lord Justice Nourse said: 'It must be possible for [judges] to act without evidence, especially where, as here, the mortgagor was in court and available to be questioned and no objection to the reception of informal material is made by the mortgagee.' An income and expenditure list, and explanation of the past default may suffice. Practical analysis of the situation is called for. Ideally, there would be a witness statement, or the district judge may offer to hear brief evidence (often incontrovertible) to weigh in the balance in exercising the section 36 discretion. On a warrant suspension, of course, the past record may mean that more convincing material should be produced.


District Judge Peter Jolly sits at Portsmouth Combined Court