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Involuntary bailment – the duty of care owed by the mortgagee on execution of a possession warrant

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28/01/2015

What do you do when you take possession of a house and the former occupier has left various items of theirs behind? Mortgagees and landlords often find themselves in this position when they execute a warrant for possession. What are their obligations towards the borrower/former tenant when clearing the property of the items left behind?

In the case of Da Rocha-Afodu and anor v Mortgage Express and anor [2014] EWCA Civ 454 in March this year, the Court of Appeal clarified a number of points relevant to mortgage repossession:

  • a borrower that has received a warrant for possession must deliver up vacant possession
  • if chattels are left behind on the execution of the warrant, the mortgagee is an involuntary bailee
  • an involuntary bailee must do what is right and reasonable
    what is right and reasonable is dependant on the particular circumstances of the case
  • the terms of the mortgage agreement operate as a framework within which the bailee’s duty of care to act right and reasonable operates.

The High Court has since applied these principles to the case of Campbell v Redstone Mortgages Ltd [2014] EWHC 3081 (Ch)

Facts
Redstone Mortgages sought possession proceedings from the borrower who had a history of mortgage repayment default. The mortgage terms stated that on taking possession of the property the mortgagee could require the borrower on notice to remove all its furniture and belongings within seven days, failing which, the mortgagee was entitled to remove, store or sell the items.

The borrower left many items at the property when she delivered up possession, causing the mortgagee to leave notices at the property warning the borrower that the items would be disposed of if they were not collected within seven days. In the following fortnight, the borrower was given access three times to remove her items, but failed to clear everything despite being given extra time to do so. It became clear that the borrower was deliberately leaving items at the property to hinder the mortgagee’s attempts to sell the premises. Indeed on one visit to the property, the borrower attempted to barricade herself in.

The High Court held that, in accordance with Da Rocha, the mortgagee had become an involuntary bailee of the borrower’s items and thus it was necessary to consider whether the mortgagee has done what was right and reasonable in the circumstances of the case.

It decided that the mortgagee had left appropriate notices and had made every effort to accommodate and facilitate the borrower’s removal of her items despite her deliberate attempts to thwart the resale of the property. Further, given the amount of the mortgage debt (over £730,000) and the ‘low intrinsic value’ of the items left at the property, the court considered it appropriate that the mortgagee had disposed of the goods rather than selling them or putting them in storage.

As such, the mortgagee’s conduct throughout was considered right and reasonable in the circumstances. It was not held liable to the borrower for damages in respect to its actions as an involuntary bailee of her left items.

Comment
These two cases clarify the mortgagee or landlord’s obligations in respect of items left at the repossessed property. Provided that the tenant/borrower is afforded reasonable opportunity to collect its goods, the involuntary bailee is likely to be considered to have discharged its duties. It may not be sufficient, however, merely to adhere to the terms of the mortgage, particularly if they are strict. The mortgagee in Campbell went further by allowing longer than seven days for removal of the items and in Da Rocha, the mortgagee even suggested a house sitter to allow for the removal to occur under secure conditions.

When a warrant for possession is executed, mortgagees should be entitled to expect that the property is returned with vacant possession. However, mortgagees should have systems in place to document any items left behind and the efforts made to give notice to the borrower and opportunities provided to retrieve the goods. Thereafter, mortgagees should make reasonable (and documented) decisions on the removal and disposal of the items based on the value of the goods and the convenience to the parties concerned.

For more information and advice on involuntary bailment, contact Andrew Beck.

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