The increasing impact of Article 8 ECHR issues on mortgage possession claimsPrint publication
Article 8 of the European Convention of Human Rights (ECHR) provides that everyone has a right to respect for his home. A possession claim by a mortgagee for mortgage default will inevitably interfere with a person’s Article 8 rights. The ECHR allows such rights to be lawfully interfered with if it is “in accordance with the law and is necessary in a democratic society in the interests of…the economic well-being of the country, for the preventions of disorder or crime,… or for the protection of the rights…of others [emphasis added].”
Section 36 of the Administration of Justice Act 1970 (AJA) (as amended) allows a stay in the execution of a possession order only if it can be established that the borrower is likely to be able to repay sums owed to the mortgagee within a ‘reasonable’ period. Those sums include the arrears that the mortgagor has incurred plus interest, together with any further sums due within the reasonable period. Further, section 36 allows the court to impose conditions with regard to payments by the borrower of ‘any sum’ secured by the mortgage.
If there is little prospect that the borrower can repay the mortgage arrears and ongoing instalments of the mortgage, his application under section 36 will likely fail. Increasingly borrowers have turned to the wider discretion afforded to the courts by Article 8 of the ECHR and the courts have had to consider the application of human rights defences in possession claims.
In its decision in Manchester City Council v Pinnock  UKSC 45, the Supreme Court set out guidelines for the consideration of Article 8 in possession cases of a person’s home by local authority landlords. Because the local authority was a public body, its actions in seeking to recover possession must be a proportionate means of achieving a legitimate aim in accordance with Article 8.
Recent cases have extrapolated the Pinnock decision to suggest that as the court hearing the possession proceedings is itself a public body, Article 8 is engaged, despite both parties to the claim being private individuals. In Malik v Fassenfelt  EWCA Civ 798 it was made clear that an eviction application by a private landowner would be a major interference by a public authority – the court – to the respondent’s right to a family life and home and as such the proportionality of the claimant’s actions had to be assessed by the court.
Pinnock provided further details on the proportionality test. It confirmed that the impact of Article 8 and the need to consider proportionality is most significant where domestic law gives an unqualified right to possession. In those cases, the court is obliged to consider the proportionality of the order sought. The fact that domestic law entitles possession would be a strong indicator that the making of a possession order would be proportionate. In contrast, Article 8 should impact less on the court’s decisions in cases where, as a matter of domestic law, the court has a discretion whether to make a possession order based on the criteria of reasonableness (for example, landlord possession proceedings for secure and assured tenancies). Any factor affecting proportionality would already have been taken into account by the court under domestic law when it considered reasonableness.
Arguably, therefore, Article 8 should have less impact on Section 36 applications to stay mortgage possession orders because the court has used its discretion and considered whether the borrower is likely to be able to repay within a reasonable period. And yet, more borrowers are requiring the court to consider the impact of Article 8.
In the recent case of Bank of Scotland v Cloke (unreported 28 June 2013) a possession order by the claimant lender was suspended by the court under section 36 AJA on condition that the respondent pay the current monthly instalment plus an additional £2,000 per month towards arrears. The defendant failed to meet those conditions and sought to stay a further warrant for eviction due to the fact that her severely disabled son needed urgent surgery with a lengthy recovery time. Although the defendant was unlikely to be to meet the financial conditions and so would fail in a section 36 AJA application, the district judge allowed a stay of execution stating that Article 8 of the ECHR gave the court a wider discretion. The Supreme Court in Pinnock had suggested that proportionality was more likely to be a relevant issue in respect of occupiers who are vulnerable because of mental illness, physical or learning disability, poor health or frailty. And so, the district judge suspended the warrant for eviction for a further eight weeks.
The condition of the defendant’s son in Cloke was clearly an unfortunate and exceptional circumstance which the district judge considered warranted a full consideration of whether the lender’s actions in seeking to recover possession were a proportional means to achieve its aim and compatible with Article 8 ECHR.
Lord Neuberger said in Pinnock that the wide implications of the obligation to consider proportionality “will have to be worked out” and these cases are doing just that, but there is no doubt that Article 8 presents an additional obstacle to the recovery of possession. Tenants and borrowers’ advocates are likely to assert Article 8 with increasingly regularity and the courts will continue to grapple with what constitutes special circumstances and proportionality going forward.
In the meantime lenders and landlords alike can take certain best practice steps to minimise the risk of successful article 8 challenges, such as:
- assess whether any proposed action is a proportionate means of achieving a legitimate aim – can repossession be objectively justified on the facts of the particular case? Properly document the entire decision-process to enable the best evidence to be given if required
- take into account any medical evidence produced in respect of the tenant/borrower and their dependants and seek assistance of specialist agencies at an early stage in the process where ‘vulnerable’ individuals are involved.
For more information on possession orders and the impact of Article 8 contact Andrew Beck.