2. ‘The relationship between claims of undue influence and possession proceedings is illustrated by Albany Home Loans v Massey [1997] 2 All ER 609 and below n 50.Google Scholar

3. ‘See now Cheltenham and Gloucester Building Society v Norgan [1996] 1 WLR 343.Google Scholar

4. [1997] 1 All ER 21.Google Scholar

5. [1996] TLR 656.Google Scholar

6. (1997) 73 P & CR 158.Google ScholarPubMed

7. [1993] Ch 330.

8. See Mrs Palk's standard personal covenant to repay all outstanding sums. The point raised by E L G Tyler and R Oughton in Fisher & Lightwood's The Law of Mortgages Supplement to the 10th edn (London: Butterworths, 1994) p A88 that Mrs Palk could have crystallised her liability by presenting her own petition in bankruptcy fails to meet the point: viz that her liability prior to such a petition would continue to rise under the scheme proposed by the mortgagee.

9. With whom Butler-Sloss LJ and Sir Michael Kerr agreed.

10. The forerunner of s 91(2) is s 48 of the Chancery Amendment Act 1852, which gave the court power to order sale in foreclosure actions. This was replaced by s 25(2) of the Conveyancing and Law of Property Act 1881 (which became s 91(2)) in order that the court could order sale ‘[i]n any action’. At first blush then, s 91(2) would seem to comprise a discretion to order sale where other proceedings already are afoot (eg Woolley v Colman (1882) 21 ChD 169). However, a jurisdiction to order sale in an action commenced de novo for that purpose is found in s 91(1), which provides that ‘any person entitled to redeem mortgaged property may have a[n]… order for sale instead of redemption in an action brought by him either for redemption alone, or for sale alone or for sale or redemption in the alternative’. So, in strict terms, a mortgagor's application for sale alone flows from s 91(1) and is regulated by s 91(2). It is a wide-ranging jurisdiction to order sale whether or not the mortgagee is taking steps concurrently to enforce its security. 11. (1995) 28 HLR 634.

12. (1997) Times 6 May.

13. The mortgagee was not seeking possession but had refused consent to the discharge of the mortgage through sale on the reasonable ground that the proceeds would not meet the debt and that the mortgagor had no other moneys.

14. An action on the mortgagor's personal covenant to repay is not attractive to a mortgagee seeking quick settlement of the debt. Further, it might lead only to bankruptcy. The prospects are brighter if the mortgagee has the benefit of mortgage indemnity cover.

15. [1997] 1 All ER 21. This post-dated Palk and Barrett but preceded Polonski..

16. ‘Most mortgages of a dwelling house contain a mortgagee's covenant not to seek possession unless specified events occur, usually relating to the mortgagor's default: see Midland Bunk plc v McCruth [1996] Egcs 61. Such a term can be implied in instalment mortgages: Esso Petroleum v Alstonbridge Properties [1975] 1 WLR 1474.Google Scholar

17. Other statutory restrictions on the mortgagee's right to possession exist in particular circumstances and are outside the scope of the present article, for example, Limitation Act 1980, Consumer Credit Act 1974, Rent Act 1977 and the insolvency legislation. See generally P Brimelow and N Clayton Mortgage Possession Actions (London: Longman, 1994).

18. See the Report of the committee on the Enforcement of Judgment Debts (the Payne Committee) 1969 (Cmnd 3909) Part IX, particularly pp 352–364; Smith, R J ‘The Mortgagee's Right to Possession — the Modern Law’ (1979) 43 Conv 266. 19. RSC Ord 55, r 5(a), as was.Google Scholar

20. [1962] 1 Ch 883.

21. As a result, the discretionary element of Ord 55, r 5(a) was omitted in the 1965 rules. See generally Haley, M ‘Mortgage default: possession, relief and judicial discretion’ (1997) 17 LS 483, particularly p 485 et seq.Google Scholar

22. Above n 18.

23. ‘The analysis in Cheltenham and Gloucester Building Society v Norgan [1996] 1 WLR 343 is now reflected in The Supreme Court Practice 1997 vol 1, para 88/5/9, noted in All ER Rev 1996, p 61.Google Scholar

24. ‘“Likelihood” is a question of fact to be determined by the judge on the evidence before him’, per John, Sir Pennycuick in Royal Trust Co v Markham [1975] 1 WLR 1416 at 1422.Google Scholar

25. The following section discusses the circumstances in which the s 36 jurisdiction exists. For an analysis of the difficulties facing the courts in exercising the discretion given by that jurisdiction see Haley, above n 21.

26. Royal Trust Co v Markham [1975] 1 WLR 1416. In such cases the mortgagee usually will not oppose sale (and will not be seeking possession) unless there are other outstanding areas of default, see below n 60.Google Scholar

27. (1997) 73 P&CR 158.Google ScholarPubMed

28. Ibid at 162. See also Mortgage Service Funding plc v Steele (1996) 72 P & CR D40, where a mortgagor's request was rejected as being based on ‘utterly flimsy’ evidence as to the prospects of a sale. Contrast with the generosity shown the mortgagor in National and Provincial Building Society v Lloyd [1996] 1 All ER 630 and see Haley, above n 21, at pp 494–495.Google Scholar

29. For example, where the mortgagor deliberately overvalues the property or seeks to delay completion for an unjustified period. In Ellis, Auld LJ also was of the view that the terms of a suspension should be less generous if the sum owed was close to the market value of the property.

30. The relevant condition in s 36 is that ‘as a consequence’ of suspension of possession the mortgagor must be likely to be able to pay any sums due. So, as long as the suspension permits a sale, which then permits the mortgagor to discharge their liability, it matters not that the balance is furnished from other funds.

31. [1997] 1 All ER 21 at 30.Google Scholar

32. In Krausz, Phillips, Lj Notes that ‘the procedure followed and the decision reached in Bnrrett's case tend fundamentally to undermine the value of the mortgagee's entitlement to possession’ [1997] I All ER 21 at 27. Millett LJ was more direct, noting that he had ‘serious doubt whether that case was rightly decided’ (ibid at 31).Google Scholar

33. In Kruusz the mortgagee also had obtained a warrant for possession which had fallen due for execution. The court makes little of this, preferring to distinguish Palk because no challenge was made to the jurisdiction, not because the mortgagee in that case had travelled a shorter distance on the path to possession. See also below nn 38, 56.

34. Butler Sloss LJ agreed with both judgments. In Polk her Ladyship had agreed with Nicholls V-C.

35. [1997] 1 All ER 21 at 25.Google Scholar

36. Ibid at 31. He does not explain why there should be a difference between enforcing the security by possession leading to a sale (Krausz) and possession not leading to an immediate sale (Palk).

37. For example, Royal Trust Co of Canada v Markham [1975] 1 WLR 1416 was neither discussed, nor apparently cited, to the court in Palk.Google Scholar

38. The fact that a warrant for possession had been issued in Krausz but only an order for possession granted in Palk is not material for a s 36 application. Although the need for suspension necessarily was more urgent in Krausz, in both cases the heart of the matter is the existence — if any — of a jurisdiction to suspend. Unless the jurisdictional statute is so limited, the fact that a mortgagee with a warrant is closer to obtaining possession (even if the warrant has fallen due) does not defeat the jurisdiction. If the mortgagor could have paid any sums due in Krausz after the warrant had fallen due (eg the mortgagor had won the lottery), s 36 would have been available.

39. In Fisher & Lighrwood (above n 8) at p A88, the view is expressed that the mortgagee's action in Palk was ‘a commercial decision taken in good faith’ vindicated by the subsequent fall in interest rates that would have reduced the gap between Mrs Palk's continuing liability and the anticipated rental income. That the mortgagee acted in good faith to obtain the maximum advantage from the mortgage does not make its action any more palatable or indicate that it should tip the scales of judicial discretion. That its action is given a rosy glow by later events is irrelevant.

40. The jurisdiction is that of the High Court, available in proceedings in the county court by virtue of s 76 of the County Courts Act 1984.

41. [1996] TLR 656.

42. Ibid at 656.

43. [1962] 1 Ch 883.Google ScholarPubMed

44. Eg by finding another willing mortgagee.

45. Such as non-performance of related covenants.

46. This reasoning applies, mutatis mutandis, to endowment mortgages where the borrower pays back interest in instalments and repayment of capital is secured by an endowment policy maturing at the due date. For both ‘term’ and ‘endowment’ mortgages, default of instalments usually triggers liability to repay the whole capital sum.

47. [1979] 1 WLR 318.Google Scholar

48. Ibid at p 322.

49. [1997] 2 All ER 609.Google Scholar

50. ‘In Albany the existence of a joint mortgagor not bound by the mortgage and against whom no possession order could be made is such a powerful factor that it offers little support for application of the Quennell theory to cases where all mortgagors are bound. Note also Ashley Guarantee plc v Zocaria [1993] 1 WLR 62 and Sadiq v Hussain [1997] NPC 19, where the courts, inferentially and without discussion, appear to have accepted that Lord Denning's view of the inherent jurisdiction might defeat a claim for possession, although not on the facts of those cases.Google Scholar

51. ‘Lord Denning justified a wider jurisdiction on the ground that equity will intervene to mitigate the rigour of the law, especially in the law of mortgages, but he does not explain why the judges in Caunt and cases thereafter had not utilised it. Quennell itself is explicable on the ground that possession would have been contrary to the Rent Acts: viz that the plaintiff mortgagee was in all respects an agent of the landlord seeking to avoid Rent Act restrictions. Similar reliance on statutory protection of tenants was used to defeat a mortgagee in Woolwich Building Society v Dickman [1996] 3 All ER 204. See also Barclays Bank plc v Zoroovabli [1997] 2 All ER 19 at 24.Google Scholar

52. [1996] TLR 656.

53. The mortgagors could claim no relief under s 36 AJA 1970 being unable to pay sums due in a reasonable time.

54. According to the court, such an order would be justified if the mortgagee did not require possession but was content that the property be surrendered direct to the purchaser on completion; the physical occupation by the mortgagor would enhance (or not diminish) the sale price; and the mortgagor would co-operate in the sale and surrender possession on completion. Clearly, this is a consent order and the inherent jurisdiction is simply the method by which an agreement is carried out. In Booker itself the mortgagors would not co-operate.

55. As noted, the differences between Krausz and Palk (and Barrett) cannot be explained by the existence in Krausz of a warrant for possession that had fallen due as opposed to ‘only’ an order for possession. First, no clear distinction of the kind is drawn in Krausz itself. Palk and Barrert are distinguished on other grounds. Secondly, in any event, as with s 36 Aja (see above n 38), if s 91 encompasses a suspensory jurisdiction there is no reason why it should be available only in those cases where possession has been ordered but not when possession is more imminent. There is no such restriction in s 91. in practical terms, if the court has the power to suspend possessory rights pending sale of the property, the crucial question is whether the mortgagee actually is in possession, not how many steps it has taken or how far it has gone to secure it. Even then, as we know from the law of forfeiture, a plaintiff claiming possession of land as of right but contrary to the rights of an estate-holder in occupation is not in the strongest position: Billson v Residential Apartments Ltd [1992] 2 WLR 152. Hence, the real issue remains: does s 91 contain a suspensory power.Google Scholar

56. Section 48 of the Chancery Amendment Act 1852, then s 25(2) of the Conveyancing and Law of Property Act 1881.

57. Strictly, Caunt is not authority that no such jurisdiction exists.

58. [1993] Ch 330 at 341.

59. Or by refusing to agree to the discharge of the mortgage on account that the debt will not be repaid, as in Polonski.

60. As where the mortgagee objects to the sale for reasons unrelated to repayment of the capital, such as non-fulfilment of contractual terms giving valid collateral advantages.

61. The mortgagor was penniless and the mortgagee bound to suffer a shortfall, but a sale was granted despite objections in order to permit the mortgagor to escape a hostile neighbourhood for the good of her small children.

62. Fisher & Lightwood's The Law of Mortgages (above n 8) ch 21. For the accepted wisdom just after the 1925 reforms, see R L Ramsbotham Coore on Mortgages (London: Stevens, 9th edn, 1927), p 751.

63. Although it would be going too far to suggest that s 91 was a direct response to the changes in the method of creating mortgages after 1 January 1926, it should not be forgotten that the overwhelming regard for the mortgagee's right to possession originated at a time when mortgages were created by a complete transfer of all the mortgagor's interest in the land to the mortgagee. Now that the mortgagor retains the ultimate title, it is certainly possible that his or her own right of sale should be given equal importance with the contractual rights of the mortgagee.

64. Woolley v Colman (1882) 21 Ch D 169; Merchant Banking Co of London v London and Hanseatic Bank (1886) 55 LJ Ch 479.Google Scholar

65. [1993] Ch 330 at 341, repeated at 343. See, in the same vein, Nicholls V-C at 340.

66. [1993] Ch 330 at 343, per Sir Michael Kerr.

67. As the matter was not argued, Krausz is open to the charge that material matters of jurisdiction were not fully explored, just like Palk and Barrett.

68. Apparently, a sale by the mortgagee, after obtaining possession, usually at a lower price and which does not discharge the debt is perfectly acceptable.

69. ‘I accept, of course, that it must be only in exceptional circumstances that the power will be exercised against the mortgagee's wishes when a substantial part of the mortgage debt will nevertheless remain outstanding’ [1993] Ch 330 at 343, per Sir Michael Kerr. In Pearn v Mortgage Business plc (19 January 1998, unreported) Rimer J decided that an order under s 91 should not be made, on application by the mortgagor, where the proceeds would fall substantially short of the outstanding debt.