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Human rights and mortgage repossession: beyond property law using Article 8

Published online by Cambridge University Press:  02 January 2018

Sarah Nield  and
Nicholas Hopkins
Sarah Nield*
Affiliation:
University of Southampton
Nicholas Hopkins*
Affiliation:
University of Southampton
*
Sarah Nield, University of Southampton, School of Law, Highfield, Southampton, Hampshire, SO17 1BJ, UK. Email: [email protected]. Nicholas Hopkins, University of Southampton, School of Law, Highfield, Southampton, Hampshire, SO17 1BJ, UK. Email: [email protected]
Sarah Nield, University of Southampton, School of Law, Highfield, Southampton, Hampshire, SO17 1BJ, UK. Email: [email protected]. Nicholas Hopkins, University of Southampton, School of Law, Highfield, Southampton, Hampshire, SO17 1BJ, UK. Email: [email protected]
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Abstract

Following the Supreme Court decisions in Manchester CC v Pinnock and Hounslow CC v Powell, this article examines the possible impact of Article 8 of the European Convention on Human Rights and Fundamental Freedoms upon protection of the home in creditor repossession proceedings. The central argument advanced is that, although occupiers may not all be protected through property law, they may enjoy an independent right to respect for their home under Article 8, which should be acknowledged in the legal frameworks governing creditor's enforcement rights against the home. The article suggests that the most common creditor enforcement route, through mortgage repossession proceedings, falls short in this regard. It takes as its primary focus the treatment of children in such proceedings to provide an example of the potential for a human rights-based property protection heralded by these two Supreme Court decisions.

Type
Research Article
Information
Legal Studies , Volume 33 , Issue 3 , September 2013 , pp. 431 - 454
Copyright
Copyright © Society of Legal Scholars 2013

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Footnotes

*

The authors are grateful to their colleague, Dr Caroline Jones and to Professor Rebecca Probert, University of Warwick, Amy Goymour, University of Cambridge, and anonymous reviewers for their constructive comments on drafts of this article.

References

1. Eg on divorce or dissolution of a civil partnership where statutory schemes apply.

2. Although the Article 8 concept of ‘home’ is not necessarily limited to property which the victim currently occupies see Gillow v UK [1989] 11 EHRR 335 and Blecic v Croatia [2005] 41 EHRR 13.

3. Most notably through Trusts of Land and Appointment of Trustees Act 1996, s 15.

4. For a summary of these limitations, see Cooke, E ‘Children and real property: trusts, interests and considerations’ (1998) 28 Family Law 349 Google Scholar.

5. Law of Property Act 1925, s 1(6).

6. Eg Hammersmith and Fulham LBC v Alexander-David [2010] Ch 272.

7. Children Act 1989, sch 1 para 1(1)(e) enables the court to order the transfer of property to be held on a child's behalf.

8. Hypo Mortgage Services Ltd v Robinson [1997] 2 FLR 71.

9. Ibid, at 72.

10. In English law, property rights held by persons in occupation automatically bind third parties and this is the principal basis upon which beneficial interests are enforced against creditors. At the time of the decision in Robinson, provision for such claims was contained in the Land Registration Act 1925, s 70(1)(g), since replaced by the Land Registration Act 2002, sch 3(2).

11. Hypo Mortgage Services Ltd v Robinson, above n 8, at 72.

12. See, eg, Flynn L and Lawson A ‘Gender, sexuality and the doctrine of detrimental reliance’ (1995) 3 Fem Leg Stud 105.

13. While the common intention constructive trust has its origins in earlier cases, the leading decision on acquisition is Lloyds Bank Plc v Rosset [1991] 1 AC 107. The scope of the trust has been scrutinised more recently in cases concerning the quantification of beneficial shares: Stack v Dowden [2007] 2 AC 432 and Jones v Kernott [2012] 1 All ER1265.

14. Through the limited protection afforded to beneficial owners in occupation. See William & Glyn's Bank v Boland [1981] AC 487 (overriding interests) and Kingsnorth Finance v Tizard [1986] Ch 441 (constructive notice of occupiers of unregistered land) as circumscribed by overreaching in City of London Building Society v Flegg [1988] AC 54, implied consent and the rejection of the scintilla temporis in Abbey National Building Society v Cann [1991] AC 56.

15. Consent to a home acquisition mortgage may be implied, eg Abbey National Building Society v Cann, ibid. The risk of undue influence in other mortgages is addressed by the need for independent advice. See Barclays Bank v O'Brien [1994] 1 AC 180 and Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773.

16. As acknowledged by Baroness Hale in ZH (Tanzania) v SS for the Home Department [2011] UKSC 4 at [23] and [25].

17. For a convenient account, see Choudhry S and Herring J European Human Rights and Family Law (Oxford: Hart, 2010) ch 3.

18. Ibid, pp 127–137. Leading contributors to this debate include Eekelaar J ‘The interests of the child and the child's wishes: the role of dynamic self determinism’ (1994) 8 International Journal of Law and the Family 42; Freeman, M The Rights and Wrongs of Children (London: Frances Pinter, 1983)Google Scholar and The Moral Status of Children (London: Martinus Nilhoff, 1997); Fortin J ‘Accommodating children's rights in a post human rights era ’ (2006) 69 MLR 299.

19. Kingston Upon Thames v Prince [1999] 1 FLR 593 at 603.

20. Fox, L Conceptualising Home: Theories, Laws and Practice (Oxford: Hart, 2007).Google Scholar

21. Ibid, ch 4.

22. Ibid, ch 7; and Fox L ‘ Creditors and the concept of “family home”: a functional analysis ’ (2005) 25 LS 201.

23. See Choudhry and Herring, above n 17, p 168; and O'Mahony C ‘Irreconcilable differences? Article 8 Echr and Irish law on non-traditional families’ (2012) 26 International Journal of Law, Policy and Family 31.

24. It is acknowledged that sadly a home can also be a centre of abuse and violence: Fox, above n 20, p 162.

25. Ibid, pp 438–39.

26. Nettleton, S, Burrows, R, England, J and Seavers, J The Social Consequences of Mortgage Repossession for Parents and Their Children (London: Joseph Rowntree Foundation, 1999)Google Scholar; Ford, J, Burrows, R and Nettleton, S Home Ownership in a Risk Society: A Social Analysis of Mortgage Arrears and Possession (Bristol: Bristol Policy Press, 2001)Google Scholar; Nettleton S ‘Losing a home through mortgage repossession: the views of children’ (2001) 15 Children and Society 82.

27. Nettleton et al, ibid, p 49.

28. Gillow v UK, above n 2; Buckley v UK [1996] 23 EHRR 101.

29. See, eg, Connors v UK [2005] 40 EHRR 9; McCann v UK [2008] 47 EHRR 40; Kay v UK [2011] HLR 2.

30. A Busye ‘ Strings attached: the concept of home in the case law of the Echr’ (2006) EHRLR 294.

31. Ibid, at 296.

32. Connors v UK, above n 29, at [82].

33. As they are required to do by Human Rights Act 1998, s 2.

34. See Manchester CC v Pinnock [2010] UKSC 45 at [61]; Hounslow LBC v Powell : Leeds CC v Hall : Birmingham CC v Frisby [2011] UKSC 8 at [33].

35. In Leeds CC v Price [2006] UKHL 10, a few days residence failed to qualify.

36. Barca v Mears [2004] EWHC 2170 at [33]. See also Rook, D Property Law and Human Rights (Oxford: Oxford University Press, 2001) p 203.Google Scholar

37. For analysis and criticism of the courts' approach, see BakerA ‘The judicial approach to “exceptional circumstances” in Bankruptcy: the Impact of the Human Rights Act ’ [2010] Conv 352.

38. Mckenna v British Aluminium Ltd [2002] Env LR 30 at [53]. The claim in nuisance was coupled with a claim under Rylands v Fletcher.

39. Redress for nuisance is available only to those with an interest in the land. See Hunter v Canary Wharf Ltd [1997] AC 655.

40. Dobson v Thames Water Utilities Ltd [2009] EWCA Civ 28 and [2011] EWHC 3253.

41. Beoku-Betts v SS for the Home Department [2009] 1 AC 115.

42. Ibid, at [43].

43. See EM (Lebanon) v Secretary of State for the Home Dept [2008] UKHL 64; C (Zimbabwe) v Secretary of State for the Home Dept [2008] UKHL 40; R (on the application of Stephenson) v Secretary of State for the Home Department [2010] EWHC 704.

44. Beoku-Betts v SS for the Home Department, above n 41, at [4].

45. Family members can join together to bring a joint complaint to demonstrate the impact on the whole family.

46. Eg Nielson v Denmark [1989] 11 EHRR 175.

47. Choudhry and Fenwick H ‘ Taking the rights of parents and children seriously: confronting the welfare principle under the Human Rights Act ’ (2005) 25 OJLS 453; Harris S Short ‘Family law and the Human Rights Act 1998: judicial restraint or revolution’ (2005) CFLQ 517; Fontin J‘ The effect of the Human Rights Act on domestic practices in children's cases ’ (2005) 68 MLR 300.

48. The suggestion is that the domestic courts have misinterpreted Strasbourg decisions in holding the paramountcy principle compliant.

49. See First National Securities Ltd v Hegerty [1985] QB 850; Ahmed v Kendrick [1987] 56 P&CR 120; Bank of Ireland Home Mortgages Ltd v Bell [2001] 2 All ER (Comm) 920; Edwards v Lloyds TSB Bank Plc [2004] EWHC 1745 (fraud);First National Bank Plc v Achampong [2003] EWCA Civ 487;Zandfarid v BCCI [1996] 1 WLR 1420 (undue influence).

50. Charging Orders Act 1979.

51. Insolvency Act 1986, ss 336 and 337.

52. LPA, s 101(1)(i), confers an implied power of sale upon a legal chargee which will overreach the chargor's interest, ss 88(1) and 89(1).

53. Cuckmere Brick Co v Mutual Finance Ltd [1971] Ch 949;Silven Properties Ltd v Royal Bank of Scotland Plc [2004] 4 All ER 484.

54. In 1991 the Law Commission proposed wholesale domestic mortgages reform but their proposals have not been implemented. See Law Commission Report 204, Transfer of Land: Land Mortgages (1991).

55. Nield, S ‘Borrowers as consumers: new notions of unconscionability’ in Kenny, M et al (eds) Unconscionability in European Financial Transactions (Cambridge: Cambridge University Press, 2010) ch 10.Google Scholar

56. Fsma (Regulated Activities) Order 2001 SI 2001/544, art 61. Second mortgages and unsecured lending are regulated by the Consumer Credit Act 1974 (as amended).

57. Fsma 2000, s 19. A mortgage granted to an unlicensed lender is unenforceable save to the extent that a court determines that enforcement is just and equitable. See Fsma 2000, ss 23 and 26–28.

58. Fsma 2000, s 64.

59. Fsma 2000, ss 64 and 68. Eg fines were imposed on GMAC-RFC Limited FSA/PN/147/2009 (29 October 2009), Kensington Mortgage Company FSA/PN/065/2010 (12 April 2010), Redstone Mortgages Ltd FSA/PN/120/2010 (15 July 2010) and DB Mortgages FSA/PN/025/2011 (22 February 2011), and conditions regulating mortgage enforcement were imposed on Bridging Loans Ltd and J Cummings FSA/PN/159/2010 (4 November 2010).

60. Fsma 2000, part XVI.

61. Fsma 2000, s 150.

62. Fsma Handbook, principle 6.

63. Pre-Action Protocol for Possession Claims Based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property, para 3.

64. Whitehouse L ‘The Mortgage Arrears Pre-action Protocol: an opportunity missed ’ (2009) 72 MLR 793.

65. Haley M ‘Mortgage default possession, relief and judicial discretion’ (1997) 17 LS 483; and McMurtry L ‘Mortgage default and repossession: procedure and policy in the post-Norgan era’ (1997) 58 NILQR 194.

66. Harrow LBC v Qazi [2003] UKHL 43; Kay v Lambeth LBC [2008] UKHL 10; Doherty v Birmingham CC [2008] UKHL 57.

67. Connors v UK, above n 29;McCann v UK, above n 29; Paulic v Croatia App No 3572/06; Cosic v Croatia (2011) 52 EHRR 39; Zehentner v Austria [2011] 52 EHRR 22, Kay v UK, above n 29. See Nield, S ‘Clash of the titans: Article 8, occupiers and their home’ in Bright, S (ed) Modern Studies in Property Law, Vol 6 (Oxford: Hart, 2011) ch 5.Google Scholar See also Orlic v Croatia [2011] HLR 44

68. Manchester CC v Pinnock, above n 34.

69. Hounslow LBC v Powell : Leeds CC v Hall: Birmingham CC v Frisby, above n 34.

70. Kenna P ‘Housing rights: positive duties and enforceable rights at the European Court of Human Rights’ [2008] EHRLR 193. See, eg, the positive duties imposed in cases of environmental pollution like Lopez Ostra v Spain [1994) 20 EHRR 277, Hatton v UK [2003] 37 EHRR 28 and Khatun v UK [1998] 26 EHRR CD 212; and in the anti-social behaviour cases of Mielva v Bulgaria App Nos 43449/02 and 21475/04, Morena Gomez v Spain App No 4143/02, Oluic v Croatia App No 61260/08 and Zammit Maempel v Malta App No 24202/10. In relation to Article 10 (freedom of expression) within the home, see Khurshid Mustafa v Sweden [2011] 52 EHRR 24.

71. Zehentner v Austria, above n 67; and Connors v UK, above n 29.

72. James v UK [1986] 8 EHRR 123 at [46].

73. Hickman notes that Article 8 does not require strict necessity to allow some latitude. See Hickman T Public Law after the Human Rights Act (Oxford: Hart, 2010) p 120.

74. R (Daly) v Secretary of State for the Home Department [2001] 2 AC 532 at [28] (Lord Steyn).

75. Connors v UK, above n 29, at [86].

76. Ibid, at [82]–[83]. See also McCann v UK, above n 29; Cosic v Croatia, above n 67; Zehentner v Austria, above n 67; Paulic v Croatia, above n 67; Kay v UK, above n 29.

77. McCann v UK, above n 29, at [50].

78. In Buckland v UK App No 40060/08, in a separate opinion, De Gaetano J doubted that the third element should apply to private possession claims.

79. Nield, above n 67.

80. Sections 2, 3 and 6.

81. Manchester CC v Pinnock, above n 34, at [51]. For a convenient summary of the debate, see Phillipson G ‘Clarity postponed: horizontal effect after Campbell’ in Fenwick H, Phillipson G and Masterman R (eds) Judicial Reasoning under the Human Rights Act (Cambridge: Cambridge University Press, 2007); and Phillipson G and Williams A ‘Horizontal effect and the constitutional constraint’ (2011) 74 MLR 878.

82. LPA 1925, ss 87(1) and 101(1)(i). It could be argued that a state's positive duties dictate the regulation of consensual enforcement powers to prevent a severe Article 8 infringement. See Zehentner v Austria, above n 67, and Khurshid Mustafa v Sweden, above n 70, although in Horsham Properties Ltd v Clark [2008] EWHC 2327 the High Court believed that an express power of sale should not be subject to human rights scrutiny.

83. AJA s 36.

84. See, by way of analogy, the statutory framework governing relations between private landlord and tenant in Ghaidan v Godin Mendoza [2004] 2 AC 557 and between private landowner and squatter in Pye v UK [2008] 46 EHRR 45.

85. HRA, s 6. It is suggested that through this obligation the courts are required to develop the common law in a compatible manner – known as indirect horizontal effect. See Phillipson, above n 81.

86. It is unsurprising that this balance is controversial. See, eg, Jowell J ‘Judicial deference’ [2003] PL 592; Allan Trs ‘ Human rights and judicial review: a critique of due deference’ (2006) 65 CLJ 671; King A ‘Institutional approaches to judicial restraint’ (2008) 28 OJLS 409; Kavanagh A ‘ Defending deference in public law and constitutional theory’ (2010) 126 LQR 222.

87. Kay v Lambeth LBC, above n 66; Manchester CC v Pinnock, above n 34; and Hounslow LBC v Powell, above n 34, re public authorities' right to repossess social housing.

88. In creditor enforcement actions early cases also demonstrated deference – eg Barclays Bank Plc v Alcorn [2002] EWHC 498 and BCCI v Mamon [2005] EWCA Civ 970 – but recent cases are beginning to assess the compatibility of governing legislation – eg Barca v Mears, above n 36; Close Invoice Financing Ltd v Pile [2008] EWHC 1580; Horsham Properties Ltd v Clark, above n 82; and Ford v Alexander [2012] EWHC 266.

89. Wood v UK [1997] 24 EHRR CD69. See the domestic courts' views in Barclays Bank Plc v Alcorn, above n 88 and BCCI v Mamon, above n 88.

90. The Law Commission has called for reform. See above n 54.

91. Whitehouse L ‘A longitudinal analysis of the mortgage repossession process 1995–2010: stability, regulation and reform ’ in S Bright, above n 67, ch 7.

92. In 2008, 68.3% of households were owner occupied and 55% of owners were purchasing with mortgage finance: Department of Community and Local Government, Survey of English Housing Live Tables S1101, Trends in Tenure: 1918 to 2008, England and S317, Trends in Type of Owner Occupation, England, 1996/97 to 2007/08, available at: http://www.communities.gov.uk/housing/housingresearch/housingsurveys/surveyofenglishhousing

93. A significant increase in owner occupation during the interwar years had taken place against a background of political indifference. See, eg Ball M Housing Policy and Economic Power: the Political Economy of Owner-occupation (London: Methuen, 1983) p 40. He notes that the state ‘did little’ to develop owner occupation at that stage.

94. FWS Craig (ed and compiler) British General Election Manifestos, 1918–1966 (Chichester: Political Reference Publications, 1970) p 146.

95. For discussion of these, and of the debate surrounding the extent to which these values are in fact dependent on home ownership, see Bright S and Hopkins N. ‘Home, meaning and identity: learning from the english model of shared ownership’ (2011) 28 Housing, Theory and Society 377.

96. Eg AJA s 36, which was enacted following the finding in Birmingham Citizens Permanent BS v Caunt [1962] Ch 883 that the court had no inherent jurisdiction to postpone a mortgagee's claim to possession. See the Payne Committee on the Enforcement of Judgment Debts Cmnd 3909 (1969).

97. Eg FSMA and the Consumer Credit Act 1974 (as amended).

98. Hansard HC Deb, vol 446, col 316, 10 May 2006.

99. Eg Hopkins N ‘Regulating trusts of the home: private law and social policy’ (2010) 125 LQR 310 and Fox, above n 20 ch 3.

100. Nield S ‘Responsible lending and borrowing: whereto low cost home ownership?’(2010) 30 LS 610.

101. See ibid for details.

102. TOLATA 1996, s 15(1)(c). The provision of a home for children may also be an ongoing purpose of the trust within s 15(1)(b). See, eg, Edwards v Lloyds TSB, above n 49.

103. Close Invoice Finance Ltd v Pile, above n 88.

104. Insolvency Act 1986, ss 335A, 336 and 337, following, in some measure, the recommendations of the Cork Report Cmnd 8558 (1982).

105. See, eg, First National Bank plc v Achampong, above n 49, where little weight was attached to the presence of children in the absence of evidence as to how their welfare would be affected by sale.

106. Close Invoice Finance Ltd v Pile, above n 88; Forrester Ketley & Co v Brent [2009] EWHC 3441; National Westminster Bank Plc v Rushmer [2010] EWHC 554.

107. See Baker, above n 37.

108. See Ghaidan v Godin Mendoza, above n 84.

109. The Ministry of Justice is considering placing a minimum threshold on charging orders of some debts (CP2/10, February 2010). In certain states in the USA, ‘homestead’ legislation limits security over the home for nonacquisition or improvement funding, and in New Zealand the Joint Family Homes Act 1964 (NZ) prohibits enforcement against the home by unsecured creditors. A proposal to adopt similar legislation to encourage ‘entrepreneurship’ was considered in the Insolvency Services Consultation Paper ‘Bankruptcy: A Fresh Start’ (2000), but not enacted in the Enterprise Act 2002.

110. For further details, see Nield, above n 67.

111. Manchester CC v Pinnock, above n 34, at [77].

112. Paulic v Croatia, above n 67.

113. Ropaigealach v Barclays Bank Plc [2000] QB 263 and Horsham Properties Group Ltd v Clark, above n 82.

114. Ministry of Justice Consultation Paper on Mortgages: Power of Sale and Residential Property CP55/09, December 2009.

115. Despite comments to the contrary in Barclays Bank Plc v Alcorn, above n 88 and BCCI v Mamon, above n 88.

116. Paulic v Croatia, above n 67, at [44].

117. De Freitas v PS of Ministry Agriculture, Fisheries, Lands and Housing [1999] 1 AC 69. See Hickman, above n 73, ch 6, for a detailed consideration of proportionality.

118. Manchester CC v Pinnock, above n 34, at [51]–[54] and Kay v UK, above n 29.

119. Manchester CC v Pinnock, above n 34, at [51].

120. Ibid, at [54].

121. Ibid, at [64]. See Barber v Croydon LBC [2010] EWCA Civ 51; Eastland Homes Partnership Ltd v Whyte [2010] EWHC 695; and the Strasbourg case of Zehentner v Austria, above n 67.

122. Kay v Lambeth, above n 66, at [38].

123. Ibid.

124. Ibid.

125. Manchester CC v Pinnock, above n 34, at [57].

126. Corby BC v Scott & West Kent Housing Association v Haycroft [2011] EWCA Civ 276.

127. See Baker, above n 37, and Dixon M ‘To sell or not to sell that is the question: the irony of the Trusts of Land and Appointment of Trustees Act ’ (2011) 70 CLJ 574, for recent contributions.

128. Bank of Ireland Home Mortgages v Bell [2001] 1 FLR 809; First National Bank plc v Achampong, above n 49; Edwards v Lloyd TSB, above n 49.

129. Close Invoice Finance v Pile, above n 88.

130. See Insolvency Act 1986, ss 335A, 336 and 337.

131. See n 37.

132. Re Citro [1991] 142 Ch 157 (Nourse LJ).

133. Eg Claughton v Charalambous [1991] 1 FLR 740.

134. Barca v Mears, above n 36, at [42].

135. Kay v Lambeth LBC, above n 67.

136. Martin-Sklan v White [2006] EWHC 3313. The case arose under the Insolvency Act 1986, s 337, but in relation to the court's jurisdiction to order sale there is no material difference between that provision and s 335A. Although the court's discretion was not technically constrained by exceptional circumstances, the application was made so close to the year deadline that the court in effect adopted that test.

137. Ibid, at [15].

138. In contrast to Donohoe v Ingram [2006] EWHC 282, where no exceptional circumstances were found to allow the home interests of the bankrupt's four children to be balanced against the interests his creditors.

139. Cheltenham & Gloucester Building Society v Norgan [1996] 1 All ER 449.

140. But evidence suggests that county court judges are not taking full advantage of the Norgan guidelines, with typical periods of suspension being between 1–5 years. See Whitehouse, above n 91, p 162.

141. Cheltenham & Gloucester Building Society v Booker [1997] 73 P&CR 412.

142. National & Provincial Building Society v Lloyd [1996] 1 All ER 630.

143. (1997) 29 HLR 282.

144. Ibid, at 162 (Auld LJ).

145. The argument made and succeeding in relation to an adult daughter in Official Receiver for Northern Ireland v Rooney [2008] 2 FLR 1437, but failed on the facts in Barca v Mears, above n 36.

146. The courts have been creative in their duty to interpret legislation in a human rights compliant manner. See Manchester CC v Pinnock, above n 34.