(8).jpg)
This was the question asked in the recent case of Thakker v Northern Rock plc. Mr & Mrs Thakker had got into difficulties with their loan and were being sued for possession, this involved a decision that had ramifications for short-term as well as long-term lenders.
This was the question asked in the recent case of Thakker v Northern Rock plc. Mr & Mrs Thakker had got into difficulties with their loan and were being sued for possession, this involved a decision...
< 
div>This was the question asked in the recent case of Thakker v Northern Rock plc. Mr & Mrs Thakker had got into difficulties with their loan and were being sued for possession, this involved a decision that had ramifications for short-term as well as long-term lenders.
This was the question asked in the recent case of Thakker v Northern Rock plc. Mr & Mrs Thakker had got into difficulties with their loan and were being sued for possession, this involved a decision that had ramifications for short-term as well as long-term lenders.The borrowers countered the claim, alleging that the lenders had been in breach of their duties under the Mortgage Conduct of Business Rules (“MCOB”) which, they said, provided them with a counterclaim which operated as a defence to the claim for possession.
The Thakker's stated that the lenders had not treated them fairly and reasonably when they got into difficulties in breach of the provisions of the code.
In the leading case of National Westminster Bank Plc v Skelton [1993], the Court of Appeal said that: “a pleaded equitable set off arising from a counterclaim for an unliquidated sum cannot defeat a claim to possession.” The borrowers argued that compliance with the MCOB trumped the decision in Skelton, which they said did not apply until the code had been complied with.
Well, lenders can breathe a sigh of relief because the Court of Appeal on this occasion had no hesitation in rejecting that argument.
Breach of the Code can result in regulatory and disciplinary action by the Financial Services Agency and even a claim for damages but it does not provide a defence to a proper claim for possession.
It may only apply when the judge is considering the discretionary stage of proceedings, having first made the possession order, when deciding whether or not to give the borrowers more time to pay. As the Court of Appeal said when dealing with breaches of the code: “...they do not afford a basis in law for maintaining that the rights of the mortgagee under the mortgage contract to possession, a fundamental and important right, are unenforceable.”
So, that's all good, then.
By Stephen Gerlis
Leave a comment