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Human Rights

WHAT EXACTLY ARE HUMAN RIGHTS?

Human Rights as they are commonly understood by lawyers in this country comprise a number of rights and freedoms guaranteed under the European Convention on Human Rights to which legal effect is given by the Human Rights Act 1998 which came into force on 2nd October 2000.

The Act requires that so far as possible, legislation should be read and given effect in a way which is compatible with Convention Rights, and where the legislation is incompatible, the court may make a declaration of incompatibility.

The Act maks it unlawful for a public authority to act in a way which is incompatible with the Convention Rights. A 'public authority' includes a court. In principle therefore, the Act affects the interpretation of legislation and may affect the way in which the court operates.

The Convention Rights are set out in the Articles to the First Schedule. Part I comprises a number of convention rights and freedoms followed in Parts II onwards with a number of Protocols comprising further rights.

HOW DO THEY AFFECT MORTGAGES?

IF I RUN INTO DIFFICULTY WITH MY MORTGAGE AND MY LENDER THREATENS REPOSSESSION, CAN I RELY ON THE HUMAN RIGHTS ACT AS A DEFENCE?

Probably not. There has been quite a bit of caselaw concerning possession claims.

In Kay and others v London Borough of Lambeth, Leeds City Council v Price [2006] UKHL 10 [2006] 2 WLR 570, the House of Lords (seven Law Lords) sought to clarify the application of Article 8 of the European Convention of Human Rights to domestic possession proceedings:

1. An Article 8 defence will generally not assist a mortgagor in resisting an order for possession, because, according to Wood v United Kingdom (1997) 24 EHRR CD 69 it is in accordance with the terms of the loan and the domestic law and is necessary for the protection of the rights and freedom of others, namely the lender.

2. Ordinarily, the process by which the county court considers the application of the substantive law and procedure ensures practical compliance with the protections afforded by Article 8, and in practice county court judges should assume compliance.

3. Only in exceptional circumstances can a defendant show a seriously arguable case that the law is incompatible with his Article 8 rights.

The House of Lords subsequently reaffirmed this approach (in response to fairly stinging criticism from the Court of Appeal that the law simply wasn’t clear): See Doherty v Birmingham City Council [2008] UKHL 57

The House of Lords confirmed that county courts should apply the principles set out in Kay v Lambeth LBC  in deciding whether or not a defendant has a defence under Article 8 of the European Convention of Human Rights, ie if the defendant has no legal or equitable right to remain in possession then he has no defence unless one of the two "gateways" applies:

(a) If there is a seriously arguable challenge to the law itself under Article 8 or

(b) On public law grounds that the decision was unreasonable.

The Court of Appeal subsequently gave further guidance on the application of Doherty and the defences under gateway (b): Doran v Liverpool City Council [2009] EWCA Civ 146

However, to an extent, this may now have to be read in the light of the recent Supreme Court decision in Manchester City Council v Pinnock [2011] UKSC 8
The case concerned possession proceedings brought by a local authority, however it was held that in order to ensure that domestic law was compatible with Article 8, a court should consider whether it is proportionate to make the order and for that purpose it should be able to investigate and determine any issues of fact. This may extent beyond possession proceedings brought by public authorities. The Supreme Court did however acknowledge that the European Court "also franked the view that it will only be in exceptional cases that Article 8 proportionality would even arguably give a right to continued possession where the applicant has no right under domestic law to remain: McCann v UK 47 EHRR 913, para 54; Kay v UK (App No. 37341/06, para 73" per Lord Neuberger at para 45.

Note also the very recent decision of the Supreme Court in Mullen v Salford City Council [2011] UKSC 8  in which the court had to consider the form and content of the proportionality review in the context of possession claims against introductory tenants or homeless persons. At para 33, Lord Hope said:

"The court will only have to consider whether the making of a possession order is proportionate if the issue has been raised by the occupier and it has crossed the high threshold of being seriously arguable. The question will then be whether making an order for the occupiers's eviction is a proportionate means of achieving a legitimate aim"

HORSHAM PROPERTIES AND HUMAN RIGHTS

We referred to the case of Horsham Properties Group Ltd v Clark [2009] 1 WLR 1255 in connection with orders for sale and the Ministry of Justice Consultation on changes in the law which will require lenders to obtain the court's permission to sell, which will in turn engage similar statutory protections to those involved in obtaining orders for possession under s 36 Administration of Justice Act 1970.

The case also raised a significant Human Rights challenge under Article 1 of the First Protocol. We repeat the facts and findings here:

Facts:

B and C mortgaged their property to a lender, L. B and C fell into arrears and L appointed LPA receivers pursuant to a contractual power in the mortgage deed (as well as s 101(1)(iii) LPA 1925). The receivers contracted to sell the property to Company X following a sale by auction. The purchase price was sufficient to pay off the mortgage debt. Upon completion Company X transferred the property to Company Y (Horsham Properties Group Ltd) and they were registered as proprietors. They subsequently issued proceedings for possession against B and C claiming that they were trespassing on the property, and asserting that their rights as borrowers had been overreached by the receivers’ sale to Company X.

It was common ground that the effect of a contract for sale entered into by a mortgagee, or a receiver appointed by a mortgagee, is such as to destroy the mortgagor’s equity of redemption – the right to discharge the mortgage and take back the property free of the charge.

It was also common ground that applying the law prior to the Human Rights Act, a lender could exercise the statutory power of sale under s 101 LPA 1925 and thereby obtain possession without engaging s 36 Administration of Justice Act 1970: Ropaigealach v Barclays Bank Plc [2000] QB 263, but it was argued that this is no longer compatible with the Convention rights of residential mortgagors. It was argued that it would only become compatible if either (1) s 101 was construed as requiring a mortgagee first to obtain a court order for possession or to make an application for an order permitting sale, and giving the court on such application a discretion similar to that conferred by s 36; or (2) s 36 was construed so as to confer upon the court the discretionary powers to adjourn or suspend the making of a possession order where the application was made, not by the mortgagee, but by the mortgagee’s purchaser. Otherwise, the borrowers sought a declaration of incompatibility in relation to s 101, on the basis that the section amounted to State intervention by legislation which deprived the borrower of his equity of redemption and which in turn amounted to a deprivation of the peaceful enjoyment of his possessions in accordance with Article 1 of the First Protocol, and that this applies irrespective of any separate contractual power of sale in the mortgage.

Findings:

According to Briggs J, the correct analysis is as follows:

(1) The borrowers lost their equity of redemption by virtue of the contract of sale entered into by the receivers. S 101 did not confer on the receivers a statutory power of sale free of the mortgage. Their powers were purely contractual and did not involve any State intervention.

(2) However, even if the lender had sold purely in exercise of its statutory powers, there would still have been no relevant deprivation of possessions within the meaning of Article 1 FP. S 101 serves merely to implement rather than to override the parties’ private bargain. It is far removed from the concept of State intervention into private rights through overriding legislation. In any event, the continued occupation of the mortgaged property by the mortgagor after the ink is dry on the mortgage is subject only to statutory intervention or contractual restraint. The liability of the mortgagor to lose possession through default is fully spelt out in the mortgage conditions.

(3) Furthermore, any deprivation of possessions as a result of a sale out of court, without first obtaining a court order, is justified in the public interest, and did not require a case-by-case exercise of a proportionality discretion by the court.

(4) Ultimately, the question of whether any wider public policy ought to be implemented wherever steps taken by a mortgagee to realise its security are likely to lead to the obtaining of possession is a matter for Parliament.

(5) Accordingly the effect of the sale in the present case was to discharge the equity of redemption and discharge the mortgage. By the time Company Y applied for possession, there was no subsisting mortgage and nothing upon which the court could exercise a discretion to stay or suspend under s 36.

(6) Company Y was therefore entitled to possession.

Comment:

In the context of Human Rights issues, the significance of the case is the risk that lenders might opt to appoint receivers with a view to selling standard residential home-loan mortgaged property on the basis that the contract for sale destroys the equity of redemption and deprives the borrowers of any statutory protection. Hence the Ministry of Justice Consultation. Note also the contents of the Secured Lending Reform Bill 2011 (summarised in the March 2011 Update)

HUMAN RIGHTS AND WARRANTS OF POSSESSION

It should be noted that a lender's application to the court for the issue of a warrant of possession is simply an administrative act to give effect to a judicial decision. The occupier's Human Rights are engaged at trial and no separate determination of those rights arises on the issue of the warrant: Southwark London Borough Council v St Brice [2002] 1 WLR 1537