Court Ref: A59/12

Note by


In the cause

ACCORD MORTGAGES LIMITED, incorporated under the Companies Acts (registered number 02139881) with their Registered Office at 1 Filey Street, Bradford



STEPHEN EDWARDS, as representative of the late MISS DONNA EDWARDS, formerly residing at 40 Muckletts Crescent, Musselburgh EH21 6SS ("the deceased")



Haddington, 25 June 2012

Act: Meakin


This is an action in which the pursuers seek to enforce their rights under a standard security granted by the deceased over subjects at 40 Mucklets Crescent, Musselburgh ("the subjects"), following the service of calling up notices and the expiry of the period of notice. As such, the pursuers' rights and remedies are regulated by the Conveyancing and Feudal Reform (Scotland) Act 1970 ("the Act").


The remedy sought by the pursuers is a declarator (i) that the defender is in default within the meaning of standard condition 9(1)(a) of schedule 3 to the Act; (ii) that the subjects are not used to any extent for residential purposes within the meaning of section 20(2A) of the Act; and (iii) that the pursuers have the right to sell the subjects and to enter into possession and exercise all other rights and powers under the standard security, in terms of the Act.


The pursuers aver that the deceased's estate has been sequestrated. The subjects are not presently occupied by any person.


At the very outset of the action, a question has arisen as to whether the action should proceed as an ordinary action or by way of summary application; and the related question as to whether or not the pursuers are entitled to seek declarator only or whether they are bound to proceed under section 24 of the Act, with a corresponding requirement to show that they have undertaken the pre-action requirements.


The action called before me in chambers on 15 June 2012 to address these issues prior to the issue of a warrant. Mr Meakin attended for the pursuers. In a well-presented and carefully structured submission, he drew my attention to the relevant statutory provisions. First, he pointed to the terms of section 20 and in particular section 20(2A) of the Act. Section 20 deals with the exercise of a creditor's rights where a debtor is in default within the meaning of standard condition 9(1)(a) (failure to comply with a calling-up notice. Subsection (2) confers a right of sale. However, subsection (2A) provides that "where the standard security is over land...used to any extent for residential purposes", the creditor is entitled to exercise his rights only where either the conditions specified in section 23A are satisfied, or with the warrant of the court granted under section 24. Section 23A deals with voluntary surrender and has no application here. Section 24(1B) applies to a standard security over land used to any extent for residential purposes. Before making an application under section 24 in relation to such a standard security, the creditor must, by virtue of section 24(1C), comply with the pre-action requirements imposed by section 24A. Any application under section 24(1B) must be made by summary application (section 24(1D)). In considering such an application, the court may not grant decree unless it is satisfied both that the pre-action requirements have been complied with and that it is reasonable to do so (section 24(5). Finally, the pre-action requirements specified in section 24A require the creditor to provide the debtor with certain prescribed information and to take certain other steps with regard to the debtor.


Against this statutory framework, Mr Meakin submitted that the means by which the pursuers must enforce their remedies hinged upon the meaning of the phrase "used to any extent for residential purposes". Whatever the situation might be in other cases where a debtor had died and the property might be occupied by a person entitled to succeed to his or her estate, in the present case the fact of the matter was that the subjects were not occupied by any person. It therefore could not be said that they were being used by anyone for any purpose, let alone that they were being used to any extent for residential purposes. The point of time at which the use must be considered was the time of enforcement, not any earlier time. It was not disputed that in the present case the subjects had been used for residential purposes and doubtless would be so used in the future but they were not presently being used for that purpose. Had Parliament intended the provisions of sections 20(2A), 24(1B) and 24(A) to have applied to all houses, the provisions would have been worded differently. Further, when one looked at the purpose of the provisions referred to, that was to give the debtor information and assistance. Since there was no living debtor in the present case, nor anyone using the house for residential purposes, it would be impossible for the pursuers to comply with the pre-action requirements. Further, the court had no power to dispense with those requirements. I should therefore proceed upon the basis that section 20(2A) did not apply, with the result that the action should proceed as an ordinary action with no pre-action requirement.


I was persuaded by Mr Meakin's submission. Section 20(1) provides that where a debtor is in default, the creditor may exercise such of his rights as he considers appropriate. Subsection (2A) then restricts that right by requiring the creditor to have resort to section 24 (and thereby be subject to the pre-action requirements) where the standard security is over land used to any extent for residential purposes. Two things flow from those provisions, in my view. First, the determining factor in deciding how the creditor must exercise his remedies is the use to which the subjects of the standard security are being put; and, second, as a mater of plain English, the point in time at which the use is considered is that at which the creditor wishes to exercise his remedies. I also noted that the purpose of the legislation, which I take to be to provide information and assistance to persons with a view to their not being evicted unreasonably from their homes, would be thwarted if any other construction were adopted. The use of land may change over time. It makes no sense that the use of the land at some earlier stage, such as the date of granting of the standard security, be the determining factor. That might result either in the creditor's rights being unreasonably restricted where property which was previously used for residential purposes was now used exclusively (say) as a shop; or in a debtor not receiving the protection which Parliament had intended where subjects which had once been commercial were now used residentially.


Having determined that the legislation enjoins one to consider the use presently being made of the subjects at the time of raising of the action, then, it seems correct that (at least on the pursuers' averments), it cannot be said that the subjects are presently being used for any purpose, let alone to any extent for residential purposes. They are empty. No-one resides there. There is no person requiring the protection of the pre-action requirements.


Accordingly, I accepted the submission that, as pled, section 20(2A) does not apply and that the pursuers are entitled to proceed by way of an action of declarator only and are not obliged to have recourse to section 24. It follows that the action must proceed as an ordinary action and that there is no requirement to comply with the pre-action requirements. The impossibility of complying with them therefore does not arise as an issue in this case.


As Mr Meakin acknowledged, problems may in theory arise, in this or other cases, for example if it turned out that contrary to what is averred, the subjects were occupied. A creditor is not necessarily in a position to know to what use subjects are being put. Moreover, there may be cases where the debtor has died, as here but the subjects are being used for residential purposes. How, in those circumstances, is a creditor to comply with the pre-action requirements? These difficulties arise from drafting infelicities in the Act, but it is not necessary to address them here, beyond commenting that if it emerges that the subjects are currently being used for residential purposes, the action will turn out to have been incompetent. That is a risk the pursuers will simply have to run.