Pursuer: Party

First defenders: Hawkes; BBM Solicitors

27 June 2013

[1] The pursuer's former husband, Michael Hoblyn, purchased subjects in Clarkston in 1978. Although the subjects served as the matrimonial home for the pursuer, Mr Hoblyn and their family, title was taken in the sole name of Mr Hoblyn. In September 1986 Mr Hoblyn granted a standard security in favour of the Woolwich Equitable Building Society, to provide security for a loan in his favour. The creditor's interest in that security has since been transferred to the first defenders. The pursuer and her former husband separated in 1994 and were divorced in about 2004. Since the separation Mr Hoblyn has not resided in the house, which has been occupied by the pursuer, living with her children or on her own. Mr Hoblyn nevertheless remained the sole proprietor. He was subsequently sequestrated.

[2] I was informed that Mr Hoblyn's loan account with the first defenders has been in arrears for much of the past 10 years. Payments towards the account have been made by the Department of Work and Pensions, but these have fallen short of the monthly liability on the loan and arrears have continued to accrue. In 2010 the first defenders raised proceedings against Mr Hoblyn to recover possession of the subjects. Decree in absence was granted; Mr Hoblyn made it clear to the present first defenders' agents that he had no objection to the subjects' being repossessed and sold. Following his sequestration the Accountant in Bankruptcy, acting as his trustee, also raised an action against the pursuer for her removal from the subjects so that the equity in the subjects might be realized in order to meet the claims of creditors. Following the decree obtained in the action at the instance of the first defenders, ejection was arranged for 13 August 2010. The pursuer's MSP then made certain representations, and that date was deferred for 12 weeks to enable the pursuer to find alternative accommodation. Decree was also granted in the action at the instance of the Accountant in Bankruptcy. The present pursuer appealed against that decision to the Sheriff Principal. A further ejection was fixed by the present first defenders for 19 November 2010. Shortly before that date the Sheriff Principal had superseded extract in the action at the instance of the Accountant in Bankruptcy for seven months. The present first defenders nevertheless wished to proceed to ejection, but immediately before the date fixed they received a summons at the instance of the present pursuer seeking reduction of their decree against Mr Hoblyn; interim interdict had been granted against their taking steps to remove the pursuer from the subjects.

[3] The legal position was then complicated by the decision of the United Kingdom Supreme Court in Royal Bank of Scotland PLC v Wilson, [2010] UKSC 50; 2010 SC (UKSC) 66. The first defenders' action to recover possession had proceeded on the basis of a notice of default, the normal procedure used to enforce standard securities. In Royal Bank of Scotland PLC v Wilson, however, it was held that this was not competent where the debtor was in arrears, and that in such a case a calling up notice must be used instead. It is well known that this decision caused difficulties in conveyancing practice, and the problems that faced the present first defenders is an example of these. The first defenders had not served a calling up notice, and they required now to rectify this. A calling up notice was therefore served on the present pursuer on 31 January 2012. This was followed by proceedings in Paisley Sheriff Court against Mr Hoblyn for declarator that he was in default within the meaning of standard condition 9(1)(a) of Schedule 3 to the Conveyancing and Feudal Reform (Scotland) Act 1970, for warrant to sell or take possession of the subjects in terms of section 24(1B) of the 1970 Act, and for removing from the subjects. Decree in absence was granted on 25 June 2012.

[4] The present pursuer was of course in occupation of the subjects, and she received an occupier notice in terms of section 19A(1) of the 1970 Act when the calling up notice was served. That notice informed the pursuer as occupier of the subjects that the notice of calling up had been served on Mr Hoblyn. It was sent by recorded delivery post, and the certification of service was available in process. When the proceedings were raised in Paisley Sheriff Court, the pursuer also received two further occupier notices. Both of these were sent by recorded delivery post, and once again the certification of service was available in process. The first of these notices was to fulfil the requirement set out in section 24(3)(b) of the 1970 Act, as amended by the Home Owner and Debtor Protection (Scotland) Act 2010; that subsection requires a creditor who applies to the court for remedies on default in accordance with section 24(1B) to serve such a notice on any occupier of the security subjects. The form of notice is specified in Form F of Schedule 6 to the 1970 Act, as amended by the Home Owner and Debtor Protection (Scotland) Act 2010 (Consequential Provisions) Order 2010 (SSI 2010 No 318). The notice served conformed to that form. The second notice was served in accordance with section 5A(2)(b) of the Heritable Securities (Scotland) Act 1894 as amended by the Home Owner and Debtor Protection (Scotland) Act 2010. The form of notice is specified in Form 2 in Part 2 of the Schedule to the Mortgage Rights (Scotland) Act 2001, that form having been amended by the Home Owner and Debtor Protection (Scotland) Act 2010 (Consequential Provisions) Order 2010. The notice served on the present pursuer conformed to that form. Those two notices contain a detailed explanation of the court proceedings for recovery of possession of the property, and indicate the general nature of the rights that an occupier may have in that property. Those rights have been significantly extended by the 2010 Act, which was designed to provide greater protection to occupiers of residential property in the event of proceedings for repossession or sale of the property. In the opinions of the United Kingdom Supreme Court in Royal Bank of Scotland PLC v Wilson considerable importance is placed on the protection of occupiers of residential property. Nevertheless no reference is made to the 2010 Act, which had been passed some time previously.

[5] Thus the present pursuer was given detailed notice of the proceedings to recover possession of the subjects. Under provisions introduced by the Home Owner and Debtor Protection (Scotland) Act 2010 certain occupiers of property, known as "entitled residents", may apply to the court for a range of remedies in the event that proceedings are brought to recover possession of the property where they are resident; the remedies available to an entitled resident are set out in section 24B of the Conveyancing and Feudal Reform (Scotland) Act, as amended. The expression "entitled resident" is defined in section 24C(1) of the 1970 Act, as amended. So far as it has a bearing on the present case, this provides as follows:

"For the purposes of sections 24B, 24C, and 24E, an entitled resident is a person whose sole or main residence is the security subjects (in whole or in part) and who is -

(a) the proprietor of the security subjects (where the proprietor is not the debtor in the standard security);

(b) the non-entitled spouse of the debtor or the proprietor of security subjects which are (in whole or in part) a matrimonial home;

(c) the non-entitled civil partner of the debtor or the proprietor of security subjects which are (in whole or in part) a family home;

(d) a person living together with the debtor or the proprietor as husband and wife;

(e) a person living together with the debtor or the proprietor in a relationship which has the characteristics of the relationship between civil partners;

(f) a person who lives together with the debtor or the proprietor in a relationship described in paragraph (d) or (e) if-

(i) the security subjects (in whole or in part) are not the sole or main residence of the debtor or the proprietor;

(ii) the person lived together with the debtor or the proprietor throughout the period of 6 months ending with the date on which the security subjects ceased to be the sole or main residence of the debtor or the proprietor; and

(iii) the security subjects (in whole or in part) are the sole or main residence of a child aged under 16 who is a child of both parties in that relationship".

It is clear that the present pursuer is not an entitled resident. She is not the proprietor of the security subjects; she is not the non-entitled spouse or civil partner of the debtor or the proprietor of security subjects which are a matrimonial or family home; she did not live together with the debtor, Mr Hoblyn, as husband and wife or civil partners within the meaning of paragraphs (d) and (e); and, in relation to paragraph (f) of section 24C(1), the security subjects are not the sole or main residence of any child aged under 16 who is a child of the pursuer and her former husband. Consequently the pursuer had no right to oppose the grant of decree for possession of the subjects in the proceedings brought by the present first defenders against Mr Hoblyn.

[6] In the proceedings in Paisley Sheriff Court for possession of the security subjects, decree was granted on 25 June 2012. In terms of the decree, the debtor, Mr Hoblyn, was found to be in default in terms of standard condition 9(1)(a) of Schedule 3 to the 1970 Act, and the present first defenders were authorized to sell or enter into possession of the subjects. Warrant was granted for summary ejection from the subjects. Ejection was fixed for 13 September 2012. Before that could take place, the present summons was presented to the court. Its conclusions are for reduction of the decree pronounced at Paisley Sheriff Court on 25 June 2012, for suspension and interim suspension of the notice of eviction following upon that decree, and for interdict and interim interdict against the first defenders' selling the subjects. On 12 September 2012 interim interdict was granted against the first defenders' selling the subjects and the notice of eviction was suspended ad interim. Thereafter the first defenders enrolled a motion for recall of the interim suspension and interim interdict. This was opposed by the pursuer. The motion was continued on a number of occasions to enable the pursuer to obtain legal representation, but attempts to obtain representation were unsuccessful, and the motion was argued on 3 May 2013.

[7] For the first defenders, it was submitted that they had complied with all the statutory requirements for exercise of the right under section 24(1B) of the Conveyancing and Feudal Reform (Scotland) Act 1970. The debtor in the standard security, Mr Hoblyn, was in default under standard condition 9(1). Warrant had been granted by the sheriff under section 24(1B). That warrant entitled the security holder to sell the subjects, and the decree also ordained any other persons occupying the subjects to vacate them and granted warrant for summary ejection. The pursuer had received all of the three notices to which she was entitled as an occupier of the subjects. The pursuer suggested in her pleadings that she should have been a defender to the proceedings for ejection. Counsel for the first defenders submitted that there was no requirement to that effect. He accepted that as an occupier she might have attempted to enter the process as a minuter, but he submitted that if she had done so the fact that she was not an entitled proprietor would have made it difficult for the sheriff to grant her any remedy.

[8] Counsel for the first defenders did not dispute that the pursuer had title and interest to raise the present proceedings, seeking reduction of the Sheriff Court decree, even though she had not been a party to that action. For reduction to be granted in such a case, it was not necessary to establish exceptional circumstances; instead, the court should consider the whole circumstances bearing upon the justice of the case: Royal Bank of Scotland v Matheson, [2012] CSIH 64, at paragraphs [34]-[37]. Counsel submitted, however, that in the cases dealing with whether decree in absence should be reduced the person seeking reduction was the party against whom decree was taken; different considerations would apply to a person, such as the present pursuer, who had not been a party and could not therefore have defended the action. On that basis, counsel submitted that when a third party challenges decree it should not matter whether the decree in question was in absence or in foro, as the relevant considerations will be the same. Whatever the test was, however, counsel submitted that the pursuer had not set out any prima facie case in the present action. The ground of challenge appeared to be that the correct statutory procedure had not been followed, but that was not established by the documentation relating to the sheriff court process.

[9] The pursuer makes averments about her involvement with the repossession proceedings. The original action for repossession, she states, was intimated to her by a notice dated 2 August 2010; this gave her 11 days to empty the house, which is a substantial size, of the possessions that she had accumulated during the 40 years since her marriage. On that occasion ejection was postponed, although the episode had caused her serious psychological and emotional distress. The pursuer also makes averments about the actings of her former husband. He had arranged for his own sequestration to avoid the debts that he had incurred, and this had rendered her occupation of the house vulnerable. The averments on this point were fairly detailed. It is unnecessary to repeat them for present purposes; it is sufficient to record that the pursuer challenges the good faith of her former husband's sequestration. The pursuer further makes averments regarding the hardship that will be caused her if she is removed from the home that she has occupied for many years. She further complains about the adequacy of the notification that she was given in relation to the attempts to remove her from the subjects.

[10] At the hearing of the first defenders' motion for recall of the interim suspension and interim interdict, the petitioner referred in some detail to the events surrounding the breakdown of her marriage, her former husband having left the matrimonial home in 1994. She further queried the procedures that have been followed in her former husband's sequestration. She submitted that he had been in bad faith in a substantial number of his financial dealings, and that she had been quite unaware of what he was doing. The pursuer also referred to previous proceedings in Paisley Sheriff Court in 2002 and subsequently in Hamilton Sheriff Court, but it did not appear to me that these were of any direct relevance to the present proceedings.

[11] The pursuer stated that she had made substantial contributions towards payment of sums due to the present first defenders, but because of a serious accident 11 years ago she was now unable to work; this had made it impossible for her to pay the whole of the sums due in respect of the loan. She thought that she had paid at least £40,000 to the first defenders. She emphasized that if she were ejected from the house she would be homeless. She spoke with great feeling on this subject, stating that she was entitled to a roof over her head and should not be compelled to resort to accommodation for the homeless. She would be required to move out of an eight-roomed house, and council housing was difficult to find in East Renfrewshire.

[12] I have great sympathy for the pursuer's predicament. I must nevertheless come to the conclusion that neither in her pleadings nor in her submissions has she stated anything approaching a prima facie case. It is clear on the basis of the productions that in the repossession proceedings the first defenders have done everything required of them by way of service on the pursuer. All of the formalities required in that action have been completed. The fundamental problem for the pursuer is that the house is subject to a standard security in respect of a loan granted to her former husband. The payments in respect of the loan have not all been paid, and arrears have accumulated. The full calling up procedure, as required by sections 19 and 19A the Conveyancing and Feudal Reform (Scotland) Act 1970, has been followed. That is the standard method, prescribed by statute, by which a secured creditor can enforce payment of sums due under a secured loan. In these circumstances the first defenders are entitled to enforce the standard security, if necessary by repossessing the house and selling it. The fundamental objectives of the law of heritable security would be frustrated if that course were not available. I am accordingly compelled to recall the interim suspension and interim interdict that have been pronounced in this action in respect of the decree in Paisley Sheriff Court and the potential sale of the property.

[13] The pursuer emphasized that the non-payment was the fault of her former husband, who had left her without funds following the breakup of their marriage and had then arranged to have himself sequestrated. While it is easy to sympathize with the pursuer's predicament, as a matter of law it does not matter whose fault it is that the sums due to a secured creditor have not been paid; it is the mere fact of non-payment that gives rise to the creditor's remedies. The pursuer further made reference to a number of deficiencies that she said had occurred in her former husband's sequestration proceedings. As with responsibility for non-payment, that is irrelevant to the remedy that the first defenders seek in the repossession proceedings. Sequestration is a means whereby creditors seek to obtain payment of debts due to them, so far as the debtor has the resources to do so, but it is quite independent of proceedings for the calling up of a standard security and repossession of property. The sequestration operates for the benefit of creditors generally; the standard security and the attendant procedures, by contrast, operate for the benefit of the secured creditor alone. There are connections, in that the secured creditor's right to rank in the sequestration is affected by its security, but the existence of sequestration proceedings does not in any way affect the right that the secured creditor has to enforce its security. Moreover, the present proceedings are concerned only with the repossession proceedings under the standard security; it has nothing to do with the sequestration. For that reason any deficiencies in the sequestration are irrelevant to this action.

[14] I entirely accept that the pursuer is likely to suffer hardship as a result of my recalling the interim suspension and interim interdict. Nevertheless, in view of the first defenders' statutory rights, there is nothing that I can do to alleviate this. I likewise accept that the pursuer feels an intense sense of injustice. The fundamental problem, however, is that as a result of various events, including divorce and sequestration, the pursuer's former husband has left her with little in the way of resources to service the loan secured over the property. If the sums due under the loan cannot be paid, the first defenders as security holders are entitled to enforce their statutory rights.

[15] In conclusion, however, I should mention one matter that arose during the course of the hearing. Counsel for the first defenders indicated that the arrears due in respect of the loan appear to be relatively modest, or at least appeared to be modest at the time when the calling up notice was served on 12 December 2011. He stated that the first defenders wanted their debt to be paid, and if that were possible without selling the property they would be quite content with the result. Counsel indicated that the first defenders could write to the solicitor who had acted for the pursuer in certain respects to state the current level of arrears, with a view to trying to pay off the arrears. Obviously I can do no more than indicate this possibility. Nevertheless, I have no alternative but to recall the interim suspension and interim interdict pronounced on 12 September 2012.