JOAN ALEXANDRA HOBLYN AGAINST (1) BARCLAYS BANK PLC AND (2) THE ACCOUNTANT IN BANKRUPTCY
| EXTRA DIVISION, INNER HOUSE, COURT OF SESSION |
| | [2014] CSIH 52 |
| Lady Paton Lord Brodie Lady Clark of Calton | A433/12 OPINION OF THE COURT delivered by LADY PATON in the reclaiming motion by JOAN ALEXANDRA HOBLYN pursuer and reclaimer; against (First) BARCLAYS BANK PLC defenders and respondents and (Second) THE ACCOUNTANT IN BANKRUPTCY defenders _______________ |
Act: Party; pursuer and reclaimer
Alt: Hawkes; Aberdein Considine; first defenders and respondents
(non-participating party; second defender)
11 June 2014
Introduction
[1] In this action, the pursuer seeks reduction of a sheriff court decree authorising her eviction from her home at an address in Clarkston, Glasgow; suspension of any diligence following thereon; and interdict against Barclays Bank (the first defenders) from selling the property.
[2] On 12 September 2012, Lord Doherty granted the pursuer interim suspension and interim interdict. On 27 June 2013, Lord Drummond Young recalled those interim orders. On 18 September 2013 Lord Hodge inter alia refused to grant interim interdict against eviction. The pursuer marked a reclaiming motion against Lord Hodge’s interlocutor. However the pursuer was in fact evicted from her home two days later, on Friday 20 September 2013. This was a hugely traumatic experience. She required hospital treatment and other care. She is now living in alternative accommodation.
[3] Those significant developments have a major impact upon the viability (and usefulness to the pursuer) of the current court proceedings. Nevertheless at a continued procedural hearing on 13 May 2014, the pursuer explained to the court that she wished to insist upon her reclaiming motion.
History of events
[4] In 1978, the house in question was purchased as the family home for the pursuer and her husband, Mr Hoblyn. The title was taken in Mr Hoblyn’s name alone, not in joint names. A loan of £30,000 was secured over the house, and mortgage payments duly made. The house was occupied by the pursuer, Mr Hoblyn, and their children. Mr Hoblyn was working as a financial advisor and mortgage broker.
[5] In 1986, unknown to the pursuer, Mr Hoblyn obtained further loans and granted further securities over the house. In particular he granted a standard security to the Woolwich Equitable Building Society. The lender’s interest in that security was subsequently transferred to Barclays Bank.
[6] The marriage deteriorated. In 1994, Mr Hoblyn left home. In 2004, a divorce took place. Mr Hoblyn had ceased to make any mortgage payments as from 1 January 2002 (condescendence 3 in the pursuer’s summons for reduction). The pursuer made payments towards the loan, estimated to amount to at least £40,000. The Department of Work and Pensions also made some contributions. However arrears accrued. In 2010, Barclays Bank raised an action in the sheriff court against Mr Hoblyn in order to recover possession of the subjects. Mr Hoblyn (who had become bankrupt in June 2004) did not defend the case. Some delay occurred as a result of the Supreme Court decision in Royal Bank of Scotland v Wilson 2010 SC (UKSC) 66, as Barclays Bank had to rectify the procedure which they had adopted. In so doing, they served a calling-up notice on the pursuer on 31 January 2012. They obtained a decree by default against Mr Hoblyn in Paisley Sheriff Court on 25 June 2012, with a warrant to sell or repossess. The pursuer avers in condescendence 9 of her summons:
“ … This decree has been solely served on Mr M A Hoblyn, my ex-husband, as sole defender, although in any previous matters regarding monies so called due to Barclays Bank (originally Woolwich Building Society) I have been included as second defender because of my rights under the Matrimonial Homes Act (Scotland) 1981 [sic]. I certainly feel that this has been done deliberately (albeit illegally) to exclude me from this action – an action that has been ‘live’ for 12 years long within the courts, whilst I try to achieve justice for a situation which I have always maintained to be a criminal matter rather than a civil matter, since my ex-husband, together with other parties including his friendly lawyer and business partners, is a conman and has committed fraud over many years, including mortgage fraud.”
Eviction proceedings were arranged for 13 September 2012. However before those proceedings could take place, the pursuer raised the present action in the Court of Session, seeking suspension, interdict, and reduction of the sheriff court decree. On 12 September 2012 the pursuer obtained interim suspension of any diligence following upon the sheriff court decree, and interim interdict against Barclays Bank from selling her home. As is noted in paragraph [6] of Lord Drummond Young’s opinion:
“Thereafter [Barclays Bank] 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] On 3 May 2013, Lord Drummond Young heard submissions from Barclays Bank and from the pursuer in person. He made avizandum. On 27 June 2013 he issued a written judgment and recalled the interim orders. In his judgment, the Lord Ordinary detailed the calling-up and court procedures (paragraphs [2] to [5]). In particular he explained why the pursuer was not an “entitled resident” within section 24C of the Conveyancing and Feudal Reform (Scotland) Act 1970 as amended, and concluded at the end of paragraph [5]:
“Consequently the pursuer had no right to oppose the grant of decree for possession of the subjects in the proceedings brought by [Barclays Bank] against Mr Hoblyn.”
The Lord Ordinary set out the submissions in paragraphs [7] to [9] of his opinion. He noted the pursuer’s submissions relating to:
- Bad faith on the part of Mr Hoblyn, particularly in his financial dealings (of which she had been unaware), his arranging his sequestration in order to avoid debts, and his leaving her vulnerable as an occupant of the house.
- Questions about certain procedures adopted in that sequestration.
- The existence of certain other court proceedings.
- The financial contribution which she had made to repay Barclays Bank’s loan (at least £40,000).
- The fact that she was currently unable to work as a result of a serious accident some years earlier.
- The hardship and trauma which she would suffer if removed from her 8-roomed house, which she had occupied for many years, and if she were to be made homeless.
[8] The Lord Ordinary finally concluded:
“[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.”
[9] Barclays Bank then sought to evict the pursuer. She responded by applying to the Court of Session for interim interdict and for recovery of certain documents. On 23 August 2013, the case came before Lord Hodge. In his Note dated 3 January 2014, Lord Hodge recorded the pursuer’s submissions as follows:
“7. At the hearing on 23 August 2013, Mrs Hoblyn asserted that her former husband had been guilty of mortgage fraud as he had obtained the three advances as home improvement loans when he had ceased to live in the former matrimonial home. She submitted that the creditors of her former husband had been paid off in the sequestration except for the secured debts of the bank and The Royal Bank of Scotland plc. She described her former husband as a ‘con man’ who had refused to assist her to ascertain the extent of his borrowings and the circumstances in which the secured lending had occurred. She asserted that she had paid £10,000 towards the interest due on her former husband’s borrowings in the last ten years. She explained that she no longer wished to live in the house, which she could not maintain, but that she did not want to be homeless.”
[10] The Lord Ordinary carefully reviewed the pleadings, Lord Drummond Young’s judgment, and the oral submissions. He concluded that he must refuse her motions. On 6 September 2013 the pursuer enrolled a motion for leave to reclaim against his decision of 23 August 2013. The pursuer also enrolled further motions for recovery of documents and for interim interdict, as the bank had served a fresh notice of ejection which it intended to enforce on 20 September 2013. On 18 September 2013, having heard submissions, Lord Hodge inter alia refused the motion for interim interdict as there had been no relevant change of circumstances since his decision of 23 August 2013. He stated that the pursuer was no longer a non-entitled spouse under the 1981 Act and that, as Lord Drummond Young had held, she was not an entitled resident under the 1970 Act. There was no bar to Barclays Bank’s repossession of the security subjects. Lord Hodge refused the application to recover documents for the reasons given in his Note, and also refused the pursuer leave to reclaim against an earlier refusal. As he had concerns for the pursuer’s wellbeing in the event of an eviction being carried out, he arranged for social work involvement.
[11] The pursuer reclaimed against Lord Hodge’s interlocutor of 18 September 2013 insofar as he refused to grant interim interdict against eviction proceedings. At a procedural hearing before me on 9 January 2014, the pursuer stated that she had in fact been evicted, and had suffered major upset and trauma. Her home had been repossessed by Barclays Bank and was for sale. The pursuer gave the court details of her new address in Giffnock. As is noted in the minute of proceedings:
“The court advised Mrs Hoblyn that, as the property is repossessed and marketed, any review of Lord Hodge’s decision appears to be academic and aspects of the history of the case which she wishes to explore may not be addressed by this reclaiming motion. Further she was strongly advised to seek legal advice.”
Nevertheless the pursuer was adamant that she wished to continue with the reclaiming motion. The procedural time-table was varied such that the pursuer was to lodge grounds of appeal by 23 January 2014, Barclays Bank was to lodge answers by 7 February 2014, the pursuer was to lodge any appendices by 23 February 2014, and both parties were to lodge notes of argument and estimates of the length of any hearing also by 23 February 2014. The procedural hearing was continued to 6 March 2014.
[12] The pursuer duly lodged grounds of appeal dated 23 January 2014. Barclays Bank lodged answers on 6 February 2014. On 10 February 2014, the pursuer left the UK to visit her daughter in Australia. Before leaving, she telephoned the General Department and left a message on their answering machine explaining her current circumstances and requesting advice in view of the time-table. She received no reply and left the country without her court file. She subsequently faxed the Court of Session a letter dated 23 February 2014 explaining the circumstances, and advising that she would return to the UK on 12 April 2014.
[13] On 20 February 2014, Barclays Bank enrolled a motion “to refuse the reclaiming motion at the continued procedural hearing on [6] March 2014”, on the ground that “the reclaiming motion has been rendered wholly academic by a change in circumstances and its determination would therefore be inappropriate and unnecessary”.
[14] At the procedural hearing on 6 March 2014, the pursuer did not attend, being in Australia at the time. Lord Brodie continued the bank’s motions and the procedural hearing to be heard before three judges on 13 May 2014.
[15] The pursuer returned to the UK on 12 April 2014. She did not lodge a note of argument or any appendices.
[16] On 1 May 2014, Barclays Bank enrolled a motion seeking to have the pursuer lodge caution of £10,000 in the event that the reclaiming motion were to proceed. The bank explained the reason for the motion as follows:
“The economic circumstances of the parties have now changed, and the respondents are now unable to recover their costs by adding them to the mortgage balance, given that the property has sold and the account redeemed.
The respondents possess a reasonable belief that the reclaimer has limited financial resources to meet any award of expenses that might be made against her. Legal aid has been refused. In addition, the respondents should not be put to the expense of resisting a reclaiming motion with no reasonable prospects of success. Lord Drummond Young observed in his opinion dated 27 June 2013 that the reclaimer has no prima facie case. In line with the approach taken in McTear’s Executors v Imperial Tobacco Ltd 1997 SLT 530, the respondents are entitled to be protected against the necessity of incurring heavy expenses where the nature of the litigation is such that the interests of justice require such protection.”
The procedural hearing on 13 May 2014
[17] At the procedural hearing on 13 May 2014 (Lady Paton, Lord Brodie, and Lady Clark) the pursuer offered apologies for her non-appearance on 6 March 2014, explaining that the date of her visit to Australia had to some extent been dictated by family circumstances outwith her control.
[18] Submissions for Barclays Bank: On behalf of Barclays Bank, Mr Hawkes submitted first, that the pursuer had failed to adhere to the time-table issued by the court. While an explanation had been given, the pursuer had returned from Australia in mid-April 2004 and yet had not rectified matters. Accordingly in terms of rule of court 38.15(2)(b), the reclaiming motion should be refused.
[19] The second motion made by Mr Hawkes concerned the nature of the reclaiming motion. As was clear from the pursuer’s grounds of appeal, she sought to challenge Lord Drummond Young’s decision of 27 June 2013 (which she was entitled to do: McCue v Scottish Daily Record & Sunday Mail Ltd 1998 SLT 983). Lord Drummond Young had concluded, after a lengthy hearing, that the pursuer had no prima facie case: paragraph [12] of his judgment. In August and September 2013, the pursuer’s case was examined in detail by another Lord Ordinary, Lord Hodge, who also found no stateable case for the pursuer. The property had now been repossessed and in fact sold. The proceeds had been remitted to Mr Hoblyn’s trustee in bankruptcy. Matters had therefore reached a stage where this reclaiming motion, which had previously placed under review events which had given rise to eviction proceedings, had become academic. In issues of private rights, such a situation entitled the court to strike out the appeal (Sun Life Assurance Co of Canada v Jervis [1944] AC 111, Viscount Simon LC at pages 113-114; Ainsbury v Millington (Note) [1987] 1 WLR 379, Lord Bridge of Harwich at page 381). Matters might be different in questions of public law, where the court retained the power to hear submissions on an issue of general importance (Napier v The Scottish Ministers, 10 February 2005, P739/01 paragraphs [4] and [7]; R v Secretary of State for the Home Department ex parte Salem [1999] 1 AC 450 at page 457). But that was the exception, not the rule. Accordingly the bank’s motion was that there was no point in allowing the reclaiming motion to proceed. Even if some further document (such as a note of argument) were to be lodged, the pursuer’s case would not be any more stateable at a summar roll hearing. The pursuer had concerns about what had happened in the past, leading to her loss of the family home. But while she might, conceivably, have some form of claim against her husband, that did not affect the bank’s entitlement to enforce the security, or Lord Drummond Young’s decision to recall the interim orders, or Lord Hodge’s decision to refuse to grant interim interdict against eviction. There were no remedies available in the current proceedings which would be of any use to the pursuer.
[20] Submissions for the pursuer: The pursuer stated that the sale of her house had been bull-dozed through in a wholly inhumane way. Since 12 September 2013, there had been 16 interlocutors and several judges. The pursuer had been given the impression by a QC that taking the case into the Inner House would stop the wheels running: but that had not happened. The case had come to court on Wednesday 18 September 2013, the court had refused to grant the orders she sought (including interim interdict), and she had been thrown out of her house at 10 am on Friday 20 September 2013. She had been in such a bad way that a social worker was involved, and she had been seen by psychiatrists. She had been forced to put many of her belongings into storage.
[21] The pursuer submitted that the house had not been lawfully sold. There were too many open questions. There were certain factors which had never been taken into account – for example, the fact that Mr Hoblyn obtained and secured additional loans without her knowledge; the fact that he made himself bankrupt, giving rise to doubts about “the validity, legality, legitimacy, [and] competency of his sequestration” (condescendence 3 of the pursuer’s summons for reduction); the terms of the divorce settlement; the order of ranking of creditors (including an alteration to the ranking in 1989) and the position of the Royal Bank of Scotland. Barclays Bank were unaware of most of the background. The monies due to them had been granted unlawfully to Mr Hoblyn.
[22] The pursuer confirmed that, if necessary, she sought further time within which to lodge her note of argument and her appendices (if that was a prerequisite of her continuing with her appeal). When the court suggested that she would benefit from legal advice, the pursuer stated that Lord Doherty and others had also made that recommendation; that she had had Legal Aid at one stage, but ultimately it had been withdrawn; and that she did not see why she had to pay for justice.
Discussion and decision
[23] In the introductory paragraph of her grounds of appeal, the pursuer challenges Lord Drummond Young’s decision of 27 June 2013. Although the reclaiming motion was marked against Lord Hodge’s interlocutor of 18 September 2013, Mr Hawkes very properly took no point about this, citing McCue v Scottish Daily Record & Sunday Mail Ltd 1998 SLT 983.
[24] The grounds of appeal are too lengthy to be replicated here in full. What follows is a summary.
Ground 1: The monies being reclaimed by Barclays Bank constituted monies illegally and irresponsibly lent to Mr Hoblyn as home improvement loans without the pursuer’s knowledge or consent, when Mr Hoblyn was not living in the family home.
Ground 2: In 2002 Mr Hoblyn managed to acquire a further mortgage from the Bank of Scotland at a time when he was already in default with existing mortgage payments and the home was in a state of repossession in Paisley Sheriff Court. That amounted to mortgage fraud.
Ground 3: In the divorce settlement in 2005 Mr Hoblyn authorised any “rump” of his bankruptcy estate remaining after all lawfully adjudicated claims to be made over to the pursuer. There were only two secured creditors, namely Barclays Bank and the Royal Bank of Scotland. The pursuer questioned whether their claims had been “lawfully adjudicated”, as she had been completely unaware of the level of debt secured over the matrimonial home.
Ground 4: The original standard security over the property referred to Mr Hoblyn and his business partner. There was also a third partner in the business. The pursuer questioned where the partners featured in the indebtedness. Furthermore a ranking agreement dated 1989 altered the Royal Bank of Scotland’s ranking from second charge to first charge: but the Royal Bank had never foreclosed.
Ground 5: The pursuer questioned why the sale of the house was being instigated by Barclays Bank rather than the Royal Bank of Scotland. There had been a lack of information from those acting for Barclays Bank (including information that they might have been willing to enter into negotiations with her, as set out in paragraph [12] of Lord Drummond Young’s opinion).
Ground 6: Because of all those unanswered questions, and because she had contributed more than £40,000 towards the mortgage, the pursuer was entitled to the recovery of documents which she had sought.
Ground 7: The pursuer challenged counsel’s submission made on 9 January 2014 that the court action was now merely “academic”. As at that date, the house had not been sold, but was being advertised for sale.
Ground 8: Mr Hoblyn had behaved as a con-man/fraudster. During the time when he and the pursuer remained married, the pursuer had certain rights (for example under the Matrimonial Homes (Scotland) Act 1981). The pursuer also had human rights.
In the final paragraph of the grounds of appeal, the pursuer records that Lord Hodge’s Note dated 3 January 2014 contained inaccuracies.
[25] The current court action seeks reduction of the sheriff court decree authorising the pursuer’s eviction from her home; suspension of any diligence following thereon; and interdict against Barclays Bank from selling the property. Reasoned decisions have been given by Lord Drummond Young and Lord Hodge. The grounds of appeal lodged by the pursuer do not disclose legally relevant criticisms of those decisions. Moreover the house has now been sold and the title transferred to a third party. Thus the point and focus of the current court action has ceased to exist. In all the circumstances we are of the opinion that it would be futile to permit further procedure in the current court action. A hearing on the summar roll would be pointless. Although the pursuer criticised counsel’s submission that the current proceedings have become “academic”, we agree with that submission. Any remedy possibly available to the pursuer must be sought in another action.
[26] As noted in paragraphs [11] to [15] above, the pursuer has failed to comply with the time-table set down by the court on 9 January 2014. The pursuer explained the circumstances of that failure, and apologised. We accept both the explanation and the apology. However we also accept counsel’s submission that, as a consequence of the pursuer’s failure to comply with the time-table, this court has power in terms of rule of court 38.15 to dismiss the action at this stage. Had we considered that there was any possibility that the pursuer could achieve a stateable case and/or a remedy in these proceedings, we would have varied the time-table and permitted the pursuer further time within which to lodge her note of argument and her appendix or appendices. However we do not consider that any such possibility exists.
[27] In the result therefore we have decided to refuse the reclaiming motion at this stage, in terms of the power available to the court under rule of court 38.15(2)(b), and also applying the guidance given in Sun Life Assurance Co of Canada v Jervis [1944] AC 111, Viscount Simon LC at pages 113-114; and Ainsbury v Millington (Note) [1987] 1 WLR 379, Lord Bridge of Harwich at page 381). It is therefore unnecessary for this court to consider the bank’s motion that the pursuer should lodge caution of £10,000. We shall continue the question of expenses to enable parties to address us on that matter.