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Horsham Properties Group Ltd v Clark & Ors [electronic resource]

Language: English Publication details: 2008Subject(s): Online resources: Summary: [2008] EWHC 2327 (Ch), 8 October 2008. The court found that the Law of Property Act 1925 S101 did not impact the rights of mortgagors under the European Convention on Human Rights 1950 by permitting mortgagees to sell properties prior to obtaining a court order for possession. Interpreted as a whole, the Act put into place the private bargain between mortgagor and mortgagee, as opposed to overriding this mechanism. Claimant company (H) claimed possession of a property belonging to defendants (B), who had defaulted on mortgage payments. H appointed a receiver to sell the property at auction and at the point of sale, the property was transferred to H. B was still in immediate possession of the property, with H instigating an instant claim. It fell to the court to determine whether the European Convention on Human Rights had been breached, with B submitting that the Law of Property Act could only be compatible with the Convention if it was construed as requiring a mortgagee to obtain an order for possession or an application requiring sale. Held: judgement for claimant. B had lost the right of redemption to the property and the receiver's power to sell derived purely from the mortgage contract and as such, the issue for determination never actually arose. Regardless, an important legal matter had arisen that deserved to be answered - on the flexibility of the 1925 Act. The court found that the exercise of statutory power of sale under S101 of the Act after default by the mortgagor was not a deprivation of possession under the Convention and neither was the sale of the property. Any deprivation of possession was justifiable in the public exercise and a test of proportionality by the court was deemed inappropriate. The right of the mortgagee to sell a property was historically established as part of the bargain between lenders and borrowers and was deemed as an essential aspect of lenders' ability to issue mortgages at fair rates of interest.
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Item type Current library Call number Copy number Status Barcode
Book Virtual Online ONLINE PUBLICATION (Browse shelf(Opens below)) 1 Available 146362-1001

[2008] EWHC 2327 (Ch), 8 October 2008. The court found that the Law of Property Act 1925 S101 did not impact the rights of mortgagors under the European Convention on Human Rights 1950 by permitting mortgagees to sell properties prior to obtaining a court order for possession. Interpreted as a whole, the Act put into place the private bargain between mortgagor and mortgagee, as opposed to overriding this mechanism. Claimant company (H) claimed possession of a property belonging to defendants (B), who had defaulted on mortgage payments. H appointed a receiver to sell the property at auction and at the point of sale, the property was transferred to H. B was still in immediate possession of the property, with H instigating an instant claim. It fell to the court to determine whether the European Convention on Human Rights had been breached, with B submitting that the Law of Property Act could only be compatible with the Convention if it was construed as requiring a mortgagee to obtain an order for possession or an application requiring sale. Held: judgement for claimant. B had lost the right of redemption to the property and the receiver's power to sell derived purely from the mortgage contract and as such, the issue for determination never actually arose. Regardless, an important legal matter had arisen that deserved to be answered - on the flexibility of the 1925 Act. The court found that the exercise of statutory power of sale under S101 of the Act after default by the mortgagor was not a deprivation of possession under the Convention and neither was the sale of the property. Any deprivation of possession was justifiable in the public exercise and a test of proportionality by the court was deemed inappropriate. The right of the mortgagee to sell a property was historically established as part of the bargain between lenders and borrowers and was deemed as an essential aspect of lenders' ability to issue mortgages at fair rates of interest.