Sheriff Principal upholds Ayrshire homeowner's appeal against mortgage repossession

The Sheriff Principal of North Strathclyde has allowed a homeowner's appeal against a decree for mortgage repossession at Kilmarnock Sheriff Court today.

In the case of Clydesdale Bank plc v. S, an order for ejection and possession had been granted earlier this year as the homeowner's mortgage had matured and come to an end. The homeowner had become ill, with a drop in household income, and the bank was unwilling to provide any further lending.

All possible avenues for a solution had been pursued unsuccessfully, however, the Ayrshire Homelessness and Prevention (AHAP) project solicitor, Lynn Fraser of Govan Law Centre (GLC) had pursued a mortgage mis-selling case against Clydesdale Bank plc.

This was on the basis that the bank had sold their customer an interest only 'mortgage' that lasted for three and half years. The customer had purchased a property upon the understanding that a mortgage had been provided on the standard repayment basis, with an initial short term period of three and half years being 'interest only'. In fact, the product actually sold was a short term secured loan, and not a mortgage in the normal understanding of that term.

When the case called before the sheriff, the Clydesdale Bank plc advised the court that the mis-selling complaint had been 'rejected', notwithstanding this had not been intimated to the customer in writing. The sheriff considered that there was no defence, although the homeowner's solicitor advised the mis-selling case was live, and access to the Financial Ombudsman Service's statutory alternative dispute redress scheme might well be pursued given the unusual nature of the mortgage product sold.

In recalling the sheriff's interlocutor (decree for repossession), Sheriff Principal Murray held that the sheriff had erred in law in his application of the statutory tests in section 24(7) of the Conveyancing and Feudal Reform (Scotland) Act 1970, and the identical provisions in section 5A(7) of the Heritable Securities (Scotland) Act 1894. He considered that the mis-selling case was a relevant matter which should have been explored further and that a proof should have been fixed.

The Sheriff Principal allowed answers (defences) to be lodged by the appellant and defender, and fixed an evidential hearing (diet of proof). The appellant and defender was represented by GLC's Mike Dailly; and the respondents and pursuers by McClure Naismith LLP's David Forrester.

The decisions of Sheriff Principals are binding in their Sheriffdoms. The Sheriffdom of North Strathclyde includes the Sheriff Courts of Kilmarnock, Dunoon, Oban, Campbeltown, Greenock, Dumbarton and Paisley.  Scotland has six Sheriffdoms.

Sheriff Principal upholds Ayrshire homeowner's appeal against mortgage repossession