Cheltenham & Gloucester plc v Krausz  1 All ER 21
Order to suspend a warrant for possession overturned in case of negative equity
The respondent borrowers had fallen into arrears on their mortgage payments. They applied for an order suspending a warrant for possession of the property, on the basis that they had identified a buyer and would take steps to arrange for the sale of the property. The appellant lender resisted the proposed sale on the basis that the mortgage debt exceeded the proposed sale price.
The respondents’ application for an order to suspend execution of the warrant was allowed. The appellants appealed on the grounds that the Court did not have jurisdiction to make such an order.
The Court of Appeal allowed the appeal. The right of the appellant to enter into possession of the mortgaged property was protected strictly at common law (Birmingham Citizens Permanent Building Society v Caunt  Ch 883). Furthermore, under section 36 of the Administration of Justice Act 1970, the power to suspend a warrant for possession was only exercisable to allow the lender to pay off instalment arrears but not through the sale of the mortgaged property. If a sale is proposed, then the Court had to be satisfied that the sale proceeds would entirely discharge the mortgage debt. Furthermore, the Court was not justified in exercising its inherent jurisdiction to order the sale of the property, where the appellant was seeking to enter into possession, and sell the property which was in negative equity. Accordingly, there had been no jurisdiction for the judge to make an order which suspended the appellants warrant for possession.
Cite This Essay
To export a reference to this article please select a referencing style below: