Scottish Mortgage Lenders All Wrong
26th November 2010
In its early years the UK Supreme Court appears keen to forge a reputation for itself as an audacious and independent powerhouse of jurisprudence. Not even a month after its judgment in Cadder ―v― HMA sent shockwaves through the landscape of Scots criminal law, now on 24 November, it has pronounced judgment in the case of Royal Bank of Scotland plc ―v― Wilson, with like consequences in the Scots civil law of mortgage repossessions.
The central question for the court related to the form of procedure adopted by a bank in court action for repossession of a mortgage customer’s home upon default, particularly the bank’s pre-litigation procedure, and whether they served a Calling Up Notice.
Since the Conveyancing & Fedual Reform (Scotland) Act 1970, Scottish banks have developed a procedure of raising a court action founded on s.24 of the 1970 Act without prior-service of a Calling Up Notice.
However, the Supreme Court has ruled that Standard Condition 9 makes it necessary that a Calling Up Notice be served before a court action is raised, and that a ‘certificate of default’ does not constitute requisition within the meaning of s.5 of the Heritable Securities (Scotland) Act 1894.
Accordingly, Scottish homeowners who currently face court action for repossession of their home should take legal advice as a matter of priority to ascertain whether this action is lawful, or whether the proceedings fall to be dismissed at court.