Mortgage accounts cannot always be remedied in court
The High Court dismissed a claim for a mortgage account as there was no genuine dispute underlying the request.
Background:
Mr. Coutts-Lovie was granted a mortgage in September 2006 for £640,000 for a term of eight years on an interest-only basis and registered at HM Land Registry on 23 October 2006. The interest chargeable on the loan was at the rate of 4.79% until 1 August 2008 and, thereafter, for the next five years and two months at a standard variable rate and, for the 'remainder of the mortgage', at the standard variable rate subject to a potential 0.25% discount if payments were maintained promptly. The mortgage has subsequently been held by various companies, the latest being Topaz Finance Ltd. The principal sum has never been repaid.
Although a possession order was made against Mr. Coutts-Lovie in June 2016, and a further order for possession was made against his wife, Mrs. Lovie, in June 2019, Mr. Coutts-Lovie and Mrs. Lovie remain in possession of the property as their home.
The claim arose when Mr. Coutts-Lovies made an inquiry as to the amounts due to Topaz, alleging that he had been overcharged on his mortgage by in excess of £117,000 and was therefore entitled to a rebate.
Decision:
The High Court dismissed the claim for an account due to the lack of realistic prospect that a court would direct such an account. The Court had first to determine whether Mr. Coutts-Lovie had the right to request an account and whether there was indeed a case of overcharging. Master Bowles noted that a claim for an account is a discretionary remedy and requires a genuine dispute regarding the state of the mortgage account. It is not a claim which a mortgagor can claim as of right. The Judge was not convinced such a remedy was only available in certain circumstances. In his opinion, it was available “whenever there is a genuine and real dispute as to the state of the mortgage account”.
The claimant failed to demonstrate that the claim was extinguished. The Court found quite the contrary that the outstanding liability was in excess of £1million and nothing demonstrated that he was entitled to a rebate.
The Judge concluded that the claim of overcharge lacks legal basis as there was no requirement to offered Mr. Coutts-Lovie a new mortgage agreement in 2008 or 2009. Moreover, no realistic evidence of overcharging was provided.
The Court concluded that allowing a non-existent claim to proceed would not benefit any party involved. Especially, since there was no genuine dispute regarding the mortgage account.
Finally, the previous settlement of Mr. Coutts-Lovie’s application did not establish a settled account or allow him to reopen issues he had originally agreed not to pursue.
Implications:
This decision makes it clear that to go to court, there must be a genuine dispute regarding the mortgage account, as the courts will not intervene in the dealings between the mortgagor and mortgagee without good reason. Additionally, a claim for an account is a discretionary remedy and cannot be claimed as of right. This case reaffirmed the view endorsed by the literature and, in a very old case, Ponsford v Hankey and Harrison (1861). This case reinforced the lender’s rights.
