Whether bank discriminated against borrower in seeking possession order (County Court)

The County Court considered whether a lender’s refusal to agree to change a borrower’s mortgage from a repayment mortgage to an interest only mortgage was discriminatory. The borrower claimed that the lender’s blanket policy of not allowing a switch to an interest only mortgage breached the legislation on disability discrimination and human rights. The court dismissed the borrower’s defence in possession proceedings and held that:

Even if it was difficult for the borrower to access the service, it was not reasonable or proportionate for the lender to have allowed the borrower to switch.

Various guidance had been issued to lenders on responsible lending and switching mortgages to interest only. Although the guidance was mainly published after the lender reached its decision, it contained good practice and it was not good practice to lend on an interest only basis except in certain circumstances.

In light of the Court of Appeal’s decision in McDonald v McDonald [2014] EWCA Civ 1049 (on whether there is a defence under Article 8 of the European Convention on Human Rights for possession claims by a private landlord), the borrower could not rely on Article 8 as a defence.

The court granted an order for possession. However, noting that the Supreme Court had allowed permission to appeal in McDonald v McDonald, the court ordered a stay of the order and an extension of time for filing an appeal by either party until 28 days after the Supreme Court’s judgment. (Southern Pacific Mortgage Ltd v Green [2015] EW Misc B42 (CC).)