11 Dec 2013

Case Comment: Mortgages 1 Ltd v Shaida Ahmed Chaudhary

Case Comment: Mortgages 1 Ltd v Shaida Ahmed Chaudhary

Kirsty Allen, Solicitor, looks at the implications of the recent repossession case of Mortgages 1 Ltd v Shaida Ahmed Chaudhary and its implications for lenders, Sheriffs and solicitors.

Kirsty Allen, Solicitor, looks at the implications of the recent repossession case of Mortgages 1 Ltd v Shaida Ahmed Chaudhary and its implications for lenders, Sheriffs and solicitors.

Never let it be said that residential repossessions are a stagnant area of the law. A further case has emerged which may influence the way in which summary applications under s.24 of the Conveyancing and Feudal Reform (Scotland) Act 1970  (“the 1970 Act”) are considered by Sheriffs (District Judge equivalents in the world of repossessions for English readers). Fear not, this development is not another earth-shattering or concerning decision however the decision is an important reminder to all solicitors working in this area of law of the importance of fully addressing a Sheriff when moving for decree.


Ms Chaudhary had purportedly remortgaged her property after the death of her husband and had subsequently failed to maintain her contractual monthly payments. The lender accordingly commenced repossession proceedings at Airdrie Sheriff Court under s24 of the 1970 Act.

At a hearing on the 9th of May this year, following various procedure which included continuations to allow Ms Chaudhary  to apply for legal aid, the Sheriff ordained Ms Chaudhary  to lodge Answers to the Application in order to progress matters. This is not uncommon in this type of action as Sheriffs are often keen to embrace the spirit of the Summary Application procedure (being that matters should be dealt with efficiently and with the least procedure necessary. In addition to ordering Ms Chaudhary  to lodge Answers the Sheriff assigned a procedural hearing for 6th June and continued consideration of the Pursuer's Motion for Decree to that date. Ms Chaudhary  was personally present at this Hearing, therefore no order for intimation of the continued Hearing was made. 

Ms Chaudhary  lodged Answers which disclosed several strands of defence to the action. Ms Chaudhary  averred that she was seeking to remortgage with another lender and accordingly sought a sist in order to allow her time to do so. In addition Ms Chaudhary  averred that she had three children living in the property, including one under the age of 16 and that she also cared for her dependant Granddaughter who was at the time four months old. Ms Chaudhary  stated that it would not be reasonable in the circumstances for decree to be granted as both her and her dependants would become homeless.

When the case called on 6th June 2013 Ms Chaudhary  was neither present nor represented. The agent for the Pursuer highlighted that Ms Chaudhary  had been personally present at the previous hearing and moved the Sheriff to grant decree by default which was accordingly granted.

The decision was appealed to the Sheriff Principal (the most senior Sheriff in the Sheriffdom) on the basis that Sheriff hearting the case had ‘erred in law’ by failing to take into consideration the whole circumstances of the case in determining whether it was reasonable for Decree to be granted.

The Law

In terms of the 1970 Act, before a Sheriff can grant a secured creditor’s motion for Decree they must first be satisfied that the Pre-Action Requirements (or PAR) have been properly complied with and in addition must be satisfied that it is reasonable in the circumstances to do so.

s24(7) of the 1970 Act details the factors which a Sheriff must consider when determining "reasonableness" for this purpose. These factors are:

a) the nature of and reasons for the default;

b) the ability of the debtor to fulfil within a reasonable time those obligations under the standard security in respect of which the debtor is in default;

c) any action taken by the creditor to assist the debtor to fulfil those obligations;

d) where appropriate, participation by the debtor in a debt payment programme approved under part 1 of Debt Arrangement and Attachment (Scotland) Act 2002; and

e) the ability of the debtor and any other person residing at the security subjects to secure reasonable alternative accommodation.

The Appeal to the Sheriff Principal

The Sheriff Principal heard the Appeal on 28th October. The point in contention was whether the Sheriff had erred in law by failing to consider the points in s.24(7) of the 1970 Act. The Sheriff had restricted himself to the normal considerations made by a Sheriff when considering a Motion for Decree by default for failure to appear (that is to say, was Ms Chaudhary  aware that they required to be present or represented at the hearing? Also, had intimation been ordered and if so, had it been effective? Lastly, had there been any contact from Ms Chaudhary  to explain her absence?)

The Sheriff Principal determined that the Sheriff had indeed ‘erred in law’ by restricting his consideration of whether to grant Decree to the issues of whether Ms Chaudhary had appeared when cited and whether payment had been made.

In the Sheriff Principal’s view the Sheriff had failed to consider whether it was reasonable in the circumstances of the case to grant decree and had also failed to consider the ability of the borrower and any other occupants to secure reasonable alternative accommodation. In his decision, the Sheriff Principal expressed the view that Ms Chaudhary's Answers had disclosed material which the Sheriff should have considered when determining the Motion for Decree as there was an obligation to consider reasonableness.

Sheriff Principal Lockhart went on to state that the Sheriff must report why in the whole circumstances of the case, it is reasonable for decree to be granted.

The Sheriff Principal upheld the Appeal, although it is interesting to note that Sheriff Principal Lockhart was persuaded to grant the expenses of the Appeal against the borrower on the basis that the Appeal procedure had been due to her failure to attend court on 6th June.


Whenever a Solicitor makes a Motion for Decree in repossession proceedings they should always address the Sheriff fully in relation to reasonableness and not simply in relation to payment.

A Sheriff is obliged to record their reasons for granting Decree (which in busy courts such as Glasgow is sure to impress Sheriffs!).

Nothing in this decision will affect the way in which repossession proceedings are dealt with from a secured creditor’s point of view.

Kirsty Allen, Solicitor

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