04 Sep 2013

Case Update: Bank of Scotland plc -v- Gallacher

Case Update: Bank of Scotland plc -v- Gallacher

Aaron Doran, Senior Solicitor, provides an overview of another decision from Glasgow Sheriff Court, which will affect a Lender’s ability to repossess a borrower’s property following their failure to maintain payments of their mortgage.

Aaron Doran, Senior Solicitor provides an overview of another decision from Glasgow Sheriff Court, which will affect a Lender’s ability to repossess a borrower’s property following their failure to maintain payments of their mortgage.

Case Update: Bank of Scotland plc -v- Gallacher

Yet another decision has emerged from Glasgow in the sphere of repossession law. This time, it is the Sheriff Principal (top Judge in Glasgow) who has handed down the decision meaning all Sheriffs in Glasgow are bound to follow suit.

The Case

The case first called at the tail end of 2012, when the repossession judgement (Decree) was granted after the Sheriff refused the borrower’s request for a further continuation to allow him to find employment.

The borrower subsequently appealed this decision to the Sheriff Principal on the ground that the Sheriff hearing the case had failed to properly take into account all factors which he was required to consider before exercising his discretion in terms of reasonableness.

The Law

In terms of the Conveyancing and Feudal Reform (Scotland) Act 1970, before a Sheriff can grant a lender’s application for a repossession judgment, he or she must be satisfied that the Pre-Action Requirements have been complied with and that it is ‘reasonable’ in the circumstances to do so.

There are specific rules contained in the legislation on what the Sheriff must have regard to when deciding whether it is ‘reasonable’ to grant Decree, but the ultimate decision on what is ‘reasonable’ falls within the discretion of the Sheriff.

The Appeal

The Sheriff that originally granted Decree noted that “nothing was put forward by the agent” with regard to alternative accommodation and that “there was no request for time to obtain alternative accommodation.”

In making his Appeal, the agent for the borrower submitted that the Sheriff “ought to have fixed an evidential hearing to reach a proper determination of questions of fact”. On that point, the Sheriff Principal stated that he found it “undesirable” to dictate to a Sheriff that an order for Answers (defences) and a full hearing should be made in every case. 

However, the Sheriff Principal noted that although these cases are calling in busy courts, “that does not detract from the need to give careful consideration to the circumstances of each case”. In his view, the real issue raised by this Appeal was “whether the Sheriff went too far too quickly by granting Decree on the basis of the information he had before him”. In the current case, he believed that the Sheriff had indeed gone too far, too quickly.

The Sheriff Principal went on to state that “the requirement to ‘have regard to’ the ability of the [borrower] to secure alternative accommodation cannot be met by a lack of information or the absence of a request for a continuation to secure accommodation”.  Although commenting that “the question of whether this [borrower] has alternative accommodation may not be a material consideration, he did consider it was “an important one to which more than lip service should be paid.”

The Decision

The decision requires the Sheriff, when considering whether to grant Decree for repossession, to make positive enquiries into a borrower’s ability to secure alternative accommodation. This information will usually be out-with the knowledge of the lender and their agent, so it will be interesting to see how Sheriffs will make such enquiries in cases where the borrower doesn’t attend the hearing. 

As seems to be the way with this new area of law; we will simply have to wait and see how far the Sheriffs will go with their enquiries and ensure as much information is provided to our agents attending court so that they can address any question the Sheriff puts to them.


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