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Repossession cases thrown out for wrong procedure

1 March 2012

A significant case affecting homeowners facing repossession has been decided at Glasgow Sheriff Court.

Sheriff Anthony Deutsch dismissed as incompetent, actions by Northern Rock and Royal Bank of Scotland, for failing to follow what was held to be the correct, and required, sequence of steps by a creditor.

The sheriff held that a "default" on which a creditor was bound to take certain steps under the Home Owner and Debtor Protection (Scotland) Act 2010 before raising proceedings, meant a default constituted by the service and expiry of a calling-up notice, and the lenders in the present cases had failed to comply with the legislation where the 2010 Act steps had been taken first.

The Supreme Court decision in the Wilson case in 2010, given after the Act was passed, made the calling-up notice a more essential stage in establishing a default than had been previously understood, but the sheriff held that the consistent use of "default" meant that it had to be read in the same way in the various places in which it was used in the legislation.

The cases were defended by Govan Law Centre, whose principal solicitor Mike Dailly said the judgment was "of huge significance for homeowners facing repossession across Scotland and will result in many court actions being dismissed as wholly incompetent or rendered of no use".

He added: "It means in the future all lenders will have to give homeowners a genuine final chance to come to a repayment arrangement before court proceedings are commenced."

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