Craig Whyte, Castle Grant and Avoiding Mortgage Repossession

Craig Whyte, former owner of Rangers*, has another of his cases due in court today (4 July). This is the mortgage repossession case brought by the Bank of Scotland against Mr and Mrs Whyte in Inverness Sheriff Court. The bank wants to have orders granted entitling it to “enter into possession” of Castle Grant and for the owners and their tenants, family and belongings etc to be removed.

*The reference to being the owner of Rangers should of course properly read “Mr Whyte is believed to have been the owner of the company (Liberty Capital) which owned the company (Wavetower Ltd) which owned 85% of the shares in the company (Rangers Football Club PLC) which owned the assets and business which made up Rangers Football Club”! One can forgive the media referring, albeit incorrectly, to him as “the Rangers owner”.

Press coverage suggested Mr Whyte had been given two weeks to clear his arrears or face losing his Castle. That is possible though in most mortgage repossession cases the owner would not be given so stark a choice.

CAstle Granbt

I have no knowledge, other than what has been published, about Mr Whyte’s case but bearing in mind the thousands of mortgage repossession cases going on in Scotland just now, I thought I could use his case as an example of how these cases progress and, hopefully, provide useful info for anyone now facing such a case.

Nothing below should be taken as legal advice, as each case rests on its own circumstances, and anyone facing repossession action should seek advice, whether from a solicitor, an In-Court Adviser (where available) or a Citizens Advice Bureau or similar body.

The key to these cases is the Home Owner and Debtor Protection (Scotland) Act 2010 which is one of the most important pieces of legislation passed by the Scottish Parliament.

Until that Act, a mortgage lender had the right to re-possess a property where the borrower fell into arrears. A court action was required and in certain circumstances a borrower could have the court make an order delaying exercise of the lender’s rights (Mortgage Rights (Scotland) Act 2001) but that could not deprive the lender of those rights.

The 2010 Act turned things around. Now lenders had to demonstrate compliance with various requirements before raising an action. The Pre Action Requirements (PAR) were designed to make it clear to a borrower falling into difficulties what might happen to them if they did not remedy their problem. The PAR requires lenders to be proactive in seeking solutions short of repossession. The lender has to tell the borrower where he can get advice.

Even once those steps have been taken, the lender can only get its court order where the Sheriff finds it “reasonable” to grant it. It is not for the borrower to show it is unreasonable.

In practice that fundamental change has little effect where a borrower does not take action.

One additional change in the 2010 Act required all mortgage repossession cases to call in court. Until then, if the borrower failed to lodge papers saying the action was defended, the lender could get their court order by sending a simple form to the Sheriff Clerk.

So if a borrower does not go to court or seek advice then usually repossession will be granted. Sheriffs are told what the arrears are and when the last payment was made. In a busy court, and a Sheriff might have 70 or 80 mortgages cases due to call, there is no time for the Sheriff to thoroughly investigate all aspects of the case if the borrower does not come to court. I have seen decrees granted for repossession where arrears have only been a few hundred pounds, and the monthly mortgage payment less than £100, simply because the borrower has done nothing about the court action.

In fact, if a borrower takes advice, as Mr Whyte has done, it is common to find that there is some flaw in the process by which the lender seeks to fulfil the PAR. Papers might have been served at the wrong time, or may have omitted required information. It takes proper advice, from a solicitor, In-Court Adviser or CAB, to identify this, and not all solicitors are up to date with the intricacies and technicalities of this area of the law.

There has been ground-breaking work done, especially by Mike Dailly of Govan Law Centre, who has been successful in having cases dismissed because the formalities have not been followed. The courts have accepted that the PAR is not a mere formality but instead essential steps in the protection of the debtor and the avoidance, where possible, of repossessions.

At the end of the day, lenders want their money. They do not want to have to re-possess properties and then sell them, as this often crystallises a loss for them. Many (though not all) lenders are flexible about arrangements to avoid re-possession, as long as they see the borrower being committed to the process. Taking advice is an essential part of this. After all, it is not the job of the lender’s lawyer to tell the borrower that the paperwork might be wrong!

Having a case dismissed does not eliminate the mortgage. It simply means that the lender has to go back to the beginning and do things properly.

One reason for this approach, which has been called pedantic and nit-picking, is that the UK Supreme Court decided in 2010 that, in fact, lawyers for lenders had not been carrying out re-possessions in accordance with the law for 40 years! This is one factor therefore which leads the courts now to consider that, before depriving a person of their home, the lender has to do everything according to the rules, and do so exactly right.

So, turning back to Mr Whyte, I am sure his lawyers will have carefully scrutinised all of the papers to see that the lender has fulfilled the PAR. Even if it has, it is always possible to defend the case by requiring the lender to show that it is reasonable to grant repossession.

The defender in such a case would be required to put forward some proposal or plan for dealing with the debt, if arguing on reasonableness. This might be that there is some money coming to them to assist in dealing with the arrears, or that assets are being sold, or, as in the case of the football agent I mentioned previously, that they were about to earn lots of money from the sale of footballers in the transfer window.

The choice for the court then is to decide if it is reasonable to grant the order for re-possession, which includes many different factors. There have been, as far as I am aware, no reported decisions yet on reasonableness in this context and until there are, there will be uncertainty about what the courts will accept as justifying decree being granted.

Whilst it is possible therefore that, in light of what was said to the court in Mr Whyte’s case, that he has been ordered to pay off arrears by today, it is more likely the case was continued to give him the chance to do so and, if he has not, then his lawyer would seek a hearing on the reasonableness of his proposals.

However, in a case like this, where there are two parties to the action, or indeed where the mortgage is in the name of one partner and the other lives in the home too, decree can be recalled at any time up to the actual re-possession taking place. If the other defender or “entitled resident” has not taken part in the court case, they have an automatic right to have any decree granted recalled, as long as they apply to do so before the repossession date (which is often far later than the court grants the order).

If the other party or entitled resident has taken part in the proceedings, then they cannot recall the decree. One decision therefore for an adviser is, if instructed by both debtors or both partners, whether or not to appear representing both, or whether, to retain the possibility of recall, to only appear for one party in the proceedings.

So, even if Mr Whyte has decree granted against him, if his estranged wife has not appeared or been represented in the case, then she could come to his rescue by recalling the decree. As they are separated however one suspects that any such action by her would be to protect her own financial interests in Castle Grant, which is of course entirely legitimate.

So Mr Whyte has done things right – he has taken advice – which greatly reduces the chance of decree being granted. Even if s of his wife, get that decree recalled.

Craig Whyte, in happier times

Craig Whyte, in happier times

And either way, if he can come up with a way of meeting his mortgage commitments, then I am sure the bank will be very happy for him to do so!

Posted by Paul McConville

 

 

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667 Comments

Filed under Civil Law, HOme Owner and Debtor Protection (Scotland) Act 2010, Mortgage Repossession

667 responses to “Craig Whyte, Castle Grant and Avoiding Mortgage Repossession

  1. I swear I can hear flutes ….

  2. Dan

    Great win by Great Tim, well done Andy

  3. lordmac

    i can see the plan is working, it took me a while to see it, all those Celtic fans telling the rangers supporters on here about the way things are going like a second liquidation for there club, but i must admit you Celtic guys are a crafty lot, you all knew if you kept telling the rangers guys that there club was in trouble they would not listen and would not ask question of there directors hats off to you guys now here they

  4. barcabuster

    @ Queenie
    That’s not flutes mate. That’s the grim reaper whistling on his way to work. He seems particularly happy this warm summers eve.

  5. Dan

    Mr Wanka why are you homophobic?

  6. Dan

    There is some unhealthy stuff on here tonight and I refer to the homophobia that is coming from some quarters. It should stop immediately.

  7. Fra

    @mcfc….. I’m looking at the shares as 52p mate and moving downwards. 5000 sold at 52p….. It’s looking ominous for fans of the toxic entity

    • Mcfc

      @fra

      Not looking good – sentiment or money – a lot of fans must be thinking whether to bail out.

      The finger having written moved on . . .

      Ultimately the share price is academic to the future of the club unless they want to raise more capital from the market through a future share issue.

      But the share price is a strong indication of confidence in the future on the current regime.

      Chico Pyro Pants would appear to have a deal with the Sleasdales that is based on the share price when the transfer takes place in mid December – and Chico knows the ropes and he can see the only way is down, down, deeper and down.

      Did he do all that work for a measly milllion – ffs – no wonder he’s apoplectic with rage at the current feet of clay board – no wonder he is speaking out and stirring the pot.

      If you’ve ever been in sales you’ll know that some people are gifted at it and some are entirely, utterly useless – without meaning to be vulgar – it’s a bit like pulling girls – some guys can do it all day long and some guys just never understand how it’s done.

      Chico knows that the current board couldn’t pull a rope in a tug of war. So his payday depends on replacing them with people he thinks willl hold up the share price – and he thinks the only people for the job is himself 🙂

  8. Happy nearest Saturday to the !2th to Britannia’s lost tribe.
    What a sad bunch of fascist time wasters. Wonka I take it you’ll be twirling your stick at the front of the ….ahem….”.family day parade”.
    Scotland’s shame…then. now. forever.
    T A L…………

  9. portpower

    #BECELTIC
    BELONG

  10. portpower

    #BECELTICBELONG

  11. portpower

    Shirley it can`t be true “sevco have laid-off the lawn mower.”

  12. portpower

    A SIGNIFICANT institutional investor in sevco5088 has called on Charles Green to surrender his £2.8 million shareholding and leave the board again immediately, claiming he has brought the club into disrepute.
    My man Agent Whyte.

  13. portpower

    I’m that wee bit older and a card-carrying homophobic. I can’t stand guys like you.
    No Dogs, Irish, blacks & wonkos`

  14. portpower

    ” First erected in 1735 it’s the oldest in Glasgow. It stood at the Trongate facing London road for over a hundred and fifty years having been erected as tribute to Scotland’s first protestant settlement.”
    @Stevie.
    That makes the protestants immigrants.

  15. A wee bit off topic now,but should Scotland fans not invade Wimbledon instead of wembley. Wouldn’t it be great to see Scotland flags and jimmy wigs all around this quite essentially English garden,in support of our andy.Im sure he would love that,coming out to flower of Scotland,he would win Wimbledon no bother,then we could all invade and steal the net.
    C’mon the Murray.

  16. Fra

    Was just watching a show compered by Jeremy Paxman about Britains role as an imperialist towards India. Ghandi visited the cotton mills of Lancashire as they were not happy that India was producing garments with their own cotton as opposed to shipping it to England where they could make them.

    The crowds were moaning at Ghandi about the levels of unemployment caused by Indias refusal to ship cotton. Ghandi replied that unemployment in his country was ten times worse. In 1948 they gained independence, as they were sick of their colonial masters taking their materials while their people starved.

    Seems to be the order of the day but as we have seen, there is no longer a great in Britain, so I suggest it should be dropped.

    • Stevie

      Fra. You stick to your own Republican policies mate. The Brit’s have never appreciated interference from outside agencies. Especially during their attempts at world domination.
      All this angst fetterd toward a community that adopted your ancestors into their bosom when their own country could not sustain them
      Gift horse and mouth???

      • @Steie…. “The Brits have never appreciated interference from outside agencies”…….That’s because “The Brits” have been busy fashioning a name for themselves INTERFERING in everybody else’s territory, pillaging resources a speciality. Couldn’t mark your Brit Neck wi a Flame Thrower!!!! btw Brit interference in Ireland & Scotland led to the consequences of the potato blight in both countries. If your looking for thanks for “taking us in” forget it Billy Boy……….. .

      • Paddy Malarkey

        Were all the Irish incomers to Caledonia Catholic ? How did the residents arrive here and when ?Were the Picts not the populace at one time ?

      • Fra

        @Stevie….they were too busy intimidating my ancestors from their land. My ancestors were doing quite nicely thank you until the brits decided they wanted the land and nothing was going to stop them. After all, these people were catholic, Irish and in the way. The history has been passed to us to uphold and furnish future generations with the evil deeds of the british government. So please don’t tell me how the brits took us into their bosom.

  17. Iain Mcg

    Absolutely, Budweiser.
    And it’s been needed saying for ages.
    Thank you.

  18. Fra

    Ah canny sleep……where’s mogadon Niall……two seconds of reading his tripe and am out for the count.

  19. Stevie

    Barca. I commend you for being the first to accept and condemn this hideous abhorrent crime that was perpetrated within the auspices of your club.
    The conduct of the senior officials in attempting to throw a fire blanket over this scenario is truly shameful. I commend your thought process to the blog!

    However i also note a slight tinge of deflection which is dissapointing.
    You also appear to have dismissed my comment regarding the contribution of the victims to the debate and why their evidence was paramount.
    It almost makes your earlier words hollow,although not entirely.

    As we find ourseves amid the modern era of cyber technology which is being used as a tool of hatred and bigotry concealed under a smokescreen of truth and integrity i agree with your later point regarding these individuals staying away from football and seeking a head massage of some degree. Sadly i concur it has not. As can be seen by the two year campaign of hatred against a particular football club.

    I see you thanking Bud for the reference to the link,again dissapointingly an attempt at deflection. I as mentioned earlier had been aware of the contents.
    As previously stated i did not bring Big Jock into the debate i referred only to the chairmen and directors. Your good self and Bud brought JS into the debate,again a vain attempt at deflection.

    Whilst on the subject of public knowledge, i note mucho back slapping plaudits are being afforded to Ecobhoy/Jon for his sterling work alongside Cha.F.
    I wonder if his pursuit of truth and integrity will be all encompassing in a balanced way by revealing the contents of all the E-mails and other pertinent documents associated between the officials at the SPL/SFA.

    I also recall the dash at the eleventh hour to save the sky deal. I distinctly remember the pics of PL and ND enroute from the airport. Given what Eco and Co are suggesting {see Cha.F} A few further question’s need to be raised.
    Is it possible they were all part of fraudulent contractual transactions? Heaven forbid the blasphemous utterances from a Rangers fan, but never the less Scottish football and the fans deserve to be made aware of how much Mr Celtic,Mr Dundee Utd and Mr Hib’s knew.
    I wonder who the fall guy will be,Mr Olgilvie per chance?
    Come on ECO and co let’s have a balanced approach to your work the scottish football fan is watching …you are being monitored!

  20. Budweiser

    Your good self and Bud brought JS into the debate,again a vain attempt at deflection.

    Stevie. Like your good self I posted a link. Like your self I never mentioned Jock.Unlike your self I am not an OF FAN. Like barca I deplore any instances of child abuse or indeed any case of sexual abuse, and believe that all perpetrators of such abuse should be prosecuted whatever ‘colour’ they hide under. I did not try to score footballing points under the guise of rangers haters. Football is a game. If you truly had any thought for, or knowledge of, the victims of abuse, then you might reconsider your response. However, I suspect that you have absolutely no regard for these victims, and instead use them as a point scoring exercise to further your ‘rangers haters agenda ‘.

    • Stevie

      @Budweiser…Typical selective paraphrasing response Bud.
      How do you arrive at “Use victims as a point scoring exercise to further your “Rangers haters agenda”? How does that equate then?
      I raised various points which i consider tobe fair and accurate questions that require debate. I note you totally ignored them in your response. What is your agenda?

      • Budweiser

        Stevie.

        I am not a celtic fan and feel no need to defend them. You bring up a link about child abuse and justify it by stating ” modern cyber technology is being used as a smokescreen of hatred and bigotry towards one particular club “.
        Typical paranoid ‘ everyone hates us’ mentality beloved of rangers fans. You then further justify it by claiming ‘ all’s fair in love and war’. So what’s next stevie ? Are you desperately searching for evidence of child abuse at St. Mirren , killie, Aberdeen and all the other SPL and 1st division clubs that didn’t want sevco near them ? You certainly epitomise the Ranger’s way of truth seeking.

        • Stevie

          Okay Bud.
          I thought i made my comments crystal clear. Please except my apology for confusing you.
          I stick by what i said. I’m not interested in what team you or anyone else support it is of no consequence.. Thhat was not the point i was making…but you already know that….eh Bud?

          • Budweiser

            Stevie.
            Sorry, you are being particularly cryptic. Please state unequivocally what exactly IS the point you are making— eh stevie ?

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