Debtors had relevant damages claim for post-Wilson enforcement: sheriff

Enforcement of a valid decree for recovery of possession of heritable property could give rise to a claim for compensation, where the decree was obtained before the change of practice brought about by the Supreme Court decision in RBS v Wilson but enforced afterwards, a sheriff has ruled.

Sheriff Daniel Kelly QC at Hamilton Sheriff Court allowed proof on a claim by Brian and Linda McBride, borrowers in relation to a standard security in favour of GE Money Secured Loans Ltd, for compensation for enforcement proccedings taken in 2014.

In 2009 the lenders sent a certificate of arrears and then raised an action for recovery of possession and ejection. It was averred that the borrowers failed to repay the monthly instalments due and were in default. The action relied on standard condition 9(1)(b) rather than service of a calling up notice. Decree in absence was granted.

Later that year the Supreme Court ruled that a creditor in a standard security had first to serve a calling-up notice where it intended to exercise the power to sell the property on the debtor's default.

The lenders did not seek to enforce the decree until 2013. At that point the borrowers disputed that the lenders held a decree, and when in 2014 the lenders served a charge for ejection and payment, the borrowers lodged a reponing note denying service of the initial writ. The lenders then lodged certified copy notices relating to the service of calling up notices in 2009, which were also disputed by the borrowers. Being unable by then to prove service, the lenders lodged a minute of abandonment seeking dismissal of their action, which had not yet been given effect pending submission of the borrowers' account of expenses.

In a counterclaim the borrowers maintained that the enforcement steps taken by the lenders in 2014 were without regular, lawful warrant. They sought compensation totalling £50,000, believing and averring that deductions of sums from their account and the decree taken had an adverse impact on their credit ratings and that the threat of eviction caused them stress and anxiety.

The lenders argued that their decree was valid unless and until reduced; that no action of damages could be taken on the ground that a decree was wrongful, where decree had been taken against a defender who had knowledge of the action and took the proper steps to contest it; and that at most this decree was one that had been irregularly obtained rather than one that was unlawful, and damages could not be sought for execution of it unless malice and want of probable cause were averred.

Sheriff Kelly ruled that applying the test of relevancy, the averments as to whether by 2014 the execution of the diligence had become wholly unjustifiable or wrongful would not necessarily fail. "I propose to allow a proof in relation to those averments relating to failure to serve the initial writ (such as they are) and calling-up notices, as to whether these might amount to a flaw, error or irregularity in process in the light of the Supreme Court decision in Royal Bank of Scotland plc v Wilson and as to quantum in relation to what damage the borrowers have suffered thereby", he said. He held irrelevant other averments relating to the forms, certificate and amounts owed, in the absence of averments of malice and want of probable cause.

The sheriff said there was authority that in certain circumstances a charge could be wrongful if its use was unjustifiable, though the procedure was formally regular. Further, if there was some flaw in the steps of process, and if in spite of it diligence was persisted in, it might amount to a wrongous use of it and give rise to an action for damages. "In my view the averments sufficiently raise the question as to whether any aspect of the procedure adopted in the present case could be said to be 'some flaw in the steps of process'."

He concluded: "A person is entitled to damages at common law if the execution of diligence is wholly unjustifiable though formally regular: Grant v Magistrates of Airdrie [1939 SC 738], per Lord President Normand at p 758; Dramgate Ltd v Tyne Dock Engineering Ltd [2000 SC 43] at p 54. On that basis, averments to this effect ought to proceed to probation."

Click here to view the judgment.