Possession orders

Borrowers flouting court orders should beware!

Mr Canty was made bankrupt in 2000 on a petition based on a relatively small debt which arose as a result of an unpaid costs order. Mr Canty never accepted the validity either of the original costs order or of the subsequent order for his bankruptcy and a number of appeals and challenges followed over a number of years each involving an attempt to reopen and to re-litigate the earlier proceedings. Several years passed without the trustee getting close to obtaining the benefit of his orders and by 2005 there had been several unsuccessful appeals in the County Court and subsequently the High Court. Mr Canty refused to accept any of the orders made or to give up possession of his property. Ultimately in order to avoid enforcement, Mr Canty took to the roof to continue his protest leaving the trustee in bankruptcy with the unenviable option of taking possession of most but not all of the property!

Giving up possession

In 2006 with his patience exhausted, and some four years after having obtained his first order, the trustee in bankruptcy applied to the court for Mr Canty’s committal for contempt. After adjourning to see if there were any other options available, (and with Mr Canty still on the roof) the judge at first instance held that Mr Canty was in contempt in failing to comply with the court order and give up possession. He sentenced Mr Canty to six months’ imprisonment. Mr Canty appealed to the Court of Appeal.

Deliberate breach

In refusing Mr Canty’s appeal both against committal and the length of the sentence, the Court of Appeal held that it was plain Mr Canty was in breach of the possession order and also that Mr Canty was not willing to accept orders made against him. They felt that judge could not be criticised either for imposing an immediate custodial sentence or for the length of that sentence.

The court found that Mr Canty’s wilful and deliberate breach had been maintained on the strength of his refusal to accept that the bankruptcy and possession orders were validly made.
Unfortunately for creditors this can be an all too familiar story. The greater access to justice since the coming into force of the Civil Procedure Rules (CPR) coupled with the severe reduction in the availability of legal assistance funding has led to a growth in the number of litigants acting in person particularly in possession proceedings. Such litigants, unfettered by legal assistance, are often loath to believe that their arguments against possession will not hold up in law and, more importantly, faced with the prospect of losing their homes, they have little to lose financially in holding out against possession for as long as they are able. This means that a creditor can often find themself locked in battle with a defendant who will fight to the last.

Increased costs

Faced with a defendant bordering on the vexatious, the creditor has a limited number of weapons available to them and may find itself drawn into more and more applications with the resulting increase in costs. Although adverse costs orders are the usual sanctions available to the court to reflect its displeasure in such circumstances, these are of limited effect against a defendant who already faces losing everything especially where, as is often the case, there is insufficient equity in the property to cover the principal debt or interest let alone any further costs orders. The creditor is faced with the additional difficulty of enforcing its costs order against a defendant who is not only obstructive but often has no means to pay.

Prevailing climate

The decision in Canty shows that the courts are willing to take a hard line with those who persistently flout court orders and it should serve as a useful reminder to creditors that there are remedies of the last resort available to them against borrowers who persistently refuse to comply with court orders.

To obtain such an order will of course involve an application to have a penal notice included on the order for possession. Making an application for committal itself is not a decision which many creditors will take lightly particularly against a prevailing climate under which many creditors including banks and building societies are subject to close media scrutiny and where the risk of damage to their reputation or adverse publicity is often high on the radar. However, there are occasions where such a remedy may be the only practical option and the decision in Canty shows that the courts are taking this on board.

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