Web Resolutions Limited v Derek Glen & Suzanne McIntosh ? Hamilton Sheriff Court, 9 November 2009

The Defenders/Appellants appealed against the Sheriff's decision to refuse their Reponing Note in an action raised against them under the Conveyancing & Feudal Reform (Sc) Act 1970. The Pursuers/Respondents wished to repossess the Defenders' property. Decree in absence had been granted against the Defenders after they had failed to enter appearance. The Reponing Note was lodged almost 2 months later on the day before the Defenders were due to be ejected from the property. The Reponing Note had given no explanation for the failure to enter appearance. The Reponing Note had stated that the Defenders intended to defend the action by lodging a Mortgage Rights Minute application under Section 2 of the Mortgage Rights (Sc) Act 2001. They intended to have the Pursuers' rights as creditors suspended in terms of that section with a view to allowing them to address their financial issues and come to a payment arrangement with the Pursuers. The Sheriff had taken the view that the Defenders had taken no steps to respond to the Initial Writ. They had offered no explanation for this, apart from expressing a hope that matters would simply go away. They had given no reason for their failure to react at an earlier stage and they had done nothing to help themselves. The lodging of the Reponing Note was simply a delaying tactic. At the appeal hearing, the Appellants suggested that the Sheriff had focused solely on the absence of an explanation for their failure to deal with the writ. He had not addressed the question of the order which they were seeking under the 2001 Act. They argued that they had a stateable defence based on their intention to obtain finance to repay the outstanding sums. Matters had moved on since the Reponing Note hearing, however, and the Defenders had not been able to make repayment arrangements. Instead, they now wished to participate in a mortgage to rent scheme. It was accepted that this would require the consent of the Pursuers but that no steps had been taken to obtain consent and that, even if they did enter into such a scheme, there would be a shortfall. In addition, there was a second charge over the property held by another heritable creditor. The onus was on the Defenders to negotiate a settlement with the creditors in relation to any shortfall under the mortgage to rent scheme. The Defenders hadn't contacted the Pursuers to discuss a possible settlement, however. The Pursuers argued that the Defenders' position - that they proposed to proceed with an application under the mortgage to rent scheme - would not provide a defence. It was also not a defence by itself simply to state that the mortgage rights application would be made. The Defenders would have to state what would be in the application so that the Court could consider whether there was a stateable defence. Nothing in the Reponing Note gave the necessary specification. In the Reponing Note, both Defenders stated they were working, but there was no explanation as to why no payment had been made to the Pursuers for over a year. Under the circumstances, the Sheriff had been entitled to take the view that the Reponing Note was simply a delaying tactic. There had been no detailed information about how the Defenders intended to clear their indebtedness when their borrowings were substantially in excess of the value of the property and, on that basis, there was no stateable defence. The Sheriff Principal had to consider whether the Sheriff had been entitled to refuse the Reponing Note.