B&B wins right to recover losses from a 16 year old repossession


Bradford & Bingley can claim back losses from the owner of a property it repossessed 16 years ago, after winning its case in the Court of Appeal.

A lender can normally only claim for losses from a repossession up to 12 years after the sale of the property.

But B&B, represented by Optima Legal, proved that because the home owner made a number of monthly payments of £10 between 2000 and 2004 he was liable for the losses.

The case centered around John Ashcroft who bought a house in 1990 with an £85,000 mortgage from B&B.

The property was repossessed and sold in July 1992 by B&B for £57,500. It was not until 1995 that B&B wrote to Ashcroft asking him how he was going to pay the shortfall.

But it didn’t start official proceedings against him until August 2008 – 16 years after the original repossession.

Between 2000 and 2004 Ashcroft agreed to pay £10 a month to reduce the debt. But he argued these pay-ments did not represent an agree-ment to pay back the debt in full.

B&B argued that in July 2000 Ashcroft completed an income and expenditure form that acknow-ledged the debt and restarted the 12-year countdown.

B&B relied on the Limitation Act 1980 which states if “the person liable or accountable for the claim acknowledges the claim or makes any payment in respect of it the right shall be treated as having accrued on and not before the acknowledgement of payment”.

The court ruled that the nominal £10 monthly payments made without prejudice constituted both an acknowledgement and a part payment of shortfall debt for the purposes of the act. Neil Smith, asso-ciate and profes-sional support lawyer at Optima Legal, says: “This is a pleasing result for the lending sector. The Court of Appeal ruled in favour of B&B as there had been both an acknow-ledgement and part-payment within the 12-year period.”

In 2008, B&B was nationalised and split into two. Its mortgage book remained with the now nationalised Bradford & Bingley plc, the deposits and branch net-work was later sold to Santander and rebranded in January.