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Djabar Babai's home in Heaton Mersey
15-year mortgage debt wiped out by judge
Gemma Rathbone13/ 2/2008
A HEATON Mersey man who hasn’t paid a penny towards his mortgage for more than 15 years has had his debt wiped out by judges who said he had "squatters rights".
The last time Djabar Babai paid anything towards his mortgage was when he shelled out just £40 in January 1993.
But, for that very reason, the Appeal Court ruled he had developed "squatters’ rights" over his £200,000 home and the NatWest Bank’s security is now worthless.
In a controversial ruling made this week, Lord Justice Mummery decided the bank had delayed so long in taking repossession action against Mr Babai’s Valley Road home that it was now too late.
The judge, sitting with Lord Justice Hughes and Mr Justice David Richards, said the court's decision would be "of considerable interest to mortgagees and mortgagors in general".
NatWest lawyers argued there might be a "significant number" of other cases in which mortgage debts would be "extinguished" as a result of the ruling.
And banks warned that the ruling could force them to take early action which could mean vulnerable home owners being forced onto the streets.
Justin Fenwick QC, for the bank, said lending institutions "could be forced to issue possession proceedings, where they would not otherwise have done so" to protect their security.
Lord Justice Mummery added: "It was even suggested that the ruling could lead to vulnerable mortgagors being made homeless, when they could otherwise have gone on living in their own homes."
However, the judge described that as "an alarming, but unlikely prospect" and said the practical implications of the decision "are in danger of being exaggerated".
Mr Babai and his wife took out a second mortgage on her home in 1989 to secure his bank lending. NatWest issued a formal demand in 1992 but took no steps to launch repossession action or otherwise protect its legal position.
After negotiations, Mr Babai, who was made bankrupt in March 1993, paid some instalments, but his last payment was in January 1993. A further demand for payment was made but, again, the bank took no legal action to enforce its rights.
Lord Justice Mummery said Mr and Mrs Babai had remained throughout in "ordinary possession" of their home and the bank's right to enforce the mortgage was "barred" under the terms of the 1980 Limitation Act by the passage of more than 12 years without legal action being taken against the couple.
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14/02/2008 at 10:11
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16/02/2008 at 15:56