First National Bank plc v Syed

First National Bank plc v Syed
Court of Appeal 8 November 1990

In 1986, Mr and Mrs Syed borrowed £5000 secured by a second charge on their home. Interest was charged at a variable rate. Mr Syed subsequently lost his job, and had not worked since. They fell into arrears and were only able to make sporadic payments, so the balance began to rise. First National began repossession proceedings and this was granted in January 1989. In April a District Judge suspended possession provided the debtors paid off all the arrears within 28 days and then kept to their regular instalment plan. The Judge made a further order in July 1989 suspending possession provided the debtors paid the current instalments plus £172.10 per month towards the arrears, then about £2000. This would have required total monthly payments of around £270, far beyond the capabilities of Mr and Mrs Syed, who were on supplementary benefits.
In March 1990, Mr and Mrs Syed applied to the court for a further stay, on the basis that they would pay £50 per week, but this was changed to £150 and then rejected by the Judge.
Mr and Mrs Syed appealed and in April 1990, Judge James dismissed their application, saying, “There are always sad human factors in these cases. Considerable arrears have been outstanding for a long time. On past form, I do not feel justified in assuming there is a reasonable prospect for any real change.” Accordingly, he dismissed the application.

Mr and Mrs Syed appealed to the Court of Appeal, and the hearing took place in November 1990, by which time arrears had grown to £2137, with the balance being around £9200.
The Court dismissed the appeal, on the basis that Section 129 states that a time order should be granted, “if it appears to the court just to do so”. Consideration of what is “just” does not exclude the creditor’s position. In the light of the fairly long history of default and sporadic payments on the defendants’ part, and in the absence of any realistic, as opposed to merely speculative, prospect of improvement in their finances.
It would be unreasonable to expect the creditor to accept instalments which the debtors can afford, when these will be too little even to keep down the interest accruing on their account.