Alliance & Leicester plc v Slayford [2001] EWCA Civ 1984

Facts

• Alliance & Leicester plc, as mortgagee, sought to recover a debt secured by a legal charge granted by D1.
• D2, D1's spouse, asserted an equitable interest in the property, claiming she did not fully understand the consequences of her consent to the legal charge.
• D2’s assertion created an equitable defense, which prevented the lender from immediately obtaining a possession order.
• In response, Alliance & Leicester pursued a monetary judgment against D1 based on his personal covenant in the mortgage agreement.
• The lender subsequently considered initiating bankruptcy proceedings to recover the outstanding debt.
• The case raised concerns over the relationships and sequencing of remedies, namely possession, monetary judgment, and bankruptcy, available to a mortgagee.

Issues

1. Whether a mortgagee may pursue a monetary judgment and bankruptcy proceedings after being prevented from obtaining possession due to an equitable defense.
2. Whether pursuing these alternative remedies amounts to an abuse of process.
3. Whether possession and monetary judgment claims, as distinct remedies, may be applied concurrently or successively.

Decision

• The Court of Appeal ruled that a mortgagee is entitled to pursue alternative remedies when an equitable defense blocks possession.
• Obtaining a monetary judgment based on a personal covenant was found to be a claim separate from a claim for possession.
• Commencing bankruptcy proceedings after securing monetary judgment, even if it leads to an order of sale, does not constitute an abuse of process.
• The mortgagee is not confined to a single remedy and may use all lawful remedies available until the debt has been satisfied.
• The court affirmed a lender may pursue recovery using any lawful means in whatever order is tactically preferred.

Legal Principles

• A mortgagee may pursue concurrent or successive remedies—such as possession, monetary judgment, and bankruptcy—until the debt is fully satisfied.
• An equitable defense preventing possession does not prevent pursuit of monetary judgment or bankruptcy remedies against the mortgagor.
• The claim for a monetary judgment under a personal covenant is distinct from a claim for possession; the success or failure of one does not preclude the other.
• Commencing bankruptcy proceedings after an unsuccessful possession claim is not an abuse of process, even if it leads to the same ultimate result (sale).
• Legal rights of the mortgagee to recover debt are not restricted by initial setbacks in enforcing security.

Conclusion

The decision in Alliance & Leicester plc v Slayford confirms that a mortgagee may seek alternative remedies—including monetary judgment and bankruptcy—when possession is barred by equitable defense, and such actions do not constitute abuse of process; each remedy is treated as a distinct means of recovery.