National Westminster Bank plc v Skelton [1993] 1 WLR 72
Right to possession under mortgage cannot be set-off by counterclaim
Facts
The claimant bank sought repossession of the defendants’ dwelling house in terms of a legal mortgage. The mortgage in favour of the bank was as continuing security for the liabilities to the bank of a construction company.
Issues
At first instance, the bank was successful and the defendants appealed to the Court of Appeal. The defendants made a counterclaim which they said should be set-off against the claim for possession. They argued, inter alia, that the judge had wrongly held that they could not rely upon a set-off which was available to the construction company against the bank, without the company being a party to the proceedings.
Decision/Outcome
The Court of Appeal confirmed that a borrower cannot normally resist a repossession claim by raising a counterclaim by way of set-off. The defendants could not therefore rely on a right of set-off which the company might be entitled to as against the bank. There were no grounds for withholding an immediate order for possession as there was no evidence that the defendant would be able to repay the debt within a reasonable timeframe. The Court relied on the line of existing authority which established that the existence of a counterclaim, even where it exceeds the amount of a mortgage debt, will not by itself defeat the right of possession of the lender. Slade L.J. noted that this principle was to be commended, as it would be abusive if a lender were to be denied his right to possession by ill-founded allegations. The defendants should have been aware that upon the execution of a legal charge by way of guarantee, they were exposed to an immediate risk of possession proceedings.
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Updated 20 March 2026
This case summary remains legally accurate. National Westminster Bank plc v Skelton [1993] 1 WLR 72 is a Court of Appeal authority that continues to be cited for the principle that a mortgagee’s right to possession is not normally defeatable by a borrower’s counterclaim or set-off. This principle has been consistently applied in subsequent case law, including Ashley Guarantee plc v Zacaria [1993] 1 WLR 62 (decided in the same period and reinforcing the same line of authority) and remains good law.
There have been no statutory changes that displace this principle in the context described. The Administration of Justice Acts 1970 and 1973 confer a discretion on courts to adjourn or suspend possession proceedings where a mortgagor is likely to be able to pay sums due within a reasonable period, but those provisions do not affect the core principle that a counterclaim or set-off does not by itself defeat a possession claim. This article therefore accurately reflects the current legal position. Readers should note that in consumer mortgage contexts, the Financial Conduct Authority’s Mortgage Conduct of Business rules impose pre-action obligations on lenders, and the Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property also applies, but these procedural requirements do not alter the substantive rule stated in this case.
