My boat has been repossessed and I've also been handed the mortgage to pay

[DougH]

Am I correct that the boat in question is a is a ski boat or small sportscruiser. (Not familier with the boat range)

If so does such a boat come under Maritime Law ?

Do not have any real knowledge of such laws but surely for anything to be enshined in law the definition of a boat or vessel must be defined.

 

[Nick_H]

From the 1st line of the judgement it seems the OP did not acknowledge service or offer a defence, so the court would find for the prosecution regardless. I'm also not sure if he would now be granted an appeal, even if he did have a strong case?

 

[jfm]

Am I correct that the boat in question is a is a ski boat or small sportscruiser. (Not familier with the boat range)

If so does such a boat come under Maritime Law ?

Do not have any real knowledge of such laws but surely for anything to be enshined in law the definition of a boat or vessel must be defined.

The laws (both UK and overseas) generally apply to ships, which are defined as vessels used for navigation. Navigation has been intepreted by the courts as going from A to B.

The only precedent is the (Goodwin, I think) precedent where the courts held a jetski is not for going enywhere but just for having fun on the water, so not a ship. At another end of spectrum, Your s/seeker is unquestionably a ship. A (say) Laser sailing dinghy might not be a ship, but there is no precedent. A (say) 18foot sportsboat is borderline. Plainly some 18footers undertake passages, whilst others might be used exclusively for going in circles around a waterski lake. There is no precedent on this point in UK law. Frankly, getting a precedent will always cost more in legal fees than the boat in question is worth. The only reason the jetski precedent occured was becuase death or injury was involved

 

[benjenbav]

I do not see how another person's debt can become yours the way you describe. Are you sure you have read the judgement correctly? I think point 1 of the judgement is in favour of the claimant (the bank) against the person who originally borrowed the loan, not you. So I am pretty confident that you do not owe money to the bank. Put the full judgment up on a server if you want us to read it

I've been thinking about this aspect and I could see circumstances where one person takes over another's debt but not without being aware of it.

Using a parallel, which also has relevance to the marine mortgage issues which some posters have been concerned about, let's say a company goes into insolvent liquidation owing (apart from other debts) £100,000 to its bank, which has a debenture which consists of a fixed charge on a big piece of machinery and a floating charge, which crystallises on liquidation on the stock in trade owned at the time. The liquidator could sell the company to a buyer, in which case the buyer would take over the company's debts in full. Much more likely the liquidator will sell the assets. Despite the fact that both the machinery and the loose stock are charged assets any buyer will not take over the debt and will get them free of debt and free of charge.

I have deliberately used the example of a liquidator here, because the liquidator is in a special position of being tasked with realisation of assets. (Similar would apply to a trustee in bankruptcy in an individual insolvency). If the company itself, prior to liquidation (and ignoring preferences etc) were to sell a charged asset, it could not validly do so without the chargeholder (bank)'s consent and, if it did, the buyer would not acquire a good title - the bank would be able to repossess the asset. But this is not the same as the buyer taking over the debt to the bank.

BTW, I should mention that - whilst I am a lawyer, I am not a maritime lawyer and anyone advising on this properly will need to understand maritime law. As it happens, I am writing this whilst having a break from a real estate deal with a partner in what is probably the UK's best known shipping law practice, albeit that he - and I can say this with certainty because I've known him for years and years - knows about as much about maritime law as I do.

 

[duncan1859]

I acknowledged but my letter of defence was considered as no defence (i guess inadmissable) as it was not correctly filed. However, my solicitor feels that we hae a chance with this too as it is usual practice if a defence is offered by an individual that is presented incorrectly, the court out of common courtesy usually notifies the defendant and gives him a chance to resubmit his defence correctly.

the value of the boat (sports cruiser) was £17.5k in 2006. we used it a lot as we both ski and fish and so we figured that it was worth around £7k allowing for deprecation when doing our divorce figures in 2008/9. Obvoiously this is without trailer and equipment that would not have formed part of a mortgage. This is my first boat so I could have been way off I guess.

 

[duncan1859]

I agree with those who think I am confused and that the judgement was in fact against the original borrower. However, I can't ignore the fact that the bank's solicitors have presented me with a statutory demand for the £26,383.13 including interest. It is a mess and very confusing which is even proving quite a challenge for the solicitor to pick through.

I suppose the best I can get out of this is that I now know not to try to save money and to get a good lawyer straight away. I'll post the outcome or update when I get news later in the week Thanks for all your help.

 

[jfm]

BJB, I follow what you write but I don't see there is any basis in it for thinking a buyer takes over a seller's obligation to repay a lender (beyond the lender's right to seize the asset pledged as security).

It would be a most awkward piece of law, so totally contrary to fairness and public policy that parliament would surely legislate it away, if a good-faith buyer could become cash-indebted to a bank in an amount greater than the value of the asset he bought. No reason why buying a newspaper couldn't mean you owe £1m to Bank of Scotland

Excuse the pedantry, but you surely did not mean to write "...sell the company to a buyer, in which case the buyer would take over the company's debts in full"

 

[jfm]

I agree with those who think I am confused and that the judgement was in fact against the original borrower. However, I can't ignore the fact that the bank's solicitors have presented me with a statutory demand for the £26,383.13 including interest.

Right. Phew. At last we've established that, which is what Nick-H said at the start. And it's odd your sol'rs have not made this crystal clear to you. You absolutely do NOT owe £26k to the bank, for all the reasons stated above. You merely have to hand over the boat to the bank UNLESS you pay them £26k, which is a very different thing.

The statutory demand absolutely does NOT mean you have to pay £26k to the bank. You position is, I repeat (and on the facts given by you in this thread, which is a significant qualification), that you merely have to hand over the boat to the bank UNLESS you pay them £26k

As the boat is only worth £8k, you need to gulp hard and consider whether it is worth spending money on legal fees, when all you "win" is an £8k boat, and when your chances of winning might be low. It might frankly be cheaper to hand over the boat. You should also consider hard whether your solicitor is sharp enough. If he has allowed you to think that judgment means you owe the bank £26, think about how good he is. If his line of attack is anything other than finding an imperfection in the bank's security, again think about whether he is right for the job.

Good luck

 

[benjenbav]

BJB, I follow what you write but I don't see there is any basis in it for thinking a buyer takes over a seller's obligation to repay a lender (beyond the lender's right to seize the asset pledged as security).

It would be a most awkward piece of law, so totally contrary to fairness and public policy that parliament would surely legislate it away, if a good-faith buyer could become cash-indebted to a bank in an amount greater than the value of the asset he bought. No reason why buying a newspaper couldn't mean you owe £1m to Bank of Scotland

Excuse the pedantry, but you surely did not mean to write "...sell the company to a buyer, in which case the buyer would take over the company's debts in full"

Yup, not exact enough. I was hoping to make an impressionistic point. But what I should have said is "...sell the company to a buyer, in which case the buyer would acquire the company with all its existing debts". I was trying to illustrate your point that it would be most unusual circumstances and most legally awkward if debts themselves, rather than burdened items could pass to an unsuspecting buyer.

 

[Marsupial]

Right. Phew. At last we've established that, which is what Nick-H said at the start. And it's odd your sol'rs have not made this crystal clear to you. You absolutely do NOT owe £26k to the bank, for all the reasons stated above. You merely have to hand over the boat to the bank UNLESS you pay them £26k, which is a very different thing.

The statutory demand absolutely does NOT mean you have to pay £26k to the bank. You position is, I repeat (and on the facts given by you in this thread, which is a significant qualification), that you merely have to hand over the boat to the bank UNLESS you pay them £26k

As the boat is only worth £8k, you need to gulp hard and consider whether it is worth spending money on legal fees, when all you "win" is an £8k boat, and when your chances of winning might be low. It might frankly be cheaper to hand over the boat. You should also consider hard whether your solicitor is sharp enough. If he has allowed you to think that judgment means you owe the bank £26, think about how good he is. If his line of attack is anything other than finding an imperfection in the bank's security, again think about whether he is right for the job.

Good luck

Thats more like it, the bank can sieze the boat and demand money to satisfy their leon, but they cant have it both ways! ie the boat AND the money.

 

[Nick_H]

Duncan, if you like the boat, then now would be the time to offer to buy it from the bank at a knock down price. If it's worth 7-8k, you could offer them 4k?

 

[PaulGooch]

Thats more like it, the bank can sieze the boat and demand money to satisfy their leon, but they cant have it both ways! ie the boat AND the money.

I'm not a lawyer, but i think in this case they may be able to do just that.

If the previous owner still had the boat, they would re-posses it and sell it, leaving him to pay the shortfall between the price the boat made and the debt owed.

If maritime law states that the debt goes with the boat, then the OP will be responsible for the unpaid mortgage. They will again re-posses it and sell it, leaving him to pay the shortfall between the price the boat made and the debt owed. This is to me, what is stated in the judgement.

Everyone keeps quoting examples that have nothing to do with maritime law. IMO, the most important question is "does maritime law state that the mortgage becomes the responsibility of the purchaser".

I know it makes no logical sense and is grossly unjust if that is the case, but.....

 

[Marsupial]

I'm not a lawyer, but i think in this case they may be able to do just that.

If the previous owner still had the boat, they would re-posses it and sell it, leaving him to pay the shortfall between the price the boat made and the debt owed.

If maritime law states that the debt goes with the boat, then the OP will be responsible for the unpaid mortgage. They will again re-posses it and sell it, leaving him to pay the shortfall between the price the boat made and the debt owed. This is to me, what is stated in the judgement.

Everyone keeps quoting examples that have nothing to do with maritime law. IMO, the most important question is "does maritime law state that the mortgage becomes the responsibility of the purchaser".

I know it makes no logical sense and is grossly unjust if that is the case, but.....

YES! BUT! it all depends on the status/terms of the original mortgage/loan at £27,000 its too low for a marine mortgage, if the boat was unregistered then its just a loan on an asset, if it was secured on the boat by way of a registered interest via MCA it becomes a "marine issue" with all the attendant ancient rulings, in which case the brown stuff hits the spinny thing, as I have said previously.

 

[PaulGooch]

YES! BUT! it all depends on the status/terms of the original mortgage/loan at £27,000 its too low for a marine mortgage, if the boat was unregistered then its just a loan on an asset, if it was secured on the boat by way of a registered interest via MCA it becomes a "marine issue" with all the attendant ancient rulings, in which case the brown stuff hits the spinny thing, as I have said previously.

27k was the outstanding amount, we don't know the amount of the original mortgage.

 

[Searush]

27k was the outstanding amount, we don't know the amount of the original mortgage.

That 27k probably includes ALL costs including court costs as well as interest - and explains why it is sooo much higher than the boat value.

 

[duncan1859]

the original loan was for £23,800 and it was taken out on an unregistered 'ship' via a marine loan (Non-regulated).

The bank's paperwork when they started proceedings said that their interest in the boat was 'duly registered'; now they state that it is unregistered. I believe that they have changed tack because of the 'Shizelle' case, but can't be sure of course.

 

[Lucky Duck]

At the risk of being shot down in flames, my understanding of 'marine loans' was that they are unsecured personal loans offered for sums below £25k. i.e. a nautical version the loans available from high street lenders/supermarkets for car purchases, home improvements and the like.

In this case I would have thought the debt should stay with the person who took out the loan and the bank have no business trying to pursue this via the new owner.

 

[jfm]

This is to me, what is stated in the judgement.

You are misreading the judgment. The debt obligation to the bank does not transfer "with the boat" or otherwise. Nothing, even in in maritime law, causes that to happen. Even OP now confirms that to be the case. OP's only "obligation" to the bank is to hand over the boat. Please don't introduce red herring material into this already-scary subject. And be very careful about what you read on websites eg what you cited earlier; it just doesn't mean what you had in mind and the author was using sloppy/imprecise language

I'm pretty confident in saying there is no instance in UK law whatsoever, where an innocent third party can unwittingly become liable for another person's debt to a bank in this sort of circumstance. If anyone knows of one, please say

 

[ari]

Marine law is different from "normal" law, this seems to be the point that passes everyone by.

The boat does NOT need to be registered, it does NOT need to be a "marine mortgage".

If money was loaned for the boat then the debt follows the boat.

Oh, and there's no way of finding out whether a boat has outstanding finance.

And still people are saying that "it'll probably be alright so that's good enough".

Genuinely odd.

 

[jfm]

In this case I would have thought the debt should stay with the person who took out the loan and the bank have no business trying to pursue this via the new owner.

Simon my guess as to the detailed underlying facts is that you are right, and in the alternative I'd bet strongly that there is a flaw or imperfection in the bank's conduct which means their claimed security could be overturned, especially as they are enforcing it (David v Golliath-ly) against a totally innocent consumer and they made no effort to make the world at large aware of their security. For sure, Lord Denning would have found in favour of OP.

Alas that is all now academic. The time to run those arguments was at the court hearing that OP didn't turn up to. OP has made the catastrophic error of not entering a defence, and the bank now has a HC judgment saying they can take the boat. That alas changes the whole thing. OP has shot his foot right off by not entering a defence. He is going to need a very smart lawyer, and the will to place a large bet, to petition the copurt to "let him off" about the non defence, and then argue successfully that there is a flaw in the bank's security. That's two big hurdles, over BOTH of which OP must now jump in order to "win". The cost of legal fees on losing is well over £8k. Note, the court will not naturally be sympathetic towards an applicant who didn't enter a defence or even turn up to the hearing.

Sensible thing now is abandon the legal route and write to bank demonstrating the £8k value by reference to boats on the market, and offering them £4k or £6k or something as Nick H said a few posts above EDIT: when writing to bank, point out that their security is over the boat only, not the trailer. They will have to pay the cost of sending a truck and renting a crane to collect it, then take it to a sales yard. If you make it sound a lot of aggro, Nick's suggested £4k will become even more attactive to them