Disability discrimination claim against lender dismissed

In the recent case of Green v Southern Pacific Mortgage Limited, the Court of Appeal was asked to consider whether a lender’s failure to agree to change a disabled borrower’s mortgage from a repayment mortgage to an interest-only was discriminatory.

Section 19 of the Equality Act 2010 imposes a duty on service providers not to act in a discriminatory manner. 

Where the service provider puts a disabled person at a substantial disadvantage in comparison with those who are not disabled, the service provider must take such steps as are reasonable to avoid the disadvantage. 

The facts of the Southern Pacific case were that Mrs Green entered into a mortgage of her property with Southern Pacific on a repayment basis.  She subsequently began to suffer from severe depression which amounted to a disability for the purposes of the discrimination legislation.  Southern Pacific were aware of this disability.

Mrs Green then fell into mortgage arrears. Southern Pacific issued proceedings seeking possession of the property.  Mrs Green requested that her mortgage be switched to an interest‑only mortgage but Southern Pacific refused. 

Mrs Green sought to defend the possession claim by relying upon the disability discrimination legislation and arguing that Southern Pacific had discriminated against her by failing to make reasonable adjustments. Put simply, she argued that the lender was discriminating against her by failing to allow her to switch to an interest-only mortgage.   

The County Court dismissed the defence and granted the order for possession.

Mrs Green appealed to the Court of Appeal.

The Court of Appeal dismissed her appeal and ruled, in summary, that:-

• an interest‑only mortgage differed entirely from a repayment mortgage.  It was a different service, with a different loan, and a different and uncertain security.  Mrs Green was effectively seeking a new loan, with new terms, because she was in default.

   

• Southern Pacific’s policy of not allowing borrowers to convert from a repayment mortgage to an interest‑only mortgage was a policy that applied to all people.  There was therefore no basis for arguing that “adjustments” could be made to bring about an equality of result for everyone. 

   

• it would be unreasonable to expect Southern Pacific to exclude disabled persons from its policy of not allowing customers to switch to different types of mortgage.  This would require Southern Pacific to accept a lesser form of security for its loan and was not a reasonable adjustment.

The decision confirms that the provision of an interest‑only mortgage is a wholly different service from the provision of a repayment mortgage for the purposes of the disability discrimination legislation and that refusing to allow a borrower to switch from one to the other is not discriminatory and is not unlawful.