In the recent decision of Bluestone Mortgages Ltd v Stoute [2025], it was held that a moratorium over part of a debt functions as a moratorium over the whole of that debt.
The case related to an appeal by the lender (Bluestone), of an earlier decision preventing Bluestone from enforcing a possession order over the borrower’s (Mr and Mrs Stoute) property.
Bluestone had previously loaned Mr and Mrs Stoute the amount of £300,000, which had been secured by way of a first legal charge over their property.
Mr and Mrs Stoute subsequently defaulted on the loan repayments and accrued arrears in the amount of £108,000. Bluestone accordingly applied to the court and was successful in obtaining a possession order over the property and a judgment debt for the amount owing in arrears.
Mr and Mrs Stoute availed themselves of Part 1, Regulation 7(2) of the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, which applies in circumstances of mental health crisis and precludes enforcement action being taken against a debtor within a specified period (the “Moratorium Period”) without leave of the court.
The lender sought a declaration that the debt was not a “relevant debt” for the purposes of the regulations and as such the permission of the court was not needed to enforce the debt.
At first instance, the court held that, while the £300,000 loan amount was not a qualifying debt for the purposes of the regulations, the £108,000 in arrears was a qualifying debt and was therefore subject to the moratorium.
In considering the declaration sought, the court considered that the two debts should be treated together as components of a single “mixed debt” and held that the wording of Regulation 7(7), prohibiting enforcement “regarding a moratorium debt” should encompass circumstances of mixed debts where only a proportion of the total debt was subject to the moratorium.
The declaration was consequently refused.
On appeal, Mellor J concurred with the first instance judge, noting that a declaration in the lender’s favour would permit the lender to evict Mr and Mrs Stoute from their home in circumstances where Mr Stoute was seeking mental health crisis treatment.
In his decision, Mellor J noted that “there were very few events which could be more detrimental to someone's mental health” and as such there was a compelling reason to uphold the first instance judge’s purposive interpretation of Regulation 7(7).
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