Image copyright PA Image caption A judge said the bank's behaviour was "unconscionable"

Bank of Scotland has been unfairly double billing customers who fell behind on their mortgages, a High Court judge in Belfast has ruled.

In a scathing verdict, Master Ellison said the bank's behaviour had been "unconscionable".

He said it had caused borrowers to be "plunged into depression".

The findings could have implications for thousands of Bank of Scotland mortgage holders across the United Kingdom.

The Housing Rights Service which took the case said if the bank's practice had gone unchallenged, many borrowers would have lost their homes.

The bank is a major mortgage lender in Northern Ireland under the Halifax brand, and is ultimately owned by the Lloyds Banking Group.

The case focused on the way it added arrears to the original mortgage borrowing.

That is a standard practice for tackling arrears and is known as capitalisation.

It has the effect of increasing borrowers' monthly repayments.

'Erroneous'

The judge ruled that once capitalisation had taken place, the mortgage should no longer be considered as in arrears.

However, the bank continued to treat such mortgages as in arrears and used that as the basis for bringing legal cases.

The judge said this meant borrowers had been held in fear and were being threatened with repossession on account of an "erroneous and fictional arrears balance".

He said the bank's actions had distorted perceptions of affordability for struggling borrowers.

That was because they faced increased monthly payments to reflect the capitalised arrears and a demand for the immediate payment of those arrears.

The judge said this also distorted the true position in both the minds of those approached for advice and the courts.

He said this meant that "many" court decisions concerning suspended repossession orders had been made on "erroneous assumptions".

'Uphill struggle'

Master Ellison said that as a result he was imposing a series of strict conditions on the bank if it tried to enforce any suspended repossession orders.

He said that if the bank failed to meet these conditions, it "may face an uphill struggle".

The judgement concerned three separate cases brought with the support of the Housing Rights Service (HRS).

One of the people who took a case, with the support of the HRS, was a bank worker.

The court heard that she fell behind on her mortgage because she had to leave her home for a period of time on police advice.

She was warned she was in danger from a criminal conspiracy. In addition, she suffered the death of her partner.

She has now returned to her home and has been making monthly payments above the contracted amount for well over a year.

Speaking after the judgement, Christopher McGrath, solicitor for the Housing Rights Service (HRS), said: "The court has stated that the handling of accounts by Bank of Scotland in these instances, created 'a mist of incomprehension, confusion and self -contradiction'.

"It is our view that this practice unfettered would undoubtedly have resulted in many borrowers unnecessarily losing their home."

The High Court case was taken by the HRS with the help of funding from the Public Interest Litigation Support Project (PILS).

A Lloyds Banking Group spokesperson said the bank was considering the judgement and will "respond accordingly" when it has fully reviewed the findings.

The spokesperson added that the bank encourages customers to contact them at the earliest opportunity if they believe that they will be unable to make their monthly mortgage payment.