Mortgage (gleaned form essays)

Question 1

Where there is UNDUE INFLUENCE, what is the general approach?

Answer 1

1. Priority of charges (if applicable)
   • S48 LRA 2002
   • Abbey v Cann: Registration ends when
2. Undue influence
   • Barclays Bank v O’Brien
   • Etridge
   • HSBC v Brown
3. Possession by mortgagee
4. Sale by mortgagee
5. Using TOLATA 1996
6. Human rights wrt repo
7. Good-to-knows

Question 2

[Undue influence] Outline the cases.

Answer 2

1. O’Brien
   • Wife told that company would fail + son would lose his home if she didn’t sign to put matrimonial home up as security
   • Mortgagee should take REASONABLE STEPS to ensure that consent was properly obtained
2. Etridge
   • O’Brien criticised for setting a ‘low-level threshold’ too in favour of D
   • Reasonable steps include advising surety party independently on mortgage implications
3. HSBC v Brown
   • CURRENT CRITERIA for when mortgagees will be put on inquiry
   a) If likely that consent to mortgage arose from undue influence (from a r/s of trust and confidence)
   b) If, on its face, mortgage is not to the benefit of the party standing as surety

Question 3

[Possession] What can a mortgagor do keep possession?

Answer 3

1. Bring mortgagee to court for possession hearing
   • S36 Administration of Justice Act 1970
   • Mortgagor MUST SHOW that can pay sums due within a ‘reasonable period’: S36(1) AJA 1970
2. Sums due = Outstanding installments under mortgage, need not be whole mortgage: S8 AJA 1970

Question 4

[Possession] Courts will take full sum of mortgage and use guidelines in this case to determine if mortgagor can stay in house

Factors include whether difficulty in paying is temporary

Answer 4

Norgan

Question 5

[Possession] Banks do not need to seek a possession order before sale

Answer 5

• Ropaigealach

* Horsham

Question 6

[Sale] What can mortgagees do?

Answer 6

S101 LPA 1925
1. Sell, insure or appoint receiver of income from mortgaged property

2. Cut trees within 12 months from contract completion
3. Put any restriction/reservation wrt building on or other user of unsold mortgaged land

Question 7

[Sale] When may mortgagees exercise power of sale?

Answer 7

S103 LPA 1925
1. If notice requiring payment of mortgage has been served and mortgagor defaulted for 3 months since; OR

2. Some interest is in arrears and unpaid 2 months from due date; OR
3. Breach of some provision in mortgage deed

Question 8

[Sale] Mortgagee must make every effort to sell property at a reasonable price

Answer 8

Cuckmere Brick Co

Question 9

[Sale] What are 2 comments on mortgagees’ current power of sale?

Answer 9

• Ministry of Justice: Reform this ower so that banks must seek possession before selling OR get an order for sale, granted following considerations for possession in Norgan
• Thompson: Current state leaves banks with ‘wide and unfettered discretion’

Question 10

[TOLATA] What can mortgagors do to keep their property?

Answer 10

Ss14, 15 TOLATA 1996

• Can seek an order under TOLATA to delay repo/sale

Question 11

[TOLATA] Order for sale delayed until children in occupation turned 18 and moved out

Answer 11

Edwards

Question 12

[TOLATA] Could not forestall order for sale because intention to establish matrimonial home no longer prevalent

Answer 12

Achampong

Question 13

[TOLATA] To make the bank wait for payment would ‘be very unfair on the bank’

Delicate balance between ensuring bank gets paid and no undue injustice is done

Answer 13

Bell

Question 14

[TOLATA] Can delay a sale if can prove that can pay mortgage in installments

Husband forged wife’s signature for mortgage then died; wife’s interest converted into loan to bank to be paid in installments and husband’s 25% of house set aside

Answer 14

Shaire

Lord Neuberger: TOLATA ‘has changed the law’ and court now has a flexible discretion that may favour mortgagor

Question 15

{Human rights] HR do not interfere with the interests of private enterprises

Answer 15

Macdonald

Question 16

[Human rights] Proportionality made mortgage cases consistent with public interest

(Perfectly legal for mortgagee to sell property and side-step AJA protections because mortgage market is based on this selling power)

Answer 16

Horsham

Question 17

[Human rights] Court emphasises the flow of money (need to repay what is owed)

Answer 17

Southern Pacific

Question 18

[Good-to-knows] If bank is part of this council, assumed on voluntary basis that they will not seek to sell property without repo order

Answer 18

Council of Mortgage Lenders

Question 19

[Good-to-knows] Ministry of Justice pre-action protocol?

Answer 19

Encourages dialogue between customers and banks

Rule 7.1: Repo should be last resort

Question 20

[Good-to-knows] Law society on the MoJ pre-action protocol?

Answer 20

Protocol does not change the law, but courts may refer to it when determining costs in a possession hearing

Question 21

[Good-to-knows] Mortgage cases where someone was duped into signing highlight th inequality between bank’s powers and that of citizens

To set the 2 parties against each other is as appropriate as ‘smoking being seen as a healthy option’

[Academic]

Answer 21

Whitehouse