Mortgages Flashcards
Krelinger v New Patagonia
Once a mortgage, always a mortgage
Collateral advantage will be valid if arm’s length transaction
Toomes v Conset
Courts will not allow a mortgage term that prevents redemption
Knightsbridge Estates v Byrne
Freedom of contract in commercial agreements - courts will uphold a term that postpones redemption for freehold mortgages
Fairclough v Swan Brewery
Courts will uphold right to redeem early if postponement would render the right to redeem an illusion (leasehold mortgage)
Samuel v Jarrah Timber
An option granted at the same time/as a term of the mortgage will normally be invalidated
Reeve v Lisle
An option granted in a separate transaction may be upheld (12 days later) - must give borrower unfettered choice to refuse the option
Warnborough v Garmite
Mortgage and option formed part of a larger transaction - courts held it was part of a sale and purchase agreement so option was not invalidated
Noakes v Rice
Mortgage must not be converted into something else
Once mortgage has been repaid, any collateral obligations must cease
Esso v Harper
Collateral advantage may risk being invalidated if restraint of trade (policy reasons)
Cityland v Dabrah
Court struck down punitive interest rate - no explanation of high premium, unequal bargaining power (buying own home)
Multiservice Bookbinding v Marden
Punitive interest rate but Equity will not save a commercial party from a hard bargain
Unconscionable = takes advantage of youth, inexperience or ignorance and introduces a term which no sensible person would have accepted (morally reprehensible)
Holles v Wyse
Charges for arrears/penal interest rates should relate to a genuine pre-estimate of losses incurred by default
Falco Finance v Gough
Dual interest rate - extortionate credit bargain under CCA 1974 as no relation to loss finance company would incur as result of default
Also considered weak bargaining position, inducement and enticement of initial interest rate as ‘harsh, unremitting and evil term’
Paragon Finance v Nash
Court has inherent equitable jurisdiction to strike down unconscionable terms
Interest rates 2-4% above high street rates not unconscionable due to commercial difficulties
Davies v Direct Loans
Not unconscionable to impose interest rate 5% higher than market average due to borrower’s poor credit history and risk taken by lender
Avon Finance v Bridger
Mortgage set aside because son misled elderly parents into believing they were signing document relating to original mortgage, not a fresh charge
Kingsnorth Trust v Bell
Mortgage set aside as husband had misrepresented level of risk to wife and he was responsible for obtaining her signature (acted as bank’s agent)
Coldunell v Gallon
Charge not set aside as bank had not relied on the borrower to obtain signatures and had advised them to obtain independent advice
Hewett v First Plus Financial Group
Husband failed to disclose an extra-marital affair to his wife - amounted to undue influence as she had agreed to mortgage to save home and marriage
Barclays v O’Brien
Mortgage set aside as bank had failed to explain effect of second mortgage to wife (secured overdraft facility for husband’s business) and did not recommend she obtain independent advice
CIBC Mortgages v Pitt
Mortgage not set aside for undue influence as bank lender had no actual or constructive notice
RBS v Etridge
Claimant seeking to have mortgage set aside must show they placed trust and confidence in other party and that the transaction called for an explanation
Lender would be on enquiry where
1) Wife guaranteed her husband’s debts or those of his company
2) Someone with non-commercial relationship guaranteed the debts of another’s business
Not put on enquiry where transaction is jointly advanced for apparent mutual benefit
Should insist on wife taking independent legal advice in the context of face-to-face meeting in husband’s absence (solicitor not bank’s agent)
Abbey National v Stringer
Mortgagor (didn’t speak English, placed full confidence in her son) signed mortgage securing borrowing for son’s business - not for her benefit and not explained to her -set aside
Equity & Law Homes v Prestidge
Implied consent by wife to first mortgage extended to later re-mortgage (no knowledge), but could not extend to a sum large than original amount agreed
Castle Phillips Finance v Piddington
Confined Prestidge to where mortgages are for same purpose
Four Maids v Dudley Marshall
Mortgagee may go into possession before the ink is dry on the mortgage
White v City of London Brewery
Doctrine of waste - if lender goes into possession he must manage property to full potential and pay any profit back to the mortgagor
Ropaigealach v Barclays
Court order not necessary for possession
Cheltenham & Gloucester Building Society v Norgan
Reasonable period to repay sums due - starting point is outstanding term of the mortgage
National & Provincial Building Society v Lloyd
Borrower wishing to obtain relief must present detailed financial plan
Target Home Loans v Clothier
Three month postponement granted to allow borrower to sell house himself
Mortgage Service Funding v Steel
Postponement to allow for sale requires firm evidence that a particular sale is about to be completed (exchange of contracts)
Bristol & West Building Society v Ellis
Postponement unlikely if property prices are falling, there is negative equity or undue delay
Payne v Cardiff RDC
Power of sale arises as soon as one instalment of capital is due
Horsham v Clark
Power of sale not incompatible with Protocol 1 ECHR - enjoyment of possessions
Property & Bloodstock v Emerton
Borrower’s right to redeem is lost as soon as lender enters into contract to sell property
Cuckmere Brick v Mutual Finance
Duty to obtain proper or market price (not best possible price) - reduced sale price due to failure by lender to disclose planning permission
Lender entitled to sell when he likes
Michael v Miller
Lender must make informed judgement as to how the sale should be advertised/how long marketed
Will not be liable if sale price within correct bracket/acceptable margin of error
Bishop v Blake
Lender breach of duty to obtain proper price - minimum effort, collusion with buyer an uninformative advert - sold for £115k less than market value
Silven v RBS
Entitled to sell property as it stands and need not make improvements
‘Unfettered discretion’ as to when to sell
Bell v Long
Lender entitled to sell 4 properties as a discounted portfolio rather than wait
Palk v Mortgage Services Funding
Negative equity and poor market - lender wanted to rent property and wait for sale
Since arrears would increase, borrower was entitled to sell as lender was gambling with borrower’s increasing liabilities rather than their own money
Re White Rose Cottage
Equitable mortgage made by deed should also confer a power of sale
Mortgage Corporation v Nationwide Credit Corporation
Legal mortgage over registered land must be registered otherwise only equitable
Tse Kwong Lam v Wong Chit Sen
Cannot sell house like second hand furniture - must obtain expert advise as to methods of sale, marketing and any auction reserve
