Mortgages Flashcards
(45 cards)
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
