The applicant challenged the exercise of a power of sale under a mortgage, saying that the mortgagee’s purposes included purposes not those under the mortgage. The parties had been involved in an attempted development of a penthouse.
Held: The power was validly exercised. Provided the recovery of the sums for which the security was given were at least part of the motive, additional motives did not vitiate the exercise.
Lewison J held: ‘A dissection of a mortgagee’s motives is likely to be difficult in practice. Moreover, unlike statutory powers conferred for the public benefit, or trustees’ powers conferred for the benefit of beneficiaries (which were two analogies on which [counsel] relied) a mortgagee’s powers are conferred upon him for his own benefit. In such circumstances ‘purity of purpose’ may be difficult to achieve. The cases do support the proposition that a power of sale is improperly exercised if it is no part of the mortgagee’s purpose to recover the debt secured by the mortgage. Where, however, a mortgagee has mixed motives (or purposes) one of which is a genuine purpose of recovering, in whole or in part, the amount secured by the mortgage, then in my judgment his exercise of the power of sale will not be invalidated on that ground. In addition I consider that it is legitimate for a mortgagee to exercise his powers for the purpose of protecting his security.’
Judges:
Lewison J
Citations:
[2006] EWHC 74 (Ch), Times 27-Apr-2006, [2007] Ch 197, [2006] 2 P and CR 23, [2006] 3 All ER 1029, [2006] 6 EGCS 170, [2007] 2 WLR 403
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
See Also – Meretz Investments Nv v ACP Ltd QBD 27-May-2002
Meretz sued ACP for monies alleged to be due under agreements. . .
Cited – Hoystead v Commissioner of Taxation PC 1926
Lord Shaw: ‘In the opinion of their Lordships it is settled, first, that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view of obtaining another judgment upon a different . .
See Also – Channel Hotels and Properties (UK) Ltd v Fahad Al Tamimi and First Penthouse Ltd CA 30-Jul-2004
. .
Cited – Thoday v Thoday CA 1964
The court discussed the difference between issue estoppel, and action estoppel: ‘The particular type of estoppel relied upon by the husband is estoppel per rem judicatam. This is a generic term which in modern law includes two species. The first . .
Cited – Arnold v National Westminster Bank Plc HL 1991
Tenants invited the court to construe the terms of a rent review provision in the sub-underlease under which they held premises. The provision had been construed in a sense adverse to them in earlier proceedings before Walton J, but they had been . .
Cited – Republic of India and Others v India Steamship Co Ltd (‘The Indian Endurance and The Indian Grace’) (No 1) HL 29-Mar-1993
Munitions were being carried to Cochin on board the defendants’ vessel. Some was jettisoned in a fire and the remainder was damaged. The cargo owners sought damages in India for short delivery under the bills of lading, as to the jettisoned cargo . .
Cited – Johnson v Gore Wood and Co HL 14-Dec-2000
Shareholder May Sue for Additional Personal Losses
A company brought a claim of negligence against its solicitors, and, after that claim was settled, the company’s owner brought a separate claim in respect of the same subject-matter.
Held: It need not be an abuse of the court for a shareholder . .
Cited – Coflexip S A and Another v Stolt Offshore Ms Ltd and others CA 27-Feb-2004
Proceedings had been brought by a third party in which the patent had been revoked. The Defendant in the first proceedings now sought release from an enquiry as to damages after being found, before the revocation, to have infringed the patent.
Cited – Leeds Industrial Co-operative Society Ltd v Slack HL 1924
The plaintiff complained of a threatened interference with ancient lights.
Held: Damages may be awarded in lieu of an injunction even where the injunction sought is a quia timet injunction, but that power imports a further power to give an . .
Cited – Dexter Ltd v Vlieland-Boddy CA 2003
The court discussed the significance of Johnson v Gore Wood.
Clarke LJ said: ‘The principles to be derived from the authorities, of which by far the most important is Johnson v Gore Wood and Co [2002] 2 AC 1, can be summarised as follows:
Cited – Jaggard v Sawyer and Another CA 18-Jul-1994
Recovery of damages after Refusal of Injunction
The plaintiff appealed against the award of damages instead of an injunction aftter the County court had found the defendant to have trespassed on his land by a new building making use of a private right of way.
Held: The appeal failed.
Cited – Gleeson v J Wippell and Co Ltd ChD 1977
The court considered the circumstances giving rise to a plea of res judicata, and proposed a test of privity in cases which did not fall into any recognised category. ‘Second, it seems to me that the sub-stratum of the doctrine is that a man ought . .
Cited – Downsview Nominees Ltd and Another v First City Corporation Ltd and Another PC 19-Nov-1992
(New Zealand) The holder of a second debenture appointed receivers to the assets. The first debenture holder then also appointed receivers not to obtain repayment of its debt, but to disrupt the work of the first appointed receivers and in order to . .
Cited – Raja v Austin Gray (A Firm) CA 19-Dec-2002
A mortgagee is at all times free to consult his own interests alone as to whether and when to exercise his power of sale. The relationship and duties owed by the receiver are equitable only. Peter Gibson LJ said: ‘(1) A mortgagee with the power of . .
Not followed – Robertson v Norris 1857
A mortgage sale for purposes other than merely to recover payment of the debt was a ‘fraud on a power’. . .
Cited – Nash v Eads CA 1880
Sir George Jessel MR: ‘The mortgagee was not a trustee of the power of sale for the mortgagor, and if he was entitled to exercise the power, the Court could not look into his motives for so doing. If he had a right to sell on June 1, and he then . .
Cited – Belton v Bass CA 1922
The mortgagees of shares in a brewery wanted to a director to be able later to acquire the shares. They could not grant an option. They sold the shares to the director, as mortgagees, and lent the purchase price, interest free. The director could . .
Cited – Ashley Guarantee plc v Zacaria CA 1993
In possession proceedings based on a mortgage debt, the mortgagee’s right to possession of the mortgaged property will not be defeated by a cross-claim of the mortgagor in the absence of some contractual or statutory provision to the contrary. . .
Cited – Farrar v Farrars Ltd CA 1888
The mortgagor of a quarry defaulted, and the mortgagees took possession. They were unable to sell the quarry, but formed a company which bought the quarry at a proper value. The mortgagor sought to set aside the sale.
Held: A mortgagee in . .
Cited – Quennell v Maltby CA 15-Nov-1978
A house was mortgaged to a bank. The house was then let to tenants at an annual rate of pounds 1,000. The tenants were protected as against the mortgagor by the Rent Acts. The tenancy was not binding on the bank. The mortgagor’s wife took a transfer . .
Cited – Palk v Mortgage Services Funding Plc CA 1993
The mortgagees had obtained an Order for possession with the intention, not of proceeding to sell the property but of waiting in the hope that the market might improve. The mortgagor was anxious that the property should be sold so that the proceeds . .
Cited – China and South Sea Bank Limited v Tan Soon Gin PC 1990
A mortgagee’s decision on sale is not constrained by reason of the fact that the exercise or non-exercise of the power will occasion loss or damage to the mortgagor. He can sit back and do nothing. He is not obliged to take steps to realise his . .
Cited – Joseph v Joseph CA 1967
The words in section 38(1) ‘purports to’ means ‘has the effect that’ so that an agreement to give up possession in two years when the lease would still have six years to run infringed section 38 as it would preclude an application or request for a . .
Cited – Mbasogo, President of the State of Equatorial Guinea and others v Logo Ltd and others QBD 21-Sep-2005
The court was asked whether a crime, which was not an actionable tort, constituted unlawful means for the purposes of the tort of conspiracy to injure by unlawful means. . .
Cited – Mainstream Properties Ltd v Young and others CA 13-Jul-2005
The claimant appealed refusal of his claim for inducing a breach of contract against the sixth defendant. It said that an intention to disturb a contract could be inferred.
Held: A mere recklessness as to whether contractual rights were . .
Cited – Belmont Finance Corporation Ltd v Williams Furniture Ltd (No 2) 1980
It had been alleged that there had been a conspiracy involving the company giving unlawful financial assistance for the purchase of its own shares.
Held: Dishonesty is not a necessary ingredient of liability in an allegation of a ‘knowing . .
Cited – Strover v Harrington 1988
A property was at first wrongly described by the agents as having mains drainage. Correcting information was sent to the buyer’s solicitors by the Agents, but the solicitors did not pass on the correction to their client. The mistake was later . .
Cited – Douglas and others v Hello! Ltd and others (No 3) CA 18-May-2005
The principal claimants sold the rights to take photographs of their wedding to a co-claimant magazine (OK). Persons acting on behalf of the defendants took unauthorised photographs which the defendants published. The claimants had retained joint . .
Cited – Credit and Mercantile Plc v Feliciangela Marks CA 14-May-2004
The defendant had charged her home to the claimant and fallen into arrears. There was a sub-charge executed on the same day in favour of the Bank of Scotland (BOS) under which the claimant agreed to repay to BOS the amount it owed to them.
Cited – Kleinwort Benson Ltd v Lincoln City Council etc HL 29-Jul-1998
Right of Recovery of Money Paid under Mistake
Kleinwort Benson had made payments to a local authority under swap agreements which were thought to be legally enforceable when made. Subsequently, a decision of the House of Lords, (Hazell v. Hammersmith and Fulham) established that such swap . .
Cited – Paragon Finance Plc (Formerly the National Home Loans Corporation Plc) v Pender and Pender ChD 25-Nov-2003
Section 114 of the 1925 Act has no application to Registered Land. It provides for a transfer ‘unless a contrary intention is expressed’ in the mortgage. Thus if section 114 applies, all depends upon the true construction of the mortgage. The power . .
Cited – Michaels and Michaels v Taylor Woodrow Developments Ltd, etc ChD 19-Apr-2000
The respondents sought to strike out the claim for conspiracy and failure to comply with the Act. The respondent was landlord of premises occupied by the claimants. They had served a notice under the Act of their intention to sell.
Held: The . .
Cited – Kuwait Oil Tanker Company SAK and Another v Al Bader and Others CA 18-May-2000
The differences between tortious conspiracies where the underlying acts were either themselves unlawful or not, did not require that the conspiracy claim be merged in the underlying acts where those acts were tortious. A civil conspiracy to injure . .
Cited – Deakin, JDeakin v Corbett, Corbett, Halifax Plc CA 18-Dec-2002
The home owners requested the setting aside of the sale of their house after a re-possession, alleging impropriety, and that it had been sold at an undervalue. The respondent society had a rule that properties taken into possession could not be . .
Cited – Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd and Others HL 23-Jan-2001
The claimant took out insurance on its fleet of ships (the Star Sea). It had been laid up in its off season. The ship’s safety certificates were renewed before it sailed. It was damaged by fire. The insurers asserted that the ship had been . .
Cited by:
See Also – Meretz Investments Nv and Another v ACP Ltd and others ChD 14-Nov-2007
The parties disputed the success of a sale by a mortgagee in possession of various properties. The parties disputed the apportionment of costs.
Held: The appeal failed. Where there is no express agreement concerning the division of costs, a . .
Appeal from – Meretz Investments Nv and Another v ACP Ltd and others CA 11-Dec-2007
The claimant alleged that when exercising its power of sale under a mortgage over its land, the mortgagee had done so in order to override the claimant’s intention of granting a sub-lease, and that this was a tortious intention to induce a breach of . .
Cited – The Co-Operative Bank Plc v Phillips ChD 21-Aug-2014
The bank had brought possession proceedings against the defendant under two legal charges securing personal guarantees. The proceedings had been abandoned, but the court now was asked whether costs for the defendant should be on the standard or . .
Lists of cited by and citing cases may be incomplete.
Contract, Land
Updated: 05 July 2022; Ref: scu.238210