The deposit of title documents, without more, gives rise to an inference that the deposit was intended by the parties to operate as creating an equitable charge or mortgage over the property whose title document is deposited. In logic there could be no distinction between deposits to secure a first and third party indebtedness.
Templeman J said: ‘But in my judgment this is a contractual lien – it is said to be a contractual lien – and that makes all the difference. It is also a contractual charge; true it is that the charge arises by presumption, but it does not arise by operation of law. What the court does is to say: `We shall not compel the parties to write down in so many words what the effect of the deposit of title deeds is; we shall simply assume that when they contract, and although they probably do not know the consequences, the person who takes the title deeds contracts not only to retain them but also to have an equitable charge on the land.’ The presumption reads into the contract the charge which is implied. If that is right, the charge was created by the company and is therefore registrable under s95.’
Judges:
Templeman J
Citations:
[1974] 1 WLR 391, [1974] 1 All ER 561, [1974] AC 467
Jurisdiction:
England and Wales
Cited by:
Cited – United Bank of Kuwait Plc v Sahib and Others CA 2-Feb-1996
The bank appealed against a decision that the simple deposit of deeds with a bank did not take effect as an equitable charge.
Held: Depositing deeds with a bank is not sufficient to create a charge over them. The old law as to the creation of . .
Lists of cited by and citing cases may be incomplete.
Land, Equity
Updated: 25 July 2022; Ref: scu.434815
