The plaintiff had made a loan to a company in which he had a joint interest in order to enable it to pay the price due under a contract for the purchase of development land. The company failed, and he now claimed to be a secured creditor by subrogation to the vendor’s lien.
Held: A person who pays off a mortgage debt is entitled – and unless the contrary appears is presumed – to preserve the security for its own benefit. The advance to the company was intended to be an unsecured loan and held that this excluded any remedy by way of subrogation, which would give the plaintiff more than he had bargained for.
Oliver J rejected the proposition, advanced by counsel for the company, that the remedy of subrogation was available only when the common intention of the parties was that the plaintiff should have some security which, for one reason or another, he did not get. Oliver J confined himself to a narrower proposition that: ‘where on all the facts the court is satisfied that the true nature of the transaction between the payer of the money and the person at whose instigation it is paid is simply the creation of an unsecured loan, this in itself will be sufficient to dispose of any question of subrogation.’
 Ch 220,  2 All ER 587
England and Wales
Approved – Burston Finance Ltd v Spierway Ltd ChD 1974
The lender took a charge over a property held by a company which subsequently became void because it was not registered within the required period at Companies House.
Held: A voidable charge is a valid charge unless and until set aside: . .
Cited – Cheltenham and Gloucester Plc v Appleyard and Another CA 15-Mar-2004
The owners had purchased their property with a loan from the BBBS. A charge was then given to BCCI, which charge said no further charge could be registered without BCCI ‘s consent. The C and G agreed to lend a sum to refinance the entire borrowings, . .
Approved – Banque Financiere De La Cite v Parc (Battersea) Ltd and Others HL 16-Apr-1998
The making of an order for restitution after finding an unjust enrichment by subrogation, is not dependant upon having found any common or unilateral intention of the parties. The House distinguished between contractual subrogation of the kind most . .
Cited – Lowick Rose Llp v Swynson Ltd and Another SC 11-Apr-2017
Losses arose from the misvaluation of a company before its purchase. The respondent had funded the purchase, relying upon a valuation by the predecessor of the appellant firm of accountants. Further advances had been made when the true situation was . .
These lists may be incomplete.
Updated: 09 May 2021; Ref: scu.196572