Re a debtor (No 24 of 1971), ex parte Marley (J) v Trustee of the property of the debtor: ChD 1976

The court will look to the realities of the relationship between the mortgagors and will not be governed by the terms of the mortgage instrument if they do not accord with the actual facts.
Held: the court accepted that an equity of exoneration could apply after transactions between a father and his son.
Foster J said: ”As between the bankrupt’s father and the bankrupt, and bearing in mind that the father is admittedly only a surety, it should be implied that their intention was that the bankrupt’s beneficial interest should bear the burden. If that is so, it seems to me that the bankrupt’s interest vested in his trustee in bankruptcy, subject to an inchoate right of indemnity, if the surety were called on to pay, or the debt fell to be discharged, as it would have to be, out of the proceeds of sale of the property. Alternatively, I think that the father could be regarded as having an actual charge on the bankrupt’s interest within the principle discussed by Warrington J’
References: [1976] 1 WLR 952, [1976] 2 All ER 1010
Judges: Foster J and Fox J
Jurisdiction: England and Wales
This case is cited by:

  • Cited – In Re Pittortou (a bankrupt) ChD 1985
    H and W charged the property to secure the H’s overdrawn bank account. The account was used both for his business and for payment of expenses relating to the matrimonial home. H was adjudicated bankrupt. W sought her equity to be exonerated from H’s . .
    ([1985] All ER 285)
  • Cited – Day v Shaw and Another ChD 17-Jan-2014
    Mr and Mrs Shaw had granted a second charge over their jointly-owned matrimonial home to secure the personal guarantee given by their daughter and by Mr Shaw in respect of a bank loan to a company (Avon). Their daughter and Mr Shaw were the . .
    (, [2014] EWHC 36 (Ch))
  • Cited – Armstrong v Onyearu and Another CA 11-Apr-2017
    Exoneration of partner’s equity on insolvency
    The court considered the equity of exoneration, where property jointly owned by A and B is charged to secure the debts of B only, A is or may be entitled to a charge over B’s share of the property to the extent that B’s debts are paid out of A’s . .
    (, [2017] EWCA Civ 268, [2017] WLR(D) 271,, )

These lists may be incomplete.
Last Update: 27 November 2020; Ref: scu.567250