No general distinction is to be drawn between the two types of mortgage and sub-mortgage. The court considered the practice for a mortgagor to attorn tenant to his mortgagee. The tenancy contained no covenants and was merely a device to give the mortgagee a right to obtain summary judgment for possession under the Small Tenements Recovery Act 1838.
Held: It was effective to create the relationship of landlord and tenant:
Harman LJ said: ‘the new charge by way of legal mortgage created by section 87 was intended to be a substitute in all respects for a mortgage by demise, and anything which would be good in the one is good in the other. It would indeed be a trap if the rights of the mortgagee depended on whether his charge were created in one way or the other.’
Salmon LJ said: ‘In my view it is plain that the policy of the legislature, as expressed in section 87, was to put a mortgagee in exactly the same legal position whether he entered into a mortgage in the form of a legal charge or in the form of a sub-demise. The legal effect was to be the same whichever form was chosen. In the one case the mortgagee is the tenant; in the other he is deemed to be so.’
Judges:
Harman LJ, Salmon LJ, Willmer LJ
Citations:
[1966] Ch 402
Statutes:
Jurisdiction:
England and Wales
Cited by:
Approved – 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 – Ingram and Palmer-Tomkinson (Executors of the Estate of Lady Jane Lindsay Morgan Ingram Deceased) v Commissioners of Inland Revenue CA 28-Jul-1997
The deceased had first conveyed property to her solicitor. Leases back were then created in her favour, and then the freeholds were conveyed at her direction to her children and grandchildren. They were potentially exempt transfers.
Held: . .
Lists of cited by and citing cases may be incomplete.
Land
Updated: 19 August 2022; Ref: scu.197903