The customer had deposited title deeds with the bank as security for a loan, but no deed of charge had been executed.
Held: The mere deposit of title deeds does not create an equitable charge without more. The 1989 Act operated as a statutory bar to such a claim. The rule that the deposit of title deeds by way of security created an equitable mortgage of the property had not survived the coming into force of the section.
Chadwick J said: ‘Whether or not the enforcement of the agreement which is to be inferred or presumed from the deposit of the title deeds was properly to be regarded as an example of the operation of the doctrine of part performance, as Lord Selborne LC suggested in Maddison v. Alderson, 8 App. Cas. 467, or as a sui generis exception to the Statute of Frauds 1677 which was outside the proper scope of that doctrine – in that the act of part performance relied upon was not the act of the mortgagee who was seeking to enforce the agreement – there can, in my view, be no doubt that the courts have, consistently, treated the rule that a deposit of title deeds for the purpose of securing a debt operates, without more, as an equitable mortgage or charge as contract – based, and have regarded the deposit as a fact which enabled the contract to be enforced notwithstanding the absence of evidence sufficient to satisfy the Statute of Frauds. It is impossible to distinguish those cases, of which Ex parte Langston, 17 Ves. 227 is an example, in which the court, having inferred from the fact of the deposit an intention to create security, let in oral evidence to identify the scope of the obligation which was to be secured from cases in which there was no evidence beyond the fact of the deposit. In all those cases, the court was concerned to establish, by presumption, inference or evidence, what the parties intended, and then to enforce their common intention as an agreement.’
Judges:
Chadwick J
Citations:
Times 07-Jul-1994, [1995] 2 WLR 94
Statutes:
Law of Property (Miscellaneous Provisions) Act 1989 2, Law of Property Act 1925 53(1)(c)
Jurisdiction:
England and Wales
Citing:
Disapplied – Dearle v Hall 1828
. .
Cited – Russel v Russel 16-May-1783
. .
Cited by:
Appeal from – 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, Banking
Updated: 28 April 2022; Ref: scu.90066