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  • Created by: Rachel
  • Created on: 10-04-14 13:34
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  • Protection for the Mortgagor
    • mortgagor retains equity of redemption
      • the rights of the borrower that arise as soon as the mortgage is executed
        • used to cover the...
          • right to redeem the mortgage
          • the rights protecting the borrower from exploration by the lender
        • mortgage can't be made irredeemable
          • can't be made limited by their terms of the mortgage deed so that it can only be redeemed by a certain persons for a limited time
          • "A mortgagor is entitled to get his property as free as he gave it"
            • "once a mortgage, always a mortgage"
          • mortgagee can't enforce any "clog or fetter on the EoR" - Browne v Ryan
        • CASES
          • Knightsbridge Estates Trust v Byrne 1939
            • Redemption of mortgage was postponed for 40 years, borrower argued this time period was unreasonable
              • HELD: As long as the date of redemption is genuine and not a sham - it will be upheld.
                • In this case there were good reasons why the date of redemption was postponed
          • Fairclough v Swan Brewery 1912
            • Mortgage included a term stating it couldn't be paid off (and interest redeemed) until the last 6 weeks of the 21 year lease.
              • HoL HELD: this contradicted the requirement of redeem-abilty of the mortgage
    • a mortgage will be set aside if its been obtained via undue influence or oppression
      • mortgage can be set aside/terms modified where theres evidence of undue influence or misrep
        • borrower can be pressurised by the lender in such a way that the transaction entered into isn't from his own free will
          • Undue influence can be in 2 different forms
            • 1. ACTUAL undue influence
              • you can rely on evidence of undue influence or pressure put on  borrower by lender
              • Claimant must prove the wrongdoer actually exerted undue influence on him
            • 2. PRESUMED undue influence
              • relationship of parties is one where one party is assumed to be more powerful than the other
                • thus, can easily take advantage of this position to put pressure on other side in negotiations
              • BCCI SA v Aboody 1990
              • Claimant must prove that there was a relationship of trust between the parties and that the trust and confidence of claimant was abused
              • 2a) relationships where undue influence is presumed due to NATURE OF REALTIONSHIP
                • eg: solicitor and client, parent and child
                  • Husband & wife are excluded from this group
                • Langton v Langton 1995
                • Allcard v Skinner 1887
              • 2b) relationships where undue influence is presumed because of SPECIFIC RELATIONSHIP between the parties
                • relationship where undue influence isn't automatically presumed from the nature of relationship BUT may arise as one party placed so much trust in the other
                • Barclays Bank v O''Brien 1994
                • Avon Finance v Bridger 1985
            • 2 landmark decisions which has clarified the law on what constitutes undue influence
              • Barclays Bank v O'Brien 1994
              • Royal Bank of Scotland v Etridge (no 2) 2001
        • Mortgages which act in an oppressive or unconscionable manner (mostly w/ interest rates) can be struck down
          • Cityland & Property (Holdings) Ltd v Dabrah 1968
          • Multiservice Bookbinding Ltd v Marden
    • no collateral advantages
      • if mortgage contained a term which prevented the borrowers from redeeming the mortgage for another reason - TERM WOULD BE VOID
      • must be no clog or fetter on the borrowers equity of redemption
      • Rights of the lender is to have the return of the loan, interest and costs and any attempt to get an extra benefit from borrower will be struck down
      • CASES
        • Bigg v Hoddinott 1989
          • Decision
            • Collateral advantage can be upheld as long as it ends when mortgage comes to end
          • Comment
            • Lenders could enjoy additional advantage of covenant as well as repayment of capital and interest
        • Noakes & Co v Rice
          • Decision
            • Any collateral terms in mortgage deed must come to an end when mortgage is redeemed even if the mortgage allows them to continue
          • Comment
            • once a mortgage, always a mortgage and nothing but a mortgage - Lord Davey
        • Bradley v Carritt 1903
          • Decision
            • A collateral advantage which continued after the mortgage ended was unenforceable
          • Comment
            • There was a strong dissenting judgement from Lord Lindley who though term should be upheld
        • Kreglinger v New Patagonia Meat & Cold Storage CO Ltd 1914
          • Decision
            • A collateral advantage lasting after mortgage has been redeemed will be upheld if its fair and doesn't clog the equity of redemption & isn't inconsistent w/ the right to redeem mortgage
          • Comment
            • marked a turning point w/ collateral advantages - allowed such terms to continue after mortgage has been redeemed
    • Consumer Credit Act 1974

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