Land -> Mortgagee's Remedies4

A legal mortgagee has a common law right to posession of the mortgaged property (Four-Mains v Dudley). However in practice a mortgage deed will often provide the mortgagee's right of possession shall only arise on the mortgagors default.

Where a mortgagee brings a claim for possession, this right will be restricted by the Admin of Justice Act 1970, s36. Which is operable only where court proceedings for possesion take place (Ropa v Barclay). So the m'gee right to possession could be exercised by peaceable entry withut court assistance (but regulated under s6(1)) Criminal Law Act 1977 preventing use of threatening behaviour or force).

In practice a m'gee will usually seek possession in order to sell the mortgaged property. The statutory power of sale in LPA 101 arises where the mortgage money has become due (legal date of redemption has passed). Exercisable under one of the three sections of LPA s103.
In exercising a power of sale, a m'gee must take reasonable are to obtain a proper market price for hte property.

In Cuckmere Brick v Mutual Finance the m'gee had failed to obtain the true market value of the property and were liable to the mortgagor in damages. Such a claim must be brought within six years (Raja v Lloyds TSB). M'gee's have a duty in exercising this power of sale in equity. Thus a m'gee needs not carry out any improvements to the property or obtain planning permission (Silven v RBS) but merely duties of good faith and diligence.

However there is no duty on the m'gee to delay power of sale until market conditions are more faourable. Therefore a m'gor may not argue theres been abreach merely because the market value of the property has risen since it was sold (Palk v MSF).

LPA s105 states all proceds of sale must be paid in order of priority of mortgages and any o/s amounts maybe claimed personally.

Land -> Mortgagee's Remedies3

The whole purpose of amortgage is to provide security which the mortgagee can release if the mortgagor fails to repay the loan.

Foreclosure
When a borrower can not repay a loan and the lender seeks to sell the property. The legal process by which the mortgagor's equitable/statutory rights to redeem property is terminated.

• Forclosure can not besought before contractual obligations to repay has been broken (Williams v Morgan).
• A court order is required for foreclosure, its effect is to vest the mortgagor's estate in the mortgagee in ful settlement of debt (LPA 1925, s88(2) & 89(2))
• If the property is worth more than the debt, the m'gee is not liable to pay the balance in value to the m'gor.
• On hearing an application for forclosure the court will give the m'gor a period to redeem the mortgage. However since m'gor usually in financial difficulty therefore unable to repay the loan.
• M'gor has right to ask for an order for sale instead of foreclosure (LPA s91(2)). This is advantagous because after sale the m'gee can only keep the sum for debt while the remainder goes to the m'gor or others entitled.
• Disadvantage to the m'gor, as even after an order for foreclosure has been given, the case can be reopened and allow m'gor to redeem property (Campbell v Holyland); provided critera are: Speed of mortgagors application, reason for failure to redeem and nature of property. UNLESS property already sold by m'gee.

Possession
Although the m'gee hass the right to possession, the m'gee will not nomrally exercise hte right where the borrower has not defaulted (Exp Bignold).
Requires a court order (Barclay Bank v Bird). Although theoretically they do NOT need one, acording to the article by Wade (1995).

Equity & Trusts -> The 3 Certainties

The Settlor holds absolute title in the property before the creation of a trust.

The Trustee once a trust has been created the legal title in the trust property must be vested in the trustee and held by the trustee on trust for the beneficiaries.

The Beneficiary the person(s) for whom the property title is to eventually end up in.

Bare Trust: where the trustee holds property for a single absolute beneficiary and therefore owns the entire equitable interest in the trust fund, the trustee has no discretion or any obligation other than stewardship.

Fixed Trust; when a trust is held by a trustee for a fixed list of beneficiaries.

Discretionary Trust and power of appointment: discretion of distributing property in a manner the trustee deems suitable.

Notice: A purchaser is taken to have notice of an equitable interest unless they had either actual notice of the equitable interest of the beneficiaries or constructive or imputed notice.

Capacity: the ability to own property (under 18s cant legally own property[land]). Therefore a trust is usually created to transfer property once he/she turns 18.

A valid trust can only exist if the settlor intends to create a trust and defines the relevant property an beneficiaries clearly. The criteria to decide this was established in Knight v Knight per Lord Langdale;

• Certainty of Intention, which is an intention on the part of the settlor to create a trust. This is usually done by examining the words used by the settlor. Did he intend to impose a trusteeship on the recipient of the property? 'The words must be imperative' Wright v Atkyn. However since equity looks at intent rather than form theres no technical way to create a trust. Re Hamilton is the authority for looking at the entire document to determine the existance of a trust. Mere expression of hope, wish and trust does not amount to a trust.
• Certainty of subject matter, which the settlor expresses the a clear description of the trust property and what type of interest each beneficiary has and the respective interests they will share. Re London Wine Co buyers of wine stored in warehouse-not segregated-unable to ID which bottles belonged to whom... therefore no trust. However in Hunter v Moss oral declaration of 5% of shares - held valid. If shares in the same company and of the same class, no need to segregate. The rule in Hancock v Watson states where a property has been left to a beneficiary as an absolute gift subject to a trust which has failed, then the bene takes the property absolutely.
• Certainty of Object, sufficient identification of the beneficiaries.

Re Aster Settlement Trust: a trust was created with the objective of advancing 'the preservation' of the independant and the integrety of newspapers in particular the Observer. It was held that there was no beneficiary of such a purpose and uncertain therefore the trust was held void.

Deal with each certainty in a logical order even where there are no problems.

• Intention
• Subject Matter
• Property
• Beneficial Interest
• Objects
• Effect of any uncertainty.

Contract -> Frustration

After making the contract an unforeseen event occurs beyond the control of either party making performance of the contract (1) illegal (2) impossible or (3) radically different from what was originally contemplated by both parties.

1. Impossibility: events where performance of the contract has become impossible. Physically destruction of subject matter as in Taylor v Caldwell destruction of the concert hall made performance impossible.

Death of one of the parties to a contract (Stubbs v Holywell Railway) will frustrate a contract. Unless performance of the contract need not be performed by any particular person thereby not preventing actual performance.

Temporary Impossiblity may frustrate a contract where eventual performance would be radically different from that originally envisaged. Pioneer Shipping v BTP Tioxide where a charter body was contracted to make 6 voyages within 9 months but this was halved due to a strike at the port therefore although performance was possible it just wasn’t what they originally contracted for.

Sometimes performance may not be impossible as such as the thing still exists but for reasons beyond either parties control it may not be used as they intended. Bank Line v Arthur Capel a ship requisitioned thereby unable to charter on the day.

Also the case that an illness will frustrate a contract. Robinson v Davison wife contracted to play the piano fell ill on day of performance.

Or the unavailability of agreed terms may also frustrate a contract Nickoll & Knight v Ashton, Etridge – unavailability of the specified ship named in the contract frustrates a contract.

2. Illegality although performance is physically possible the contract is frustrate as since the time of the contract there has been a change in the law making further performance illegal. The Fibrosa case in which war broke out as Germany invaded Poland (WWII), it became illegal to trade with the enemy if war is declared before time of performance. Unless it has already illegal at the time of the contract in which case the doctrine of frustration will not apply.

3. Frustration of common purpose of both parties: performance is still possible but would be radically different performance from originally envisaged by both parties. An intervening event has destroyed all purpose of the contract thereby frustrating the contract. But only if the contract “wholly devoid of purpose”. Krell v Henry subject of the contract was a view of the coronation of King Edward VII. Since the king fell ill the purpose was destroyed.

Herne Bay Steam Boat v Hutton: the hire of a boat to observe the kings review of the navy and a cruise of the fleet. The review was cancelled due to the king’s illness… but it was still possible to cruise around the fleet.

Self induced frustration; a party cant plead frustration if he’s responsible for the frustrating event (Maritime v Ocean Trawlers). Although there’s doubt whether a negligent act may amount to self induced frustration. Commercially the answer is yes (The Super Servant II) but in a personal capacity the situation is still unresolved (Joseph Constantine).

Event must not be foreseeable by either party (Davis Contractors v Fareham UDC) otherwise they could have prevented it by taking out insurance or something.

Effect of Frustration

Parties are discharged from performance of ay future obligations. Any monies paid could be recovered if there’s a total failure of consideration (Fibrosa).

Under the Law Reform (Frustrated Contract) Act 1943 any money paid or payable before the frustrating even ceased to be payable but is recoverable by payee subject to 2 things:

1. Any advance payment used in performance of contract maybe kept in full or part (Gamerco v Fair Warning).
2. Where a party has obtained a valuable benefit before the frustrating event, the other party may recover from him a sum not exceeding the value of the benefit (BP Exploration (Libya) v Hunt).

GENERAL ANSWER STRUCTURE

• Has the event sufficiently radically changed to frustrate the contract?
• What is the common objective of the contract and how has it been affected.
• Was the event reasonably foreseeable.
• Has either side received a benefit?
• Can the other party claim for expenditure?

Contract -> Answer Undue Influence

The CoA defined undue influence in Allcard v Skinner as “some unfair and improper conduct, some coercion from outside, some over reaching, some form of cheating generally, though not always some personal advantage gained”.

Allcard v Skinner suggests in every professional relationship involves parties dealing with each other on some unequal footing. There must be evidence of victimisation or improper conduct leading to some personal advantage being gained.

Relationship between bank & debtor

In Lloyds Bank v Bundy the HoL stated ‘there must be evidence that the bank overstepped the boundaries of a normal confidential relationship before undue influence can be presumed’ also that the transaction was ‘wrongful’ (RBS v Etridge). So has the bank overstepped its boundary to a normal bank and customer relationship.

Wife Undue Influence

Current law suggests banks must take reasonable steps when dealing with wives acting as surety for a husbands business (Etridge No.2). Failure to do so mean the banks fainted by undue influence of the debtor, leaving it with little chance of enforcing the security against the wife.

We must ask whether the bank was ‘put on enquiry’ in considering the nature of the transaction. Drawing an analogy with Goode Durrant v Biddulph was the wife risk/benefit ratio grossly disproportionate to that of the debtor?

However if on the face of it the transaction is not suspicious the bank need only act as a reasonable prudent one, and need not show suspicion (Woolwich v Gomm).

If wife successfully argues the bank was put on enquiry then the bank will need to show it followed procedures laid down in Etridge (No.2); the bank should have persuaded the wife to seek an independent advisor to explain the nature of the transaction & possible liability. As well as discussing with her directly if she wished to proceed (Aboody). In not doing so they falls short of the standards expected in Northern Rock BS v Archer.

Guidelines under Etridge (No.2) clearly state it is the independent legal advisor who will confirm to the bank that the proper advice has been given to the surety.

If the bank fails to comply with Etridge No.2 the wife will still need to establish that her husband/debtor acted wrongfully towards her.

If there’s a manifest disadvantage the bank has a duty to ensure wife receive independent advice (Natwest v Morgan).

Remedies

If successful the primary remedy is rescission subject to the lapse of time, affirmation and restitutio in integrum. Damages NOT available for undue influence, unless bank has broken a duty of care towards wife damages available in negligence. Advice would be to act sooner rather than later and notify the bank of their intention to avoid contract.

Contract -> Undue Influence

A person who has been induced to enter into a transaction by the undue influence of another is entitled to set that transaction aside as against the wrongdoer.

UI is either ‘actual’ or ‘presumed’ - as classified by the HoL in Barclays Bank v O'Brien put forward by SA v Aboody.

Actual (Class 1) Where proof of the unfair pressure was required. The person alleging UI must also suffer a manifest disadvantage (Barclays Bank v Coleman). Royal Bank of Scotland v Etridge (No 2): The Etridge principle applied to banks seeking to enforce surety: The bank should take steps to check directly with the wife the name of the solicitor who acts for her. The communication must be direct with the wife. The bank should give the solicitor the necessary financial information. If the bank suspects the wife is being misled by her husband, it should inform the solicitor. It should always get written confirmation from the solicitor.

Presumed (Class 2) Where the relationship meant the party accused of unfair pressure had to disprove it. Class 2A: Nature of relationship means UI is automatically presumed, unless it can be shown that the person alleging it had legal advice (Allcard v Sknnner). Parent & child (Wright v Vanderplank); Solicitor & client (Wright v Carter); Doctor & patient (Mitchell v Homfray); Trustee & beneficiary (Ellis v Barker); Religious adviser & disciple (Roche v Sherrington). Class 2B: if the claimant can show the relationship was one of trust and confidence then it is for the other party to disprove the UI (O’Brien). Bank and customer (Lloyds Bank v Bundy).

With both Class 2A&B the transaction must be to the ‘disadvantage of the party claiming UI’ (National Westminster Bank v Morgan).

If wives can show a relationship of trust and confidence in their husbands (qualify under Class 2B) presumed UI. Therefore a creditor (bank) can be put on notice if:

1. the contract is not prima facia to the wife’s advantage.
2. there is a risk the husband has committed a wrong in getting the wife to stand as surety.

Therefore the creditor can’t enforce the surety unless he takes ‘reasonable steps to satisfy himself that the surety entered into the obligation freely and in full knowledge of the true facts’ which involves (O’Brien).

• Personal interview without debtor present.
• Explaining full extent of liability and risks involved in standing surety.
• Encourage them to seem independent legal advice.

Although the creditor needs not enquire about the nature of the legal advice (Massey v Midland Bank) and may presume the solicitor will act honestly/competently (Banco v Mann & Others). The bank need only act as a reasonable, prudent one would, need not show suspicion (Wollwich v Gomm).

Tort -> Occupiers Liability

The Occupiers Liability Act 1957 applies not only to land and buildings but also to fixed and moveable structures, including any vessel, vehicle or aircraft.

Occupier: any person who has a sufficient degree of control over premises (Wheat v Lacon - landlord and tenant of pub both owed duty of care to guest injured on stairs. However, no breach on the facts).

Visitors – under s.1(2) the occupier owes a duty of care to all lawful visitors. Express or implied permission defined as a lawful visitor i.e. invitees, licensees, people entering under a contract, people with a legal right to enter. Trespassers do not fall within this scope.

Note: a person may be a visitor in one part of premises and not another (Campbell v Shelbourne Hotel).

s.2(2) states that an occupier has a duty of care to ensure that in all circumstance visitors will be reasonably safe in using the premises for the purpose for which he is invited or permitted to be there for. (Simms v Leigh RFC - P injured by hitting concrete wall surrounding rugby field. D not liable as injury foreseeable but so improbable that it was not necessary to guard against it).

Children - An occupier must be prepared for children to be less careful than adults (s.2(3)(a)). Therefore, if an occupier admits children to the premises the child visitor must be reasonably safe.

• Occupiers must not lead children into temptation (the allurement principle (Glasgow Corp v Taylor - 7 year old died after eating poisonous berries in park. D knew of the berries but took no precautions against children).
• However occupiers are reasonably entitled to assume small children are accompanied by an adult (Phipps v Rochester Corp).

Experts – s.2(3)(b) occupiers can expect experts who come on his property to guard against inherent risks. Occupiers may assume professional visitors will guard against risks that are within their professional knowledge (Roles v Nathan). However occupier still owes a duty to professional visitors as seen in Salmon v Seafarer.

An employer may still be liable for failing to provide safe system of work (General Cleaning v Christmas).

Independent Contractors – s.2 (4) states there’s no liability for ‘faulty execution of any work or construction, maintenance or repair by an independent contractor…’ providing

• It was reasonable to entrust the work (Haseldine v Daw).
• A competent contractor was hired.
• If necessary the occupier checked work was carried out properly (Woodward v Mayor of Hastings).

Three key points:

• The standard of care is the same as for negligence as there’s no need to guard against the unforeseeable (Bolton v Stone).
• Duty only exists while the visitor carries out authorised activities.
• The visitor must be kept safe, not premises.

Avoiding liability

Warning Signs: s.2 (4) warning relieves liability if ‘in all circumstances it was enough to enable the visitor to be reasonably safe’. However what is sufficient warning is a question of fact in each case, as in others but in certain circumstances a warning maybe insufficient and a barrier maybe needed (Rae v Mars (UK)).

• If the danger is obvious to all, the occupier can assume the visitor will take care (Staples v West Dorset D.C).

Exclusions: s.2 (1) exclusions are allowed ‘by agreement or otherwise’, so can exclude by a term of the contract or by a communicating notice (Ashdown v Samuel Williams).

• Excluding liability to person entering by a legal right is not possible nor is excluding liability when bound by a contract to admit strangers to a contract.

Defences

Contributory Negligence: It applies to cases where plaintiffs have, through their own negligence, contributed to cause the damages they incurred as a result of defendants negligence.

Volenti: latin for “to a willing person, no injury is done”, this doctrine holds that a person who knowingly and willingly puts himself in a dangerous situation cannot sue for any resulting injuries s2 (5).

• If risk is fully understood (Simms v Leigh RFC).
• Mere knowledge of a risk is insufficient to raise defence (White v Blackmore).
• Where claimant has no choice then there is no consent (Burnett v British Waterways).
• Express warnings of claimant entering at own risks are probably caught by Unfair Contract Terms Act.

Occupiers Liability to Trespassers

Occupiers Liability Act 1984 applies mainly to trespassers.

Traditionally no duties were owed to trespassers except when intentional or recklessly inflicted harm.

Section 1(3) provides that a duty will be owed by the occupier if:

(a) he is aware of the danger or has reasonable grounds to believe that it exists;
(b) he knows or has reasonable grounds to believe that the other is in the vicinity of the danger concerned or that he may come into the vicinity of the danger; and
(c) the risk is one against which, in all the circumstances of the case, he may reasonably be expected to offer the other some protection.

The duty is to take such care as is reasonable in all the circumstances of the case to see that the non-visitor does not suffer injury on the premises by reason of the danger concerned (s1(4)).

Revill v Newbury - D liable for shooting trespassing burglar through door. A duty of care is owed to trespassers engaged in criminal activities. D used greater violence than was justified in lawful self-defence.

The duty can be discharged by taking steps to warn of the danger concerned, or to discourage persons from incurring the risk (s1(5)) (Westwood v Post Office).