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Case name Neutral citation Legal points Case summary Facts Held Comment NRAM Plc v Evans [2017] EWCA Civ 1013 All-monies charge – bankruptcy – discharge of charge by mistake – grounds for alteration of register Where a bank made a mistake in providing an e-DS1 to discharge a registered charge, the register would be altered (to restore the charge) for the purpose of bringing it up to date under Para 2(1)(b), Sched 4, LRA 2002 In 2004 Mr & Mrs E purchased a property with funding from a bank comprising (1) a loan of £197,000 secured by way of a standard all-monies legal charge which was registered against the property, and (2) an unsecured loan of £21,400. In 2005 Mr & Mrs E refinanced their borrowings with fresh secured and unsecured loans and with the charge remaining in place. Mr & Mrs E were subsequently declared bankrupt. Their statement of affairs included the bank as creditor and referred to the mortgage account as ‘secured mortgage’. The bank did not prove in either bankruptcy. Following their discharges, Mr & Mrs E made further payments under the mortgage but in 2014 their solicitors wrote to the bank pointing out that the 2004 mortgage was discharged in 2005 yet the charge remained registered, and asked for a DS1. The bank identified that the 2004 loan had been redeemed but did not identify the 2005 loan, and provided Land Registry with an e-DS1. The mistake subsequently came to light and the bank registered a unilateral notice to protect its interest. Mr & Mrs E maintained that the charge did not secure the 2005 loan and that it had been discharged by their bankruptcies. They also maintained that the security had been discharged. At first instance, the judge held that as a matter of construction, the all-monies charge continued to secure the 2005 loan. This was clear from the terms of the charge and the mortgage conditions. On the bankruptcies of Mr & Mrs E their estate vested in the Official Receiver as trustee pursuant to s 306(1) IA 1986, but by reason of s 283(5) this was subject to the bank’s charge. As to the mistaken discharge of the mortgage, the judge concluded that in issuing the e-DS1 the bank made a mistake which had been induced by the solicitor’s letter which referred to the 2004 loan account number and not the 2005 loan account number. As to alteration of the register, since Mr & Mrs E were in possession as registered proprietors, rectification could only take place if they had contributed to the error by lack of proper care, which the judge concluded they had. Mr & Mrs E obtained permission to appeal in respect of the judge’s order for rectification only, contending that the judge erred in ordering rectification of the register by reason of a mistake, and if there was one, it was one for which the bank was responsible. The correct starting point was whether the alteration of the register was properly classified as having been made for the purpose of bringing the register up to date within the meaning of Para 2(1)(b), Sched 4, LRA 2002 or as having been made for the purpose of correcting a mistake within the meaning of Para 2(1)(a). “Mistake” is not defined, and extends to a wide variety of circumstances (per Megarry & Wade, Law of Real Property, 8th Edition, para 7-133) but a distinction must be drawn between a void and a voidable disposition. This is principled and correct and derives from Norwich & Peterborough Building Society v Steed [1993] Ch 116. The registration of a voidable disposition before it is rescinded is not a mistake for the purposes of Sched 4, LRA 2002. It may be the case that the disposition was made by mistake but that does not render its entry on the register a mistake, and it is entries on the register with which Sched 4 is concerned. Once such a voidable disposition has been rescinded, the register can plainly be brought up to date, and under Para 3(3) the court must do so unless there are exceptional circumstances which justify it not doing so (Garwood v Bank of Scotland Plc [2012] EWHC 415 (Ch)). In the present case, once the judge rescinded the e-DS1, it was necessary to alter the register to bring it up to date (by restoring the registered charge). The judge had elided the question whether or not the issue by the bank of the e-DS1 was a mistake with whether there was a mistake on the register, and consequently went on to consider whether alteration of the register would amount to rectification and whether it was necessary for the bank to establish that Mr & Mrs E, as registered proprietors in possession, had contributed to the error by lack of proper care. This was not necessary, and since alteration was ordered to bring the register up to date, there were no grounds to order an indemnity under Para 1(1), Sched 8, LRA 2002. Appeal dismissed. For practice and procedure on Land Registry claims for rectification and indemnity, see Practice Guide 39 (updated 15 May 2017).
Case name Neutral citation Legal points Case summary Facts Held Comment Waugh v Emery [2017] UKUT 270 (TCC) Legal charge – appointment of receivers – procedural irregularities The Upper Tribunal granted permission to appeal against an order made by the First Tier Tribunal on account of procedural errors, but dismissed the substantive appeal In 2003, trustees of property executed a registered charge to the bank which incorrectly described the trustees and was not witnessed. In subsequent proceedings, the court held that although the charge was not effective to create a legal charge, it was nonetheless effective to create an equitable charge, and directed the trustees to execute a replacement legal charge or in default, a District Judge should execute one on their behalf. Following default by the trustees, the District Judge duly executed the charge. The bank subsequently appointed LPA Receivers under the charge, and they sold the property to E who applied to be registered as proprietor. W, one of the trustees objected to the registration on the ground that the appointment of the Receivers was not valid. The First Tier Tribunal directed the Registrar to give effect to E’s application, but there were a number of procedural errors associated with the order. The Upper Tribunal granted permission to appeal, but refused the substantive appeal. Although W had raised a number of points - charge executed in different form; attempt by bank to back-date charge; deed appointing receivers not served; deed not made by trustees; deed not made under Power of Attorney; failure to serve certain documents upon the trustees in the FTT etc, there was no reason why the replacement charge or the appointment of Receivers were not valid.
Press Release On 27 July 2017 Lloyds Banking Group issued a Press Release in which it announced that it was setting up a redress scheme for mortgage customers who incurred fees after they fell behind with their mortgage payments. The move follows Lloyds acknowledgement that it did not always have sufficient knowledge of customers' financial situations to ensure its arrears management plans were affordable and sustainable. The scheme covers all fees charged to customers for arrears management and broken payment arrangements from 1 January 2009 to January 2016. The payments, estimated to total some £283m, will include: • any litigation fees incurred unfairly • compensation for potential distress and inconvenience • consequential loss which customers may have experienced as a result of not being able to keep up with unsustainable repayment plans • direct debit fees incurred on broken repayment plans • the accrued interest on all fees up to the remediation date or, where customers have already paid the fees, the date when the fees were paid • an additional 8% interest for customers deprived of funds Lloyds will write to affected customers explaining how to make claims.