COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
HIS HONOUR JUDGE COWELL
CHY06155
Strand, London, WC2A 2LL |
||
B e f o r e :
LORD JUSTICE THOMAS
and
LORD JUSTICE LAWRENCE COLLINS
____________________
LAWRENCE ST JOHN BANFIELD BEAULAH AVONDA BANFIELD |
Appellants/ Defendants |
|
- and - |
||
LEEDS BUILDING SOCIETY |
Respondent/Claimant |
____________________
Mr Mark West and Miss Frances Ratcliffe (instructed by Walker Morris)
for the Respondent
Hearing dates : October 17 & November 26, 2007
____________________
Crown Copyright ©
Lord Justice Lawrence Collins :
Introduction
II The background
(1) By clause 4 the Society would not require repayment of capital in respect of any amount covered by subsisting endowment assurance, but this does not apply if the policy is held as security only.
(2) By clause 12(a) the principal amount of the debt would become immediately repayable "if the Borrower defaults for two months in making a payment of money payable under the Charge."
III The proceedings
(a) The original charge certificate was void because the defendants did not sign it and it stated it was for the value of £35,000, not the £30,000 actually advanced. Judge Cowell found that this did not affect the liability of the defendants.
(b) The charge was not valid because the application form contained Mrs R.L. Thornhill as an applicant as well as Mr and Mrs Banfield. The judge found that Mrs Thornhill had dropped out of the picture by the time the loan was made.
(c) The Society had not shown or proved how the arrears occurred. The judge was satisfied by the evidence of Susan Astles, a team leader in the collections department of the Society, who gave oral evidence over nearly two days, that her figures were accurate and that the arrears were established.
(d) The Society had failed to apply MIRAS (Mortgage Interest Relief at Source) to the advance covered in May 1996, and that there were inconsistencies in the 1996 payment schedules. The judge found that the mortgage did not come within the MIRAS scheme when the first instalment was paid and not at all until the end of 1986. In October 1986 the Inland Revenue confirmed the mortgage was in the MIRAS scheme and the monthly repayments were reduced to £243.61. He was satisfied that MIRAS was dealt with appropriately by the Society. If Mr and Mrs Banfield had any complaints of negligence about the treatment by the Society of the MIRAS scheme, it would have been statute-barred, and in any event for the legal adviser of Mr and Mrs Banfield.
(e) The Society was negligent in advancing £30,000 when £32,500 was applied for. The judge found that £30,000 was the agreed advance.
(f) The charge registered at Land Registry did not contain the signatures of both Mr and Mrs Banfield. The judge found that there was nothing in the point.
IV The appeal
1 The mortgage guarantees
"… [T]he purpose of section 28 of the [Building Societies Act 1962] was to put the borrower on notice that the basic security over his house was not thought by the building society to be adequate and that, in the event of default, he might become liable, not only to the society under his covenant for payment, but also to the rights, by way of subrogation, of an institutional guarantor who had been required to make a payment to the society in respect of a shortfall.
… It is not, I think, helpful to attempt to categorise the arrangement as a 'guarantee,' an 'indemnity' or 'insurance'. There are features which suggest each of those categories; but the arrangement does not fit readily into any one category rather than another. The security which the Mortgage Indemnity Guarantee is intended to provide is the covenant of the insurance company."
2 Endowment or repayment mortgage?
3 The second policy
A The position of Mr and Mrs Banfield
B The position of the Society
C Conclusion
Lord Justice Thomas:
Lord Justice Longmore: