PP 2000/12

Insolvency and family lawyers alike will find plenty of food for thought in Mortgage Corporation Ltd v Shaire [2000] EGCS 35. Consider the following scenario: A matrimonial home is registered in the name of H and W, who are beneficially entitled in equal shares. H forges W’s signature and purports to execute a legal mortgage to secure a loan from X, who now wishes to enforce his security. Q  What interest, if any, is taken by X? A  He cannot claim to be a legal mortgagee, but the transaction was effective to create an equitable charge over H’s beneficial interest. X has no statutory power of sale, but he can (stepping into the shoes of H) apply under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 for an order for sale. Q  Under the now repealed section 30 of the Law of Property Act 1925, the practice was to order a sale unless the circumstances were quite exceptional. Does the same apply today? A  No. As observed in Shaire, there is no presumption in favour X. Under section 15 of the 1996 Act, equal weight has to be given to the circumstances and wishes of any beneficiary entitled to occupy, and to the welfare of any minor who occupies, or might reasonably be expected to occupy, the property as his home. Thus, in that case, it was ordered that X’s application be held over to enable W to consider alternative arrangements for servicing the loan. But contrast Bank of Ireland Home Mortgages Ltd v Bell [2000] EGCS 151. Q  Would the same hold if X had applied in the capacity of trustee in bankruptcy to H? A  No. A different regime applies: see PP 2000/15.