Equitable Mortgage in UK Law

The Land Registry have taken the point in correspondence that, as the charge was unregistered, it took effect in equity only and that, as an equitable mortgage, albeit made by deed, the power of sale did not arise. This, it seems to me, is erroneous. The power of sale, as I have said, arises under section 101 of the 1925 Act, and that merely requires that a mortgage be made by deed, which this one was.

My attention was drawn to the decision of, firstly, Wilberforce J and then of the Court of Appeal in Re White Rose Cottage [1964] Ch 483. Wilberforce J held—in the case of a mortgage by deposit under seal, a true equitable mortgage—that the expression "the mortgaged property" in section 101 meant the property over which the mortgage deed purported to extend and was not limited to an equitable interest in that property.

My Lords, there is no general doctrine of unjust enrichment recognised in English law. It is a convenient way of describing a transfer of rights from one person to another, without assignment or assent of the person from whom the rights are transferred and which takes place by operation of law in a whole variety of widely different circumstances.

This does not of course mean that questions of intention may not be highly relevant to the question of whether or not enrichment has been unjust.

In my judgment the case in United Bank of Kuwait v Sahib does not help Mr Green, because that was a case where there was no deed, unlike this case. There was in that case a purely informal equitable mortgage by deposit of title deeds. That had no effect because, as a contract, it was required to comply with section 2 and it did not comply. In my judgment His Honour Judge Jones was right to reject the submission that Mr Green made on the effect of section 2.

Plainly there are large areas where the two concepts do not overlap : when a landowner stands by while his neighbour mistakenly builds on the former's land the situation is far removed (except for the element of unconscionable conduct) from that of a fiduciary who derives an improper advantage from his client. But in the area of a joint enterprise for the acquisition of land (which may be, but is not necessarily, the matrimonial home) the two concepts coincide.

It is common ground that Paragon, as registered proprietor of the Legal Charge, retains legal ownership of it. One incident of its legal ownership—and an essential one at that—is the right to possession of the mortgaged property.