The Mortgage Business Plc v Lars Green and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 27 June 2013 |
| Neutral Citation | [2013] EWHC 4243 (Ch) |
| Court | Chancery Division |
| Date | 27 June 2013 |
[2013] EWHC 4243 (Ch)
IN THE HIGH COURT OF JUSTICE
(CHANCERY DIVISION)
(BRISTOL DISTRICT REGISTRY) (2BS31117)
Bristol Civil Justice Centre
2 Redcliff Street
Bristol BS1 6GR
Mr Justice Morgan
Mr Gatty appeared on behalf of the Claimant
Mr Rogers appeared on behalf of the Second Defendant
Thursday 27 th June 2013
THE MORTGAGE BUSINESS PLC - v - LARS AND LONE GREEN
What this case is all about
The claimant is a mortgage lender known as the Mortgage Business plc, to which I will refer as the Bank, and the first defendant is Mr Lars Green. He was born in 1970 and he is the elder son of the second defendant, Mrs Green. Mrs Green was born in 1943, she is a Danish national but has lived in this country since 1964. It is not suggested that she does not have a good command of English. Mrs Green is now 70 years of age and is not in good health. It may be that she has been in bad health in different ways for some considerable time. She worked for a time as a carer in a nursing home but she has not worked for some time. For the last few months she has been confined to a wheelchair. She gave evidence at the trial but she told me, and I accept, that she could remember very little about the events which are relevant to this case.
This case concerns a mortgage in relation to Mrs Green's home at 7 Swindon Street, Highworth, Swindon. Mrs Green and her then husband bought that property in around 1985. Mrs Green and her husband had two children, Lars Green, and a younger son, Peter Green. Mrs Green divorced her husband in 1994 and title to the house was transferred to her in 1995 as part of the divorce settlement. At that time the house was subject to a mortgage in favour of the Cheltenham & Gloucester Building Society. Mrs Green thinks that the amount outstanding on the mortgage was then some £15,000. In 1999 the property was transferred into the joint names of herself and her son Lars. At the same time the property was charged to the Bradford & Bingley Building Society to secure borrowings of £40,000 and the Cheltenham & Gloucester charge was redeemed. There is not much reliable evidence as to the circumstances surrounding this transaction in 1999. It seems likely that the remortgage was to provide Lars Green with funds to be used in his business.
Mrs Green had been having difficulty keeping up the payments previously due to the Cheltenham & Gloucester and from around this time, if not before, Lars Green took on the liability to make the payments due under whatever was the relevant mortgage. Later in 1999 there was a second charge over the property in favour of First National Bank Ltd. In 2002 the two outstanding charges were redeemed and the property was remortgaged to Future Mortgages (1) Ltd. In 2003 the property was remortgaged again, this time to Abbey National plc and the earlier charge was redeemed. At this time the borrowings from the Abbey National were in excess of £96,000. Although there was little or no reliable evidence as to this, it seems likely that from 1999 onwards the various remortgaging transactions were for the purpose of providing funds to Lars Green's business and that he, rather than his mother, was making the payments due under the various mortgages.
In late 2007 Lars Green was in financial difficulties. On 2 nd October 2007 a second charge was granted over the property in favour of Jabac Finances Ltd and the sum secured was £30,000. The interest rate was 24 per cent per annum. In early 2008 Lars Green's financial difficulties appeared to be serious. He wanted money, he wanted it quickly and so he went to a mortgage broker, N & P Financial Services Ltd. He gave them certain information about himself and his mother. The broker involved a further company described as a mortgage packager. The broker applied for a loan from the claimant bank. In due course on 7 th April 2008 the bank advanced to Mrs Green and to Lars Green the sum of about £146,000 secured by a first charge over the house. About £99,000 was paid to redeem the Abbey National charge and £15,000 was paid to Jabac Finances Ltd in part payment of the sum due to them. Jabac Finances Ltd then postponed its charge to the new charge granted to the Bank. After payment of certain fees there was a balance of the advance in the sum of £30,355 and this was paid to Lars Green. Not long afterwards, in around August 2008, Lars Green asked the Bank for a further advance of £15,000 and this was made available to him. He gave £1000 of that further advance to his mother to pay for renovations on the house.
Lars Green soon fell behind with the instalments due to the Bank and although there was little direct evidence of his circumstances, there was a suggestion that he stopped work to look after his wife who was ill. The result was that the sums due under the mortgage to the Bank mounted up. The Bank brought these proceedings for possession.
The defendants, as I have said, are Lars Green and Mrs Green. Lars Green has taken no part in the proceedings. His mother served him with a witness summons but he did not attend the trial. The amount currently due to the bank is just over £240,000. The current monthly instalment due under the mortgage is just over £1000. The Department for Work & Pensions is paying the bank on account of the sums due under the mortgage the sum of £61.44 every four weeks. Mrs Green has been able to secure public funding to defend the claim. In her defence and counterclaim she contends that her obligations under the mortgage of 7 th April 2008 and her obligations in relation to the further advance of August 2008 were procured by undue influence practised on her by her son Lars. She says that the Bank's rights under the mortgage are affected by that undue influence and that she is entitled to have the mortgage set aside as against her. She adds that her son Lars has no beneficial interest in the property so even if the charge is not set aside against him, it is not effective to create any equitable charge over any interest in the property.
The case on behalf of Mrs Green originally went further. She originally contended that every mortgage on the property which she entered into since 1999 had been similarly vitiated by the undue influence of Lars Green. She was, therefore, entitled to have them all set aside. These earlier charges have all been redeemed apart from the charge to Jabac Finances Ltd but the relevance of Mrs Green's case was that the Bank, the claimant in these proceedings, could not claim to be subrogated to any charge entered into in or after 1999. Mrs Green accepted that the original charge to Cheltenham & Gloucester was not vitiated by undue influence and so the Bank was entitled to be subrogated to the rights to the mortgagee under that charge; however, she said that the sum due under that charge was only something of the order of £15,000.
In the course of the closing speech of Mr Rogers, counsel for Mrs Green, he accepted, I think very realistically, that he could not say that the charges prior to the charge of 7 th April 2008 in favour of the Bank were ever liable to be set aside for undue influence. There was simply no evidence before the court which would allow the court to find that the mortgagees under any one of those charges had any notice of any kind of the alleged vitiating undue influence. Accordingly, Mr Rogers accepted that if Mrs Green succeeded in setting aside the mortgage of 7 th April 2008 in favour of the Bank, the Bank would be entitled to be subrogated to the immediately preceding charge in favour of the Abbey National. In the light of that concession the Bank pointed out that the sum due and secured by the Abbey National charge to which the Bank would be entitled on subrogation would be a sum in excess of £124,000.
Mr Rogers' concession in closing submissions puts a somewhat different complexion on what this case is all about. The house is currently worth about £200,000. If the mortgage to the Bank is not set aside, then it seems inescapable that the court will make an order for possession to allow the Bank to exercise its power of sale. The debt to the Bank exceeds the value of the house. Mrs Green is not able to keep up the current instalments and even less able to pay anything off the arrears of instalments. But even if the mortgage to the Bank were set aside by reason of vitiating undue influence, the outlook for Mrs Green would still be very bleak. The house is worth £200,000, subject to a charge securing £124,000 and Mrs Green is not able to keep up the current instalments under the Abbey National mortgage and even less able to pay anything off the arrears of instalments under the Abbey National mortgage. It seems unlikely that in that event Mrs Green would be able to go on living in this house for any lengthy period.
Anyone would feel considerable sympathy for Mrs Green. However, because the outlook for Mrs Green is bleak, whether the mortgage to the bank is set aside as against her or not set aside, a decision in her favour is unlikely to transform her position. It is unlikely to allow her to retain possession of the house. Nonetheless, there is a difference between the result contended for by the Bank and the result now accepted by counsel for Mrs Green. The issues in this case have to be decided.
I referred earlier to the fact that Lars Green has played no part in these proceedings. He has failed to attend court pursuant to a witness summons served on him by his mother. On one view of the matter he has been the cause of his mother's problems throughout. Since 1999 on one view...
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