R – Release of security
18/7/13
EVANS v FINANCE-U-LTD [2013] EWCA Civ 869
The defendant was entitled to delivery up of a car on which it had been given a bill of sale as security for a loan to the claimants. Although the claimants had no personal liability because each of them had been made bankrupt and been discharged from bankruptcy, the Insolvency Act 1986 preserved the defendant’s right to enforce its security. That right had not been lost by the defendant proving in the first claimant’s bankruptcy for the full sum owed under the loan agreement because the defendant had disclosed its security in its proof even though it had not attributed any value to it. The loan had been regulated by the Consumer Credit Act 1974 but it was doubtful that service of a default notice under s 87 was appropriate once the claimants had ceased to have any personal liability. Until the term of the loan expired, service of a termination notice under s 76 and/or enforcement notice under s 98 would have been necessary. But once the term had expired no such notice was necessary to entitle the defendant to delivery up.
12/7/13
MENELAOU v BANK OF CYPRUS UK LTD [2013] EWCA Civ 1960
A bank agreed to release charges on a property owned by the claimant’s parents if provided with a new charge on a property to be purchased in the name of the claimant. The new property was in fact purchased but a charge was never signed by the claimant. The claimant had been unjustly enriched because discharge of the bank’s charges on the old property had released the funds for the claimant to purchase the new one. That was sufficient to entitle the bank to an equitable charge on the new property by subrogation to the unpaid vendor’s lien.
30/1/13
CUKUROVA FINANCE INTERNATIONAL LTD v ALFA TELECOM TURKEY LTD [2013] UKPC 2
The defendant had been entitled in its discretion to conclude that events had occurred having a material adverse effect in the claimant’s financial conduct, thereby triggering an event of default and giving the defendant the right to enforce a charge on shares. In doing so the defendant had a duty to act for a proper purpose. It had done so by appropriating the shares for the proper purpose of satisfying the debt. The fact that the defendant also wished to use the shares to obtain control of a company was a collateral purpose and did not cause the purpose of enforcement to be improper. But the court’s power to grant relief from forfeiture is not limited to mortgages of land and relief would be allowed on terms to be determined by the court.
14/2/12
RE J T FRITH LIMITED [2012] EWHC 196 (Ch)
Secured creditors were entitled to surrender their security by executing a deed of release and by omitting to disclose the security in a proof of debt in the liquidation of the debtor company. They were then entitled to participate in the prescribed part available to meet claims of unsecured creditors in the liquidation.