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The law makes a distinction between absolute assignments and other non absolute assignments.It is well established that in order for a an assignee of a debt to be able to sue the assignor for the obligation to pay the debt under the contract the assignment must be an absolute one . If it is a partial assignment the assignee must join the assignee to the proceeding to enable him to prove the assignment is subsisting. This is owed to the nature of the partial assignment which does not allow someone to know whether it still operational by the time the assignee sues the debtor. An assignment by way of charge may state that a debt is assigned to a creditor as security for a loan until the money is repaid ( Durham Bros V Robertson [1898] 1 Q.B. 765 )in this case the creditor/assignee in order to sue for the debt must join the assignor to the action since it is not possible for the debtor ( not the assignor /debtor) himself to know if the assignment is still legally valid or it has been invalidated by the payment of the transaction and hence risking paying the wrong party. To put it another way he has no access to the transactions and accounting books between the assignor and assignee, this can only be done if the assignor is before the court himself so he may also be bound by the decision. This way the assignee is protected from the eventuality of facing a potential lawsuit by the assignor for wrongly paying the debt to a party who claims he is an assignee. However an issue of practical importance is the identification of the type of assignment (whether absolute or partial) as the assignee. For this, one need to look at the wording of the assignment and whether it safely allows the debtor to pay the assignee without risking paying the same amount twice to the assignor. Thus, if he receives notice from the assignee that the debt has been assigned to him and it will be re-assigned to the assignor ones the debt is settled, the debtor does not need to investigate into the dealing between the assignor and assignee. He may safely may assume that the debt has not been paid since he has not received notice of reassignment until he receives notice of reassignment then he may pay the assignee. Though, In the case of an assignment by way of charge there is nothing to indicate to the debtor that the assignment still subsists, that it is still valid there is no safety net of reassignment occurrence, there is only the repayment of the debt that would invalidate the assignment. In conclusion it all boils down to how the wording of the assignment reflects the intentions of the parties.

How is a freehold land mortgaged?

Before 1925 it was by conveyance in the fee simple. If the date fixed for repayment was met successfully then the conveyance would cease. If not either one of the two agreed eventualities would happen. Either the mortgagee  (as entitled) would enter possession and collect rent and profits in discharge of principal and rent or either he would collect rent and profits only to discharge the interest.

Since LPA 1925 Act.

Now however since the enactment of the LPA 1925and the Land Registration Act 2002 there are two methods by which a mortgage of freehold property for unregistered land and registered freeholds before 13 October 2003. Notably, as far as registered land is concerned since the passing of the Land Registration Act 2002 land the sole manner in which legal mortgages of freehold land are created are by way of a charge.

1)    The mortgagor will demise a term of years absolute.

2)    The mortgagor creates a charge by deed. (s 85, 87 LPA 1925)

How is a leasehold/estate mortgage created?

Before the LPA 1925 Act, the mortgagor could sublease his interest to the mortgage for a shorter period than the remainder. The subleasing method was preferred over the other method which was by assignment. The reason for this was that by assignment there was going t be privity of estate between the sublessee mortgagee and the landlord and the former wanted to avoid that.

Since LPA 1925 Act for unregistered land and registered land before 13 October 2003 there are two methods. They are as follows:

1)    A sublease (as the mortgagor is already a leaseholder) which must be shorter than the lease of the mortgagor. (This is because the mortgagor cannot grant a greater term than they have already). The leasehold mortgagor may go on and sublease the lease burdening it with further mortgages which must be longer than the term granted to the first leasehold-mortgagee (because they are separate legal estates) but shorter than the mortgagor’s lease (sine he is a lessee and he is subject to a certain term of years which was granted to him by the original lessor).

 

2)    The charge under section 87of the LPA 1925. (s 85, LPA 1925)

 

How are legal mortages created over freehold land since the passing of the Land Registration Act 2002?

Legal mortgages created since the passing of the LRA 2002, over registered freehold or leasehold land are only created by charge.

 Can a legal lease be granted out of an equitable freehold?  (don’t confuse the equity of redemption)

Pre 1925 it would have been possible to grant a legal lease by the mortgagor in possession of the equity of redemption (which was left to him after he granted a legal mortgage to his land). That would be possible if the Landlord had either parted negligently or fraudulently with his possession of the titles deeds that he would be stopped from later claiming that his legal interest ranked first and second it could happen with his consent, however this would mean that he would be left with an equitable title since he

No an owner of land can only convey the title which he owns.

Can a mortgagor create other legal interests/estates/mortgages after the first legal mortgage?

Before the introduction of the LPA 1925 when the mortgagor mortgaged his land to the mortgagee he would convey his legal title to him and the latter would be the legal owner of the property free to deal in any way he wished with it. The mortgagor was left with the equity of redemption (as he could not convey the legal title since it was held by the mortgagee). Since the equity of redemption was an equitable interest he could only create a second equitable mortgage or interest or estate on his land. The Conveyancing Act 1881 granted statutory powers to mortgagors in possession of granting leases which afforded a legal term.

Since the introduction of the LPA 1925 the mortgagor does not convey the legal title to the land as security for loan but a lease since the mortgage is recognized only for what it really is, security for money. Thus, he can create as much legal interests/estates as he wants on the land. Therefore he is no more left with the equity of redemption and he thus the protection and priority of estates depends on the whether an interest provided that it is registrable is registered or not. The law provides for different systems of registration between registered and unregistered land.

A Settlement agreement excludes the right to defend case and a Court considers that no reasonable grounds exists for not granting summary judgment even if a Cross-claim called for further investigation into the facts of the case before summary judgment was passed.

In the case of IG Index Ltd v Ehrentreu [2013] EWCA Civ 95 (22 February 2013)the Court of appeal decided that there were no reasonable grounds upon the facts of the case calling for further investigation allowing for a court hearing to be held and thus dismissed the appeal against an order granting summary judgment.

In deciding this it considered that had the settlement agreement not blocked or excluded the right to defend the claim the summary judgment would have been granted.

Does this go to show that the counter-claim by virtue of being a counterclaim by virtue of or even a free standing claim will not withstand an application for a summary judgment unless it amounts to a defence?( set-off or equitable set-off or even a normal defence?).No, according to our opinion what it means is that upon the facts of the case no reasonable grounds existed for the courts further investigation into the facts of the case that could add or alter the  evidence available to a trial and change the outcome of the case.

As to the case settlement agreement it the Court ruled that there was enough evidence before it in order to “grasp the nettle” and decide its effect. So neither it could be said that the construction of the points of law of the settlement agreement should await trial.

More specifically, The case was that the defendant had signed a settlement agreement in which he acknowledged his debt, this on the evidence pleaded was found by the court to exclude any right of defence ( be it a set-off , equitable or even legal ) and most importantly called for an immediate right to the payment of the debt owed by the defendant without having to wait for any defence to be heard first. As the facts where clear and the court interpreted the compromise , “settlement agreement ” to work in that way it decided that summary judgment should be granted. What one needs to understand from this case is not that the Court dismissed the appeal and affirmed an order for summary judgment not only because the right to defend the case was precluded but simply because acknowledgment of the debt through the settlement agreement was part of a set of facts which where undisputed and allowed the granting of a summary judgment. The facts of that case being merely that the plaintiff agreed to pay his debt now and argue later.

 

The Court will not grant a summary judgment if there is a factual dispute that could be prima facie be supported by the evidence. In this case the counterclaim raised very important issues that needed to be tried before judgment would be passed ( issues of causation and breach of contract, contributory negligence on the part of the defendant). However the settlement agreement eliminated every chance of avoiding the claim being tried together with the counter -claim because its purpose was to render the payments expressly payable, thus suspending the effect of potential defences to the debt.

First, the Court found that the settlement agreement purported to secure the right of payment of the debt expressly, otherwise if the claimant had to wait and expend further costs for the cross claim to proceed at trial the settlement agreement would be of no avail, it would certainly not be an express or an agreement aiming to addresses not merely the amount to be paid, but also the mechanics and timing of payments. So as well as dealing with liability it also deals expressly with cash flow ( a key component of the defence of set-off)

More importantly, the Court found that although the settlement agreement excluded the right to postpone payments due to the claimant before the cross -claim was heard, the cross claim was not extinguished. That meant that the defendant did not waive his cross -claim and that he could pursue it after judgment was granted against him on the debt payable to him. The settlement agreement was branded by the Court as merely a “pay now and argue later” agreement. it was said that the settlement agreement was “not incompatible with a right on the part of Mr Ehrentreu, at some time within the six years following the events of which he complains, from pursuing a claim for unliquidated damages for alleged breaches of the Customer Agreement or alleged breach of statutory duty”.

This case is an important one because it shows that when a debt is acknowledged through a compromise agreement and provided that it is clear upon the facts that no reasonable grounds existed for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case even though the cross claim if heard would affect the outcome of the case . In IG Index the Court decided that since the settlement agreement was part of the case, the exclusion of a defence to that claim provided no reasonable grounds for calling a further investigation thus dismissing the application for a summary judgment.

Many of us have wondered whether a consent order may be set aside.

A consent order  is basically a contract. It is a written agreement that may be enforced as a court order or judgment.  The agreement is entered by the parties in the suit and ones recorded and accepted by either side it is hard to rescind or set aside unless any of the following considerations come apply to ones case:

1) There must be any a cause that rescinds the contract ( duress, undue influence , mistake,misrepresentation)

2) The consent order or judgment must have been the product of collusion of fraud

3) If there was a lack f authority or the agent or the attorney has no authority to settle the case or settle the case in the way it was reflected in the consent order and

the third party knew of that fact or

as a result of the unauthorized acceptance of the consent order  he suffered a grave injustice.

 

 

no