The Gazette 1990

GAZETTE

A PRIL 1990

The mortgage by deposit for "present and future advances"

such transactions, where often so little is expressed either in writing or orally, what are the terms of the agreement? Further, if the parties dispute the existence of a fundamental term, can it be said that they are ad idem ? In the passage from Bank of Ireland -v- Macaura quoted above, Kennedy C.J. set out the central difficulties in such cases: that while in theory a mortgage is a matter for express agreement, in practice the mortgagor usually hands over the deeds while a rather vague formula is recited to or by him, often leaving him completely blank as to what has been agreed. Two common problems are (i) the extent of the liabilities secured (ii) the continuing nature of the security. As to the first, the phrase "all liabilities" would probably cover liabilities at different branches of a mortgagee bank. However, if no such formula is expressed, it may be held that the liabilities secured are only those at the branch where the deposit took place. In Bank of Ireland -v- Macaura a mortgagee's claim that a deposit of title deeds was security for all liabilities of the mortgagor at any of its branches was rejected by both High Court

Probably the commonest form of mortgage in Ireland is the equitable mortgage by deposit of title deeds to secure "all present and future liability" of the mortgagor. The great advantage is simplicity; the great drawback is the vagueness of what is agreed. If, as frequently, a memorandum stating that the mortgagor is depositing the deeds to secure "all his liabilities present and future whether as principal or surety" (or some such phrase) accompanies the deposit, some assistance can be gained from it, but where no such memorandum is produced, the agreement is a matter of implication and convention.

ever, since the presumption can be rebutted by the simple claim that the customer had another purpose (normally safe-keeping) its practical value in a contested mortgage suit is probably nil. Where there is a conflict of evidence, the weight of probability will usually be with the mortgagee; in addition, the fact that such securities are required as

(The practice of making such deposits without any written agreement apparently originated in order to avoid a need for having a document requiring registration in the Registry of Deeds, and came to be extended to deposits of register- ed land also.) Normally this works against the mortgagor. In Bank of Ireland -v- Macaura 1 Kennedy C.J. remarked drily that: — "In matters of this kind very wordy documents which were not very explicit were supposed when read to or by persons making deposits to be understood by. them but the effect often was that the depositor gave a larger security than he intended to give. Depositors should have what they were doing brought to their minds. Everything depended upon agreement and the intention between the parties". 2 There are however circum- stances in which the vagueness of the agreement may work against the mortagee. The first problem which may arise is whether any mortgage is created at all. If no written document exists and the customer (as frequently occurs in a mortgage suit) denies the existence of the mortgage, in theory the creditor could face a considerable difficulty in proving its claim. It is doubtless true as Wylie states 3 that the deposit of title deeds creates a presumption of an equitable mortgage: in National Bank -v- McGovern A Meredith J. referred (in a somewhat oracular fashion) to "the eloquence of an unexplained possession"; 5 how-

a matter of course from a propertied customer making a borrowing works in the mortga- gee's favour. One interesting exception is the deposit by a wife as security for her husband's liabilities. In Northern Banking Co. -v- Carpenter 6 and National Bank - v- McGovern claims by the mortgagee that the wife (in each case sole owner of the property) had voluntarily deposited deeds to secure her husband's liabilities were rejected. In each case two grounds can be seen for the decision: (i) that where there is a conflict of evidence and the circumstances of the deposit are ambiguous, the mortgagee may be unable to satisfy the Court that on the balance of probabilities the wife freely consented to the deposit, (ii) that in such a case, particularly where the wife is not inde- pendently advised, the Court may infer that she was unaware of the nature of the agreement. This raises another problem - in

Christopher Doyle.

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