The Gazette 1990

GAZETTE

A PRIL 1990

and Supreme Court on the grounds (i) separate securities had been given at each branch, so it followed logically that each was for a separate loan; (ii) the mortgagee's request for the deposit referred to one loan only. 7 Clearly the Court will not infer additional terms favourable to the mortgagee. As to the continuing nature of the security, the position is somewhat more complicated. An express agreement to secure "present and future advances" is clearly a continuing security. However, it has also been held that such mortgage may be inferred simply from the circumstances. 8 In practice, even where there is no written evidence, it is invariably assumed that an equitable mortgage by deposit is for all continuing advances; presumably it is the formula recited by the mortgagor at the deposit which creates this term. In Bank of Ireland -v- Coen & Coen 9 the mortgagors expressly conceded that the mortgages were to secure "all liabilities present and future"; Lynch J. in finding for the

mortgagee nonetheless stated that the mortgagors appeared to have no understanding of the nature of a continuing security. This raises interesting questions about the need to bring to the mortgagor's mind the precise nature of the agreement, especially in the light of the views expressed in Macaura. Clearly if the mortgagor signs a memorandum he is bound by its terms; but if a mere oral formula is employed, can it be said that the mortgagor has had the terms sufficiently brought to his attention? Further, what would be the position if a mprtgagor claimed to have under- stood that the mortgage was to secure present liabilities only, and the mortgagee could neither produce a written memorandum nor swear positively that it had explained to the mortgagor that the transaction was to secure future advances also? If the mortgagee maintained that in its view the transaction covered future advances, it might plausibly be argued that the parties were not ad idem and that no mortgage agreement existed.

At this point it is appropriate to mention a curious practice which existed at least until very recently known as the "withdrawal from correspondence". Certain lending institutions were in the habit of preparing a letter prior to the deposit binding the borrower to certain terms; in itself this would appear reasonable enough since it would have the advantage of setting out clearly the terms of the agreement. However, curiously, at the time of the deposit the borrower was often required to sign a document entitled the "Memo- randum of Withdrawal from Corres- pondence" the effect of which was normally that the terms of a security would henceforth be oral only and that all previous written terms agreed were abandoned. It is not easy to see either the purpose or the effect of this arrangement. If the lending institution was worried that there might be a document which would require registration, it would surely have been more sensible to dispense with the letter altogether. If on the

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