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UK-Justice
UK-Justice, Barrister
Category: Law
Satisfied Customers: 16193
Experience:  Called to the Bar in 2007
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Hi in 2008 we aproached a mortgage broker to borrow £14000

Customer Question

Hi in 2008 we aproached a mortgage broker to borrow £14000 to pay a tax bill and had asked for a loan,secured loan or second charge mortgage to releace some equty from our property, the broker told us that because we were doing some improvements to our property and there wasn't a kitchen fitted that all he could do was to put us onto a first charge bridging loan that would pay out are existing mortgage with RBS. believing this was our only option we took his advise and he proceeded. at the end of the five month term we found that he hadn't done as he told us he would and there was no repayment vehicle in place (ie a mortgage to repay the bridging loan) the lender started reposetion proceedings and we filed a defence of misselling,irrisponcable lending and misrepresentation due to the fact that they had not checked our afordability and we didn't have an income that would allow us the get a mortgage big enough to cover the redemption figure of the loan, after four years of fighting the reposetion action against us the lender revised their claim against us and claimed subrigation and have been awarded possetion of our property.I have done some reading up on subrigation and have read that subrigation canno't be awarded if the claimant has:- interfered with the rights of the person their claiming against, comitted fraud or have been negligent.Would the fact that we have defended the claim due to irrisponssable lending and have a counter claim lodged of negligance mean that the lender should not be allowed to claim subrigation. sorry to go on a bit but this is a very complicated case and I have cut it as short as I could. Thanks Phil Buxton
Submitted: 3 years ago.
Category: Law
Expert:  UK-Justice replied 3 years ago.
Thanks for your question, I will do whatever I can to help you. Please remember to rate my answer SMILEY FACE OR ABOVE.

Have you brought in the broker in proceedings?
Customer: replied 3 years ago.


Yes the broker was brought in as a part 20 claim for misselling and misrepresentation

Expert:  UK-Justice replied 3 years ago.
And your question is regarding subrigation - is that right?
Customer: replied 3 years ago.


yes as to wether they can just change their claim against us and include subrigation and with a defence submitted of irrisponcable lending and negligance if they can cliam it at all?

Expert:  UK-Justice replied 3 years ago.
There are three main principles:
(
1) Was D enriched at C's expense?
(2) Was the enrichment unjust?
(3) Are there any policy reasons to deny C a remedy?

Subrogation is a flexible remedy but one which has to be applied in a principled fashion. The principles have been reviewed and summarised most helpfully in Cheltenham & Gloucester plc v Appleyard [2004] EWCA Civ 291.

The common phrase that the later lender "steps into the shoes" of the earlier lender does not mean that the earlier charge is kept alive. Usually it will be discharged. It means that the later lender has the same rights as if the earlier charge had been kept alive and the benefit of it assigned to the later lender.

Subrogation is not based on the agreement or intentions of the parties. Consequently it is not necessary that it is a condition of the later loan that the earlier loan is discharged, so long as the later lender's money is in fact used to discharge the earlier loan, so that the borrower(s) are thereby enriched at the later lender's expense

Nor does it matter whether the later lender (or its solicitors) failed to take proper precautions to ensure it obtained a valid security

Subrogation usually only arses where the earlier loan is discharged in full, although it may be possible to obtain subrogation pro tanto

The fact that the later lender obtains some valid security does not prevent him from seeking further security.

BUT if the later lender obtains all the security he bargained for, he cannot claim subrogation. Nor can subrogation be invoked so as to put the later lender in a better position than that in which he would have been had he obtained all the security he bargained for.

Normal equitable defences apply to subrogation (Cheltenham & Gloucester, para 44). Thus the equitable right of subrogation can be overridden by a bona fide purchaser for value of the legal estate without notice.

It is technically possible to exclude the right to subrogation by contract (Fisher & Lightwood's Law of Mortgage, 12th Edn, para 43.8 citing Banque Financiere).

As such based on what you have said, I do not believe they can use this as a defence.

It is a matter of law whether they can claim it and subject to some legal argument and decision by a Judge.


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UK-Justice, Barrister
Category: Law
Satisfied Customers: 16193
Experience: Called to the Bar in 2007
UK-Justice and other Law Specialists are ready to help you
Customer: replied 3 years ago.


Hi they aren't using subrigation as a defence they are claiming possesion through subrigation our defence and counter claim have been dismissed due to there subrigation calim

Expert:  UK-Justice replied 3 years ago.
Thanks.

If the Claimant has been negligent, or there is fraud alleged, interference with rights or some other mischief then it can not be claimed.

Fraud is very hard to raise as there must be hard evidence that this is the case.

If they failed to check you could afford it and by asking for evidence then this could be negligent.

But the only issue have is seeking a remedy in particular equity is that is a shield, not a sword.

So you could use it for your defence claim but not part of a Part 20 claim.

But if there has been negligence then the Judge was wrong to dismiss the defence.

Negligence is where

1) there was a duty of care
2) that duty was breached
3) there was a loss

In this case you would need to prove 2) above.

But based on what you have said, you may have a point worthy of appeal.

But you need to apply to appeal any decision within 21 days or seek leave out of time.




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Customer: replied 3 years ago.

would the FSA regulations on responcable lending count as duty of care as I can proove they have breached these, They had my accounts to check my afordability, the redemption figure for the bridging loan was £206,000 and i have sinc found out that my income as to the accounts they had (£21,000) gave me an afordability of a maximum of £115,000. I can also prove misrepresentation on many counts. would the afordability issue count as negligance?

Expert:  UK-Justice replied 3 years ago.
If you can prove a breach then this, whilst in not law amounts to a claim, but is pursuasive.

Misrepresentation would also help, but that is where C made a statement that turned out to be false and you relied upon that statement and signed the contract.

But really that should have been pleaded in the defence............



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Customer: replied 3 years ago.

the misrepresentation was pleaded in our defence. the claimants barister convinced the judge that through subrigation they stepped into the shoes of RBS and because RBS had done all the afordability checks in 2002 when my income was £57,000 that they didn't have to carry out affordability checks in 2008 when my income was £21000 and that any irisponcable lending claim had to be against RBS for giving a mortgage on the property origanaly.

Expert:  UK-Justice replied 3 years ago.
I see. In that case you can appeal on the basis that the decision made was one which no reasonable Judge could have made................
Customer: replied 3 years ago.


ok thanks could you tell me of any good books or web sites that would have the relivant regulations on as I am struggaling to find them the majority of the information on subrigation on the internet relate to insurance and are not really relivant to mortgages.

Expert:  UK-Justice replied 3 years ago.
For case law on this please go to:

www.bailii.org


Please remember to click *** OK SERVICE *** or above so that I am credited for my time. The question does not close and you can ask follow ups.

Important: If you feel the need to rate as one of the lower two scores, it counts as negative feedback so please reply to me via the REPLY with any further questions you may have. I will be happy to assist you further.
Customer: replied 3 years ago.


Ok thanks you very much for your help and advise and taking the time to answer my questions I appreciate it...regards Phil

Expert:  UK-Justice replied 3 years ago.
Welcome :)
Customer: replied 3 years ago.


Sorry just one more thing i forgot to ask the lender has not signed the legal mortgage or facility agreement dose this have any significance as the the contract being binding or legally enforcable?


 

Expert:  UK-Justice replied 3 years ago.
It may have an argument yes ........................
Customer: replied 3 years ago.


roughly what would the argument be and can you suggest where I'd find the relevant information.

Expert:  UK-Justice replied 3 years ago.
You need to Google in the legal website enforceable mortgage agreements.



Customer: replied 3 years ago.


ok thank you very much once again you have been a big help enjoy the rest of your evening....


 

Expert:  UK-Justice replied 3 years ago.
And you...................
Expert:  UK-Justice replied 3 years ago.
I'm just following up with you to see how everything is going. Did my answer help?

UK-Justice

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