The Gazette 1990

GAZETTE

A PRIL 1990

other hand the institution regarded it as advantageous to have written terms set out in such a letter, it is difficult to see the point of withdrawing the letter at the very point where it would become operative. As far as the writer is aware the practice of "withdrawing from correspondence" has largely died out in recent years; it would be interesting to know how it grew up and what its precise purpose was. The most problematic question raised by the security for present and future advances is that of redemption and discharge. Whereever there is a long-running banker/customer relationship, there is the likelihood that at times there will be an overall credit balance on the customer's accounts. Where the borrowings are secured by a deposit of deeds, can it be argued that the paying off of the borrowing redeems the mortgage and that a fresh agreement would be necessary to recreate the security? If not, what precisely is the nature " T he most problematic question raised by the security for present and future advances is that of redemption and discharge." There is a suprising lack of authority on these points. There is authority that an equitable mortgage is discharged by a receipt (or more strictly that the receipt is evidence of discharge) 10 but as this presupposes that all money advanced has been repaid, it does not get us very far. As to the nature of a mortgage by deposit, the classic statement is that of Kenny J. in Allied Irish Bank -v- Glynn": - "The deposit as security of documents of title to land which is not registered gives the person with whom it is made an equitable estate in the lands until the money secured by it is repaid: the remedy for securing payment is to apply to the Court for a declaration that the deposit has given a charge on the lands. The right created by the deposit is not limited to keeping the deeds until the money has been paid but gives an equitable estate in the lands". 12 This could be taken to suggest of the mortgagee's interest where there is no debt?

that the repayment of a loan amounts to redemption and that the mortgagor is entitled in such a case to ask for the deeds back. However, the crucial phrase here is "the money secured by it". If the security is for "all present and future advances" it would appear that the agreement is that so long as the deeds remain with the mortgagee, any sum advanced at any time is secured until repayment. In Bank of Ireland -v- Coen & Coen Lynch J. stated: — "The mere fact that at certain times no debt may be owing to the Bank does not alter the position that the lands remain as security when the account runs into overdraft again". 13 This is noteworthy as being one of the very few definite pro- nouncements on the point, though it takes the form of an assumed fact rather than a statement of principle. In Bank of Ireland -v- PurcelF 4 it was held that where a mortgage for present and future advances is created, each further advance is a separate conveyance of an interest in the mortgaged property for the purpose of Section 3 of the Family Home Protection Act, 1976. Of wider interest is the description there of an equitable mortgage as an estate of fluctuating size. In the High Court Barron J. stated: — "In the case of a mortgage the extent of the estate depends upon the amount which has been borrowed. Even in the case of a legal mortgage where there is a conveyance of the fee simple the interest of the mortgagor and of the mortgagee in the lands so mortgaged will depend at any given time upon the extent of the monies lent and borrowed. No doubt so long as any monies are charged on the lands the fee simple estate will be in the mortgagee. However, that of itself does not mean that thereafter the mortgagor cannot purport to convey a further interest to the mortgagee but that in that situation the value of the equity of redemption is being altered on the occasion of each further advance. The same situation arises in the present case. Each time there is a further advance the amount which is being charged on the lands is altered and accordingly the

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interest of the mortgagor in those lands is altered". 15

" . . . where e mortgegee for present and future advances is created, each further advance is a separate conveyance of an interest . . . for the purpose of Section 3 of the Family Home Protection Act, 1976." "Thus the transaction con- templated further charging of the interest in the land in question by way of mortgage. If at any time no monies were due on foot of the mortgage then for the purpose of Section 3 the property was unencumbered notwithstanding the deposit of deeds and the bare equitable interest therein by the deposit of deeds was not the substantive interest in the property contemplated by Section 3. If such was the position on the date the deposit was made then the family home was not encumbered. If some monies The Supreme Court approved this reasoning and added: —

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