The Gazette 1990

GAZETTE

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.

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.

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

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.

PRIL

1990

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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