The Gazette 1990

GAZETTE

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."

of the mortgagee's interest where

there is no debt?

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)

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".

This could be taken to suggest

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".

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

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".

" . . . 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."

The Supreme Court approved

this reasoning and added: —

"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

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