Redstone Mortgages Ltd v Wiemer & Anor

A contractual demand may validly accelerate repayment where the mortgage conditions provide that notice is deemed served on posting, even if the borrower denies actual receipt. The court must apply the agreed service machinery unless the borrower shows a real prospect of proving that the contractual requirements were not met.

Payments made by a lender’s insurers under a policy taken out for the lender do not ordinarily reduce the borrower’s mortgage liability merely because the lender mistakenly credits them to the borrower’s account. A summary judgment may be entered where the borrower has no real prospect of establishing a contractual entitlement, estoppel, or other defence.

The claimant appealed against an order of Master Teverson granting summary judgment for £287,697.78 on a mortgage loan. The first defendant had borrowed money to acquire a property but had neither created the required first legal charge nor made the stipulated monthly interest payments. The claimant accelerated the debt by letter. The defendant denied receiving the letter and argued that payments made by the claimant’s insurers should be credited to his account.

The appeal concerned whether there had been an effective demand, whether the insurance payments benefited the defendant, and whether permission should be granted for additional estoppel and quantum grounds.

1. The appeal was dismissed. The summary judgment for £287,697.78 stood.

2. The mortgage conditions made the debt payable immediately on demand where the borrower failed to pay interest or where the legal charge was defective or unperfected. The claimant accepted that a demand was required before the debt became repayable before the end of the mortgage term, consistent with Esso Petroleum Co Ltd v Alstonbridge Properties Ltd [1975] WLR 1474.

3. The conditions provided that notice could be given by post to the borrower’s contact address and would be treated as given on the second working day after posting, even if it never arrived or was returned undelivered. The demand letter had been posted to the address stated in the mortgage deed, which remained the borrower’s qualifying contact address unless he had subsequently notified the claimant in writing of another address.

4. The borrower’s denial of receipt raised no real prospect of successfully defending the claim. His late and tentative evidence that he had notified the claimant of a new address was rightly excluded. It had not previously been advanced, lacked a proper evidential basis, and would have required an adjournment for responsive evidence.

5. The insurance payments did not have to be credited for the borrower’s benefit. The policy was the claimant’s policy, and there was no evidence that the borrower was an intended beneficiary. The mistaken entries in statements of account did not establish a contractual entitlement. The principle in Leeds Building Society v Banfield [2007] EWCA 1369 supported that conclusion.

6. Permission was refused for the further estoppel and quantum grounds. The estoppel argument had no evidential basis because there was no indication that the borrower would have paid the interest but for the statements. The quantum point had either been abandoned or lacked substance and could have been raised before the Master.

7. The borrower’s inability to create the charge resulted from the second defendant’s conduct and did not relieve him of his contractual obligations to the claimant.

• High Court (Chancery Division): On appeal from an order of Master Teverson dated 24 June 2011, the court dismissed the appeal and upheld summary judgment for £287,697.78.
• Permission stage: Sales J refused permission on the draft amended grounds. On renewed oral application, Roth J granted permission on limited grounds concerning receipt of the demand and the treatment of insurance payments.