Shearer & Ors v Spring Capital Ltd & Ors

A redemption tender may be valid where the mortgagor tenders the whole sum due, including costs, keeps the money available, and payment is to occur simultaneously with the mortgagee’s ordinary obligation to release the security. Refinancing arrangements do not automatically make the money unavailable merely because the new lender requires simultaneous security. Conditions requiring unusual or unreasonable acts may invalidate the tender. Whether the money was sufficiently available, whether the tender was conditional, and whether the proposed releases required further consideration were fact-sensitive issues unsuitable for summary determination. The court granted interim protection against enforcement while those issues proceeded to trial.

The claimants brought a CPR Part 8 redemption action concerning loans secured by guarantees, charges and other security. They had tendered approximately £3.18 million under protest and sought declarations that interest should cease and that the security should be released. The first defendant disputed the tender’s validity and applied to strike out the relevant claims or obtain summary judgment. The claimants sought an interim injunction restraining enforcement of the security.

The central issues were whether the tender covered the amount due and costs, whether refinancing funds were sufficiently available and set aside, and whether simultaneous release of the existing security could lawfully be required.

1. Applications dismissed. The pleaded claims concerning the tender disclosed issues fit for trial. The court declined to strike them out or grant summary judgment.
2. For equitable tender, the mortgagor must offer the whole sum due, including costs where payable, and must keep the money available for payment. A tender does not discharge the debt, but a valid tender may cause equity to curtail further interest.
3. The authorities did not establish a rigid rule that draft release documents must always be supplied and approved before tender. Wiltshire v Smith (1744) 3 ATK 90, Webb v Crosse [1912] Ch 323 and Graham v Seal [1919] Ch 31 were concerned with particular circumstances, including impossible or abusive conditions. The present tender might not have been conditional upon documents in the precise form supplied.
4. The court considered it at least arguable that funds obtained through refinancing remained sufficiently available where the new lender would provide them upon simultaneous release of the existing security. Such simultaneity was inherent in an ordinary redemption transaction. A condition requiring the mortgagee to do something unusual, impossible or unreasonably immediate would stand differently.
5. Whether the funds were effectively available, whether the tender was conditional, what time was reasonably required to consider the releases, and whether equitable considerations such as clean hands affected relief required evidence and a trial.
6. An interim injunction was granted until trial or further order. There was a serious issue to be tried, the balance of convenience favoured protection against enforcement, and the defendant’s cross-undertaking was to be fortified by an appropriate charge. The costs of the applications were provisionally costs in the case.

Not stated in the judgment. This was a first-instance decision on interlocutory applications in a redemption action.