NRAM Plc v Evans & Anor

A mortgage charge may secure later lending where its incorporated conditions define the secured debt broadly enough to include money owed under any offer and provide for continuing security. A lender’s careless act may be corrected in equity where it results from a distinct, causative mistake of sufficient gravity, central to the transaction, with serious consequences, and it would be unconscionable to leave the mistake uncorrected. Rectification of the register may be ordered where the registered proprietors contributed to the mistake by lack of proper care.

The bank sought declarations and rectification concerning a mortgage over the defendants’ property. The original 2004 lending comprised secured and unsecured elements. In 2005 the lending was refinanced under a new offer, with a further unsecured loan, and the original loan account was redeemed without a fresh Land Registry entry.

The bank later issued an e-DS1 cancelling the registered charge after receiving a solicitor’s letter referring only to the redeemed 2004 account. It subsequently discovered that the 2005 lending remained secured. The defendants disputed the security and claimed relief concerning bankruptcy debts, credit information and alleged overpayments. The court had to determine whether the charge secured the 2005 loan and whether the e-DS1 could be corrected.

1. Security for the 2005 loan. The charge expressly secured further advances. The incorporated Northern Rock Plc Mortgage Conditions 2001 defined the mortgage debt to include all money owed under any offer. That wording was sufficiently broad to secure the 2005 loan, notwithstanding the absence of a further Land Registry entry. The charge therefore remained effective after the defendants’ bankruptcies, subject to the bank’s security under sections 306(1) and 283(5) of the Insolvency Act 1986.
2. Correction of the e-DS1. Applying the approach in Futter & Anor v Revenue and Customs [2013] UKSC 26, carelessness did not prevent a mistake from being recognised. The bank made a distinct mistake, rather than suffering mere inadvertence. The mistake was causative, central to the transaction and carried serious consequences because the bank would lose its security. Considering the circumstances in the round, it would be unconscionable to leave the mistake uncorrected. The reasoning in Garwood v Bank of Scotland [2013] EWHC 415 (Ch) was materially applicable despite factual differences.
3. Rectification. The bank was entitled to be re-registered as proprietor of the charge under section 65 and Schedule 4 of the Land Registration Act 2002. The defendants had contributed to the error by referring their solicitors only to the 2004 loan and not the secured 2005 loan.
4. Counterclaims. The defendants established no compensable breach of the Data Protection Act 1998. No overpayment was established. The Consumer Credit Act claim also failed: the relevant loan had been dealt with in bankruptcy, and no interest had been charged to Mrs Evans after judgment.

The bank was granted the relief sought. The defendants were not entitled to relief.

First-instance judgment. No prior appellate decision is stated in the judgment.