Paul Evans & Anor v Swansea Building Society

A fixed-term interest-only mortgage does not continue indefinitely merely because development works remain incomplete. Contractual construction gives primacy to the words read in their commercial and documentary context, but cannot create an obligation to refinance that the agreement does not contain. A lender’s failure to demand immediate repayment, or continued receipt of contractual payments while refinancing is discussed, does not ordinarily waive the right to demand repayment, particularly where the charge requires waiver to be in writing. An injunction will not restrain a demand already made and will not be granted anticipatorily where the threatened enforcement step is insufficiently imminent.

The claimants obtained an all-moneys legal charge securing lending by the defendant building society. A further advance made in 2020 was documented as an interest-only mortgage with a three-year term, intended to allow completion of renovation and development works.

The works were not completed within that term. The defendant demanded repayment, relying on expiry of the term and alleged enforcement events concerning false declarations and unauthorised demolition. The claimants sought an interim injunction restraining further demands and the appointment of a receiver, and brought a Part 8 claim seeking substantially the same relief. The central issues were whether the further advance remained payable only after completion, whether the defendant had waived its right to demand repayment, and whether anticipatory relief was justified.

1. Disposition. The application for an injunction was refused and the Part 8 claim was dismissed. The demand for repayment had already been made, so an injunction restraining its issue would serve no purpose.
2. Receiver. The evidence did not show that appointment of a receiver was imminent or that there was a strong possibility or probability of such appointment. The defendant had expressly threatened possession proceedings with a view to exercising its power of sale. Any defence to such proceedings could be raised in the county court. An anticipatory injunction was therefore inappropriate.
3. Construction of the further-advance offer. The offer, read as a whole, provided for a fixed three-year term. References to completion of the development explained the intended purpose and timing of the term; they did not provide for the interest-only arrangement to continue indefinitely or impose an obligation on the defendant to grant a further fixed-term loan if the works were incomplete. The court could not substitute a more sensible bargain for the one expressed.
4. Waiver. The offer and charge contained provisions preserving the lender’s rights and requiring any waiver or consent to be in writing. An email stating that monthly payments would continue while a new facility was arranged did not waive the right to demand repayment. It merely described the interim position while refinancing discussions continued.
5. Because the advance had fallen due on expiry of the three-year term, the defendant was entitled to demand repayment. It was unnecessary to decide whether the demolition breached the charge or whether the false declarations independently constituted enforcement events, although the latter appeared capable of doing so.