Commercial First Business Ltd v Munday & Anor [2014] EWCA Civ 1296
Nathaniel Duckworth appeared for the successful Respondent in the Court of Appeal’s recent decision in Commercial First Business Ltd v Munday & Anor [2014] EWCA Civ 1296.
In Munday, the borrowers under two separate mortgages of agricultural property contended that there was an estoppel by convention or alternatively a procedural estoppel which precluded the mortgagee from relying on a cross-security provision, contained in both mortgages, at the enforcement stage. The borrowers argued that that was so because the mortgagee had obtained separate possession orders and separate judgments in 2007, in each case without reference to its security over the other property, and had not sought to reassert its right of cross-security until 2012, when it applied for a warrant for possession.
The Court of Appeal held that the estoppel by convention had not been made out on the facts, but agreed with the borrowers that the mortgagee’s right of cross-security in respect of the 2007 judgment sum had merged with the judgment obtained and such that it was now no longer available to it. Only the interest accruing post judgment remained secured against both properties.
The decision will be of interest to lenders generally who will now need to exercise care to ensure that their rights under an ‘all monies’ charge are not lost when enforcement action is taken against some, but not all, of the relevant security.
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