Below are the relevant sections from the 1996 Court of Appeal decsion in UBK v Sahib & others, which demonstrate beyond doubt that in the absence of a mortgage contract that contains all of the terms and conditions of the agreement and the signatures of both the mortgagor [the alleged borrower] and the mortgagee [the alleged lender], pursuant to section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 and the authorities given below, no charge against the mortgagor’s property can be legally enforced.
This landmark case is a vindication of all administrative processes that demand production of an enforceable bilateral contract signed by both parties, without which, the bankster has no lawful claim over the mortgagor’s property, since the mere deposit of title deeds with the land registry can no longer be accepted by the courts as a contract for the sale and/or disposition of an interst in land, notwithstanding the continued common practice of the lower courts.
I am currently involved in two High Court cases that will be relying upon this judgment in support of claims against a couple of mortgage bandits for negligent misrepresentation [easier to prove than fraud]. Should the judgments be given in our favour, we will seek a judicial declaration that no more property can be seized by the banksters unless they can produce a mortgage contract that complies with section 2 of the 1989 Act and that all legal charges registered with the Land Registry without an enforceable contract are considered null and void in law.
All England Law Reports/1996/Volume 3 /United Bank of Kuwait plc v Sahib and others – [1996] 3 All ER 215
[1996] 3 All ER 215
United Bank of Kuwait plc v Sahib and others
COURT OF APPEAL, CIVIL DIVISION
LEGGATT, PETER GIBSON AND PHILLIPS LJJ
1, 2 FEBRUARY 1996
Equity – Charge – Creation of equitable charge – Husband purporting to charge wife’s interest without her consent or authority to bank – Husband holding land certificate to joint property to order of bank – Whether effective to create equitable charge over husband’s interest in property – Whether charge invalid because not in writing – Whether deposit of title deeds without wife’s consent effective to create equitable charge – Law of Property (Miscellaneous Provisions) Act 1989, s 2.
In September 1991 the plaintiff bank obtained judgment against S for principal and interest in respect of banking facilities which it had granted to him. In October 1992 the plaintiff obtained a charging order nisi over S’s interest in property which he jointly owned with his wife, H, to secure and enforce that judgment. In November 1992 that order was made absolute at a hearing at which H was represented. At that point, H did not know that in 1990 S’s solicitors had written to the defendant bank confirming that the land certificate relating to the same property was being held to the defendant bank’s order as security for funds which it had also advanced to S. The plaintiff brought proceedings against S, his wife and the defendant bank, seeking, inter alia, a declaration that the defendant bank did not hold any equitable mortgage or charge over the joint property or, if it did, that such mortgage or charge did not take priority over the plaintiff’s charging order absolute. The defendant bank claimed to be entitled to an equitable mortgage over S’s interest in the property by virtue of the deposit of the land certificate ranking in priority to the plaintiff’s charge under the charging order. There was no evidence that the defendant bank gave notice to H of the interest which it claimed until after the proceedings were commenced. The judge found for the plaintiff and the defendant bank appealed. The principal question arose whether the rule that the deposit of title deeds to a property by way of security created an equitable mortgage of the property survived the requirement laid down by s 2a of the Law of Property (Miscellaneous Provisions) Act 1989 that the disposition of an interest in land had to be in writing.
Held – The formalities contained in s 2 of the 1989 Act, which required a contract for the sale or other disposition of an interest in land to be in writing in a single document incorporating all its terms and signed by the parties, governed the validity of all dispositions of interests in land and abolished the rule that a mere deposit of title deeds relating to a property by way of security created a mortgage or charge. The deposit of title deeds took effect as a contract to create a mortgage and, as such, it fell within s 2. It followed that, since there was no written document in the instant case, the mere deposit of title deeds by way of security could not create a mortgage or charge. The appeal would accordingly be dismissed (see p 221 a h, p 222 j, p 225 c f, p 226 h and p 227 h, post).
Decision of Chadwick J [1995] 2 All ER 973 affirmed.
[1996] 3 All ER 215 at 216
Appeal
By notice dated 26 July 1994 the third defendant, Société Générale Alsacienne de Banque SA (Sogenal), a French body corporate, appealed from that part of the order of Chadwick J (1995 2 All ER 973, [1995] 2 WLR 94) made on 24 June 1994 whereby it was declared that as between Sogenal and the plaintiff, the United Bank of Kuwait plc (UBK), Sogenal did not hold any equitable mortgage or charge arising by way of the notional deposit of title deeds over the undivided share of the first defendant, Hadi Haji Sahib, in the proceeds of sale of 37c Fitzjohn’s Avenue, London NW3, which the latter owned jointly with the second defendant, Raja Saad Hashim (his wife). The facts are set out in the judgment of Peter Gibson LJ.
Christopher Pymont (instructed by Radcliffes Crossman Block) for Sogenal.
James Munby QC (instructed by Clyde & Co) for UBK.
The first and second defendants did not appear.
PETER GIBSON LJ
[…] The s 2 point
Section 2 of the 1989 Act was enacted to give effect to the substance of that part of the Law Commission’s Report, Transfer of Land: Formalities for Contracts for Sale etc of Land (1987) (Law Com No 164), which recommended the repeal of s 40 of the Law of Property Act 1925 and the abolition of the doctrine of part performance and proposed new requirements for the making of a contract for the sale or other disposition of an interest in land. The material parts of s 2 are:
‘(1) A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where the contracts are exchanged, in each.
(2) The terms may be incorporated in a document either by being set out in it or by reference to some other document.
(3) The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract …
(5) … nothing in this section affects the creation or operation of resulting, implied or constructive trusts.
(6) In this section—“disposition” has the same meaning as in the Law of Property Act 1925; “interest in land” means any estate, interest or charge in or over land or in or over the proceeds of sale of land …
(8) Section 40 of the Law of Property Act 1925 (which is superseded by this section) shall cease to have effect.’
‘Disposition’ in s 205(1)(ii) of the 1925 Act includes a conveyance, and ‘conveyance’ includes a mortgage or charge. Section 40, which replaced s 4 of the Statute of Frauds (1677), contained provisions less stringent than the 1989 Act governing formalities relating to contracts for the sale or other disposition of land or any interest in land, and by sub-s (2) had preserved the law relating to part performance.
The effect of s 2 is, therefore, that a contract for a mortgage of or charge on any interest in land or in the proceeds of sale of land can only be made in writing and only if the written document incorporates all the terms which the parties have expressly agreed and is signed by or on behalf of each party. […]
(4) […] I accept that there need not be an express contract between the depositor of the title deeds and the person with whom they are deposited for an equitable mortgage to arise (subject to s 2). But I have already stated why it is clear from the authorities that the deposit is treated as rebuttable evidence of a contract to mortgage. Oral evidence is admissible to establish whether or not a deposit was intended to create a mortgage security, whether or not the original deposit was intended at the outset to be security for further advances, whether or not it was agreed subsequently that that deposit should be security for further advances and whether or not any memorandum of agreement accurately stated the terms of the contract or was complete. To allow inquiries of this sort after the 1989 Act in order to determine whether an equitable mortgage has been created and on what terms seems to me to be wholly inconsistent with the philosophy of s 2, requiring as it does that the contract be made by a single document containing all the terms of the agreement if it is to be valid.
(5) […] It is clear that the rule relating to the creation of an equitable mortgage by deposit proceeded on the footing that the act of deposit constituted a sufficient act of part performance of the presumed agreement to mortgage. I accept that that is contrary to the normal rule that an act of part performance can only be relied upon if done by the plaintiff and not the defendant. But in Maddison v Alderson (1878) 8 App Cas 467 at 480, [1881-5] All ER Rep 742 at 750 Lord Selborne LC said that the law of equitable mortgage by deposit of title deeds depended upon the same principles as the cases of part performance to which he had been referring, and in each of which a valid contract was an essential feature. In Re Beetham, ex p Broderick (1886) 18 QBD 380 the Divisional Court considered whether certain facts were sufficient to establish an equitable mortgage by deposit of title deeds. Cave J (with whom Wills J agreed) said (at 382-383):
‘The law on the subject … forms a branch of the equitable doctrine of the specific performance of oral contracts relating to land based on part performance. It has been held that there is an inference from the mere deposit of title deeds that it was intended to give an interest in the land, and in that way there is something more than a mere oral contract, something in the nature of part performance, so as to take the case out of the Statute of Frauds.’
Further, as Smith J pointed out in Francis v Francis [1952] VLR 321 at 339-340, although Lord Eldon LC repeatedly criticised the way in which the doctrine of part performance had been applied in the case of mortgages created by deposits of title deeds, this criticism was based, not on the view that in such cases there is no act on the part of the mortgagee, but on the equivocal significance of the act of deposit. But even as early as Lord Eldon LC’s time, the recognition by the courts of an equitable mortgage created by the mere deposit of title deeds was too settled to be challenged.
To the extent that part performance is an essential part of the rationale of the creation of an equitable mortgage by the deposit of title deeds, that too is inconsistent with the new philosophy of the 1989 Act. As the Law Commission said in its report (para 4.13):
‘Inherent in the recommendation that contracts should be made in writing is the consequence that part performance would no longer have a role to play in contracts concerning land.’
(6) […] I have already referred to the express reference in the Law Commission’s report to the intention to include in its proposals contracts to grant mortgages. In the same paragraph (para 4.3) it was made clear that contracts to grant leases were also to be included. In my judgment, for the like reasons to those given in (2) above, the absence from the report of express mention of the effect of void dispositions as agreements to dispose cannot alter the effect of s 2.
(7) […] The judge said (1995 2 All ER 973 at 990, [1995] 2 WLR 94 at 111):
‘The recommendation [of the Law Commission] that contracts relating to land should be incorporated in a signed document which contains all the terms was, clearly, intended to promote certainty. There is no reason why certainty should be any less desirable in relation to arrangements for security over land than in relation to any other arrangements in respect of land. The present case itself illustrates the need to be able to identify the obligation which is to be secured. I do not find it surprising that Parliament decided to enact legislation which would be likely to have the effect of avoiding disputes on oral evidence as to the obligation which the parties intended to secure.’
I agree. Indeed, it seems to me that the whole of the judge’s reasoning, to which I would pay tribute, on the s 2 point cannot be faulted. Like him, I am fortified by the support for the same conclusion given in Emmet on Title para 25.116. I therefore conclude that by reason of s 2, the mere deposit of title deeds by way of security cannot any longer create a mortgage or charge. […]
PHILLIPS LJ.
I agree that this appeal should be dismissed and would simply add a few words on the s 2 point.
Mr Munby has referred us to a lengthy line of authorities spanning the period from 1783 to 1985. In these cases, the court consistently recognised that the basis of the equitable mortgage that was created by the deposit of title deeds, was a contract. Indeed, to state that the deposit created the mortgage is an oversimplification. The mere deposit of title deeds was never of itself an act which created a mortgage. It was an act which led the court, despite the Statute of Frauds (1677), to receive parole evidence to prove that it had been agreed that the deeds should be deposited by way of security for a loan. The agreement was no legal fiction.
It is true that in the most extreme case the court would infer the agreement when the evidence showed no more than that the deeds had been deposited with a creditor, who had advanced a loan to the depositor. In most cases, however, evidence was adduced of a specific agreement reached before, or at the time that the deeds were deposited, or of a variation of it thereafter. Often, the issue was as to the precise terms of that agreement.
Mr Pymont sought to persuade us that while in some cases the agreement in question had all the elements of a contract, this was not necessarily so, and that the court did not adopt the approach of identifying the necessary elements of a contract: offer, acceptance, consideration and certainty. No doubt, the court did not. That is not an approach that the court adopts in a dispute about a contract, save where an issue is raised as to the existence of one or more of those elements. I have found nothing in the cases which supports the submission that the agreement to which the court looked was something other than a contract.
In my judgment, the cases fully support the following clear and succinct statement of the law in 32 Halsbury’s Laws (4th edn) para 429:
‘A deposit of title deeds does not in itself create a charge, and the mere possession of deeds without evidence of the contract under which possession was obtained, or of the manner in which the possession originated so that a contract may be inferred, will not create an equitable security. The deposit is a fact which admits evidence of an intention to create a charge which would otherwise be inadmissible…’
That passage states the law as it was before 1989.
In Ex p Mountford (1808) 14 Ves 606 at 607, 33 ER 653 at 654, where the extent of the debt secured by a deposit of deeds was in issue, Lord Eldon LC complained:
‘The mischief of all these cases is, that, we are deciding upon parole evidence with regard to an interest in land within the Statute of Frauds. The evidence is quite contradictory.’
That was a frequent complaint of Lord Eldon LC in such cases. It was a complaint which could properly have been made in many of the equitable mortgage cases over the last 200 years. The clear intent of s 2 of the Law of Property (Miscellaneous Provisions) Act 1989 is to introduce certainty in relation to contracts for the disposition of interests in land where uncertainty existed before. Section 2(5) contains a list of contracts expressly excluded from the operation of the section. I can see no basis for implying a further exclusion in respect of contracts for the grant of a mortgage which are secured by a deposit of title deeds.
LEGGATT LJ.
I agree that, for the reasons given by the judge as well as by Peter Gibson and Phillips LJJ, this appeal fails.
Appeal dismissed. Leave to appeal to the House of Lords refused.
Mary Rose Plummer Barrister.
[1996] 3 All ER 215 at 228
Editorial note
Prior to the coming into force of the Law of Property (Miscellaneous Provisions) Act 1989, it was common for security to be created by the deposit of title deeds (in the case of unregistered land) or of the land certificate (in the case of registered land).
In Sahib, however, the Court of Appeal confirmed that statute had rendered this practice no longer effective to create valid security. The theoretical basis of the security created by a deposit of title deeds was that it took effect as a contract to create a charge, enforceable in equity despite the Law of Property Act 1925, s 40, because the deposit operated as an act of part performance. However, after the coming into force on 26 September 1989 of the Law of Property (Miscellaneous Provisions) Act 1989:
‘A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each.‘1It follows that any contract to mortgage or charge land (including a contract to charge an interest in the proceeds of sale of land) will be void if it is not made in a written document (or documents) incorporating all the terms which the parties have agreed and signed by or on behalf of each party.
Even if the deposit is supported (as used to be the practice with some lenders) by a memorandum of deposit signed by the chargor, it will be ineffective unless the memorandum is also signed by the chargee and in all other respects complies with the statutory requirements.
In the case of registered land, the entry of any new notices of a deposit on the register in respect of any still subsisting securities created by deposit has been prohibited since 3 April 1995.
From Fisher and Lightwood’s Law of Mortgage:
Agreement to create a legal mortgage
Generally
[3.2]
The agreement1 must be for valuable consideration. A voluntary agreement to create a security will not be enforced2. The money must have been paid3 or in the case of an antecedent debt there must be an agree-ment to forbear from suing4. A mere executory agreement to borrow or lend money on mortgage, not in-tended to create a present security, will not constitute an equitable mortgage and specific performance of such an agreement will not be ordered5.
1 See para 1.20. 2 See para 1.19. 3 Rogers v Challis (1859) 27 Beav 175. Also see Lucia Heights Pty Ltd v Comptroller of Stamps [1985] VR 338. 4 Or an actual forbearance: Alliance Bank Ltd v Broom (1864) 2 Drew & Sm 289; Fullerton v Provincial Bank of Ireland [1903] AC 309, HL. 5 See para 1.21.Form
Before 27 September 1989
[3.3]
An agreement to create a legal mortgage was not enforceable unless in writing or evidenced by a written note or memorandum1 of the agreement, signed by the party to be charged therewith or some person there-unto by him lawfully authorised2, or unless there had been part performance of the agreement3.
1 Fenwick v Potts (1856) 8 De GM & G 506; Warner v Willington (1856) 3 Drew 523; Liver-pool Borough Bank v Eccles (1859) 4 H & N 139; Fullerton v Provincial Bank of Ireland [1903] AC 309, HL; Astor Properties Ltd v Tunbridge Wells Friendly Society [1936] 1 All ER 531; Wil-liams v Burlington Investments Ltd (1977) 121 Sol Jo 424, HL. 2 Law of Property Act 1925, s 40(1). See Mounsey v Rankin (1885) 1 Cab & El 496. 3 The payment of money (by itself an equivocal act: see Re Whitting, ex p Hall (1879) 10 Ch D 615, CA) might, taken with other matters, be a sufficient act of part performance: see Stead-man v Steadman [1976] AC 536, [1974] 2 All ER 977, HL; [1979] Conv 40 (Thompson).Since 27 September 1989
[3.4]
By the Law of Property (Miscellaneous Provisions) Act 1989, s 21 a contract for a mortgage of (or charge on) land (or any interest in land) can only be made in writing2. A further requirement of the statute is that the contract incorporates all the terms which the parties have expressly3 agreed in one single document4 or, where contracts are exchanged5, in each6 and, moreover, the document so incorporating the terms, or where contracts are exchanged, one of the documents incorporating them (though not necessarily the same one) must be signed7 by or on behalf of each party to the contract8. In this regard, terms may be incorporated in a document either by being set out therein or by a reference to another document containing such terms9. The contract of sale must refer to the other document; it is insufficient simply for the other document to refer to the contract of sale10. The document referred to need not itself be signed, but it has to be identified in the document which is signed11.
Consequently, neither an exchange of correspondence12 nor a facility letter13 will satisfy the statutory re-quirements.
The variation of a material term of a contract for the disposition of an interest in land (including, therefore, a contract for a mortgage) is similarly subject to the formalities requirements imposed by s 214. However, s 2 does not apply to a collateral contract which is not itself a contract for the disposition of an interest in land15.
Non-compliance with s 2 renders the purported contract or variation thereto (as the case may be) void16.
Section 2 does not invalidate a document which creates an equitable charge17, as distinct from an agreement to create to a legal mortgage, or (as the case may be) that part of a document which so operates (notwith-standing the invalidity of a severable part of the same document which purports to create an equitable mort-gage)18. Equally, s 2 does not apply to a mortgage itself executed as a deed (which deed need not comply with the requirements of s 2)19. The form of words is decisive: any form of words which, on their proper con-struction, are apt to create an immediate security will suffice20.
The 1989 Act, s 2 does not affect the validity of an equitable mortgage created before 27 September 198921.
1 Section 2 of the 1989 Act repealed the Law of Property Act 1925, s 40 and, in so doing, abolished the doctrine of part performance. A detailed consideration of s 2 is to be found in Hill and Redman’s Law of Landlord and Tenant (looseleaf) LexisNexis Butterworths, paras HR A1002-1056.
2 The definition of ‘disposition’ contained in the Law of Property Act 1925, s 205(1)(ii), which includes mortgage, is incorporated into the Law of Property (Miscellaneous Provisions) Act 1989, s 2 by s 2(6).
3 It need not incorporate those implied by law: Blackburn v Walker [1920] WN 291.
4 Therefore, an agreement reached in correspondence, ie an exchange of letters constituting an offer and acceptance, which does not record the express terms of an agreement already reached between the same parties does not satisfy the conditions of s 2 of the 1989 Act (which are more stringent than those of its predecessor, the Law of Property Act 1925, s 40): Commis-sion for the New Towns v Cooper (Great Britain) Ltd [1995] Ch 259, CA.
5 In Commission for the New Towns v Cooper (Great Britain) Ltd above, it was held that the expression ‘exchange of contracts’ is a well-recognised concept which has the following fea-tures: (1) each party draws up or is given a document which incorporates all the terms which they have agreed, and is intended to record their proposed contract; (2) the documents are called ‘contracts’ or ‘parts of a contract’. They are intended to take ef-fect as formal documents of title and must be capable, on their face, of being fairly described as contracts having that effect; (3) each party executes his part in the expectation that the other party has executed or will execute a corresponding part incorporating the same terms; (4) at the time of execution neither party is bound by the terms of the document which he has executed, it being their mutual intention that neither will be bound until the executed parts are exchanged; (5) the act of exchange is a formal delivery by each party of its part into the actual or con-structive possession of the other with the intention that the parties will become mutually bound when the exchange occurs, but not before; (6) the manner of exchange may be agreed and determined by the parties, and may be ei-ther simultaneous (eg when across a table or by telephone) or sequential (eg when by post) in which event exchange does not occur until the second document to be dispatched has been received or posted.
It matters not, therefore, that the exchange of contracts has been preceded by an express oral or written agreement (concluded by final acceptance of an offer in the ordinary way) which agreement (eg as made in correspondence) cannot itself be a legally binding contract by virtue of s 2 of the 1989 Act. (An agreement to exchange contracts for the sale of land is a contract which is required to comply with s 2 of the 1989 Act: Sharif v Sadiq [2004] EWHC 1913 (Ch), (2004) 148 Sol Jo LB 665.)
6 Law of Property (Miscellaneous Provisions) Act 1989, ss 2(1) and (6).
7 The requirement for a signature was not satisfied where the purchaser’s name had been typed at the top of a document as addressee and he had not otherwise signed the letter: Firstpost Homes Ltd v Johnson [1995] 1 WLR 1567, CA. The endorsement on a document of a party’s initials may constitute a sufficient signature provided it is clear that the signatory is thereby intending to authenticate all of its terms. Thus, the mere initialing of a correction in the margin of a document did not constitute the signing of the document for the purposes of s 2(3) of the 1989 Act: Newell v Tarrant [2004] EWHC 772 (Ch), [2004] PLSCS 93.
8 Law of Property (Miscellaneous Provisions) Act 1989, s 2(3). Thus an agreement for lease signed by one of three prospective tenants under an agreement for lease did not comply with the Act: Enfield London Borough Council v Arajah [1996] 2 EGLR 21, [1995] EGCS 164, CA. Similarly, an agreement between husband and wife who were joint beneficial tenants of the former matrimonial home to transfer the husband’s beneficial interest entirely to the wife was of no effect where the agreement was signed only by the husband and not the wife: Chandler v Clark [2002] EWCA Civ 1249, [2003] 1 P & CR 239.
9 Section 2(2) and Firstpost Homes Ltd v Johnson, above, in which it was held that a letter purporting to constitute a contract for the sale of land which referred to an enclosed plan was a separate document from the plan itself. Moreover, because the plan was incorporated in the letter (rather than the other way round), it was the letter and not the plan which the 1989 Act required to be signed, so that the purchaser’s signature on the plan alone did not suffice to cre-ate a contract.
10 Record v Bell [1991] 4 All ER 471, [1991] 1 WLR 853.
11 Record v Bell [1991] 4 All ER 471, [1991] 1 WLR 853.
12 Commission for the New Towns v Cooper (Great Britain) Ltd, above, not following Hooper v Sherman [1994] NPC 153, CA.
13 Lloyds Bank v Bryant [1996] NPC 31, CA.
14 McCausland v Duncan Lawrie Ltd [1997] 1 WLR 38, CA. (For the position in relation to the variation of an executed (cf executory) contract, ie a mortgage itself, see para 10.2); Kilcarne Holdings Ltd v Targetfollow (Birmingham) Ltd [2004] EWHC 2547 (Ch), [2005] 2 P & CR 105.
15 Record v Bell [1991] 4 All ER 471, [1991] 1 WLR 853 (vendor’s solicitor’s letter to the pur-chaser’s solicitor shortly before exchange of contracts informing recipient that sender was awaiting the original office copy entries from the Land Registry showing the vendor as regis-tered owner of the property held to constitute an offer of a warranty as to the state of the title to induce him to exchange which offer had been accepted by exchanging contracts such as to give rise to an enforceable collateral contract). It is unclear whether parties can hive off parts of the terms of a composite bargain into two contracts, namely a written land contract within s 2 and a separate non-land contract incorporating the remainder of the terms (not all recorded in writing), in an attempt to side-step the affects of s 2: cf Tootal Clothing Ltd v Guinea Properties Management Ltd (1992) 64 P & CR 452, [1992] 2 EGLR 80, CA, and Grossman v Hooper [2001] EWCA Civ 615, [2001] 2 EGLR 82; and Northern Eastern Properties v Coleman [2010] EWCA Civ 277, CA.
16 Cf the Law of Property Act 1925, s 40 which formerly rendered a contract not meeting its requirements merely unenforceable. A party seeking to rely on proprietary estoppel as a basis for disapplying s 2(1) of the 1989 Act is not prevented from relying in support of his case on the agreement which s 2(1) would otherwise render invalid. Thus, the requirement that the defen-dant encouraged (or allowed) the claimant to believe that he would acquire an interest in land may, depending on the facts, consist in the defendant encouraging the claimant (by words or conduct) to believe that the agreement for the disposition of an interest in land (here a security interest) was valid and binding: Kinane v Mackie-Conteh [2005] EWCA Civ 45, [2005] 06 EG 140, CS.
17 As to equitable charges generally, see Chapter 6.
18 Murray v Guinness [1998] NPC 79; De Serville v Argee Ltd [2001] NPC 82. An equitable charge must, in order to be valid, comply with the requirements of the Law of Property Act 1925, s 53(1)(a). The Court of Appeal in Kinane v Mackie-Conteh, above, made it clear that an equitable chargee does obtain a security interest and that an agreement to create an equitable charges falls within s 2. Murray v Guinness, above, was considered but distinguished on the basis that the documents in that case were held to create an immediate charge.
19 Eagle Star Insurance Co Ltd v Green (8 August 2001, unreported), CA, Mummery LJ (ap-plication for permission to appeal). In Lingard’s Bank Documents, (4th edn, 2006), para 3.47 it is said that the practice has arisen of banks executing security documents which relate to an in-terest in land on the basis that any covenant for further assurances is a contract for the disposi-tion of an interest in land. If the bank does not execute the document, this does not invalidate a legal charge or the powers contained in it but only any agreement which the document contains for some further disposition of an interest in land. Lingard takes the view that, however, a fail-ure to sign an equitable mortgage over an interest in land would invalidate it because the basis of an equitable mortgage is the making of an agreement to create a mortgage. It is suggested that it would be open to the bank to sign the document at any time subject to the risk that the security is effective only from the date it does sign. Execution of the document subsequently may, of course, give rise to problems with respect to registration of company charges, as to which see para 6.14.
20 See Cradock v Scottish Provident Union (1893) 69 LT 380; affd (1894) 70 LT 718; Na-tional Provincial and United Bank of England v Charnley [1924] 1 KB 431 at 440, 445 and 459.
21 Sections 2(7), 5(3) and (4).
