Helden v Strathmore  EWCA Civ 542 contains lots of useful footnotes and pointers on different issues, so it’s worth a read. In this note, I’m going to focus on two such footnotes, which have a bearing on issues with which it’s fair to say make me cross: the ambit of section 2, Law of Property (Miscellaneous Provisions) Act 1989; and the basis for a lender’s costs in seeking possession when there is no express provision in the mortgage terms. The Court of Appeal got the answers absolutely spot-on in Helden. The actual facts for the purposes of those footnotes are largely irrelevant so, if you’ll forgive me, I will leave them to you. The other important issues considered in the case concern the ambit of section 22, Financial Services and Markets Act 2000 and associated SI, The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, as far as lending secured on land used as a dwelling by the borrower and the correlative discretion of the court to enforce such loans even if not made in accordance with the FSMA.
The point about section 2 is obvious; axiomatic indeed. The loans in this case had been executed by a deed which was defective in its terms (but properly capable of rectification or, as decided at first instance, effective by reference to an oral agreement). The point taken by Mr Helden, however, was that you couldn’t fill in the gaps in the deed by reference to an oral agreement which was in breach of section 2, LP(MP)A. Lord Neuberger MR dealt with this really quite sweetly (and swiftly) in the following terms:
Mr Helden’s case on section 2 is hopeless. It proceeds on a fundamental misunderstanding of the reach and purpose of that section, a misunderstanding, it is fair to say, which appears to be not uncommon. Section 2 is concerned with contracts for the creation or sale of legal estates or interests in land, not with documents which actually create or transfer such estates or interests. So a contract to transfer a freehold or a lease in the future, a contract to grant a lease in the future, or a contract for a mortgage in the future, are all within the reach of the section, provided of course the ultimate subject matter is land. However, an actual transfer, conveyance or assignment, an actual lease, or an actual mortgage are not within the scope of section 2 at all.
This is properly a footnote as it seems just blindingly obvious and Mr Helden’s position unarguable.
On costs, the judge at first instance granted costs on the indemnity basis to Strathmore because that is the usual way in which lender’s costs are dealt with where there is express provision for costs. Lord Neuberger regarded that analysis as “fundamentally flawed” because the relevant charge in this case had no such express contractual provision. He said that “… it seems to me that it would be wrong in principle for the court to proceed on the basis that there is such a provision, simply because the majority of agreements of the type in question do contain such a provision. If anything, one would presume that the parties intentionally departed from the norm” (at ).
Costs were, therefore ordered on the standard basis (and 60:40 on the basis that Strathmore had to rely on the court’s discretion and their argument on the FSMA failed). Note to self: check that mortgage costs recovery provision. [by the way, on that subject, there is also an excellent article on the potential use of the UTCCR 1999 to challenge the mortgagee’s express term anyway in the Journal of Housing Law (2005) 13(1) pp 31-2 (Bates, “Costs in mortgage possession proceedings: An unfair contract term?”), which is worth a read if you’re not familiar with that argument].