land UNIT 9- LEVEL 6 - LAND LAW SUGGESTED ANSWERS - January 2010 Note to Candidates and Tutors: The purpose of the suggested answers is to provide students and tutors with guidance as to the key points students should have included in their answers to the January 2010 examinations. The suggested answers do not for all questions set out all the points which students may have included in their responses to the questions. Students will have received credit, where applicable, for other points not addressed by the suggested answers. Students and tutors should review the suggested answers in conjunction with the question papers and the Chief Examiners’ reports which provide feedback on student performance in the examination.
Question 1(a) A mortgage is a charge over land or other property to secure payment of a debt or compliance with some other obligation. Undue influence is some improper pressure falling short of duress. Equity identifies three categories of undue influence (O'Brien/Aboodi). The first (Class 1) requires the claimant to demonstrate actual undue influence. The second and third categories require the claimant to demonstrate a particular type of relationship (in the second category (2A) are listed a number of often fiduciary relationship, ie doctor/patient; but not husband and wife): in the third (2B) the relationship is one of "trust and confidence"). Once the relationship is made out, the burden shifts to the defendant to prove that there was no undue influence. If the undue influence is made out, the claimant is entitled to have the contract/mortgage set aside as against the unduly influencing party. It is rare that that party is the mortgagee. For the charge to be set aside as against the mortgagee on the basis of the undue influence of another party, it is necessary for the claimant to show that the mortgagee had constructive notice of the possibility of undue influence (Compare O’Brien and COBC Mortgages –v- Pitt for the circumstances where notice arises - for instance, that the mortgagee is aware that a wife is standing surety for her husband's business debts) and that the mortgagee failed to take steps to "clean the taint". Etridge explains the steps necessary to clean the taint: advising the wife about the risks she is taking and inviting or ensuring that she receives independent legal advice. This may be from the husband's solicitor, but it should not be in the presence of the husband. Ordinarily, a certificate from that solicitor that the wife has been advised is sufficient to clean the taint. Page 1 of 9
Question 1(b) The fundamental conflict at a policy level is between the need for mortgagees to lend with some certainty that their charges can be enforced (which is good for the economy - we wouldn't want the banks to stop or limit lending), set against the need to protect vulnerable people from oppressive conduct: in simple terms, where should the balance lie between the economic benefit of secured lending and the rights of the "innocent" wife to keep her home? Prior to Etridge, it was recognised that a lender could be tainted where the charge was not for the wife's benefit, but there was no clear judicial guidance on how that taint could be removed. Etridge provided that guidance and, in particular, enabled the solicitor's letter to clean the taint. There is little prospect of unjust results here: if the wife goes against good advice, she cannot be said to have been unaware of the risks (and she retains an action against her husband, although if the bank is enforcing its charge, such action would probably not be worth powder and shot), whilst if the advice was negligent, she has an action against the solicitor. It should also be recognised that equity will not assist the wife in any case if she is a party to a fraud or misrepresentation to the lender (by, for instance, signing an application form which states, untruthfully, the purpose of the loan (CIBC -vPitt)). Question 2 Prior to...
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