Lloyds TSB Bank Plc v Shorney & Anor [2001] EWCA Civ 1161 (20 July 2001)

Lloyds TSB Bank Plc v Shorney & Anor [2001] EWCA Civ 1161 (20 July 2001)

The Bank was precluded from relying on clause 21 of the mortgage due to its failure to obtain Mrs Shorney's consent to the increased guarantees, which materially prejudiced her position as co-surety. The Bank's actions were not covered by clause 16, and Mrs Shorney was entitled to subrogation and priority over the Bank's charging order.

Citation
[2001] EWCA Civ 1161
Parties
Claimant/appellant: Lloyds TSB Bank plc; Defendant/respondent: Mr and Mrs Shorney
Jurisdiction
England and Wales
Judgment Date
20 July 2001
Procedural Posture
Appeal / Court of Appeal Judgment
Outcome
Appeal dismissed
Legal Topics
Guarantees, Subrogation, Mortgage Enforcement, Duty of Disclosure, Priority of Charges
Banking Law Equity Contract Law Guarantees Subrogation Mortgage Enforcement Duty of Disclosure Priority of Charges

Case Brief

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Parties

Lloyds TSB Bank plc

Claimant/appellant

Mr and Mrs Shorney

Defendant/respondent

Procedural Posture

Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether Mrs Shorney's charge by virtue of s.5 of the Mercantile Law Amendment Act 1856 takes priority over the Bank's charging order
  2. 2 Whether the Bank can rely on clause 21 of the mortgage to prevent Mrs Shorney from exercising subrogation rights
  3. 3 Whether the Bank owed a duty to disclose increased liabilities to Mrs Shorney

Ratio Decidendi

The Bank was precluded from relying on clause 21 of the mortgage due to its failure to obtain Mrs Shorney's consent to the increased guarantees, which materially prejudiced her position as co-surety. The Bank's actions were not covered by clause 16, and Mrs Shorney was entitled to subrogation and priority over the Bank's charging order.

Court Disposition

Appeal dismissed

Orders

  • Appellant to pay Respondent's costs