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I hope that this case may raise awareness in the mental incapacity/contract area.
http://www.bailii.org/ew/cases/EWCA/Civ/2012/962.html
The issues are far reaching and relate to the exercise of power of sale without recourse to the courts after the mortgagor lost mental capacity
Mental incapacity, disability discrimination and human rights issues are involved
Brief Summary
The mortgagor executed a charge by way of a legal mortgage over an unregistered commercial property that he solely owned. The Bank held the deeds and the mortgagor retained title.
The mortgagor subsequently lost mental capacity and hadn’t made an Enduring Power of Attorney.
When the Bank was put on notice of the mortgagor’s incapacity it formally demanded full repayment of the balance outstanding on the loan account. There were no arrears or defaults.
Despite the Bank being informed that the mortgagor could only act through a Court of Protection appointed receiver, it chose to continue to rely on the terms of the contract and exercised power of sale.
The Court decided that the mortgagor’s subsequent incapacity was not relevant and the Bank had been entitled to act as it did because the mortgagor had capacity when he executed the mortgage
Whereas a person lacking capacity cannot act by an agent without a courts authority, the Court considered that as Law of Property Act Receivers are not agents in the usual sense their appointment was valid and a court order wasn’t necessary.
http://www.bailii.org/ew/cases/EWCA/Civ/2012/962.html
The issues are far reaching and relate to the exercise of power of sale without recourse to the courts after the mortgagor lost mental capacity
Mental incapacity, disability discrimination and human rights issues are involved
Brief Summary
The mortgagor executed a charge by way of a legal mortgage over an unregistered commercial property that he solely owned. The Bank held the deeds and the mortgagor retained title.
The mortgagor subsequently lost mental capacity and hadn’t made an Enduring Power of Attorney.
When the Bank was put on notice of the mortgagor’s incapacity it formally demanded full repayment of the balance outstanding on the loan account. There were no arrears or defaults.
Despite the Bank being informed that the mortgagor could only act through a Court of Protection appointed receiver, it chose to continue to rely on the terms of the contract and exercised power of sale.
The Court decided that the mortgagor’s subsequent incapacity was not relevant and the Bank had been entitled to act as it did because the mortgagor had capacity when he executed the mortgage
Whereas a person lacking capacity cannot act by an agent without a courts authority, the Court considered that as Law of Property Act Receivers are not agents in the usual sense their appointment was valid and a court order wasn’t necessary.
