Cuckmere Brick Co Ltd v Mutual Finance Ltd
A mortgagee selling the property must take reasonable care to obtain the true market value at the time it chooses to sell.
Facts
Cuckmere Brick mortgaged land to Mutual Finance. The land had planning permission for 100 flats, as well as for houses. When the company defaulted, Mutual Finance sold the land at auction, but the advertisements mentioned only the planning permission for houses, and did not mention the permission for flats, which made the land more valuable. The company argued that the land had been sold for less than it was worth.
Legal principle
The Court of Appeal held that the mortgagee was liable for the loss. Salmon LJ said that, although a mortgagee is entitled to choose when to sell, and does not have to wait for the market to improve, it owes a duty to the mortgagor to take reasonable precautions to obtain the true market value of the property at the date on which it decides to sell. By failing to mention the permission for flats in the advertisements, the mortgagee had failed to take reasonable care.
Related cases on mortgages
- Barclays Bank plc v O'Brien [1994] 1 AC 180
- Biggs v Hoddinott [1898] 2 Ch 307
- Cheltenham & Gloucester Building Society v Norgan [1996] 1 WLR 343
- CIBC Mortgages plc v Pitt [1994] 1 AC 200
- Cityland and Property (Holdings) Ltd v Dabrah [1968] Ch 166
- Fairclough v Swan Brewery Co Ltd [1912] AC 565
- Four-Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317
- Horsham Properties Group Ltd v Clark [2008] EWHC 2327 (Ch), [2009] 1 WLR 1255
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