Mortgage — Mortgagor letting mortgaged property — Mortgage repayments in arrears — Mortgagee taking possession of rent — Mortgagor regaining possession of property from tenants — Mortgagor seeking account of the rents and profits in the hands of the mortgagee — What sums properly due to mortgagor
In early 1979 the plaintiff bought a house in Hull. He borrowed about £1,000 from the defendant secured by a mortgage of the property in a fairly common form. His monthly repayments came to £28. Shortly afterwards he lost his job and let the house furnished for £25 per week. He fell into arrears with his mortgage repayments, and in November 1979 the defendant mortgagee entered into possession of the rents of the property. At the time arrears were no more than about £235. The plaintiff recovered possession of the property as against the tenants in September 1986, and then brought proceedings in the county court asking the mortgagee to account for the rents and profits from November 1979 to September 1986.
His honour judge Walker in the Kingston-upon-Hull county court gave judgment in default of a defence, set it aside, then reinstated it on August 17 1987. He accepted evidence that at some unspecified time the mortgagee reduced the rent to £10 per week on the basis that the tenants would be responsible for repairs, and ordered that the mortgagee account for the rents received on the basis of £10 per week after allowing for the repayment of the mortgage debt. The plaintiff mortgagor appealed and contended that as the mortgagee was aware that the rent had been £25 per week, the mortgagee was liable to account in respect of this larger sum over the period.
Held The appeal was allowed and a sum of £5,000 substituted for the figure ordered by the judge. A mortgagee is under a duty to account for the best rent that could be obtained: White v City of London Brewery Co [1889] 42 ChD 237. However where the possibility of obtaining a better rent is known to the mortgagor, the mortgagor must inform the mortgagee at the time and cannot complain of mismanagement at a later date: Hughes v Williams (1806) 12 Ves 493. But it is no answer for the defendant to contend, as in this case, that the mortgagor did not complain of mismanagement when told that the rent had been reduced to £10 per week; the defendant mortgagee already knew that a better rent could be obtained and the mortgagor was not expected to bring this to his attention.
Hughes v Williams
(1806) 12 Ves 493 distinguished
Brandon v Brandon
(1862) 10 WR 287 considered.
Simon Jack (instructed by Graham & Rosen of Hull) appeared for the appellant mortgagor; and David di Mambro, who did not appear below, (instructed by Sherringtons) appeared for the respondent mortgagee.
