Baycourt Chambers’ Raynard Rigby KC and Asha Lewis successfully represented the Bank in a dispute where allegations were made that the Bank was responsible for selecting the Borrower’s lawyer and hence bore some responsibility for the title defect of the mortgage property. The case also centered on the terms of the commitment letter and the approach of the Court in interpreting its terms.
The Bank was successful in defeating these allegations and was awarded a judgment in its favour.
Senior Justice Madam Charles in her Ruling delivered on 31 January 2023 held that
1. The Defendant breached the terms of the commitment letter and the mortgage facility by failing to make payments and failing to keep moneys in her account to service the Loan.
2. The commitment letter (with the covenants) must be construed to align with commonsense and standard banking business and practices: Marley v Rawlings and another [2014] 1 All ER 807; Rainy Sky SA & Ors. v Kookmin Bank [2012] 1 All ER 1137 and Costain Ltd v Tarmac Holdings Ltd [2017] EWHC 319 (TCC)) relied upon.
3. The commonsense approach is that the Firm was selected and was paid for the purpose of investigating title to the property and therefore, the law firm alone owed a duty to the Defendant in respect of the same. Further, as the Conveyance is in the name of the Defendant, she had the duty to ensure that she received what she bargained for in relation to the property.
4. The evidence before the Court does not suggest or intimate that the Plaintiff was a party to the identification of the property or that it played any role in the title investigation of it to serve as collateral. What is clear is that the Defendant had already selected the property by the time of the Loan’s approval as she signed the conveyance in February 2004, one month prior to the execution of the commitment letter.
5. A reasonable inference to be drawn from the facts of this case is that the Defendant selected the legal firm to represent her a month before she approached the Plaintiff for financing.
6. On the clear and unequivocal provisions of the commitment letter, it is correct for this Court to find that the intentions of both parties were limited to the Plaintiff contracting to advance the amount borrowed and the Defendant contracting to pay the Loan. The duty to investigate title to the property to serve as collateral resides with the Defendant and her lawyers.
7. There was no frustration of the facility agreement and the doctrine of frustration has no applicability to the present case. In addition, mistake is not applicable to the facts of this case. Nor are the principles of estoppel.
