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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

26 AUG 2013

Garwood (as Trustee of the Estate in Bankruptcy of Adekumbi Ebrahim Fabumni-Stone) v Bank of Scotland plc [2012] EWHC 415 (Ch); [2013] BPIR 450

(Chancery Division, Norris J, 4 March 2013)

FS purchased a property with a mortgage from Mortgage Express. The property was split in two, between the lower flat (Flat 1 or Flat A) and the upper flat (Flat 2 or Flat B). FS then obtained a loan from BoS apparently to purchase the upper flat. Shortly thereafter, he obtained another loan from BoS apparently to purchase the lower flat. Such loans were obtained by misrepresentation. A charge was effected over the upper flat, citing the title number of the property, which was registered. The Mortgage Express mortgage was discharged using the proceeds of the loans. A lease was granted of the lower flat, using a new title number, and the BoS charge was mistakenly discharged. After a bankruptcy order was made against FS, BoS entered a unilateral notice against the property on the basis of the erroneous discharge. The trustee in bankruptcy's application to remove it was dismissed. Norris J dismissed the trustee's appeal. The BoS charge was an equitable charge of the upper flat (although by registration BoS had acquired a legal charge over the property). But the discharge of that charge was a mistake, either legally or factually, so that the discharge could be rescinded and the register rectified.

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