There is little point in running the race if you fall at the last hurdle. In Wood v Commercial First Business Ltd [2019] EWHC 2205 (Ch), the lender fell foul by failing to follow its own terms of business; and faced further challenge over execution of the mortgage deed.

The Facts: CFB granted two mortgages and a further advance to W, the loans being secured on W’s farms. CFB specialised in making unregulated secured loans to commercial borrowers. It only provided mortgages through a broker. CFB’s terms stated that W would be advised of certain commission paid to the broker. The broker received commissions from both W and CFB totalling £30,600, £57,092.80 and £5,234.22. CFB went into liquidation. W defaulted. W claimed amongst other things:

  1. CFB was in breach of contract as it failed to tell W of the commission and this was an unfair relationship under s140 Consumer Credit  Act 1974.
    The Court said: The payments were “fully secret” and a “special species of fraud” and rescission was available as of right; and
  2. The mortgage deed was invalid because W was not present when the witness signed attesting her signature.
    The Court said – S.1(3) of the Law of Property Act (Miscellaneous Provisions) Act 1989 states that a deed is valid when executed by an individual in the presence of a witness who attests the individual’s signature. There was NO requirement for the individual executing the deed (or anyone else) to be present when the witness signed.


Payment of commission: There are various classes of commission and the law applies different rules in each case. Contact us if you wish to know more.

Execution of Contracts and Deeds: Contracts require only a signature and do not need to be witnessed. Certain transactions can only be executed by a deed. The above decision would also apply to deeds executed by companies where a director signs in the presence of a witness who attests his signature.

Different rules apply to wills. Section 9 Wills Act 1837 provides that the testator must sign in the presence of two witnesses who must then each sign ‘in the presence of the testator’.

At Lawson & Co. we regard every case as unique and we will guide you through your transaction and help you to avoid these pitfalls. Conversely, please contact us if you believe you have made an unlawful payment of commission.

This Update is not a definitive analysis – take legal advice before pursuing any course of action.