Home Building Society Ltd v Pourzand

Home Building Society Ltd v Pourzand involved a dispute over the priority of mortgages and the amounts secured, with the respondent arguing for a dispersive or disjunctive interpretation of the word "and" in the relevant agreements. The Court of Appeal was tasked with deciding whether the word "and" should be interpreted in its ordinary conjunctive sense or whether, in light of the context, it should be given a dispersive or disjunctive meaning.

The respondent argued that the word "and" should be construed as "and/or" or "or" because the terms "Home Building Society Security" and "Second Security" were part of a list that included "any other security" and applied to future and different securities without temporal or other limitation. The respondent relied on the broad language of the definitions and the fact that new securities over the Duncraig Road property were contemplated by both parties after the Alness Street mortgages were discharged. However, the appellant contended that such a construction would lead to uncommercial consequences, potentially applying to future securities with no connection to existing or contemplated borrowings. The court examined the principles of statutory and general law relating to the priority of securities and advances, which are known to both parties.

The Court of Appeal found that the trial Judge's interpretation of the statutory and general law rules of priority applied to the facts of the case was correct. The court held that the appellant's mortgage over the Alness Street property had priority over the respondent's mortgage over the same property. The further advance by the appellant secured by its mortgage of the Alness Street property would not have priority over moneys already advanced and secured by the respondent's mortgage of the Alness Street property. The appellant's proposed first registered mortgage over the Duncraig Road property would have priority over the respondent's proposed subsequent registered mortgage of that property. All of the advances made by the appellant to the mortgagor at or before the time of the registration of, and secured by, the appellant's first mortgage of the Duncraig Road property would have priority over the moneys secured by the respondent's second mortgage of the Duncraig Road property. Consequently, the Home Building Society had priority over the respondent.

The Court of Appeal dismissed the appeal, affirmed the decision of the trial Judge, and ordered that the respondent pay the appellant's costs of the appeal.