Mason v Godiva – a mis-sold mortgage?

(full case at

Mr & Mrs Mason were misled by Martyn Balm into a disastrous mortgage.

In 2008, they were sold on the idea of investing in property having sold up their family business and borrowed to obtain capital to start up this venture. Having obtained some funding and been advised (by Mr Balm through another business) as to a potential target site, they were advised on remortgaging the family home to extend the borrowings and invest into the venture.

At this time Mr Balm had been paid a fee in excess of £50,000 to locate the site and obtain a mortgage over the site; and stood to obtain further commissions in remortgaging the family home.

To do this Mr Balm misrepresented the Mason’s earnings, and Mr Mason spotted this when approving the application and required that it be corrected before submission. However it was never corrected.

Sadly, after this remortgaging, in 2011 the loan over the development property was called in and ultimately receivers sold the land and the shortfall on that loan was written off.

The Masons therefore did not have the asset or projected profit to pay off the borrowings invested in the property business.

Accordingly, the Masons sued the lenders for inappropriate lending. Unfortunately in this case, because Godiva’s processes met the standards required for self-certification at the time, and a regulated mortgage broker (Mr Balm) brokered the deal the court could not find that Godiva acted inappropriately or in breach of their duties as lender.

Because no case was brought against Mr Balm nothing is said about his responsibilities or his firm’s responsibilities.

Today, it would be almost impossible to obtain such a self-certified mortgage – because the rules have been made stronger after the financial problems of the last decade – and so cases like this should be rarer and rarer.

When looking at mis-selling cases it is vital to take early effective advice as the last paragraph of the judgment points out. Mr & Mrs Mason are, at 79 and 80 years old, facing repossession and a judgment against them for the outstanding sums.

One slight ray of hope is that the judge directed that a copy be sent to the FCA in order that they can consider the factual matters he determined in respect of Mr Balm’s conduct.

If you have a mis-selling claim and need advice call my clerks on 01823 247 247.