Adamson v Halifax Plc
| Jurisdiction | England & Wales |
| Judge | Sir Murray Stuart-Smith |
| Judgment Date | 30 July 2002 |
| Neutral Citation | [2002] EWCA Civ 1134 |
| Docket Number | Case No: B2/2001/2031 & 2031A |
| Court | Court of Appeal (Civil Division) |
| Date | 30 July 2002 |
[2002] EWCA Civ 1134
Lord Justice Potter
Sir Murray Stuart-Smith
Case No: B2/2001/2031 & 2031A
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MANCHESTER COUNTY COURT
(District Judge Freeman)
Royal Courts of Justice
Strand,
London, WC2A 2LL
Michael Mulholland (instructed by CP Morley, Manchester) for the appellant
Kathrine McQuail (instructed by Walker Morris, Leeds) for the respondent
Introduction
This is an appeal from the judgment of Freeman DJ sitting at the Manchester County Court and given on 14 th June 2001.
The claimant Janet Adamson entered into a mortgage deed with the defendant, Halifax plc, then a building society, in September 1991 in order to purchase her flat, Flat 3 Manor Park, Manor Avenue, Urmston. She fell into arrears with the payments and on 31 st August 1995 the defendant took possession of the flat. It did so without a court order. One of the claims made by the claimant was that the defendant had wrongfully taken possession; she alleged that she was still in possession. She claimed that the defendant had wrongfully disposed of her possessions valued at £2,000 and she claimed aggravated damages. The judge dismissed this claim; he did not accept the evidence of the claimant or her mother. He accepted the evidence of Mr Delaney, called on behalf of the defence, which was corroborated by the contemporaneous documents, to the effect that she had vacated the flat. There is no appeal on this issue; but it has relevance to the question of interest and costs, the judge's award on these matters being subject to appeal and an application for permission to cross appeal.
Damages
The main issue in the appeal related to the claimant's claim that the defendant, after repossessing the property, sold at a substantial undervalue. The flat was sold for £17,000. The judge held that the true value of the property in the condition it was, which was a poor one, was £23,000. Again there is no dispute on this aspect of the case, or as to the judge's finding that the defendant was in breach of the duty to take reasonable care to ensure the best price that can reasonably be obtained (imposed by the Building Societies Act 1986 Schedule 4 paragraph 1(1)(a), but subsequently repealed in the Building Societies Act 1997 Section 12).
The judge did not award the claimant £6,000, the difference between the sale price and the proper price, but only £1,000. That came about in this way. The claimant was indebted to the Royal Bank of Scotland (the Bank) in the sum of £4,736.27. It appears to have been an unsecured debt. On 17 th December 1993 the Bank obtained a judgment for this sum. On 4 th May 1994 the Bank entered a caution on the register of title. On 14 th February 1995 the Bank obtained a charging order nisi on the flat, which was made absolute on 3 rd April. The charging order is not recorded on the office copy of the register of title before the court; but this is because the copy is dated 6 th February 1995. It existed as a subsequent encumbrance to the defendant's mortgage and the defendant was aware of it. What is now clear is that, after the sale, the defendant accounted to the Bank for £22, which was all that was left from the proceeds of sale after the satisfaction of the defendant's claim.
It is common ground that if the defendant had sold the property at £23,000 shortly after 24 th November 1995 (when contracts were exchanged) it would have accounted to the Bank as a subsequent encumbrancer for £5,000 (the amount of the judgment plus costs rounded up to £5,000) and to the claimant as mortgagor (see LPA 1925 s.105) for £1,000. However, the situation was that the Bank had never made any attempt to enforce its judgment (beyond the £22) against the claimant, no doubt for the very good reason that it did not consider that she had any money. Neither had it made any claim against the defendant for damage to its own interest as a subsequent encumbrancer by selling at an undervalue. In the light of the judge's judgment, it is clear that it could have done so. But it can do so no longer, because its claim is now barred by limitation, 6 years having elapsed since the 24 th November 1995. At the time the District Judge gave judgment, namely on 14 th June 2001, the 6 years had not yet expired; but the Bank had shown no signs whatever of making a claim against the defendant. So far as the claimant was concerned she gave evidence that the Bank had "written off" the debt. It is probable that by this she meant no more than that the Bank had not pursued her. There was certainly no formal release and nothing that could give rise to an estoppel. No action can now be brought to enforce the Bank's judgment against the claimant (see Limitation Act 1980 Section 24). But a writ of execution to enforce the judgment can be issued with the permission of the court, even though 6 years has elapsed from the date of judgment. (see CPR Sc46.2 and similar provisions for warrants of execution in the County Court CC26.5).
The judge decided that the claimant should recover no more than £1,000 because he considered that that was the extent of her loss. Had the defendant sold for the full market value it would have had to satisfy the Bank, before accounting to her. That being so, the judge considered that she should not obtain a 'windfall' of £5,000 because the Bank had taken no steps to recover their money.
Mr Mulholland who appeared in this court on behalf of the claimant, but not in the court below, submitted that the judge was in error. He submitted that the claimant's damage consisted in the diminution in value of the equity of redemption; damage should be assessed at the time of trial. If the full £6,000 is paid to the claimant, she remains at risk of enforcement proceedings at the suit of the Bank. Mr Mulholland recognised that, at the time the judge gave judgment, there was a possibility of a claim being made by the Bank against the defendant; in these circumstances he submitted that a possible alternative course would have been for the judge to have ordered £5,000 to be paid in to court to abide any claim by the Bank. If it made no claim against the defendant before 24 th November 2001, the money then should be paid out of court to the claimant.
In support of his submission Mr Mulholland referred the court to the advice of Lord Templeman to the Privy Council in Downsview Ltd v First City Corporation Ltd [1993] AC 295; at page 311F he said:
"The owner of property entering into a mortgage does not by entering in that mortgage cease to be the owner of that property any further than is necessary to give effect to the security he has created. The mortgagor can mortgage the property again and again. A second...
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