Barclays Bank Ltd v Taylor
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RUSSELL |
| Judgment Date | 24 January 1973 |
| Judgment citation (vLex) | [1973] EWCA Civ J0124-5 |
| Date | 24 January 1973 |
| Court | Court of Appeal (Civil Division) |
[1973] EWCA Civ J0124-5
In The Supreme Court of Judicature
Court of Appeal
Civil Division
On appeal from of Mr Justice Goulding.
Lord Justice Russell,
Lorp Justice Cairns(Not present) and
Lord Justice Stamp
Mr H. E. FRANCIS, Q. C. and Mr JOHN MONCKTON (instructed by Messrs Durrant Cooper & Rambling) appeared on behalf of the Appellants (Plaintiffs).
Mr PETER MOTTERSHEAD and Mr T. J. CRAVEN (instructed by Messrs Adam Burn & Matson, Agents for Messrs Rich & Carr, Leicester) appeared on behalf of the Respondents (Defendants).
The Judgment I am about to deliver is the Judgment of the Court.
This appeal is from a decision of Mr Justice Goulding determining a question referred to the Court by the Chief Land Registrar by his Order dated the 22nd January, 1969, under Rule 220(4) of the Land Registration Rules. The case below is reported in 1972 2 Weekly Law Reports, 1038, and 1972 2 All England Reports, 752.
A couple called Duxbury were registered in 1957 as proprietors with absolute title of a freehold property, 32 Westdown Drive, Thurmaston, having acquired the property with the assistance of a Building Society mortgage, which itself was registered in the Charges Register. In June, 1961, the Bank (which was Martins Bank and is now the appellant Barclays Bank), at the request of the Duxburys, paid off the Building Society by a sum of £1604, which was debited to a Duxbury joint account. In order to secure moneys due on the overdrawn joint account and on Mr Duxbury's separate trading account, the Land Certificate was deposited with the Bank. Not long afterwards (in September, 1961) the Duxburys signed a memorandum of deposit acknowledging that the Land Certificate was in the possession of the Bank as security for the liabilities to the Bank on the Duxbury joint account and on the account of Mr Duxbury trading as "John Duxbury", and by the memorandum the Duxburys undertook on demand to execute a legal mortgage in favour of the Bank whenever called upon to do so. It is to be observed that this document is the only reliable evidence of the extent of the security created by the earlier deposit of the Land Certificate: that it is in terms limited tomoneys due to the Bank on two accounts: and that the undertaking to execute a legal mortgage would not in a contractual sense oblige the Duxburys to execute a legal mortgage wider in the extent of the moneys to be secured. On the other hand, if the Bank called for a legal mortgage wider in extent, the Duxburys would no doubt as a practical matter find it difficult to resist.
The ability so to charge the land by deposit of the Certificate is conferred on the registered proprietors by Section 66 of the Land Registration Act, 1925. This provides that the proprietor of the land may, subject to any estates, interests, charges or rights registered or protected before the date of the deposit, create a lien on the land by deposit of the Land Certificate, such lien being equivalent to that created in the case of unregistered land by deposit of the title deeds.
Notice of the deposit of the Land Certificate by way of security was given to the Land Registry on behalf of the Bank in June, 1961, and this was entered in the Charges Register. This was pursuant to Rule 239, which provides that the notice shall operate as a caution under Section 54 of the Act. This rule is made under Section 144 (1) (xi) of the Act. There is no requirement that the notice of deposit, given or entered in the Charges Register, shall indicate the extent of the security. The operation of the notice of a caution under Section 54 is that it indicates that no dealing with the land is to be registered until notice has been served on the person, giving notice of the deposit of the Land Certificate: see also Section 55.
Apart from the value of notice of deposit registered in the Charges Register as operating as a caution, possession of the Land Certificate by way of security effectively prevents any entry on the register for which production of the Land Certificate is required.
In December, 1961, Mr Duxbury formed a private limited company to take over his business. On the 29th August, 1962, the situation as between the Duxburys and the Bank was as follows: Mr Duxbury's trading account was overdrawn by £1043 and the Duxbury joint account by £1488. On the 29th August, 1962, (i) the Bank agreed to open an account in the name of the Duxbury company with overdraft facilities; (ii) the Duxburys signed, in consideration of the Bank giving credit facilities to the Duxbury company, a joint and several guarantee of that company's liabilities to the Bank up to £3000; and (ii) the Duxburys executed a charge by way of legal mortgage in favour of the Bank. Clause 6 of the guarantee document provided that the Bank "shall be entitled to a lien for all moneys payable under this guarantee on all securities belonging to us … now or hereafter held by you (otherwise than for safe custody only) …".
The charge by way of legal mortgage was in the Bank's common form. The Duxburys covenanted jointly and severally on demand to pay to the Bank any balance due on any account of them or either of them and to pay and discharge all other liabilities to the Bank of them or either of them for the time being, whether as principal or surety, and charged the scheduled property with their covenanted obligations. The schedule referred to 52, Westdown Drive "and all other if anythe freehold … hereditaments described in … the following … documents …" and then, under the heading "Particulars of documents", is written "Land Certificate Title No. P. 186571". Clause 7 is in the following terms: "Nothing herein contained shall operate so as to merge or otherwise prejudice or affect any lien charge or other security … which the Bank now or at any time hereafter may have or would apart from this security have for any money intended to be hereby secured or any right or remedy of the Bank thereunder".
On the 4th September, 1962, the Duxbury company's account was debited with substantially the balance due on Mr Duxbury's trading account, which was then closed. In May, 1965, the Bank agreed to increase the overdraft facilities on the Duxbury company's account to £7500, and the Duxburys signed a guarantee in similar form for an additional £4500.
In February, 1968, the Duxburys contracted to sell the property to the Taylors for £3500 plus £1500 for fixtures and fittings, which apparently was paid without attempting to get a transfer or inspecting any entry in the Land Registry.
Mrs Duxbury and Mrs Taylor are sisters.
No step in connection with the Land Registry had been taken by the Bank in relation to the legal charge, though of course the Bank still held the Land Certificate, and the notice of its deposit with the Bank remained on the Charges Register.
In March, 1968, the Bank called in the Bank overdrafts (on the Duxbury company's account and on the Duxburys' joint account) and called for payment by the Duxburys under their guarantees. On the 18th April, 1968, the amount owing on that joint account was paid off and the account closed. Thus,neither of the two accounts mentioned in the 1961 memorandum of deposit remained in existence, but the Bank still held the Land Certificate and the Legal Charge extended to the guarantees of the Duxbury company's indebtedness.
As a result of steps taken by the Bank with a view to exercising its power of sale of the property, where, we understood, the Taylors were living, the Taylors took the step in August 1968 of registering a caution against dealings, by applying that no dealings with the land should be registered until notice had been served on them: the requisite statutory declaration by their Solicitor stated that they were interested in the land as contracting purchasers under the contract between the Duxburys and the Taylors. On the 19th August, 1968, this caution was entered in the proprietorship register. This was pursuant to Section 54- of the Act.
The Bank then applied to register the legal mortgage. Section 25 of the Act enables a registered proprietor of land by deed to charge the land; and Section 26 provides that such a charge shall be completed by registration of the charges as proprietor of the charge together with particulars thereof. The cautioning Taylors were given notice and the dispute brought to a head. The question ordered to be referred to the Court for determination was "whether the said...
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