Boscawen and Others v Bajwa and Others ; Abbey National Plc v Boscawen and Others

JurisdictionEngland & Wales
Judgment Date10 April 1995
Judgment citation (vLex)[1995] EWCA Civ J0410-10
Date10 April 1995
CourtCourt of Appeal (Civil Division)
Simon John Evelyn Boscawen & Ors.
Narip Deep Singh Bajwa & Anr. and
Abbey National Plc
Simon John Evelyn Boscawen & Ors.

[1995] EWCA Civ J0410-10

(Mr. E.G. Nugee Q.C., sitting as a Deputy Judge of the High Court)

Before: Lord Justice Stuart-smith Lord Justice Waite Lord Justice Millett





MR. W.H. HENDERSON (instructed by Messrs. Arnold Fooks Chadwick, Solicitors, London) appeared on behalf of the counterclaim Plaintiff (Respondents.

MR. RICHARD SALTER (instructed by Messrs. Shoosmiths & Harrison, Solicitors, Northampton) appeared on behalf of the counterclaim Defendants (Appellants).


This is an appeal by three of the defendants to counterclaim from a judgment of Mr. E.G.Nugee Q.C. sitting as a deputy High Court judge of the Chancery Division and given on 27th. May 1994 at the trial of the counterclaim in the action. The judge declared that the plaintiff by counterclaim Abbey National plc. ("the Abbey National") was entitled to a charge on the property 20 Windsor Road, Kew, Richmond, Surrey ("the property") by way of subrogation to the rights of the Halifax Building Society ("the Halifax") and in priority to any interest of the Appellants.


At all material times the property was registered in the name of Narip Deep Singh Bajwa ("Mr. Bajwa"). On 29th. September 1989 he charged the property to the Halifax, and the charge was duly registered in the Charges Register of the title. The charge was discharged on 29th. April 1991 in circumstances which I shall shortly describe, and the Abbey National claims to be entitled to the benefit of the charge in equity by subrogation by reason of the fact that it provided virtually the whole of the money with which it was discharged.


The Appellants are judgment creditors of Mr. Bajwa. They obtained a charging order nisi on the property on 4th. November 1991 which was made absolute on 2nd. January 1992. The present proceedings were commenced on 31st. March 1992 when the Appellants issued an originating summons against Mr. Bajwa and the Abbey National for enforcement of their charging order. An order for possession and sale was made and the property was duly sold. The net proceeds of sale amounting to £105,311.83 have been paid into court, and the present dispute concerns the rival claims of the Appellants and the Abbey National to the funds in court.


It is common ground that a judgment creditor who obtains a charging order against his debtor's property can take only such interest as the debtor has in the property, so that questions of priority and notice do not arise: see Whitworth v Gaugain (1844) 3 Hare 416; Chung Khiaw Bank v United Overseas Bank [1970] AC 767. Accordingly, the question which is determinative of the present is dispute is whether, at the time when the Appellants obtained the charging order, Mr. Bajwa was entitled to the freehold interest in the property free from incumbrances, or whether his interest in the property was subject to a charge in equity by way of subrogation in favour of the Abbey National.




The detailed facts are fully set out in the judgment of Mr. Nugee Q.C. and I need not repeat them here. It is sufficient to summarise them in order to explain the basis on which the Abbey National claims an interest in the property.


On 3rd August 1990 Mr. Bajwa exchanged contracts for the sale of the property for the sum of £165,000. It is common ground before us that the documents did not conform to the requirements of Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, with the result that neither party became contractually bound. Neither of them realised this. After allowing for the payment of the deposit and an agreed reduction in the purchase price the balance payable on completion was £140,000.


The purchasers had previously obtained an offer of a mortgage advance from the Abbey National of £140,000 which was to be secured by a first legal charge on the property. On 9th August 1990 at the request of the purchasers' solicitors B.Dave & Co ("Dave") the Abbey National sent £140,000 by telegraphic transfer to Dave's client account. As is common Dave were acting as solicitors both for the purchasers and for the Abbey National. They received the money on terms which obliged them to use the money for the completion of the purchase and to return the money if for any reason completion did not take place.


On 16th August, following discussions between Dave and Hill Lawson, Mr. Bajwa's solicitors, Dave wrote to Hill Lawson and informed them that they had given instructions to their bank for the transmission of the balance of the purchase money amounting to £137,405 to Hill Lawson's client account with Barclays Bank. Dave recorded Hill Lawson's agreement on the telephone to hold the money


"to our strict order pending execution of the transfer and release of the Title Deeds to ourselves …"


On the same day Dave obtained a bankers' draft for £137,405 from Lloyds Bank against a cheque drawn on the firm's client account and paid the draft into the client account of Hill Lawson at Barclay's Bank. The balance of £2,595 was initially retained by Dave to cover stamp duty, Land Registry fees, local authority fees and their own costs, all of which, of course, were the responsibility of the purchasers and not Mr. Bajwa.


On 21st August Mr. Duckney, the solicitor at Hill Lawson who had the conduct of the matter, learned that only £137,405 had been received into his firm's client account. He told Dave that this was not enough. Dave promised to put a cheque for £2,595 in the post. Mr. Duckney also spoke to Mr. Bajwa, who told him to complete on receipt of the £140,000. The deputy judge found that, in reliance on these instructions and Dave's promise, Mr. Duckney "agreed some form of completion" with Dave on the telephone.


Meanwhile the Halifax was pressing for payment. It had some time previously obtained a suspended order for possession of the property for non-payment of the mortgage instalments, but had agreed not to enforce it pending completion of a sale by Mr. Bajwa. On 15th August the Halifax's solicitors had written to Hill Lawson stating that the amount required to redeem the mortgage on 17th August was £141,222.40. This included a sum in respect of legal costs. Mr. Bajwa disputed these and tried to get the Halifax to accept £140,000 in full settlement. The Halifax would not agree to this, but on 22nd August it wrote to Hill Lawson stating that, if Mr. Bajwa wished to make a partial repayment in order to reduce the debt and accruing interest, it would have no objection.


On 23rd August Hill Lawson remitted £140,000 from their client account to the Halifax's account by telegraphic transfer. Some days later Dave's cheque was returned to them dishonoured. They then transferred £2,595 from another account which they held for Mr. Bajwa in order to make good the deficit in their client account. Hill Lawson gave Dave notice of dishonour and required them to remedy the matter, but received no reply. In October the firm of B. Dave & Co ceased to exist, and shortly afterwards Mr. Dave, the sole equity partner, was made the subject of a bankruptcy order. The balance of £2,595 was never paid to Hill Lawson.


After some months of argument, the balance required to discharge the Halifax's legal charge was agreed at £1,342.41. Mr. Bajwa paid this direct to the Halifax on 29th April 1991, and shortly afterwards the Halifax forwarded the title deeds to Hill Lawson together with a completed discharge in Form 53. Hill Lawson then wrote to Dave to inquire whether completion could take place, and indicated that they held the title deeds but were not prepared to release them until the balance of the purchase price together with interest thereon was paid. They received no reply. Hill Lawson still held in their possession the completed transfer of the property executed by Mr. Bajwa in the presence of Mr. Duckney but undated. It was never forwarded to Dave or submitted to the Land Registry for registration, and the purchasers, who never had an equitable interest in the property, never acquired a legal title either.


It has not been suggested that Mr. Bajwa, who throughout relied on his solicitors, was guilty of any impropriety or want of probity. Nor is it suggested that either firm of solicitors acted dishonestly or in bad faith. It may be doubted whether Hill Lawson did anything more reprehensible than act precipitately in anticipation of the clearance of Dave's cheque and the receipt of further funds from Mr. Bajwa to complete the redemption of the Halifax's charge.It is, however, beyond dispute that, as a result of their actions, money belonging to the Abbey National, which was held by Dave & Co in their client account as trust money for and on behalf of the Abbey National, and later by Hill Lawson in their client account as trust money to Dave's order pending completion of the sale of the property, was applied in breach of trust in the partial discharge of the Halifax's legal charge without obtaining the completion of the sale and the execution of a new mortgage in favour of the Abbey National.


It might, perhaps, have been argued that the transfer of the property was executed by Mr. Bajwa in escrow conditional upon the payment of the balance of £2,595 and that, on payment of that sum by the Abbey National the legal title would pass to the purchasers subject to a charge in its favour by way of subrogation to the unpaid vendor's lien. On that analysis Mr. Bajwa's interest in the property would be limited...

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