Catherine Waller-Edwards v One Savings Bank Plc
| Jurisdiction | England & Wales |
| Judge | Mr Justice Edwin Johnson |
| Judgment Date | 27 September 2023 |
| Neutral Citation | [2023] EWHC 2386 (Ch) |
| Court | Chancery Division |
| Docket Number | Appeal No. CH-2022-000239 |
[2023] EWHC 2386 (Ch)
Mr Justice Edwin Johnson
Appeal No. CH-2022-000239
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (ChD)
On appeal from the order of His Honour Judge Mitchell in the County Court at Bournemouth & Poole dated 8th December 2022 (Claim Number H00BH712)
Rolls Building 7 Rolls Buildings
Fetter Lane London, EC4A 1NL
Marc Beaumont (instructed by direct access) for the Appellant/Second Defendant
Antonia Halker (instructed by Equivo Limited) for the Respondent/Claimant
Hearing date: 10 th July 2023
Remote hand-down: This judgment was handed down remotely at 10.30am on Wednesday 27th September 2023 by circulation to the parties and their representatives by email and by release to the National Archives.
Introduction
This is an appeal by the Second Defendant in this action, Catherine Waller-Edwards ( “the Appellant”), against an order of His Honour Judge Mitchell ( “the Judge”) made in the County Court at Bournemouth & Poole on 8 th December 2022.
The respondent to the appeal is the Claimant in the action, One Savings Bank plc ( “the Respondent”). The Defendants to the action were Nicholas Bishop ( “Mr Bishop”) as First Defendant, and the Appellant as Second Defendant. Mr Bishop did not defend the action below and is not involved in the appeal.
In the action the Respondent sought an order for possession of the property known as Spectrum, 32B Beaucroft Lane, Wimborne, Dorset BH21 2PA ( “Spectrum”) and certain adjoining land, pursuant to a legal charge dated 24 th October 2013 and entered into between the Defendants and the Respondent ( “the Charge”). By the Charge the Defendants granted the Respondent a first legal charge over Spectrum and the adjoining land, as security for a loan.
The action came on for trial before the Judge on 5 th December 2022. The Judge delivered his judgment ( “the Judgment”), at the conclusion of the trial, on 8 th December 2022. By his order of 8 th December 2022 ( “the Order”), consequential upon the Judgment, the Judge made an order for possession of Spectrum and the adjoining land in favour of the Respondent, together with a money judgment for the sums outstanding under the Charge, and an order for costs. The Order was made against both Mr Bishop and the Appellant (together “the Defendants”).
The Appellant's case is that her consent to the Charge was procured by the undue influence of Mr Bishop who was, at the time of the Charge, the partner of the Appellant. The Appellant's case is that the Respondent was put on inquiry in respect of this undue influence but failed to take any of the steps required to avoid being fixed with constructive notice of the undue influence, with the consequence that the Appellant is entitled to have the Charge set aside, as between herself and the Respondent.
For the reasons set out in the Judgment the Judge decided that the consent of the Appellant to the Charge had been procured by the undue influence of Mr Bishop, but also decided that the Respondent was not put on inquiry in respect of the undue influence and thus avoided being fixed with constructive notice of the undue influence. In consequence the Judge decided that the Charge was enforceable by the Respondent against the Appellant, and made the Order.
In this appeal ( “the Appeal”) there is no challenge to the Judge's decision that the Appellant's consent to the Charge was obtained by the undue influence of Mr Bishop. The Appellant's case in the Appeal is that the Judge was wrong to decide that the Respondent was not put on inquiry in respect of the undue influence. Further or alternatively, the Judge was wrong to reject the Appellant's argument that the Respondent was fixed with constructive notice of the undue influence by virtue of the operation of the exempting provision in Section 199(1)(ii)(b) of the Law of Property Act 1925.
The Judge refused permission to appeal against the Order, but permission to appeal was granted by Meade J, by an order made on 17 th March 2023.
At the hearing of the Appeal the Appellant was represented by Marc Beaumont, counsel, and the Respondent was represented by Antonia Halker, counsel. I had the benefit of skeleton arguments from both counsel, in addition to their oral submissions. I am grateful to both counsel for their clear and helpful written and oral submissions.
In this judgment references to Paragraphs (with the capital letter) are, unless otherwise indicated, references to the paragraphs of the Judgment. Italics have been added to quotations.
The factual background
In order to understand the issues raised by the Appeal it is necessary to provide a summary of the factual background. In setting out this summary I am indebted to the Judge, who gave a detailed account of the relevant facts and evidence in the Judgment. What follows is largely, but not exclusively drawn from the Judgment. My summary includes some details which I have gleaned from the documents put before me in the Appeal.
I should mention, at this stage, that the Judge heard “at length” (to quote the Judge at Paragraph 32) from the two witnesses who gave oral evidence at the trial. The first of these witnesses was Mr Richardson, group head of the underwriting department of the Respondent, who gave evidence at the trial on behalf of the Respondent. The second witness was the Appellant, who gave evidence on her own behalf. The Judge reviewed and summarised the evidence of these witnesses at Paragraphs 33–81. The Judge was at pains to emphasize that his summary was not a rehearsal of all the evidence, but only particular aspects of that evidence; see Paragraph 33. The summary is, nevertheless, a detailed and thorough summary. In setting out this summary, I take the Judge to have accepted the evidence of the witnesses, as the Judge summarised that evidence, save to the extent that the Judge indicated to the contrary. I make the same assumption in relation to the remainder of the Judgment, so far as the Judge dealt with the evidence of the two witnesses.
Returning to the narrative, the Appellant met Mr Bishop in late 2011 when she was, as the Judge found, at a vulnerable period in her life. They commenced a relationship shortly thereafter. The Appellant was then living in a property known as 60 Pilford Heath Road, Wimborne ( “Pilford”), which she owned in her sole name. Pilford was mortgage free. The Judge accepted the evidence of the Appellant that she was then financially independent with significant savings, amounting to around £150,000.
Mr Bishop was a local builder and developer and he was in the process of constructing three properties at 32 Beaucroft Lane, which were partially built. One of these properties was Spectrum. In February 2012 Mr Bishop proposed to the Appellant that she should exchange Pilford and a sum of £150,000 for Spectrum, as built. The Appellant agreed. The Appellant's evidence was that this was the first of a series of transactions into which the Appellant was induced to enter by the undue influence of Mr Bishop.
In terms of values, the Judge recorded the Appellant's evidence that, at the time of this exchange transaction ( “the Exchange”), Pilford was worth around £570,000 to £600,000, and Spectrum was expected to be worth around £750,000, once completed.
As I understand the position the property subject to the Charge comprises Spectrum itself, title to which is registered under title number DT403500, and an adjoining parcel of land registered under title number DT324994. It is not clear to me when this adjoining parcel of land was acquired or how it came to be included in the property subject to the Charge. These matters are not directly relevant to what I have to decide in the Appeal. In the remainder of this judgment my references to Spectrum should be taken to include the adjoining parcel of land if, at the relevant time to which I am referring, the adjoining parcel of land was in the same ownership as Spectrum.
When the Exchange came to be effected, it turned out that Spectrum was subject to an existing charge in favour of a Mr Higgins ( “the Higgins Charge”), securing a sum of £78,000, which Mr Bishop did not have the means to pay off. The Appellant was however persuaded to proceed with the Exchange, which was completed on 25 th May 2012. Each of the Defendants was represented by separate solicitors in relation to the Exchange. The Appellant was given a second charge over Spectrum, for the sum of £150,000, pending completion of the construction work on Spectrum. As I understand the position, the intention behind this second charge was that it secured the sum of £150,000 which the Appellant had agreed to pay as part of the Exchange, in the event that Spectrum was not finished by 30 th August 2013. Also pending completion of the construction work on Spectrum, the Defendants began living together as a family at Pilford, with the Appellant's two children and Mr Bishop's child.
During the summer of 2012 Mr Bishop indicated to the Appellant that he needed to borrow more money to finance his construction work. The sum secured against Spectrum by the Higgins Charge was increased to £160,000. This extended loan was completed on 20 th August 2012. The Defendants were represented by solicitors in relation to this extension of the Higgins Charge, but both Defendants were represented by the same solicitors. The solicitors in question were Ellis Jones Solicitors ( “Ellis Jones”), who had acted for Mr Bishop in relation to the Exchange. The solicitor within Ellis Jones who had acted for Mr Bishop in relation to the Exchange, and acted for the Defendants in relation to the extension of the Higgins Charge was a Mr Matthew Clake ( “Mr Clake”).
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