Cedar Holdings Ltd v Green
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BUCKLEY,LORD JUSTICE GOFF |
| Judgment Date | 09 March 1979 |
| Judgment citation (vLex) | [1979] EWCA Civ J0309-8 |
| Date | 09 March 1979 |
| Court | Court of Appeal (Civil Division) |
[1979] EWCA Civ J0309-8
Lord Justice Buckley
Lord Justice Goff
and
Lord Justice Shaw
(Not present for delivery of Judgment)
In The Supreme Court of Judicature
Court of Appeal (Civil Division)
On Appeal from The High Court of Justice
Chancery Division
Group B
(Mr. Justice Whitford)
MR. P.J. MILLETT Q.C. and MR. DENNIS LEVY (instructed by Messrs. Derrick & Co., Solicitors, London WC2N 6ND) appeared on behalf of the Plaintiffs (Appellants).
MR. A.L. PRICE Q.C. and MR. A.H.NORRIS (instructed by Messrs. Prestons & Kerlys, Solicitors, London El 5 4BV) appeared on behalf of the Defendants (Respondents).
The first and second defendants, Ira Green and Grace Ann Green, were formerly husband and wife. They lived at 12 Preston Road, Leytonstone, a freehold house registered in their joint names, of which they were joint beneficial owners. The property was subject to a first registered charge in favour of the Greater London Council and to a second registered charge in favour of Pinking Ltd, The marriage came to grief and in or shortly before 1971 the first defendant left the matrimonial home. The second defendant instituted divorce proceedings and secured a decree nisi in October 1971 which has since been made absolute. On 13th October 1971 the second defendant's solicitors intimated to the first defendant or to his solicitors that the second defendant would apply in the divorce proceedings for a property transfer order extinguishing the first defendant's interest in the matrimonial home. The second defendant has continued to live and still lives there with the four children of the marriage, of whom she has custody, the eldest being now aged about 18 years and the youngest, I think, about 11 years.
After the date of the decree nisi the first defendant approached the plaintiffs with a view to obtaining a loan from them. He offered by way of security a charge upon the property The plaintiffs naturally insisted upon the charge being executed by both the first and second defendants. None of this was disclosed to the second defendant. On 1st November 1971 the first defendant attended at the offices of the plaintiffs accompanied by a woman who was, not the second defendant. The first defendant represented to the plaintiffs that the woman was the second defendant and on that date he and the woman in question, signing in the name of the second defendant, signed a request to the plaintiffsfor an overdraft of 1,500 repayable over 120 months by monthly payments of 26.25p secured by a second mortgage on 12 Preston Road, That document contained a paragraph in the following terms: "I/we understand that I/we will be bound to accept the advance on the above terms upon your posting to me/us notification of approval of my/our application unless, prior to that time, you have received a written notification from me/us cancelling my application".
on 3rd December 1971 the first defendant and the woman referred to earlier, who again signed in the name of the second defendant, executed a legal charge expressed to be made between Ira Green and Grace Green (his wife) both of 12 Preston Road, Leytonstone, London, E. ll (thereinafter called "the borrower"), in the singular, of the one part and the plaintiff (thereinafter called "the bank") of the other part. The charge was to secure all monies due or to become due by the borrower Jointly or severally to the plaintiff. Clause 2, so far as material, was in the following terms: "The borrower as beneficial owner" - and I here omit certain words which, as is common ground, were intended to be deleted from the printed form which was used - "hereby charges by way of legal mortgage all that the property described in the first schedule hereto … with the payment of the principal money interest and all other monies hereby covenanted to be paid by the borrower subject only to the prior mortgage particulars of which are set out in the second schedule hereto the amount now outstanding on such prior mortgage being as specified therein". The first schedule to the legal charge is in the following terms: "All that freehold messuage or dwelling-house and buildings with the land and appurtenances thereof known as 12, Preston Road, Leytonstone, London E. ll being the whole of the land comprised in the title registeredat H.M. Land Registry under the Land Registration Acts 1925 to 1966 with absolute title under Title Number NGL 51246". The second schedule contained particulars of the Greater London Council first charge, the principal amount secured being stated as 4,500. Pankine Ltd 's second charge was paid off by the plaintiff company and the amount was debited to the first defendant's account,
By writ dated 22nd May 1973 the plaintiff company sued the first and second defendants for a declaration that the legal charge of 3rd December 1971 was valid and binding on both defendants; alternatively, a declaration that by executing that legal charge the first defendant had charged to the plaintiff all his beneficial interest in 12 Preston Road under the trusts for sale affecting the same; possession, and an order for sale of the property pursuant to the Law of Property Act 1925 Section 103 or alternatively, Section 30. The plaintiff company conceded at the trial that the second defendant was plainly not bound in any way by the legal charge and that her interest could not be affected by it. The first defendant took no part in the action. The second defendant by way of counterclaim claimed a declaration that the property was not subject nor in cumbered by any mortgage or charge in favour of the plaintiff and an order vacating the entry of that charge in the register.
The action came before Mr. Justice Whit ford, who on 28th January 1977 entered judgment for the plaintiff company against the first defendant in the sum of 3 980.69p due under the legal charge of 3rd December 1971 with interest thereon at 9% per annum from 28th January 1977 to date of payment and declared that the plaintiff company was entitled to a lien by subrogation to thelegal charge of Pankine Ltd. in a sum of 5 20.16p, together with interest thereon at 9% per annum from 28th January 1977 to date of payment. He ordered that upon payment of the sum due to the plaintiffs pursuant to the before mentioned order and declaration B the registration of the legal charge be deleted. In his judgment the learned Judge held that the legal charge was ineffective to effect any severance of the Joint beneficial ownership of the first and second defendants or to effect any charge upon the first defendant's interest in the proceeds of the sale of the property under the statutory trust for sale affecting it. It seems to me that the order for vacation of the registration of the legal charge is couched in language which does not give due effect to what the learned judge intended His decision was to the effect that the only charge which the plaintiff company had upon the property was a lien by subrogation under the Pankine mortgage. The order should it seems to me, have directed vacation of the registration of the charge upon satisfaction of that lien and upon that alone.
The plaintiff company appeals against the learned judge's order, seeking a declaration that by executing the legal charge the first defendant charged all his beneficial interest under the trust for sale of 12 Preston Road, an order for possession of the property and an order for sale pursuant to either Section 103 or Section of the law of Property Act 1925.
Under the Law of Property Act 1925 Section 36, the legal estate in 12 Preston Road was vested in the first and second defendants as joint tenants upon the statutory trusts set out in Section 35. The plaintiffs' contention in the present case is that either by the legal charge itself, or by a pre-existing contract to create the legal charge arising out of the written application for a loanand the plaintiffs1 acceptance of it, the first defendant effectively severed the joint tenancy in the proceeds of sale subsisting under the statutory trusts so as to become entitled to an undivided half-share of the proceeds of sale. If the effect of either the legal charge itself or of a contract to create the legal charge was, in the one case, to occasion a disposal by the first defendant of his beneficial interest under the statutory trust or, in the other, to oblige the first defendant to dispose of that interest, there can, I think, be no doubt that the legal charge or the contract would have effected a severance of the joint beneficial ownership. The legal charge or the contract would constitute an act by one of the joint owners operating upon his own share. This would fall within the first of the three methods of severance mentioned by Vice Chancellor Page Wood in Williams v. Hens man, 1 Johnson & Hemming 56 at 557 The effect of such an act is to destroy the unity of interest theretofore existing between the joint owners and so to put an end to the joint ownership.
Mr. Millett, for the plaintiff, relies in this respect, first, upon the Law of Property Act 1925 Section 63. and secondly upon the principle that where a vendor contracts to grant a particular interest in property which is in fact greater than the interest which he is competent to grant, the purchaser can elect to affirm the contract and compel the vendor to grant such less interest in the property as he is competent to grant.
Section 63 (1) of the Act provides: "Every conveyance is effectual to pass all the estate, right, title, interest, claim and demand which the conveying parties respectively have in, to or on...
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