Cheltenham and Gloucester Plc v Appleyard and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Neuberger |
| Judgment Date | 15 March 2004 |
| Neutral Citation | [2004] EWCA Civ 291 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: B2/2003/1747/CCRTF |
| Date | 15 March 2004 |
[2004] EWCA Civ 291
Lord Phillips of Worth Matravers Mr
Lord Justice Kennedy and
Lord Justice Neuberger
Case No: B2/2003/1747/CCRTF
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(CHANCERY DIVISION) (Leeds County Court)
(His Honour Judge McGonigal
Leeds Combined Court Centre
Adrian Davies Esq (instructed by Messrs Fenwick & Co) for the Appellant
Andrew Sutcliffe Esq, QC & David Gilchrist Esq (instructed by Messrs Parker Bullen) for the Respondent
This is the judgment of the court on an appeal by the defendants, Allan Appleyard and his wife Maureen Appleyard ("the Appleyards"), from a decision of His Honour Judge McGonigal, on the trial of certain preliminary issues. The effect of his decision was that the claimant, Cheltenham & Gloucester plc ("C&G"), was entitled to possession of the Appleyards' home, Royds House, Low Bentley, Shelf, Halifax ("the property") .
The facts
The property is registered at HM Land Registry with title no WYK 153502. The Appleyards became the registered proprietors on 22 nd November 1978. They had purchased it with a loan provided by the Bradford & Bingley Building Society ("B&B") in the sum of £25,000, with interest payable at B&B's "standard variable rate". This loan was, in the usual way, secured on the property by a mortgage in favour of B&B ("the B&B mortgage") . That mortgage, which was not merely in respect of the £25,000, but also in respect of any other sums advanced by B&B, was registered as a first charge in the Charges Register, also on 22 nd November 1978.
On 3 rd February 1988, the Bank of Credit and Commerce International ("BCCI") registered a second charge over the property ("the BCCI charge") in the Charges Register in respect of the debts of Batchacre Limited, a company effectively owned by Mr Appleyard, and through which he carried on business. The BCCI charge contained a provision that no further charges or mortgages were to be registered against the property without the consent of BCCI, and this was duly recorded in the proprietorship register.
During the first half of 1991, Mr Appleyard entered into negotiations with C&G (or, to be more accurate, their predecessor undertaking) with a view to C&G refinancing the loans secured on the property and providing additional finance. C&G agreed to advance a total of £321,975, with a first drawdown of £240,375, to be secured against the property. In that connection, Levi & Co ("Levi"), solicitors, were jointly instructed by the Appleyards and C&G. The Appleyards executed a mortgage ("the C&G mortgage") charging the property in favour of C&G on 5 th July 1991. On the same day, Levi received a cheque in the sum of £240,375 from C&G. From that sum, Levi paid out £73,458.61 to B&B, and £150,089 to BCCI, both on 5 th July 1991. There was no problem in relation to the former sum: it was the amount owing under the B&B mortgage, and, by virtue of its payment, the Appleyards' liability to B&B was discharged.
However, although the amount payable to BCCI under the cheque drawn in its favour by Levi was part of the amount owing under the BCCI charge, BCCI did not accept that it had been paid. By an unfortunate coincidence, the date that Levi paid over the cheque to BCCI, 5 th July 1991, was the date on which provisional liquidators were appointed in respect of BCCI, and BCCI ceased trading.
Although it appears clear from the evidence and documentation before Judge McGonigal that the £150,089 was paid to a bank account in BCCI's name, BCCI, through their liquidators, did not acknowledge receipt of the sum. Consequently they refused to supply C&G with a Land Register Form 53 (whereunder a chargee confirms that his charge has been discharged), or even to give consent to C&G registering the C&G mortgage.
In these circumstances, C&G had advanced £240,300 to the Appleyards, by paying two of their creditors and had what appeared to be a validly executed charge over the property, namely the C&G mortgage, but, although one of the previous chargees, B&B, accepted that they had been repaid, the other, BCCI, did not, and, in light of BCCI's attitude, C&G were unable to register the C&G mortgage at the Land Registry. Their mortgage was, as a result purely equitable, and was recorded as such at the Land Registry.
The Appleyards made no payments to C&G, at least in part because a large proportion of their funds was tied up with BCCI. On 3 rd January 1992, C&G began proceedings in the Halifax County Court for possession of the property. In their Particulars of Claim in those proceedings ("the 1992 proceedings"), C&G relied on the C&G mortgage, the advance of £240,375, and the fact that no payments had been made by the Appleyards. In their Defence in the 1992 proceedings, the Appleyards took various points, including the fact that the property was recorded at the Land Registry as being subject to the BCCI charge, that the C&G mortgage was not registered, and that the amount owing to BCCI, at least according to its provisional liquidators, had not in fact been paid off by C&G. In particular, it was pleaded on behalf of the Appleyards that "any charge to which [C&G] may be entitled has not been completed by registration and is not a valid charge at law", and that "at best it confers the rights of an equitable chargee which rights do not include an application for possession such has been made in these proceedings". The Appleyards did not deny that B&B had been paid off, but relied on the fact that the B&B mortgage was still registered.
We have seen at least some of the evidence in the 1992 proceedings. It included an affidavit sworn by a solicitor on behalf C&G. She exhibited correspondence which included:
i) evidence that the B&B mortgage had been paid in full, and that B&B had executed a Form 53, which, if presented to the Land Registry, would have resulted in their registered charge being removed; and
ii) a letter from BCCI's Leeds bank confirming that a banker's draft for £150,089.83 had in fact been delivered, presented and paid to a BCCI account in July 1991.
The affidavit also exhibited C&G's standard mortgage conditions (1989 edition) to which the C&G mortgage was subject; they included express rights in favour of C&G to obtain possession of, and to sell the mortgaged property, in the event, inter alia, of the mortgagor failing to pay sums due under the mortgage.
The 1992 proceedings were transferred to the Chancery Division of the Leeds District Registry. On 26 th February 1993, an order for possession was made by the District Registrar in favour of C&G in respect of the property, but the order was suspended.
"… provided [the Appleyards] shall pay to [C&G] the monthly sum of £500 in every calendar month in respect of both the monthly instalments payable under the said mortgage and the arrears thereof, the first such payment to made on 1 March 1993".
While the 1992 proceedings were progressing, there were parallel discussions between the solicitors acting for C&G and for BCCI. During those negotiations, BCCI's solicitors wrote to C&G on 23 December 1992 stating that BCCI "would be willing to enter into a Deed of Postponement whereby your client's charge would take priority". This prompted a reply from C&G asking for a draft deed to that effect. BCCI's solicitors indicated on 4 March 1993 that they were "currently discussing the Deed of Postponement" with BCCI's liquidators. However, the liquidators wrote to C&G's solicitors on 21 st April 1993 stating that the matter was "so clear-cut that we cannot justify the further involvement of solicitors", and that "BCCI are entitled to a first charge over [the] property and we can see no reason to enter into a Deed of Postponement".
On 9 th December 1993, C&G issued proceedings against Levi in negligence and breach of trust, for having parted with the £240,300 without obtaining the security of a first charge over the property. C&G obtained summary judgment against Levi on 16 th May 1994 in the sum of £166,841.39, together with interest, conditional on C&G assigning to Levi all their rights against the Appleyards, save insofar as those rights arose out of the payment of £73,458.61 made to B&B, and all their rights against BCCI arising out of the apparent payment of £150,089.83 to BCCI. The thinking behind this order was that, so far as the payment to B&B was concerned, C&G were subrogated to B&B's rights as first chargee of the property, and, so far as BCCI were concerned, there appeared to be a strong case for saying that their charge had been discharged by C&G. As we understand it, this judgment was satisfied by the payment of £166,841.39 by Levi (or, presumably, Levi's insurers) to C&G.
Thereafter, C&G and BCCI had discussions, which resulted in an agreement that BCCI would sell the property as mortgagees, and pay £73,458.61 out of the proceeds of sale to C&G. BCCI obtained possession by peaceable entry on to the property some time in 1994, but failed to sell it. In or about June 1997, the Appleyards regained possession. Thereafter, again following discussions with C&G, BCCI took possession proceedings against the Appleyards, with a view to re-obtaining possession of the property, selling it, and accounting to C&G for £73,458.61. However, BCCI's application for summary judgment was dismissed on 12 th July 1999, and their appeal failed on 17 th December 1999.
At this point, perhaps not entirely surprisingly, BCCI lost heart, and, at the end of August 2001, they informed C&G through solicitors, that they were unwilling to pursue...
To continue reading
Request your trial
-
Anfield (UK) Ltd v Bank of Scotland Plc
...to that of Walton J expressed in Burston Finance v. Speirway Ltd [1974] 1 WLR 1648. Anfield's difficulty is that in Cheltenham & Gloucester plc v. Appleyard [2004] EWCA 291, Neuberger LJ, giving the judgment of the full Court of Appeal, comprising also Lord Phillips of Worth Matravers MR an......
-
Bank of China v Yong Tze Enterprise (Pte) Ltd and Another
... ... Neuberger LJ in Cheltenham & Gloucester Plc v Appleyard [2004] EWCA 291 conveniently summarises some twelve propositions ... ...
-
Spencer Day v Tiuta International Ltd, and Another
...until it had been decided that the party seeking subrogation had not obtained the security for which it had bargained: see Cheltenham & Gloucester plc v Appleyard [2004] EWCA Civ 291; but in the present case TIL strongly contended that the TIL Charge was valid; if that were correct, then TI......
-
Melissa Menelaou (Respondent/Claimant) v Bank of Cyprus UK Ltd
...are to the same effect: see page 227 between A and C. 21 The Banque Financière case was subject to analysis in this court in Cheltenham & Gloucester PLC v Appleyard [2004] EWCA Civ 291. At paragraph [31], Neuberger LJ, who gave the judgment of the court, rejected the notion that the Banque......
-
UNJUST ENRICHMENT, PROPRIETARY SUBROGATION AND UNSATISFACTORY EXPLANATIONS
...228. Acknowledged in Bank of Cyprus UK Ltd v Menelaou[2015] UKSC 66 at [40], per Lord Clarke. 19Cheltenham & Gloucester plc v Appleyard[2004] EWCA Civ 291; Charles Mitchell, Paul Mitchell & Stephen Watterson, Goff and Jones: The Law of Unjust Enrichment (Sweet & Maxwell, 8th Ed, 2011) ch 39......