Kings North Trust Ltd v Bell and Others
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DILLON,MR. JUSTICE MUSTILL,THE MASTER OF THE ROLLS |
| Judgment Date | 21 February 1985 |
| Judgment citation (vLex) | [1985] EWCA Civ J0221-1 |
| Docket Number | 85/0061 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 February 1985 |
[1985] EWCA Civ J0221-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CARLISLE COUNTY COURT
(HIS HONOUR JUDGE LEECH)
Royal Courts of Justice.
The Master of the Rolls
(Sir John Donaldson)
Lord Justice Dillon
and
Mr. Justice Mustill
85/0061
Plaint No. 830055
and
and
MR. N.R. DAVIDSON (instructed by Messrs. Richards Butler & Co.) appeared on behalf of the (Plaintiffs) Respondents.
MR. J.H. FRYER-SPEDDING (instructed by Messrs. Atkinson & North) appeared on behalf of the (Second Defendant) Appellant.
Mrs. Bell, the second defendant in this action, appeals against an order, made by His Honour Judge Leech in the Carlisle County Court on the 15th September, 1983, that she should give possession of the property known as the Old Rectory, Scaleby, Carlisle, to the plaintiffs in the action, Kings North Trust Ltd., who claim as second mortgagees of the property. A like order for possession was made against Mrs. Bell's husband, Mr. William Bell, who is the first defendant in the action, but he has no defence to the plaintiffs' claims, and does not appeal.
The Old Rectory, Scaleby, is and has at all material times been the matrimonial home of Mr. and Mrs. Bell. The legal estate is vested in Mr. Bell alone, but it is common ground that Mrs. Bell contributed to the purchase price, and that she therefore has a beneficial interest in the property, and a right to occupy it. It is also common ground, in view of the decision in Williams & Glyn's Bank v. Boland [1981] Appeal Cases 487 that Mrs. Bell's beneficial interest and right of occupation would have priority to all rights of mortgagees of the property, who, like the plaintiffs, took their mortgage while Mrs. Bell was in occupation unless Mrs. Bell has validly consented to the mortgagees having priority.
Because of the decision in Williams & Glyn's Bank v. Boland, the plaintiffs took the precaution of making Mrs. Bell a party to their mortgage on the property, which is dated the 26th April, 1982. By the terms of that mortgage Mrs. Bell is expressed to charge all her interest in the property in favour of the plaintiffs, and to release her rights of occupation to the plaintiffs so as to give priority to the plaintiffs' mortgage. The question on this appeal is whether Mrs. Bell can establish that she is not bound by those terms of the mortgage, having regard to the circumstances in which she came to execute the mortgage and to the fact that she never received separate advice before doing so.
The plaintiffs' mortgage is a second mortgage. There is a first mortgage, in favour of the Newcastle Building Society, to which Mrs. Bell admits that she did consent and which is unquestionably valid and binding on her.
Mr. Bell was a director of a private company, Carlisle Carriers Ltd., which operated a parcel-carrying business from leasehold premises at Curnock Road, Carlisle. Mrs. Bell was the secretary of that company, but on the evidence she played no active part in its business and simply signed, at Mr. Bell's request, whatever documents relating to the company he put before her. Mr. Bell also had a son by an earlier marriage, Stephen Bell, who was thus Mrs. Bell's stepson. In October 1981 Mr. Bell bought a grocers and newsagents shop at No. 115 London Road, Carlisle. Subsequently Mr. Bell bought No. 117 London Road and an off-licence business was established there in conjunction with the business at No. 115. These businesses at Nos. 115 and 117 London Road were run in partnership by Stephen Bell and his wife. It seems that Mr. Bell was also a partner. But Mrs. Bell was not a partner and had no interest, legal or equitable, in No. 115 or No. 117 London Road.
Believing that the partnership business was soundly based, Stephen and Mr. Bell decided to expand further into the sale of frozen food. To achieve this Mr. Bell and Stephen, and no doubt Stephen's wife, decided that Mr. Bell would buy for the benefit of the partnership an existing business and premises known as Freezer King on the St. Nicholas Estate, Carlisle. Part of the finance required for this purchase was to be provided by the sale of the businesses at Nos. 115 and 117 London Road, but until such a sale could be achieved Mr. Bell required bridging finance. He was introduced to a local mortgage broker called Mr. Daniels, who put him in touch with a firm of mortgage brokers in Bristol called B. Dawson & Associates. They in turn arranged for the plaintiffs to advance £18,000 to Mr. Bell on the security, in the form which the transaction ultimately took, of a charge by Mr. Bell on the London Road premises, a charge by the company as surety on its premises and the mortgage, by way of second mortgage, by Mr. Bell of the Old Rectory, Scaleby, in which Mrs. Bell is expressed to concur, as I have mentioned, to charge all her interest in that property and release her rights of occupation to the plaintiffs. All these documents are dated the 26th April, 1982.
There had, in December 1981, been an application for loan submitted by Mr. Bell, through Mr. Daniels, to B. Dawson & Associates. This is a document which it is not entirely easy to follow. It was signed by Mrs. Bell both in her capacity of secretary of the company and in her personal capacity in that it was apparently thought at that time that she would be one of the borrowers. Nothing has however turned on this, since it was her evidence that she signed at her husband's request without reading or understanding the form, and in any event what the plaintiffs are seeking to enforce is the transaction in its final form, as embodied in the mortgage of the property of the 26th April, 1982. Mrs. Bell also counter-signed as secretary of the company the document which created the charge on the company's premises. Again, however, she signed at her husband's request without reading or understanding the document.
The history of the execution of the documents of the 26th April, 1982 is as follows: The plaintiffs had solicitors acting for them, Messrs. Trump & Partners of Bristol. Mr. Bell and the company also instructed solicitors to act for them, Messrs....
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