Lloyds Bank Plc v Carrick and Carrick
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MORRITT,SIR RALPH GIBSON,LORD JUSTICE BELDAM |
| Judgment Date | 28 February 1996 |
| Neutral Citation | [1996] EWCA Civ 1303 |
| Date | 28 February 1996 |
| Court | Court of Appeal (Civil Division) |
VAT Tribunal
[1996] EWCA Civ J0228-1
In The Supreme Court of Judicature
Court of Appeal (Civil Division)
On Appeal from Camobridge County Court
From Mr Recorder Holmes
Lord Justice Beldam
Lord Justice Morritt
and
Sir Ralph Gibson
MISS J HAYES (instructed by Taylor Vinters, Cambridge) appeared on behalf of the Appellant.
MR N VICKERY (instructed by Quirke & Co., Croydon) appeared on behalf of the Respondent.
This is an appeal of Lloyds Bank PLC, to which I shall refer as the Bank, from the order of Mr Recorder Holmes made in the Cambridge County Court on 5th July 1994. By that order he dismissed the Bank's claim as mortgagee for possession of leasehold property known as 7 Derby Way, Newmarket, Suffolk and made a declaration that the mortgagor, the first defendant Mr Carrick, held the lease of that property in trust for the second defendant, Mrs Carrick, so that her interests in and rights over that property were not subject to the Bank's charge dated 25th November 1986.
The facts are simple and may be shortly stated. No 7 Derby Way, Newmarket is a maisonette the title to which is unregistered. By a lease dated 4th August 1971 it was demised for a term of 99 years from 25th March 1971 in consideration of a premium and a relatively nominal rent. There were no restrictions on the lessee's ability to assign the term, which, on 2nd February 1982, was assigned to the first defendant Mr Carrick who then lived in the Maisonette.
Mr Jeffrey Carrick was the brother of Mr Carrick and the husband of the second defendant. Mr Jeffrey Carrick and Mrs Carrick, together with their two small boys, lived in Edinburgh Road, Newmarket. Mr Jeffrey Carrick died in March 1982. After his death but before November 1982 there were discussions between Mr Carrick and Mrs Carrick as to where she should live. Those discussions and their aftermath were described by the Recorder in the following terms
“the first defendant says that he told Mrs Carrick that, effectively, “If you like, you can come and live in this property [i. e. 7 Derby Way, Newmarket]”. She was concerned whether she could afford to do so and whether she could sell her house and what would happen. Suffice it to say that Mr. Michael Carrick, the first defendant, said to his sister-in-law “Put the property on the market and what you get from the net proceeds of sale you can pay to this property, which will become yours”.
Effectively, that is what happened. Mrs. Carrick, the second defendant put her property on the market. She realised a figure, which after deductions of repayment of mortgage (no doubt estate agent's commission and legal expenses and the usual outgoings that one incurs on a sale), amounted to around £19,000. As a result of completing that the £19,000 was paid over to the first defendant. The first defendant, being a building contractor, had a number of other properties at the material time and, in fact, went to live at another property, taking his then wife and child with him, leaving Mrs Carrick to come and live in the property.”
Mrs Carrick and her two children moved into the Maisonette in about November 1982.
In the course of his judgment the Recorder referred to the existence of a charge over the Maisonette in favour of the Bank existing at that time but that seems to be an error for the original document is dated 10th November 1983. At all events Mrs Carrick became aware of it and raised the matter with Mr Carrick on a number of occasions when he told her not to worry as he would sort it out. In the event it was redeemed on 11th November 1986 some two weeks before the execution of the charge with which this appeal is concerned. At some time before it was redeemed works were carried out in the Maisonette consisting of a kitchen extension, central heating and damp proofing. They were effected by Mr Carrick at a cost of about £5,000 but paid for by Mrs Carrick's father.
The legal charge on which the Bank relies is dated 25th November 1986 and was made between Mr Carrick and the Bank to secure all monies due on any account by the former to the latter. Mr Carrick as beneficial owner charged the lease of the Maisonette as security for those monies. The charge was preceded by a questionnaire signed by Mr Carrick to the effect that, to the best of his knowledge, there were no persons other than the mortgagor who would then or thereafter occupy the Maisonette.
On 16th January 1991 and again on 9th August 1991 the Bank demanded from Mr Carrick the substantial sums then due from him to the Bank. They were not paid and the Bank commenced these proceedings in the Cambridge County Court by a summons issued on 27th February 1992 seeking against Mr Carrick a judgment for £89,010-95 and interest thereon accruing at the rate of £53-18 per day and an order for possession of the Maisonette.
By his answer dated 8th March 1992 Mr Carrick admitted the money claim but, in respect of the possession claim, he alleged that he was and had been since a time before the execution of the legal charge relied on by the Bank a bare trustee of the Maisonette for his sister in law. Accordingly Mrs Carrick was joined as the second defendant and ordered to serve a defence. By her defence and counterclaim served on 27th April 1992 Mrs Carrick claimed that Mr Carrick had been a bare trustee for her of the long leasehold interest in the Maisonette. The material paragraphs are paragraphs 5, 6, 9, 10 and 11 which are in the following terms
“5. Pursuant to a suggestion made by the First Defendant to the Second Defendant, the Second Defendant in or about October 1982 sold her former matrimonial home and took up occupation at 7 Derby Way, Newmarket which she has occupied at all material times since that date.
6. On the direction of the Second Defendant the Solicitors who acted on the sale of the said matrimonial home paid the resulting proceeds of around £19,000 to the order of the First Defendant. The said sum was for the acquisition of 7 Derby Way, Newmarket by the Second Defendant.”
9. After the said acquisition of 7 Derby Way Newmarket the second defendant was responsible for and paid all outgoings relating to 7 Derby Way.
10. The second defendant in or about 1983 had an extension built to 7 Derby Way at a cost of about £5,000 which the second defendant paid.
11. It was the common intention of both the first and second defendants that 7 Derby Way, Newmarket should become the property of the second defendant free of all incumbrances.”
The Bank replied to the effect that the interest of Mrs Carrick was registrable as a land charge of class C(iv), namely an estate contract, and was void against the Bank for want of registration. The Bank sought particulars of the defence so as to require Mrs Carrick to spell out the origin of the interest she claimed. The particulars served by Mrs Carrick on 17th September 1993 contended
“1. that no contract of sale was concluded between the First and Second Defendant in respect of the First Defendant's interest in 7 Derby Way;
2. that upon the Second Defendant entering into occupation of 7 Derby Way and paying to the First Defendant the sum of about £19,000 as pleaded in paragraph 6 of the Defence and Counterclaim, the First Defendant held his interest in 7 Derby Way upon bare trust for the Second Defendant;
3. that further and alternatively, the Second Defendant paid the said sum and entered into occupation of 7 Derby Way and acted as pleaded in paragraphs 9 and 10 of the Defence and Counterclaim, with the intention, which was a common intention of the First and Second Defendants, that 7 Derby Way was to be the Second Defendant's permanent home and that she was to be absolutely entitled to the beneficial interest in it;”
Yet further particulars were sought from Mrs Carrick and given by her on 20th December 1993. These included the following passage
“It was agreed that the Second Defendant would buy 7 Derby Way for whatever she received upon the sale of 93 Edinburgh Road (in the event about £19,000). The First Defendant told the Second Defendant not to worry about the matter further and that he would sort things out. The Second Defendant thereafter left it up to the First Defendant to sort out the legal formalities of the sale. The Second Defendant moved in to 7 Derby Way on 19th November 1982. She paid the First Defendant the proceeds of sale from 93 Edinburgh Road on about that date. Since then the Second Defendant has lived at 7 Derby Way and paid all the outgoings on it. The agreement between the Defendants is not recorded in writing.”
The action was heard by the Recorder on 4th July 1994. He heard evidence from two Bank officials and from Mr Carrick and Mrs Carrick. He gave judgment on 5th July 1994. The Recorder set out the history of the case, the state of the pleadings and the documents of title relating to the Maisonette. He expressed the view, at page 12 of the transcript of his judgment, that the case turned on the law so far as it relates to registrable interests and later, at page 13 of the transcript, whether there was a contract between Mr Carrick and Mrs Carrick. In respect of these issues his conclusions set out on page 15 of the transcript were
“In my view there was a contract that upon payment of the £19,000 by the second defendant there arose, in my view, a bare trust. In other words, there was nothing left vested in Mr. Carrick (the first defendant) other than the legal title. Mr. Carrick had no right to the property. He simply held the legal title upon trust. Mrs. Carrick could have called for the legal title to be conveyed to her by the first defendant as bare trustee. If, as I do, I follow that through the interest behind the bare trust is not registrable.”
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