Marcan v Lloyds Bank Ltd (pet dis)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE RUSSELL,LORD JUSTICE CAIRNS,MR JUSTICE GOULDING |
| Judgment Date | 18 July 1973 |
| Judgment citation (vLex) | [1973] EWCA Civ J0718-3 |
| Date | 18 July 1973 |
| Court | Court of Appeal (Civil Division) |
[1973] EWCA Civ J0718-3
Lord Justice Russell
Lord Justice Cairns and
Mr Justice Goulding
In The Supreme Court of Judicature
Court of Appeal
Civil Division
On appeal from Order of the Vice-chancellor.
Mr MICHAEL ALBERY. Q. C. and Mr OLIVER LODGE (instructed by Messrs Edgley & Co., Agents for Messrs Reynolds, Parry-Jones & Crawford, High Wycombe, Bucks.) appeared on behalf of the G Appellant (Defendant Betty Muriel Marcan).
Mr R. A. K. WRIGHT. Q. C. and Mr GAVIN LIGHTMAN (instructed by Messrs Cameron, Kemm, Nordon) appeared on behalf of the Respondents (Plaintiffs).
This is an appeal by Mrs Marcan, the second Defendant, from a decision of the Vice-Chancellor reported at 1973 1 Weekly Law Reports, 339, and more fully at 1973 2 All England Reports, 359. Reference to those reports may be made for the details of the case, which is an unusual one. The Vice-Chancellor decided that the lease of the dwelling-house and market garden granted by Mr Marcan to his wife pursuant to and within his statutory powers as mortgagor was a conveyance made by him with intent to defraud the Plaintiff, the mortgagee, within Section 172 of the Law of Property Act, 1925: further that Mrs Marcan knew of that intent and that accordingly the lease was voidable at the instance of the Plaintiff. He made accordingly an Order against both Defendants for possession.
Some facts are clear - (1) The Bank was seeking possession in these proceedings against Mr. Marcan with a view to enforcing its security by sale with vacant possession. (2) Mr Marcan sought means to deprive the Bank of ability to obtain vacant possession because he wanted to remain with his wife and family in their home and with the market garden business.(3) After taking advice, he and his wife entered into the 20-year lease in question in order to achieve those objects, after the proceedings demanding possession from Mr Marcan had been initiated and had been adjourned after a first hearing by the Master.(4) On the evidence, the Bank would sell with vacant possession at a greater figure than if it sold subject to the lease to Mrs Marcan.(5) Mr Marcan did not know this and therefore did not know that his conduct would thus prejudice the amount which the Bank would obtain towardspayment off of his debt. On the other hand, it is clearly, and was accepted to be, the right inference that Mr Marcan must have appreciated that the Bank, in seeking vacant possession in the course of realising their security, attached value to vacant possession.(6) The terms of the lease were in accordance with Mr Marcan's statutory powers of leasing under Section 99 of the Law of Property Act, 1925, and in particular the "best rent" requirement.(7) If Mr Marcan had a relevant intent, Mrs Marcan C knew of it: though it was faintly suggested before us that this was not shown.
Several points were taken in argument. It was first said that the lease, being within the statutory powers forming part of the bargain involved in the mortgage between the Bank and Mr Marcan, could not in any event be asserted by the Bank as within Section 172: and perhaps more particularly in that by appointment of a Receiver the Bank could at any time have deprived Mr Marcan of his statutory powers of leasing and chose not to do so. I cannot accept this. It cannot be said that it was part of the bargain that Mr Marcan should be at liberty to exercise his power to lease so as, and with the intent, to defraud the Bank, or (to put it another way) that it was part of the bargain that the statute which empowered leasing should be part of the bargain but that the other statute - Section 172 - should not be.
The next criticism of the judgment below was as follows. The Judge found that Mr Marcan "intended to deprive the Bank of recourse to the property charged … and that such an intention is an intention to defraud the Bank within the meaning of Section 172". This, it was argued, would deprive the section ofany content of fraud in any sense, having regard to the express finding that, since Mr Marcan did not know that the value of the property would be less without vacant possession, the Vice-Chancellor held that "the element of depreciation by the mere grant of a lease cannot … be material in determining Mr Marcan's intention". Moreover, it was argued that a passage in the judgment below at 1973 1 Weekly Law Reports, 344D, indicated that the Vice-Chancellor considered that perfectly innocent hindrance or delay to a creditor could come within Section 172, notwithstanding the liberal content of 13 Elizabeth, chapter 5, of words indicating dishonesty and fraud: the enactment is set out in full in the report of Re Eicholz deceased (1959 Chancery, 708).
I am not sure what is meant by a perfectly innocent defeat, hindrance or delay. It must be remembered that in every case under this section the debtor has done something which in law he has power and is entitled to do: otherwise it would never reach the section. If he disposes of an asset which would be available to his creditors with the intention of prejudicing them by putting it (or its worth) beyond their reach, he is in the ordinary case acting in a fashion not honest in the context of the relationship of debtor and creditor. And in cases of voluntary disposition that...
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