Melissa Menelaou (Claimant) Bank of Cyprus Plc (Defendant) Boulter & Company (A Firm)(Third Party)
| Jurisdiction | England & Wales |
| Judge | David Donaldson Q.C. |
| Judgment Date | 19 July 2012 |
| Neutral Citation | [2012] EWHC 1991 (Ch) |
| Docket Number | Claim No: HC10C03481 |
| Court | Chancery Division |
| Date | 19 July 2012 |
[2012] EWHC 1991 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
David Donaldson Q.C. Sitting as a Deputy High Court Judge
Claim No: HC10C03481
The claimant is the registered freehold owner of a house at Great Oak Court, Hunsdon, Ware. She is the daughter of Parris and Donna Menelaou and in mid-2008, aged 18 and a student at nearby Hertford Regional College, lived with them and their two youngest children at Rush Green Hall, Great Amwell, a property owned by them jointly. Mr and Mrs Menelaou were engaged in property development, both in their own names and through various companies, and Rush Green Hall was subject to two legal charges in favour of the Bank of Cyprus ("the Bank"), the defendant to this action, to support substantial borrowings, well in excess of the value of Rush Green Hall. In 2008 Mr and Mrs Menelaou decided to sell Rush Green Hall, apply some of the proceeds to buy a smaller property as a family home, gift a sum to the claimant's elder sister to pay the deposit on a house in Enfield which she wanted to buy with her future husband, and free up capital to invest in a further development project.
Mr Menelaou's sister was the senior partner of the solicitors firm of Boulter & Co., the third party in these proceedings. One of his brothers-in-law, Paul Cacciatore, was employed by Boulters as a legal executive. Mr Menelaou instructed Boulters, and specifically Mr Cacciatore, for the conveyancing on these transactions.
Purchasers were found for Rush Green Hall at a price of £1.9 million, significantly less than the (direct) indebtedness of Mr and Mrs Menelaou to the Bank of £2.2 million. On 15 July 2008 Boulters wrote to the Bank informing it that contracts had been exchanged on Rush Green Hall and requesting a redemption statement calculated to the completion date of 12 September 2008. Around the same time, Boulters received into its client account the £190,000 deposit paid by the purchasers of Rush Green Hall.
About a week later Mr Cacciatore was informed by Mr Menelaou that he had found a new property for the family home at 2 Great Oak Court, part of a new development which was now subject to receivership, and was negotiating with the receivers. On 24 July 2008 Mr Cacciatore was instructed to act in an attended exchange of contracts with the vendor's solicitors the same morning at a price of £875,000. The draft contract showed "[blank] Menelaou" as the purchaser. On the instructions of Mr Menelaou Mr Cacciatore inserted the name of Melissa Menelaou, the claimant, and after some further amendments and retyping exchanged contracts with the vendor's solicitors, and paid over £87,500 as a 10% deposit to the vendor's solicitors to be held in the usual way "as agent for the Seller". According to the claimant, she was told by her father that Great Oak Court was being bought in her name as a gift to her on the basis that she would hold the property for the benefit of herself and her two younger siblings, and she agreed to this.
There remained the question of the Bank's charges over Rush Green Hall which would have to be released if that sale was to go through. On 5 September 2008 Boulters wrote to the Bank enclosing a copy of their earlier letter dated 15 July 2008, which had asked for the redemption statement for Rush Green Hall, and stating:
"We understand that your bank have agreed to release your two registered charges over [Rush Green Hall] both dated 14 th December 2007, upon us sending you the sum of £750,000."
The suggestion of an "agreement" by the Bank was probably premature. There had plainly been discussions, since its Corporate Bank Manager made a request on these lines for approval to his superior on 4 September 2008, though with the important additional condition that a third party charge (i.e. to cover the indebtedness of Mr and Mrs Menelaou) should be obtained. That request was not sanctioned until 9 September 2008, and with some reluctance, given the overall indebtedness of Mr and Mrs Menelaou and their companies. The Bank replied on 9 September 2008 confirming that
" upon receipt of £750,000 we will release our charges over [Rush Green Hall] subject to a 3 rd party legal charge over [Great Oak Court] which is registered in the name of Melissa Menelaou."
On 10 September 2008 Boulters sent the Bank a Certificate of Title in standard form in which Boulters (a) undertook, prior to the use of the mortgage advance, to obtain in the form required by the Bank the execution of a mortgage by the claimant over Great Oak Court, and (b) confirmed that it had complied, or would comply, with the Bank's instructions.
On 11 September 2008 Boulters sent the Bank a copy of the legal charge over Great Oak Court which it was proposed to register on completion. It purported to be signed by the claimant. It also identified the claimant as "the Customer", whose debts were to be secured, whereas the Bank's requirement was that the charge should secure the indebtedness of her parents. The Bank telephoned Boulters to point out the mistake. Mr Cacciatore simply changed the names in manuscript on the charge to show Mr and Mrs Menelaou as "the Customer" and returned a copy so amended to the Bank.
On 12 September 2008 completion took place on both Rush Green Hall and Great Oak Court. Boulters received the balance of the price from the purchasers of Rush Green Hall, remitted £750,000 from those monies to the Bank, and sent a further £785,000 of those funds to the vendors of Great Oak Court to meet the 90% balance of the purchase price on that property. At the same time Boulters sent the Bank two DS1 forms of deed to be sealed by the Bank authorising the cancellation of the entries relating to the two registered charges over Rush Green Hall. In the event, the Bank did not return the DS1 forms until 13 October 2008 1.
Following completion Mr and Mrs Menelaou moved with the claimant and the two younger children to Great Oak Court. In the spring of 2010 the claimant was told by her parents that their property business was experiencing difficulties. They proposed that Great Oak Court should be sold and a smaller property purchased. The conveyancers soon pointed out that there was a registered charge dated 12 September 2008 over Great Oak Court in favour of the Bank securing the indebtedness of Mr and Mrs Menelaou.
On 2 November 2010 the claimant began the present action, claiming an order that the Charges Register be rectified by the removal of the entries relating to the Bank's charge over Great Oak Court. In essence, her case was that:
(1) She had not signed the charge. This had the support of a reputed handwriting expert. It was also confirmed by her younger brother who stated that the signature was his and he had been asked to sign the document by Mr Cacciatore without any explanation of what it was, or why.
(2) The alteration of the deed by Mr Cacciatore changing the identity of the "Customer" to her parents without her authorisation discharged the deed under the rule in Pigot's Case.
Mr Cacciatore insisted that he had obtained the claimant's signature and that it had been witnessed, as the charge purported to show, by a legal secretary in his office. As to the change in the identity of "the Customer", while he did not suggest that he had sought the...
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