Mortgage Corporation v Shaire and Others
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE NEUBERGER |
| Judgment Date | 25 February 2000 |
| Judgment citation (vLex) | [2000] EWHC J0225-14 |
| Docket Number | 1999 02157 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 25 February 2000 |
[2000] EWHC J0225-14
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Mr. Justice Neuberger
1999 02157
1999 00298
MR. T. HARRY (instructed by Messrs. Salans Hertzfeld Heilbronn) appeared on behalf of the Claimant.
MR. P. LAWRENCE (instructed by Messrs. Pinsent Curtis) appeared on behalf of Lewis Silkin & Anor.
MR. J. ASIF (instructed by Messrs. Traymans) appeared on behalf of Marsha Shaire & Ors.
(As approved by the Judge)
INTRODUCTION
This case concerns the extent and nature of the interests enjoyed by Mrs. Marsha Shaire and The Mortgage Corporation in 74 Winchmore Hill Road, London N14, and what order should be made in relation to that house. It raises issues as to the basis upon which unmarried parties own beneficial interests in their home or former home, and also the way in which the court should exercise its powers under the provisions of section 15 of the Trusts of Land and Appointment of Trustees Act 1996.
THE BASIC FACTS
In 1976 Mrs. Shaire married Mr. Marvin Shaire and they acquired 74 Winchmore Hill Road ("the house") as their matrimonial home. It cost £18,750, which was mostly provided with the assistance of a mortgage in their joint names in the sum of £15,000 from the Abbey National Building Society ("the Abbey National mortgage") , for which they were jointly responsible. The balance consisted of a gift of £2,000, to both of them from Mr. Shaire's parents, and £1,750 which came from sources which, due to the passing of time, have become unclear.
From the entries at Her Majesty's Land Registry ("the Registry") it appears that Mr. Shaire was initially the sole proprietor (and that he may even have initially taken out the Abbey National mortgage alone) but it is clear that on 20th January 1977 both Mr. and Mrs. Shaire were entered at the Registry as joint proprietors.
A son, Adam, was born in 1977, but unfortunately the marriage did not prosper, and Mr. Shaire left the house in 1980. He continued to provide Mrs. Shaire with the funds to make the Abbey National mortgage repayments, as well as the other bills in relation to the house. After Adam started school in 1985, Mrs. Shaire began work in a local chemist's shop where she still works most mornings, and one afternoon, a week.
In early 1986 Mrs. Shaire started a relationship with a Mr. David Fox. In May 1986 she and Mr. Fox told Mr. Shaire that Mr. Fox had moved into the house and was living with Mrs. Shaire. Mr. Fox and Mr. Shaire then discussed matters in the absence of Mrs. Shaire. Following that, on 6th March 1987 a transfer of the house was executed by Mr. and Mrs. Shaire to Mrs. Shaire and Mr. Fox. This transfer ("the 1987 transfer") was said to be made "pursuant to an agreement made in divorce proceedings between the parties in the Divorce Registry … and in consideration of £15,000". Clause 4 of the 1987 transfer provided:
"The transferees declare that the survivor of them can give a valid receipt for capital money arising on a disposition of the land."
The reference to the Divorce Registry arose from the fact that Mrs. Shaire had begun divorce proceedings against Mr. Shaire, and, by an order made by consent in the Divorce Registry on 16th March 1987, it was ordered that:
"The respondent [i.e. Mr. Shaire] had transferred all of his interests in the [house] to the petitioner [that is Mrs. Shaire] and Mr. David Barry Fox."
It was stated to be in consideration for this transfer, according to the order, that Mrs. Shaire and Mr. Fox paid to Mr. Shaire the lump sum of £15,000. In consideration for this, the order recited, all claims for periodical payments, lump sum payments or property adjustment orders would be dismissed.
Partly in order to pay Mr. Shaire the £15,000, Mrs. Shaire and Mr. Fox raised a sum of £43,750 from the Chase Manhattan Bank ("Chase") , secured by way of a mortgage ("the Chase mortgage") over the house. The offer of the Chase mortgage, dated 24th November 1986, recorded that the house had a value at that time of £87,500. The Chase mortgage was duly completed on 15th January 1987. Of the £43,750, £15,000 went to Mr. Shaire pursuant to the agreement to which I have referred, £15,000 went to redeem the Abbey National mortgage, and it is unclear what happened to the £13,750.
Thereafter Mr. Fox and Mrs. Shaire lived in the house together with Adam. She continued to earn comparatively modestly through her work at the chemist shop. Mr. Fox appeared to earn money from his clothing import business. According to Mrs. Shaire's evidence, the payments due under the Chase mortgage were all provided by Mr. Fox as were the household expenses and other outgoings. Mr. Fox died of a heart attack on 25th May 1992. At least according to Mrs. Shaire's evidence, it then came to light for the first time that he had forged her signature on a number of documents of which she had previously had no knowledge. They included two relevant documents. First a further charge over the house dated 25th August 1988 in favour of First National Bank (the "FNB mortgage") registered on 6th September 1988 at the Registry, which was to secure the sum of £52,439. Secondly, a charge on the house dated 17th January 1990 in favour of The Mortgage Corporation ("TMC") and registered on 27th February 1990 at the Registry, which was to secure the sum of £118,000. The £118,000 raised by the latter mortgage ("the TMC mortgage") was used to pay off the Chase mortgage and the FNB mortgage, the balance of the money being retained by Mr. Fox.
Although Mrs. Shaire accepts that she signed and knew about the Chase mortgage at the time it was granted, she denies any liability under, or knowledge of, the FNB mortgage or the TMC mortgage.
On 22nd November 1994, TMC began proceedings in the Barnet County Court for possession of the house. Exactly one year later, TMC began proceedings in the High Court for damages against two firms of solicitors ("the solicitors") . First, against Lewis Silkin on the grounds that they acted for TMC in connection with the TMC mortgage and had stated that:
"All appropriate documentation would be properly executed and will be produced on completion."
Secondly, against a Mr. Michael Blaxill, the solicitor who had acted for Mr. Fox and purportedly for Mrs. Shaire in connection with the TMC mortgage, for breach of warranty of authority.
The two actions have now been consolidated and now come before me. Although the two firms of solicitors who have taken part in the proceedings so far through their counsel, Mr. Patrick Lawrence, it has been agreed between the parties that I should deal with the issues between TMC and Mrs. Shaire, and that the issues between TMC and the solicitors will be adjourned on the basis that either they will be compromised or that a further hearing will take place. This is because both firms of solicitors accept liability in light of decisions of the Court of Appeal: Zwebner v. The Mortgage Corporation [1998] P.N.L.R. 769, in the case of Lewis Silkin, and Penn v. Bristol & West Building Society [1997] 1 W.L.R. 1356, in the case of Mr. Blaxill. It is right to add that each solicitor has reserved his position in connection with taking the matter to the House of Lords.
THE ISSUES
1. Is Mrs. Shaire bound by the TMC mortgage on the grounds of agency or estoppel?
2. What is Mrs. Shaire's share of the house?
3. What is the consequence in terms of the interests which TMC and Mrs. Shaire have in the house?
4. Ought I to make an order for the sale of the house and, if not, what order ought I to make?
Issue 1 turns solely on the facts. Issue 2 turns on the application of principles to be derived from the application of a number of authorities to the facts of this case. Issue 3 is effectively agreed. Issue 4 turns on the effect of section 5 of the Trusts of Land and Appointment of Trustees Act 1996 ("the 1996 Act") . This appears to be the first time when a court of record has had to consider this new provision. I will deal with the issues in that order.
ISSUE 1
This issue is whether Mrs. Shaire is bound by the TMC mortgage. It is accepted by TMC that what appears to be Mrs. Shaire's signature on the TMC mortgage, and indeed on the FNB mortgage, is a forgery. The overwhelming likelihood is that it was forged by, or with the authority of, Mr. Fox. Accordingly, on the face of it, Mrs. Shaire cannot be bound by the TMC mortgage, or, indeed, by the FNB mortgage. However, it is contended by TMC, supported by the solicitors, that, on the evidence, it should be concluded either that she authorised Mr. Fox to enter into the TMC mortgage on her behalf, or that, by her conduct she is estopped from denying that she is bound by the TMC mortgage.
The matters relied on by Mr. Timothy Harry, who appears on behalf of TMC, are, in summary form, as follows. First, Mrs. Shaire said that she left all financial matters and dealings to Mr. Fox. Secondly, Mrs. Shaire signed, and accepts that she signed, together with Mr. Fox, an application to TMC for the grant of the TMC mortgage. Thirdly, Mrs. Shaire has given inconsistent explanations of the circumstances in which she signed the TMC mortgage. Fourthly, it is likely that Mrs. Shaire knew what was going on in terms of a new mortgage being granted over the house before it was granted. For instance, TMC relies on the fact that a valuation surveyor must have visited the house and a doctor gave a medical report on Mrs. Shaire to support an insurance policy on her life as further...
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