National Provincial Bank Ltd v Hastings Car Mart Ltd

CourtCourt of Appeal
JudgeTHE MASTER OF THE ROLLS, LORD JUSTICE RUSSELL
Judgment Date29 Jan 1964
JurisdictionEngland & Wales
Neutral Citation[1964] EWCA Civ J0129-1

[1964] EWCA Civ J0129-1

In The Supreme Court of Judicature

Court of Appeal

Before:

The Master of the Rolls

(Lora Denning)

Lord Justice Donovan and

Lord Justice Russell

National Provincial Bank Ltd.
and
Hastings Car Mart Ltd. & Ors.

MR HAROLD LIGHTMAN, Q. C. and MR K. BRUCE CAMPBELL (instructed hy Messrs. Preston, Lane-Claypon & O'Kelly, agents for Messrs. Perring & Co., Hastings) appeared as Counsel on "behalf of the Appellant (Third Defendant).

MR D. H. MERVYN DAVIES (instructed by Messrs. Wilde, Sapte & Co.) appeared as Counsel on behalf of the Respondents (Plaintiffs).

1

(Reserved).

THE MASTER OF THE ROLLS
2

Mr and Mrs Ainsworth (whom I will call the "husband" and "wife") were married on 21st April, 1948. They have four children, aged 14, 12, 9 and 6. Some years ago they wentto live at Hastings. The husband set up business at 7, Bank Buildings, in the centre of the town. One of his activities was as a car dealer under the name of "The Car Mart, Hastings". Another activity was as an importer of embroidered articles from the Far East. He opened accounts for these businesses at the National Provincial Bank, which was close by. I will call it "the Bank". He gave the Bank "7, Bank Buildings", as his business address.

3

His private life was at first apparently normal. He had two dwelling houses. One was at 124, Milward Road, where he lived with his wife and children. The other was at 13, Devonshire Road, where his mother lived. He opened a private account with the Bank, and gave as his private address "124, Milward Road". But this was not an operative account. The Bank never used that address for corresponding with him. They always used his business address of 7, Bank Buildings.

4

On 17th August, 1957, the husband deserted his wife and children. He left the matrimonial home at 124, Milward Road, and has never returned. The wife has remained there with the children ever since. The husband went off with another woman and committed adultery with her. The Bank did not know of these domestic happenings. They did not know he had deserted his wife. But they did know this: that he used to sleep at his mother's place from time to time. Whenever the Bank wanted to get in touch with him, they got him either at his business premises, 7, Bank Buildings, or at his mother's place, 13, Devonshire Road. They did not get him at 124, Milward Road. The Bank Manager said "We had a lot of difdiculty on occasions in tracing Mr Ainsworth when we needed him very badly. The financial affairs were never very easy. I personally was in constant necessity of getting hold of him…. Arising out of that, I would learn that on particular occasions he was at Devonshire Road…. We knew that he used 13,Devonshire Road, from time to time because his mother was there…. We knew that he was on most excellent terms with his mother…. We would never ring up his home because we never used Milward Road at all".

5

On 27th January, 1959, the wife filed a petition for judicial separation, not for divorce. The reason for judicial separation was because she wanted to remain in the house. She was advised that if she divorced her husband, she would have no security of tenure. But that, so long as she remained married to him, her position with regard to the house was reasonably secure. She did not therefore seek a divorce. But she petitioned for a judicial separation. She based it on her husband's adultery. (She did not base it on his desertion because the necessary three years had not elapsed). The husband, of course, wanted a divorce, not a judicial separation. A good deal of pressure was brought on the wife to induce her to change her prayer from one of judicial separation to one of divorce. But she refused. And her main reason was because of the house. She wanted to stay there because she had no other place for herself and the children.

6

In November, 1959, while the proceedings for judicial separation were pending and before they were heard, the husband formed a limited liability company to take over his business as a car dealer. It is said that he had an ulterior motive in so doing. He wanted to defeat his wife's claims on him. He called the company the Hastings Car Mart, Ltd. The first directors were the husband himself, his mother, and a solicitor's managing clerk. The issued capital was 7,500 £1 shares, of which 7,000 were allotted to the husband as fully paid, 450 to his mother, 49 to the solicitor's managing clerk, and 1 to another. His address was given in the Memorandum and Articles as 13, Devonshire Road, Hastings, which was the same address as his mother. Shortly after the company was formed, on 17thDecember, 1959, "the husband entered into a series of transactions with the Bank. The effect was to substitute the new company for himself. The Bank took the new company as their debtors instead of the husband. The husband transferred his properties, No. 7) Bank Buildings, and 124, Milward Road, to the new company. The new company charged them to the Bank. The new company took over the husband's indebtedness to the Bank. It amounted to nearly £6,000, and he was discharged from liability for it. In January, 1960, the new company's overdraft was guaranteed by the husband, his mother, and the solicitor's managing clerk. It appear, that at this time the husband gave his address, not as 124, Milward Road (where his wife lived with the children), but as 13, Devonshire Road (where his mother lived). Indeed, the Bank themselves inserted "13, Devonshire Road" in the Guarantee as his address. They took that address from the Memorandum and Articles of the new company which, of course, they had.

7

The important thing to notice, for present purposes, is that the Bank took a charge on 124, Milward Road, which was the property of the newly formed company, but they made no inauiries as to who was living in the house or on what terms. The Bank Manager was asked: "Did you make any enquiry into the tenancy of Mr and Mrs Ainsworth in this house, which was now the company's, as to whether they had a lease or tenancy or what?" The Bank Manager replied: "No. I think we were under the impression that there was an informal tenancy, because Mr Ainsworth then became a director of Hastings Car Mart, Limited, and he continued to live there, as far as we were concerned, as he had done prior to the formation of the limited company".

8

Now No. 124, Milward Road was registered land, and, in order to put all in order, on 24th March, 1960, the Hastings Car Mart, Limited, was registered in the Property Register with title absolute. And on 5th February, 1962, the charge to the Bankdated 17th December, 1959, was registered in the Charges Register.

9

The wife knew nothing of these transactions with the property. She proceeded with her petition for judicial separation. It came on for hearing in March, 1961. It lasted for four days. She won completely. She was granted a judicial separation on the ground of her husband's adultory, and his crossprayer was dismissed. On 2nd May, 1961, the wife obtained an order for permanent alimony against her husband on these terms: She was to be at liberty to live with the children in the house, 124, Milward Road, rent free; and in addition he was to pay her £4. 6. 6d. a week for herself, and £1.18. 5d. a week for each child. She has lived since that time in the house, rent free, with her children; but the husband has not made the money payments due under the Order. He is seriously in arrear. We were told that he has been made bankrupt. And she has had to resort to National Assistance for herself and the children.

10

In February, 1962, the Bank wrote to the wife demanding possession of the house. They said that they required to enforce their charge on the property and, in order to do so, required the property to be vacated. She went to solicitors, who pointed out that her husband had deserted her and the children and she had no place to go to. But the Bank determined to press on with the claim. They have realised all the securities which they hold in respect of the indebtedness of the company or the husband. The company's premises at 7, Bank Buildings, have been sold. The husband's house, 13, Devonshire Road, has been sold. The proceeds do not suffice to satisfy the Bank. And they now seek to get possession of No. 124, Milward Road, so as to sell it with vacant possession. If they do so, it is probably (so we were told) that, at the high prices now prevailing, they may more than recoup themselves all that they have lost with interest, and there may bea balance over to go to somebody – but not to the wife, not even for the arrears of alimony. The husband, we are told, is bankrupt. Arrears of alimony are not provable in bankruptcy.

11

The matter comes before this Court in consequence of two proceedings?

12

(1) On 4th July, 1962, the Bank issued an originating gummons in the Chancery Division. They claimed as mortgagees to be entitled to possession of 124, Milward Road. The wife resisted the claim on the ground that, as a deserted wife, she had a right to remain in occupation. On 27th March, 1963, the Judge (Mr Justice Cross) decided that she had no such right and ordered her to deliver up possession in three months; but he gave her liberty to apply. She appeals from that order. The Bank put in a cross-notice saying that, if she had any such right, the Court had a discretion to order her to give up possession, and the Court in its discretion ought to order her out.

13

(2) On 31st October, 1962, the wife issued an application in the Divorce Division asking the Court to set aside the disposition made by the husband on 17th December, 1959, whereby he conveyed the freehold property, 124, Milward Road, to Hastings Car Mart, Limited. The Bank had notice of the application but resisted any attempt to be joined as parties to it; and they were not joined. On 11th June, 1963, the Registrar made a report saying: "I...

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