National Westminster Bank Plc v Malhan and Others

JurisdictionEngland & Wales
JudgeThe Vice-Chancellor
Judgment Date22 April 2004
Neutral Citation[2004] EWHC 847 (Ch)
CourtChancery Division
Docket NumberCase No: HC 03C00031
Date22 April 2004

[2004] EWHC 847 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Before:

The Vice-Chancellor

Case No: HC 03C00031

Between:
National Westminster Bank Plc
Claimant/1st Part 20 Defendant
and
(1) Navjet Bahadur Malhan
(2) Anil Kumar Malhan
Defendants
and
(3) Puneeta Malhan
3rd Defendant/Part 20 Claimant
and
The Secretary of State for Consitutional Affairs & Lord Chancellor
2nd Part 20 Defendant

Mr. Richard Spearman QC and Mr. James Strachan (instructed by Messrs Addleshaw Goddard) for the Claimant/1 st Part 20 Defendant

Mr. Mark Herbert QC and Mr. Duncan Macpherson (instructed by Messrs Johnson Sillett Bloom) for the 3rd Defendant/Part 20 Claimant

Mr. Tim Mould (instructed by the Treasury Solicitor) for the 2 nd Part 20 Defendant

Hearing dates : 16 th/17 th/18 th March 2004

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

The Vice-Chancellor The Vice-Chancellor

Introduction

1

On 10th June 1986 Mr Navtej Bahadur Malhan ("Navtej") and his younger brother Mr Anil Kumar Malhan ("Anil") were registered under title number BK 120887 as proprietors of the residue of a term of 99 years from 31st March 1965 granted by a lease dated 6th March 1973 and made between the Bracknell Development Corporation (1) and Mr and Mrs Tindall (2) in respect of 11 Badgers Way, Bracknell, Berks ("the Property"). The proprietorship register contained a restriction in conventional form that no disposition by a sole proprietor of the land (not being a trust corporation) under which capital money arises is to be registered except under an order of the registrar or the court. On the same day Halifax Building Society was registered as proprietor of a registered charge dated 14th February 1986 ("the First Charge") conferring security over the Property in respect of the moneys mentioned therein. These registrations completed transactions effected earlier in the year whereby the Property was bought for £56,000 of which £25,000 was lent by Halifax Building Society.

2

On 7th September 1994 Navtej and Anil executed a charge ("the Second Charge") over the Property in favour of National Westminster Bank plc ("the Bank") to secure, subject to the First Charge, all moneys due to the Bank by either of them on any account. One of the liabilities so secured was the overdrawn account of SND Wholesalers ("SND"), a partnership of which Navtej, Anil and their father, Satya Paul Malhan and mother, Dulari Malhan were, or had been, the partners. At the time of the execution of the Second Charge the amount owing on that account was £20,617.

3

On 4th March 1997 the Bank demanded repayment of £181,797 being the amount then due on the SND account. SND was unable to pay. In April and June 1997 Navtej and Anil entered into Individual Voluntary Arrangements. In 1998 the warehouse and office premises of SND were destroyed by fire. On 15th March 2002 the Bank commenced proceedings in the Reading County Court against Navtej and Anil claiming possession of the Property so that it might enforce the Second Charge by sale with vacant possession. By then the amount due on the SND account was £210,216.

4

In May 2002 Mrs Puneeta Malhan ("Puneeta"), the wife of Anil, was joined as the third defendant at her request. By her defence and counterclaim dated 20th June 2002 she alleged that:

a) she paid £31,000 in respect of the original purchase price,

b) she paid instalments due on the First Charge,

c) Navtej and Anil held the property in trust for Puneeta and Anil under a resulting or constructive trust in the proportions 55.4%/44.6%,

d) she was, at all material times, in occupation of the Property so that her interest therein was an overriding interest for the purposes of s.70(1)(g) Land Registration Act 1925 and took priority over that of the Bank under the Second Charge,

e) anticipating the reliance of the Bank on the overreaching provisions of s.2(1) Law of Property Act 1925, those provisions are contrary to Articles 8 and 14 of the European Convention on Human Rights and Article 1 of Protocol 1 thereto.

In her witness statement dated 8th May 2002, but not her defence, she alleged that she had not been consulted by Navtej or Anil about the Second Charge and would not have consented to it if she had been.

5

By its reply and defence to counterclaim the Bank admitted that Puneeta had been in occupation of the Property on 17th September 1994 but put her to strict proof of the resulting or constructive trust relied on and of her alleged equitable interest thereunder. As anticipated, the Bank contended that any such interest was overreached by s.2(1) Law of Property Act 192The Bank denied that that section was incompatible with any of the Articles of the European Convention on Human Rights relied on or that those Articles were capable of amounting to a defence to its claim to possession of the Property.

6

The trial of Puneeta's counterclaim was transferred to the High Court and further proceedings against Navtej and Anil stayed in the meantime. Accordingly the issues before me are:

a) whether, on 7th September 1994, Puneeta was and now is entitled to the equitable interest in the Property she claims, and if so

b) whether Puneeta consented to the Second Charge, and if not

c) whether Puneeta's equitable interest in the Property was overreached by the Second Charge pursuant to the provisions of s.2(1) Law of Property Act 1925, and if so

d) whether those provisions are incompatible with all or any of Articles 8 and 14 of ECHR or Article 1 of Protocol 1 thereto.

I will deal with those issues in that order.

Equitable Interest

7

In order to consider this issue in its proper context it is necessary to describe the circumstances of Puneeta and her family in greater detail. Puneeta was born in England on 5th September 1959. She lived with her parents until she married Anil in August 1981. From the age of 16 Puneeta had part time jobs. For example she undertook baby-sitting for others, she took holiday jobs and had a Saturday job with D.H.Evans and Debenhams. Having completed her A levels she enrolled for a course of business studies at the Central London Polytechnic and later the South Bank University. From 29th October 1979 to 21st February 1982 Puneeta was employed by the Civil Aviation Authority in the accounts department but given day release to continue with her course. Puneeta saved what she could. She claims that between 1975 and her marriage in 1981 she saved about £4,000.

8

Anil's background is slightly different. He was born in India in 1953 and came to England with his parents Mr Satya Malhan and Mrs Dulari Malhan, Navtej and a sister in 1967. SND was started by Mr Satya Malhan shortly after they arrived with money borrowed from his nephew. It carried on business in the distribution of clothing, mostly knitwear. In due course a warehouse and office accommodation was acquired and the business was constituted as a partnership with Mr Satya Malhan, his wife and two sons as the partners. They lived together in a house called Lynton, London Road, Bracknell. As Mr Satya Malhan described it

"we chose to run the home in line with Indian tradition. We spoke Punjabi at home and my wife worked partly in the business but mainly in the home."

9

Navtej was married in September 1976. His wife Sunita joined him and his family at Lynton. Mr Satya Malhan described how

"When she married my son she brought a dowry with her. As is usual in Punjabi families all of Sunita's money was given to me as head of the family. This included all cash gifts given to Sunita at her wedding."

As Mr Satya Malhan did not maintain any bank account separate from that of the business all such money went into the business of SND.

10

Anil and Puneeta were married in August 1981. This comprised a civil ceremony on 3rd August and a marriage in the Hindu Faith on 9th August. In her second witness statement Puneeta described how, on the latter occasion, she gave all her money to her father-in-law for him to keep on her behalf. She described such action "as traditional within my culture". She claims that such money comprised £4,000 saved from her various employments since 1975, £3,000 given to her by her parents and £1,000 given to her on the occasion of her marriage by various family and friends.

11

Following her marriage Puneeta continued with her job at the Civil Aviation Authority until 21st February 1982. When she left she went to work for SND. She had previously been involved in some accident. She accepted a payment into court of £3,500 in settlement of her claim. In July 1982 she received a cheque from her solicitors for £1,500. The balance of £2,000 was received later when her solicitors had been paid by the Legal Aid Fund. Puneeta claims that both these amounts were handed to Mr Satya Malhan on the same basis.

12

Puneeta's first child was born in 1983. In due course she returned to work for SND. Her second son was born three years later in 1986. After that she gave up all regular work with SND. Between March 1982 and the spring 1986 Puneeta was living at Lynton with her in-laws free of any charge. She claims that during that period she saved substantial further amounts which were either retained by SND on account of her work or given by her to Mr Satya Malhan on the same basis as before. Finally she contends that further sums amounting to £1,000 were given to her, and by her to her father-in-law, on the occasion of the birth of each of her two sons.

13

The amount Puneeta claims to have contributed to the purchase price for the property is £31,000 made up of

Source

£

(1) Savings 1975–1981

4,000

(2) Wedding Presents

4,000

(3) Personal Injury damages

3,500

(4) Presents on birth of sons

2,000

(5) Savings...

To continue reading

Request your trial
1 books & journal articles
  • Mortgagee Powers Rhetoric
    • United Kingdom
    • The Modern Law Review No. 69-4, July 2006
    • 1 July 2006
    ...to thatof the later interest: City of London BuildingSociety vFlegg [1988] 1 AC 5 4, 81,91; NationalWestminsterBank plc vMalhan [2004] EWHC 847 (Ch); [2004] 2 P a nd CR DG9, [44],[52]; Land RegistrationAct 2002, s 52(1).24 Megarrya ndWade,n 21 above, paras 12- 088,19- 060.25 Lawof PropertyA......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT