Parker-Tweedale v Dunbar Bank Plc (No. 2)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NOURSE,LORD JUSTICE WOOLF,LORD JUSTICE PURCHAS |
| Judgment Date | 15 February 1990 |
| Judgment citation (vLex) | [1990] EWCA Civ J0215-7 |
| Docket Number | 90/0163 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 February 1990 |
and
[1990] EWCA Civ J0215-7
Lord Justice Purchas
Lord Justice Nourse
and
Lord Justice Woolf
90/0163
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
PETER GIBSON J.
Royal Courts of Justice
MR. T. LLOYD Q.C. and MR. STEPHEN ACTON (instructed by Messrs Clintons) appeared on behalf of the Appellant (First Defendant).
MR. STEVEN WHITAKER (instructed by Messrs Baldocks, Guildford) appeared on behalf of the Respondent (Third Defendant).
MR. HUGH SUMMERFIELD (instructed by Messrs Philip Ross & Co.) appeared on behalf of the Second defendant.
In Parker-Tweedale v. Dunbar Bank plc and Ors. (14th December 1989) we decided that a beneficiary, even a sole beneficiary, under a trust of which the mortgagor is the trustee is not the "neighbour" of the mortgagee. Now, in determining whether the mortgagee's costs of successfully resisting the beneficiary's action can be added to its security, we must decide whether the beneficiary is also a "stranger" to the mortgagee.
The determination is made necessary by a cross appeal brought by the mortgagee, the first defendant Dunbar Bank plc ("Dunbar"), against a declaration made by Peter Gibson J. on 9th August 1989. There being no reasonable prospect that the plaintiff will meet the orders which have been made against him, Dunbar seeks to add its costs of the proceedings to its security. The judge held that it was not entitled to do so. The contest now is between Dunbar and the third defendant Annabel Teresa Parker-Tweedale ("the wife"). The disastrous consequences to her of the appeal's being successful were referred to at the end of my earlier judgment, since when up to date figures have shown that, although there might still be some surplus to go towards paying off the mortgage on Wilkes, it would fall far short of discharging it, so that the future security of the wife and the two children at Wilkes would still be at serious risk. But the sympathy with the wife which even a most cursory view of the facts will naturally generate cannot enter into a determination of a question of law in which the general merits of the case have no part to play.
As a matter of contract between Dunbar and the wife, Dunbar's entitlement to add its costs to the security is governed by clause 21 of each of the three legal charges which, so far as material, is in these terms:
"All costs charges and expenses properly incurred hereunder by [Dunbar] and all other moneys properly paid by [Dunbar] in respect o the said costs charges and expenses or otherwise together with interest thereon as aforesaid shall be charged on the mortgaged premises".
Both sides have throughout accepted that this provision was intended to apply to the costs, charges and expenses recoverable by the mortgagee out of the mortgaged property under the general law, neither more nor less. It is therefore to the general law that we must look.
Any dispute as to the costs, charges or expenses which ought to be allowed to a mortgagee is usually determined on the taking of an account between him and the mortgagor. But where an allowance is claimed for the costs of other proceedings to which the mortgagor is a party it is obviously convenient for the claim to be dealt with, as it was here, by the judge who has tried those proceedings. Be that as it may, it must be borne in mind that the claim arises not out of the proceedings but out of the relationship of mortgagor and mortgagee and without any express contract between them.
A mortgagee is allowed to reimburse himself out of the mortgaged property for all costs, charges and expenses reasonably and properly incurred in enforcing or preserving his security. Often the process of enforcement or preservation makes it necessary for him to take or defend proceedings. In regard to such proceedings three propositions may be stated. (1) The mortgagee's costs, reasonably and properly incurred, of proceedings between himself and the mortgagor or his surety are allowable. The classical examples are proceedings for payment, sale, foreclosure or redemption, but nowadays the most common are those for possession of the mortgaged property preliminary to an exercise of the mortgagee's statutory power of sale out of court. (2) Allowable also are the mortgagee's costs, reasonably and properly incurred, of proceedings between himself and a third party where what is impugned is the title to the estate. In such a case the mortgagee acts for the benefit of the equity of redemption as much as for that of the security. (3) But where a third party impugns the title to the mortgage, or the enforcement or exercise of some right or power accruing to the mortgagee thereunder, the. mortgagee's costs of the proceedings, even though they be reasonably and properly incurred, are not allowable.
These propositions, being drawn from two lines of authorities decided between 1802 and 1936, may reasonably be thought to have become a matter of settled law. Moreover, the third of them would appear to be directly applicable to the present case, where a plaintiff who was not the mortgagor impugned an exercise of the mortgagee's statutory power of sale. But Mr. Lloyd, for Dunbar, has urged us not to apply it. He has put the case in several different ways, relying partly on an argument based on R.S.C. Order 62, rule 6(2) which was not advanced in the court below
The first and second propositions have together been called the general rule. The third has been called the exception to it. The diligence of counsel having guided us through many of the authorities on the general rule and all of them on the exception, it is only necessary to refer to the more important of them. The principal decisions which support the general rule are those of Lord Eldon L.C. in Detillin v. Gale (1802) 7 Ves. 583, of Lord Cottenham L.C. in Dryden v. Frost (1838) 3 My. & Cr. 670 and of this court (Cotton, Bowen and Fry L.JJ.) in National Provincial Bank of England v. Games (1886) 31 Ch.D. 582. The principal decisions which support the exception are those of Sir William Page Wood V.-C. (afterwards Lord Hatherley L.C.) in Owen v. Crouch (1857) 5 W.R. 545 and Parker v. Watkins (1859) John. 133 and of Eve J. in Re: Smith's Mortgage [1931] 2 Ch. 168. The decision of this court (Lord Wright M.R., Romer and Greene L.JJ.) in Re: Leighton's Conveyance [1937] Ch. 149 supports both the general rule and, through the observations of Romer L.J., the exception
The material facts of Owen v. Crouch and Parker v. Watkins are summarised in the judgment of Eve J. in Re: Smith's Mortgage [1931] 2 Ch., 171–173. Here it is desirable that they should be stated as simply as is reasonably possible. In Owen v. Crouch a mortgagee who had evicted some lodgers installed in the mortgaged property by one of his neighbours was not allowed to reimburse himself for the costs of successfully defending an action in trespass brought by the neighbour, who had also committed an assault. In Parker v. Watkins Mrs. Eaton, the tenant for life under a settlement, unsuccessfully sued for a declaration that the settled property did not stand as security for the trustees' costs of raising on mortgage a sum which had been duly appointed under the settlement (as distinct from the sum itself). On Mrs. Eaton's failure to comply with an order that she should pay the mortgagee's costs of the suit, he claimed to reimburse himself out of the settled property. It was held that he was not entitled to do so.
In each of these cases Sir William Page Wood V.-C., as he usually did, delivered an ex tempore judgment. In Owen v. Crouch [1857] 5 W.R., 546 he said:
"This violent neighbour chose to bring an action of trespass against a mortgagee with as much reason as he might against anyone then in court. Was the court to fasten upon the mortgagor the consequences of this action? It was contended that if the mortgagor had paid the defendant at the proper time, there would have been no action; but this applied equally to the assault, or any other possible collateral damage, arising from this inconvenient neighbour, which could not be fastened upon the mortgagor, who was only liable for any charges incurred in a just protection of the property. These costs did not come within that category, and they could not be allowed to the mortgagee".
In Parker v. Watkins (1859) John. 137, the Vice-Chancellor, having said that he did not see how the mortgagee could have his costs against the settled property, continued:
"I quite agree, that, where a mortgagee has been put to expense in defending the title to the estate, the defence being for the benefit of all parties, he is entitled to charge those expenses against the estate; but if some litigious person chooses to contest his (the mortgagee's) title to the mortgage, that should not affect the parties interested in the equity of redemption, unless they can be shown to have concurred in or assisted the litigation. It is the ordinary case of anyone who has the misfortune to have dealings with a litigious person, who is unable to pay the costs occasioned by his conduct".
In Owen v. Crouch the mortgagee had reasonably and properly defended his right, as mortgagee, to possession of the mortgaged property. If the action had been brought against him by the mortgagor, his costs of defending it would certainly have been allowable under the general rule. But because it was brought by a third party who disputed, not the title to the estate, but a right...
To continue reading
Request your trial
-
Red Sail Frozen Foods Ltd ((in Receivership))Red Sail Kilmore Ltd ((in Receivership)) and Red Sail Exports Ltd ((in Receivership)) Tom Grace
...against company - Cotterell v Stratton (1872) 8 Ch App 295; Re Baldwin's Estate [1900] 1 IR 15; Parker-Tweedale v Dunbar Bank plc (No 2) [1991] Ch 26; Gomba Holdings UK Ltd v Minories Finance Ltd (No 2) [1993] Ch 171 and In re City Car Sales Ltd [1995] 1 ILRM 221 followed; Mirror Group New......
-
Gomba Holdings (U.K.) Ltd v Minories Finance Ltd (No. 2)
...a mortgagee can, without express contractual justification add to the security. The recent Court of Appeal decision in Parker-Tweedale and Co. v. Dunbar Bank plc (No. 2) [1990] 3 WLR 780 has confirmed the law. Nourse LJ said at page 783: "A mortgagee is allowed to reimburse himself out of ......
- Holder v Supperstone
-
Credit & Mercantile Plc v Kaymuu Ltd and Others
...3. If C&M's charge is enforceable, is C&M entitled to its costs from the surplus, under the principles derived from Parker Tweedale v. Dunbar Bank plc (No. 2) [1991] Ch 26 , or pursuant to the terms of the mortgage deed? 196 C&M contends that it is entitled to add its legal costs of thes......
-
Pluralism and the Hobbesian Logic of Negative Constitutionalism
...Wake, pp. 136, 139.36 Gray, Enlightenment's Wake, p. 140.37 R. Tuck (ed.), Leviathan (Cambridge, Cambridge University Press, 1991) ch. 26, p. 183.References to Leviathan henceforth shall be abbreviated to L, followed by chapter and pagenumber.90 Negative Constitutionalism#Political Studies ......
-
Industrial Relations Systems and US Foreign Direct Investment Abroad
...in bothequations at the P0.01 level. Reported are the corrected estimates usingWhite’s (1980) efficient estimator as employed by Greene (1991: ch. 26).The results show that IR variables are highly correlated with thedistribution of US FDI across our sample of countries. First, averageeducati......
-
IL Register Vol.31 issue 46. Issue 46 November 16, 2007 Pages 15127-15398
...pars. 1.01 et seq) [805 ILCS 5/101], Article 9 of the Uniform Commercial Code (Secured Transaction) secured transactions (Ill. Rev. Stat. 1991, ch. 26, pars. 9 101 et seqr) [810 ILCS 5/9 101], such other corporate statutes as designated by the General Assembly, and the Revised Uniform Limit......