Thames Guaranty Ltd (Plaintiffs v Theophillus Count Campbell (First Defendant) Likemarts Ltd (Second Defendants) Michael Jonathan Gillis (Third Defendant) Laurel May Campbell (Fourth Defendant The Official Receiver, as Trustee in Bankruptcy of The Estate of The First Defendant (Fifth Defendant)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SLADE |
| Judgment Date | 23 February 1984 |
| Judgment citation (vLex) | [1984] EWCA Civ J0223-2 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 84/0077 |
| Date | 23 February 1984 |
[1984] EWCA Civ J0223-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR. JUSTICE MANN)
Royal Courts of Justice
Lord Justice Stephenson
Lord Justice May
and
Lord Justice Slade
84/0077
1976 T No. 2942
MR. JOHN BOGGIS (instructed by Messrs. Lieberman Leigh & Co, Solicitors, London WC2 6DF) appeared on behalf of the Plaintiffs (Appellants)
MR. A.V.B. BARTLETT (instructed by Messrs. Howard Thomas & Petrou, Solicitors, London SE27 9BL) appeared on behalf of the Fourth Defendant (Respondent)
This is the judgment of the court on an appeal by the plaintiff in an action, Thames Guaranty Limited, which is now in liquidation, from part of an order of Mr. Justice Mann made on 12th May 1983. There are five persons named as defendants to the action, namely, Mr. Theophillus Count Campbell, Likemarts Limited, Mr. Michael Jonathan Gillis, Mrs. Laurel May Campbell, who is the wife of the first defendant, and The Official Receiver as his trustee in bankruptcy.
The procedural history of the case is a somewhat tangled one. Though this might not appear clearly from the documentation, the real issue on this appeal, in the events which have happened, is whether the plaintiffs are entitled to an equitable charge on the beneficial interest, if any, of Mr. Campbell under the statutory trust for sale affecting a property known as 10, Holmewood Gardens, London S.W.2. This is the matrimonial home of Mr. and Mrs. Campbell and the freehold title to it has since 1973 been registered in their joint names at H.M. Land Registry.
The plaintiffs formerly carried on business as bankers. Between August 1972 and March 1976 they granted four overdraft facilities to Mr. Campbell. These arrangements involved (inter alia) the deposit by Mr. Campbell of the land certificate for 10 Holmewood Gardens with the plaintiffs in June 1973. This deposit was made without the consent of Mrs. Campbell, the co-proprietor, and she did not even become aware of it until some years later. The plaintiffs, however, assert that the arrangements have created a charge in equity on the beneficial interest (if any) of Mr. Campbell in the property.
On 30th April 1974 the plaintiffs registered a notice of deposit of land certificate at H.M. Land Registry. The plaintiffs also obtained security for Mr. Campbell's borrowing by two guarantees given by Likemarts in 1975, both of which were signed on its behalf by Mr. Gillis.
On 22nd March 1976 the plaintiffs went into liquidation and a liquidator was appointed. By that date Mr. Campbell's indebtedness to the plaintiffs had risen to about £9,500.
In November 1976 the plaintiffs instituted proceedings against Mr. Campbell and Likemarts, claiming recovery of the sum said to be due to them. Mr. Campbell, in his defence to the action, pleaded (inter alia) that, in depositing the deeds to the property with the plaintiffs, he did so merely for safe keeping, and further had no authority to bind his wife. He counterclaimed for the return of the deeds. Likemarts, in its defence, pleaded (inter alia) that he had no authority to give the guarantees. The result of these claims and cross-claims was that in 1977 Mr. Gillis was joined as a third defendant, and the plaintiffs sought damages against him for breach of warranty of authority.
On 16th February 1977 a Receiving Order was made against Mr. Campbell. On 13th July 1977 he was adjudicated bankrupt, and, as we have said, the Official Receiver is his trustee in bankruptcy. In April 1981 an order was made for the amendment of the writ by adding the name of Mrs. Campbell as fourth defendant and giving her liberty to counterclaim against the plaintiffs. In June 1981 she served a counterclaim alleging (inter alia) that the purchase of the property had been effected with funds entirely provided by her, and that she and Mr. Campbell held it as legal joint tenants upon a resulting trust in her favour. Alternatively, she asserted that if, contrary to her contention, Mr. Campbell shared the beneficial interest with her, he had no authority from her to deposit the land certificate with the plaintiffs. The only relief sought by the prayer to this counterclaim was (1) an order that the plaintiffs should deliver up to Mrs. Campbell the land certificate of the property, and (2) an order that the Charges Register of the relevent title should be rectified by the cancellation of the notice of deposit of land certificate registered on 30th April 1974.
In October 1981 the plaintiffs served a defence to Mrs. Campbell's counterclaim. In this pleading (inter alia) they denied the alleged resulting trust in favour of Mrs. Campbell. They further alleged that Mr. Campbell had the requisite authority to deposit the land certificate with them. Further or alternatively they also pleaded
"…..by the deposit of the land certificate with the plaintiffs on or about the fifth day of June 1973, the first defendant mortgaged and/or charged his interest in the said property. In the premises the plaintiffs are entitled to retain the said land certificate".
This plea, as will appear, in our judgment involved a non sequitur.
In May 1982, Mrs. Campbell was given leave to issue a third party notice to the Official Receiver, as trustee in bankruptcy of Mr. Campbell. It was ordered that this notice should stand as a statement of claim against the Official Receiver, who became the fifth defendant to the action. By this notice, Mrs. Campbell required that
"the following questions or issues, viz:-
(1) whether the transfer of the freehold of the said property ought to be rectified by deleting the declaration of beneficial interest therein contained, and
(2) the extent of the fourth defendant's beneficial interest in the said property, should be determined not only as between the plaintiffs and the fourth defendant, but also as between either or Both of them and yourself".
This reference to rectification requires explanation. The transfer of the freehold to Mr. and Mrs. Cambpell made on 2nd February 1973, was thereby expressed to be made to them as "joint tenants in law and equity". The claim to rectification thus sought deletion of the words "and equity".
On 9th May 1983 the hearing of the action began before Mr. Justice Mann. It is common ground that in opening the case on behalf of the plaintiffs, their counsel, Mr. Boggis, told the judge that there were three main issues to be decided in the proceedings, namely, first the plaintiffs' claim against Mr. Campbell, secondly Mrs. Campbell's claims against the plaintiffs, and thirdly Mrs. Campbell's claims against the Official Receiver. He told the judge that the principal issue had become whether the plaintiffs had acquired an equitable charge on Mr. Campbell's beneficial interest in the property, and that while the Official Receiver had written a letter saying that he would not contest the claims of the plaintiffs to be secured creditors to this extent, such claims would be resisted by Mrs. Campbell. He further explained to the judge that the issues involved in Mrs. Campbell's claims against the Official Receiver were of importance to the plaintiffs, because even if Mrs. Campbell succeeded in her contention that no charge had already been created in favour of the plaintiffs, this would not prevent the plaintiffs from obtaining a charging order over any beneficial interest in the property to which Mr. Campbell might be entitled. The trial then proceeded against Mr. Campbell and Mrs. Campbell, with none of the other defendants taking part in the proceedings. The claims against Likemarts and Mr. Gillis had been disposed of by way of compromise.
The learned judge heard first, evidence relating to the first two of the three issues to which the plaintiffs' counsel had referred. The hearing of this evidence concluded on 10th May 1983. On 12th May 1983 he gave judgment on the two issues. As to the plaintiffs' claim against Mr. Campbell, he found that Mr. Campbell's indebtedness as at 9th May 1983, when the hearing began, had risen to £34,362.44. He accordingly gave judgment for the plaintiffs against Mr. Campbell for this sum. No appeal from this part of the judgment is before us.
The learned judge in his judgment then proceeded to consider Mrs. Campbell's counterclaim against the plaintiffs. He explained that this counterclaim and the plaintiffs' defence to it had caused an argument as to whether the plaintiffs had an equitable charge over Mr. Campbell's beneficial interest in the property. Most of the rest of his judgment was devoted to considering this issue. His eventual conclusion was that no equitable charge had been created by Mr. Campbell over his beneficial interest.
"The fourth defendant", he said, "is therefore successful on her issue with the plaintiff….. The delivery up (of the land certificate) to the fourth and first defendants qua trustees must follow from what I have said".
Accordingly, on Mrs. Campbell's counterclaim, he ordered that the plaintiffs should deliver up to Mr. and Mrs. Campbell the land certificate and that the Charges Register should be rectified by the cancellation of the notice of deposit. He concluded this part of his judgment with these words:
"The notice of...
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