Sale of land – Solicitor’s undertakings – Release of charges – Properties subject to all-moneys charges granted by vendors to mortgagees – Indebtedness of vendors in excess of value of properties – Defendant solicitor for vendors giving undertakings to secure release of charges – No redemption statement obtained – Charges not released upon completion – Whether claimant as solicitor for purchasers entitled to summary enforcement of defendant’s undertakings – Whether redemption figure calculated by reference to sum mortgagees would have accepted at time of sale or sum currently required – Application granted
The claimant and the defendant firms of solicitors acted for the purchaser and the vendor respectively on the sale of three residential properties by three companies. Each property had been charged by the vendor to a lender, by way of an all-moneys charge, as part security for a loan facility that greatly exceeded the value of the individual property. In each case, when responding to the standard requisitions on title, the defendant undertook to redeem or discharge the existing mortgages and charges and to send the relevant form of discharge as soon as it had been received from the mortgagee. It further confirmed that it was the duly authorised agent of the holders of the charges. However, it did not, before giving those undertakings or completing the sale, approach any of the mortgagees to obtain either a redemption statement indicating the sum required for the release of their security or their consent to such a release on completion of the sales. Nor did it seek the authority of the mortgagees to act for them on the release of the charges.
Following completion of the sales in 2007, the defendant failed to secure the redemption of the existing charges over the properties. The claimant brought proceedings, seeking the summary enforcement of the defendant’s undertakings. The mortgagees indicated that, despite the “all-moneys” nature of the charges, they would be willing to release them upon the payment of the entire sale proceeds of the properties. The defendant contended that the mortgagees would have accepted a lesser sum had the charges been redeemed within a reasonable time, in 2007, and that they could not now insist upon being placed in a better position. It submitted that a summary order should not be made in advance of an inquiry in to what would have been required to comply with the undertakings at the time they were given.
Held: The application was granted.
It was desirable for the court, when compelling solicitors to comply with their undertakings, to indicate precisely what was required to be done by way of compliance and thus to specify a redemption figure if it could do so on the evidence before it. However, in the instant case, there was no dispute over the appropriate redemption figure of a kind that would need to be resolved by directing an inquiry. Since the purpose of the undertakings was to secure for the purchasers of the properties the discharge of the existing mortgages, and that could be achieved only if the mortgagees received a sum that was sufficient to secure the release of the necessary forms of discharge, the moneys that those mortgagees might have required in the past had the defendant performed its undertakings were irrelevant to the exercise: John Fox (a firm) v Bannister, King & Rigbeys [1988] QB 925 distinguished. The court had no jurisdiction to interfere with the contractual and equitable rights of the mortgagees. It could not impose a redemption figure upon a mortgagee merely because the mortgagee would, or might, have been prepared to agree such a lesser figure had it been approached to do so at some earlier time: Taylor v Ribby Hall Leisure Ltd [1998] 1 WLR 400 distinguished. The defendant had no prospect of defending the application for summary enforcement and there was no other reason why the case should be disposed of at a trial. Applications by the defendant to join the mortgagees and one of the vendors as parties were also dismissed.
Per curiam: If a mortgagee insisted upon its entitlement to receive, by way of redemption, a payment that was far higher than any sum that could reasonably have been contemplated at the time the undertaking was given and of the present unencumbered open market value of the property, the court might refuse to order summary enforcement of the undertaking and instead order the payment of compensation for breach of the undertaking. Such a course did not fall to be considered in the instant case in the light of the pragmatic attitudes shown by the mortgagees as to their redemption figures.
Ryan Clement (instructed by Angel Solicitors) appeared for the claimant; Paul Parker (instructed by Williams Holden Cooklin Gibbons LLP) appeared for the defendant; Adrian Pay (instructed by DLA Piper UK LLP, of Leeds) appeared for Barclays Bank plc, one of the mortgagees, as first respondent to the defendant’s applications; Joanne Wicks (instructed by Fladgate LLP) appeared for Close Brothers Ltd, the other mortgagee, as second respondent; the third respondent, Ellenwell Properties Ltd, did not appear and was not represented.
Sally Dobson, barrister
