Local Authorities (Historic Buildings) Act 1962 — Repayment of grant for repairs and renovations to listed building — Disposal of interest — Whether sale by mortgagees under their power of sale in the mortgage was a disposal which attracted the provisions in the Act for repayment of the grant — Section 2(1) provides for repayment in the case of a disposal during the period of three years beginning with the day on which a grant is made — The local authority claimed repayment of £1,895.46 paid within the three-year period before the sale by the mortgagees — The county court judge held that the owners who had received the grant were liable to make the repayment on the ground that there was a chain of cause and effect between the mortgaging of the property and the sale by the mortgagees, so that the recipients of the grant could be said to have disposed of the property by sale — Held on appeal that the judge’s construction of the 1962 statute was wrong — Section 2(1) was directed to three distinct and recognisable forms of disposal, sale, exchange and lease for a term of not less than 21 years; it is not directed to a disposal by way of mortgage or charge — Further, the wording of section 2(1), ‘If . . . that person disposes of the interest’ shows that the disposal must be by the recipient of the grant, whereas the disposal by sale here was made by the mortgagee bank — The position in a case where there was collusion between mortgagor and mortgagee might be different, but that was not this case — Appeal allowed
No cases are
referred to in this report.
This was an
appeal by John Quine, one of the defendants in an action by the plaintiffs
(present respondents), Canterbury City Council, claiming the repayment of
£1,895.46, being part of a grant for repairs and renovation works to a listed
property known as Pointers Hotel, Canterbury, of which the defendants were the
freehold owners.
D Barker QC
(instructed by Pettit & Westlake) appeared on behalf of the appellant;
Gavin Lightman QC and S Hilliard (instructed by Mowll & Mowll, of
Canterbury) represented the respondents.
Giving the
first judgment at the invitation of Mustill LJ, NOURSE LJ said: This appeal
raises a question on section 2(1) of the Local Authorities (Historic Buildings)
Act 1962, which provides that the amount of a grant made under the Act may in
certain circumstances be recovered by the local authority who made it.
In the light
of some narrowing of the issues which are now before the court the material
facts can be very briefly stated. The defendants to the proceedings are Mr John
Quine and two partners of his. In 1978 and 1980, as the freehold owners of a
listed property known as the Pointers Hotel, Canterbury, they obtained from the
plaintiffs, Canterbury City Council, under section 1 of the 1962 Act, grants
totalling £7,395.46 towards the cost of eligible repairs and renovation works
to that property: £5,894 had been received by March 1979 and the balance of
£1,895.46 was received between March and September 1980. On July 14 1978, after
they had made application for the first grant, the defendants executed an
all-moneys charge by way of legal mortgage over the property in favour of
Barclays Bank plc. By the early part of 1982 the work had been done, we are
told very satisfactorily. But the defendants, as a result of the prevailing
economic circumstances, in particular the very high interest rates then in
force, owed the bank in excess of £130,000. On March 10 1982 formal demands for
repayment by the defendants were made by the bank. The defendants recognised
that the property had to be sold but they were unable to find a buyer at a
price which would pay off their borrowing. In the result, on May 4 1982 the
bank entered into a contract to sell the property as mortgagee under its
statutory powers of sale and that sale was thereafter duly completed.
On July 13
1982 the plaintiffs, being aware of the sale, demanded from the defendants
repayment of the whole of the £7,395.46. That demand was later reduced to
£1,895.46, being the amount of the second grant received between March and
September 1980. Although the plaintiffs seem to have thought that they were
thereby making some concession to the defendants, it appears probable that the
three-year period hereafter referred to would have precluded them from
recovering the balance in any event. However that may be, the defendants did
not pay any part of the sum demanded. The plaintiffs commenced proceedings in
the Canterbury County Court and obtained judgment in default against Mr Quine’s
two partners. That judgment has not been satisfied. Mr Quine defended the
action, contending that there was no right of recovery under section 2(1) in
the circumstances of this case. On September 25 1986 His Honour Judge Rooke QC
gave judgment for the sum claimed, plus interest, amounting in the aggregate to
£2,695.46. Mr Quine has now appealed to this court.
Section 2(1)
of the 1962 Act is in these terms:
If, during
the period of three years beginning with the day on which a grant is made under
this Act to a person towards the repair or maintenance or upkeep of any
property, that person disposes of the interest, or any part thereof, held by
him in the property on that day by way of sale or exchange or lease for a term
of not less than twenty-one years, the local authority may recover from that
person, in any court of competent jurisdiction, the amount of the grant, or
such part thereof as to them seems fit.
It is agreed
that the grant of £1,895.46 was made less than three years before the property
was sold on May 4 1982. The question in dispute is whether that was, for the
purposes of section 2(1), a disposal by way of sale made by the defendants. If
it was not, then it is agreed that the plaintiffs have no right to recover the
amount of the grant.
In holding
that there was a right of recovery Judge Rooke said:
. . . It is
said that it was not he who disposed of his interest, it was Barclays Bank, but
it is inescapable in my judgment that there is here a chain of cause and effect
with the defendant upon his own frank confession being a knowing party to what
occurred ie that by mortgage on his property he knew that he was committing and
pledging it on a path which might conceivably, though obviously he and his
partners certainly didn’t want it, lead to a possible sale . . . and it is to
be noted, of course, that the original tying of the hands was by the making of
the original mortgage deed and all the obligations which potentially flowed
therefrom, so that it seems to me that with that chain of cause and effect, it
does not lie properly within the mouth of the defendant to argue or have argued
on his behalf, I should say, that he doesn’t fall within the words of the
statute.
That view of
the matter is adopted in the principal submission of Mr Lightman, who appears
in this court on behalf of the plaintiffs. He submits that the defendants,
having by their legal charge placed the property at the disposal of the bank
or, if you prefer, having empowered the bank to dispose of it, were, through
the medium of
It seems to me
that the first thing to be said about section 2(1) is that it is directed to
three distinct and easily recognisable forms of disposal: sale, exchange or
lease for a term of not less than 21 years. It is not directed to a disposal by
way of mortgage or charge. It would be very odd, in the absence of words to
that effect, to credit Parliament with an intention to include a disposal by
way of sale made under a form of disposal which was not itself included.
Moreover, as Mr Barker, who appears for Mr Quine, has pointed out, the language
of the subsection is in another respect very specific; sc
If . . . that
person
my emphasis
disposes of
the interest held by him . . . by way of sale.
The person to
whom attention is directed is the recipient of the grant, in this case the
defendants. The disposal made by them was not one by way of sale. It was a
disposal by way of mortgage or charge. The only disposal by way of sale was
made by the bank. It is true that that was a disposal of the interest held by
the defendants, but it was not made by ‘that’ person. In my judgment the effect
of subsection 2(1) is very plain. There is no right of recovery in this case.
I must refer
to two further submissions which are made by Mr Lightman. First, he says that
the legislation is designed to give an incentive to recipients of grants to
retain their properties (and accordingly to discharge any mortgage or other
liabilities which might prevent this) for at least three years under penalty of
being required to make repayment. I would certainly accept that as a general
submission, but I am unable to see how it can affect the plain wording of the
provision.
Much the same
can be said of Mr Lightman’s second further submission, which is that the
legislature cannot have intended that a mortgagor shall have the facility of
selling within the three-year period and yet avoiding repayment by the
expedient of causing or allowing his mortgagee to sell. That submission has the
flavour of a suggested collusion between mortgagor and mortgagee. Mr Lightman
does not make that suggestion in this case, and I would certainly refute it if
he did. It may be that in a case of collusion the position would be different.
But where there is no collusion the existence of a possible lacuna (I do not
put it higher than that) in the forms of disposal to which section 2(1) is
directed cannot be a ground on which its plain wording may be disregarded.
For these
reasons, and while I have some sympathy with the robust view which the learned
judge took of the case, I think that his decision on the question of
construction was wrong and ought to be reversed. I would therefore allow this
appeal.
The appeal
was allowed with costs; an application for leave to appeal to the House of
Lords was refused.
