Defendant selling land to father to enable father to raise money on mortgage – Father paying part only of purchase price – Solicitor failing to register transfer and subsequent mortgage in favour of plaintiff – Plaintiff obtaining order for possession – Defendant lodging inhibition against dealing with land – Plaintiff applying for removal of inhibition – Defendant claiming unpaid vendor’s lien – Judgment for plaintiff
The defendant and his father, K, (the borrowers), had at all material times engaged in a number of businesses on a joint venture basis. In 1986 they acquired an 11-acre disused hospital site for £225,000 with a view to developing it, or selling off parts of it, in stages for housing construction. At the beginning of 1990 the land was vested in the sole name of the defendant, subject to a legal charge executed by the defendant, in favour of Skipton Building Society to secure a facility of £800,000. On June 12 1990 the borrowers put their names to a short document whereby the defendant agreed to sell part of the land (the stage 1 land) to K for £950,000, of which £375,000 would be paid on completion and the balance over three years. The purpose of the sale was to enable K to obtain further finance from the plaintiff building society, which had offered a £600,000 facility on the security of a first legal charge over the stage 1 land.
During the summer of 1990 the requisite documents were executed, and the plaintiff made an initial advance of £375,000 of which £172,000 was paid to Skipton in order to release the stage 1 land from the earlier charge. However, due to neglect on the part of the solicitor acting for all the parties, neither the transfer to K nor the charge in favour of the plaintiff was registered. With the subsequent deterioration of the housing market, both Skipton and the plaintiff took steps to realise their securities. On February 9 1993 the plaintiff obtained an order for possession of the stage 1 land, coupled with a money judgment against K for £604,000. On October 18 1993 the defendant lodged an inhibition against his title to the entire land in order to prevent registration of the transactions effected in 1990. In proceedings by the plaintiff for cancellation of the prohibition and for registration of those transactions, the defendant claimed, inter alia, that he had an unpaid vendor’s lien for the balance of the purchase moneys due from K.
Held Judgment for the plaintiff.
1. The fact that the deed of transfer was executed as part and parcel of the mortgage transaction excluded any lien, or certainly any lien against the plaintiff. Estoppel led to the same result. The defendant had executed the transfer so as to allow for the creation of the mortgage. Now that the plaintiff had acted on it by making the initial and subsequent advance, it would be inequitable for the defendant to assert a lien: Barclays Bank v Estate & Commercial Ltd (1996) 74 P&CR 30 considered.
2. The purported sale was not in any case a true sale as between father and son, but a step in a joint venture between them under which they had independent accounting arrangements. Although the plaintiff was the sole legal owner of the land at the beginning of 1990, it was plainly held on behalf of both of the borrowers. Any amount due to the defendant would depend on items of account of which the expressed purchase money would form only part.
Naomi Ellenbogen (instructed by Dibb Lupton Alsop, of Leeds) appeared for the plaintiff; the defendant appeared in person.
Alan Cooklin, barrister
