Caution — Sale of land — Jewish court appointed as arbitrator in fraud claim — Direction prohibiting sale of first defendant’s home without court’s permission — Caution registered against title — First respondent selling property to second and third respondents — Whether direction creating lien or charge over property — Whether second and third respondents entitled to removal of caution Whether English law relevant to provide remedy not available under Jewish law — Appeal dismissed
A Jewish Beth Din Court was appointed as the arbitrator in a dispute between the appellant and the first respondent, both of whom were strict Orthodox Jews. The court made a “freezing” direction (the direction) prohibiting the first respondent from dealing with, or disposing of, his home without the permission of the Beth Din, pending the determination and satisfaction of the final award in the arbitration. A caution was registered against the title to the first respondent’s home. Notwithstanding the direction, the first respondent sold the property to the second and third respondents. The Beth Din subsequently awarded the appellant £237,224.50 damages for fraud, and he obtained an interim charging order against the property to secure that sum.
The issue before the Beth Din was whether the direction or the award created, in favour of the appellant, a lien or charge on the first respondent’s home securing the award of damages, and, if so, whether the second and third respondents were bound by that lien or charge. The second and third respondents also brought a separate action seeking a declaration that they were entitled to be registered as proprietors of the property free from any charge or lien. The first claim was dismissed and the second allowed: [2004] EWHC 592 (Ch); [2004] PLSCS 75.
The appellant appealed, contending that the effect of the first respondent’s promise to abide by the arbitrator’s order was to give rise to a proprietary estoppel, itself amounting to a constructive trust, in respect of the home, which was binding on the respondent’s conscience, which in turn was binding on the purchasers by reason of the constructive notice constituted by the registered caution.
Held: The appeal was dismissed.
The appeal had arisen out of an arbitration conducted under substantive and procedural Jewish law and it failed on findings of Jewish law. English law was not relevant for the purpose of discovering a remedy that Jewish law did not provide.
English law could not transmute a freezing order under Jewish law, which operated only in personam and continued to do so despite the first respondent’s agreement to comply with it, into a remedy that provided the appellant with an equitable remedy operating as a proprietary or security interest against third parties, even those with constructive notice of the order.
That was sufficient to decide the appeal but, even if the matter had been looked at as a matter of English law, the result would have been the same. The first respondent’s promise to abide by the Beth Din orders did not create a proprietary estoppel or constructive trust binding upon the second and third respondents, on the basis that they had constructive notice of the orders by reason of the caution. They had made no promise and there was no finding, and no investigation, of any detriment or reliance on the part of the appellant. The only “fault” on their part was that the caution on the register provided them with constructive knowledge of the order in circumstances where that order, because it did not in itself give rise to an interest in land, did not entitle the appellant to a caution in the fist place.
Jonathan Seitler QC (instructed by Dechert LLP) appeared for the appellant; David Lonsdale (instructed by Mills & Reeve, of Norwich) appeared for the respondents.
Eileen O’Grady, barrister
