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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Lloyds TSB Bank Plc v Markandan & Uddin (A Firm)  EWCA Civ 65 (09 February 2012)
Cite as:  WLR(D) 29,  2 All ER 884,  EWCA Civ 65
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
Mr Roger Wyand QC sitting as a Deputy High Court Judge
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE RIMER
SIR MARK POTTER
| LLOYDS TSB BANK PLC
|- and -
|MARKANDAN & UDDIN (a firm)
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Christopher Aylwin (instructed by Patricks, Solicitors) for the Appellant, Markandan & Uddin
Hearing date: 2 December 2011
Crown Copyright ©
Lord Justice Rimer :
'C&G has adopted the CML [Council of Mortgage Lenders] Lenders' Handbook for England and Wales (the "Handbook") and we therefore require you to act in accordance with the instructions contained in it. General instructions and guidance are contained in Part 1 of the Handbook and provisions which are specific to C&G, including details of who you should contact with any queries, are contained in Part 2.
We would draw your attention to the following points:
- You are required to ensure that the signed Mortgage Loan Agreement to the full value of the advance is in your possession BEFORE COMPLETION.
- It is essential to ensure that the title documents, Mortgage Loan Agreement and Mortgage Deed are all in the same names.
- Following registration you should send ONLY the documents detailed in the Completion Advice. ALL OTHER DOCUMENTS MUST BE GIVEN TO THE BORROWER(S) (or subsequent mortgagee if appropriate).
The specific instructions to this loan are listed below.'
'5.4 Good and Marketable Title
'5.4.1 The title to the property must be good and marketable free of any restrictions, covenants, easements, charges or encumbrances which, at the time of completion, might reasonably be expected to materially adversely affect the value of the property or its future marketability (but excluding any matters covered by indemnity insurance) and which may be accepted by us for mortgage purposes. Our requirements in respect of indemnity insurance are set out in paragraph 9. You must also take reasonable steps to ensure that, on completion, the property will be vested in the borrower .
18.104.22.168 A title based on adverse possession or possessory title will be acceptable if the seller is or on completion the borrower will be registered at the Land Registry as registered proprietor of a possessory title .
5.8 First Legal Charge
5.8 On completion, we require a fully enforceable first charge by way of legal mortgage over the property executed by all owners of the legal estate. All existing charges must be redeemed on or before completion, unless we agree that an existing charge must be postponed to rank after our mortgage. Our standard deed of form of postponement must be used.
10. The Loan and Certificate of Title
10.1 You should not submit your certificate of title unless it is unqualified or we have authorised you in writing to proceed notwithstanding any issues you have raised with us.
10.2 We shall treat the submission by you of the certificate as a request for us to release the mortgage advance to you.
10.3.1 You are only authorised to release the loan when you hold sufficient funds to complete the purchase of the property and pay all stamp duty land tax and registration fees to perfect the security as a first legal mortgage or, if you do not have them, you accept responsibility to pay them yourself.
10.3.2 Before releasing the loan when the borrower is purchasing the property you must either hold a properly completed and executed stamp duty land tax form or you must hold an appropriate authority from the borrower allowing you to file the necessary stamp duty land tax return(s) on completion.
10.3.3 You must ensure that all stamp duty land tax returns are completed and submitted to allow registration of the charge to take place in the priority period afforded by the search.
10.3.4 You must hold the loan on trust for us until completion. If completion is delayed, you must return it to us when and how we tell you (see part 2) .
10.3.5 If, after you have requested the mortgage advance, completion is delayed you must telephone or fax us immediately after you are aware of the delay and you must inform us of the new date for completion (see part 2).
10.6 See part 2 for details of how long you can hold the mortgage advance before returning it to us. If completion is delayed for longer than that period, you must return the mortgage advance to us. If you do not, we reserve the right to require you to pay interest on the amount of the mortgage advance (see part 2).
10.7 If the mortgage advance is not returned to us within the period set out in part 2, we will assume that the mortgage has been completed, and we will charge the borrower interest under the mortgage.
14. After Completion
22.214.171.124 You must register our mortgage as a first legal charge at the Land Registry. Before making your Land Registry application for registration, you must place a copy of the results of the Official Search on your file together with certified copies of the transfer, mortgage deed and any discharges or releases from a previous mortgagee.
14.1.4 The application for registration must be received by the Land Registry during the priority period afforded by your original Land Registry search made before completion and, in any event, in the case of an application for first registration, within two months of completion.
'The reply to this requisition is treated as an undertaking. Great care must be taken answering this requisition.
6.1 Please list the mortgages or charges secured on the property which you undertake to redeem or discharge to the extent that they relate to the property on or before completion (this includes repayment of any discount under the Housing Acts).
6.2 Do you undertake to redeem or discharge the mortgages and charges listed in reply to 6.1 on completion and to send to us Forms DS1 or the receipted charges as soon as you receive them? Alternatively will you notify us as soon as you made aware that an END [electronic notification of discharge] has been sent to HMLR?
6.3 If you agree to adopt the current Law Society's Code for Completion by Post, please confirm that you are the duly authorised agent for the proprietor of every mortgage or charge on the property which you have undertaken in reply to 6.2 to redeem or discharge.'
'WE THE CONVEYANCERS NAMED ABOVE CERTIFY as follows:
(2) Except as otherwise disclosed to you in writing:
(i) we have investigated the title to the Property, we are not aware of any other financial charges secured on the Property which will affect the Property after completion of the mortgage and, upon completion of the mortgage, both you and the mortgagor (whose identity has been checked in accordance with paragraph (1) above) will have a good and marketable title to the Property and to appurtenant rights free from prior mortgages or charges and from onerous encumbrances which title will be registered with absolute title.
(a) undertake, prior to use of the mortgage advance, to obtain in the form required by you the execution of a mortgage
(c) will within the period of protection afforded by the searches referred to in paragraph (b) above:
(i) complete the mortgage;
(ii) arrange for the issue of a stamp duty land tax certificate if appropriate;
(iii) deliver to the Land Registry the documents necessary to register the mortgage in your favour and any relevant prior dealings; '.
'5. Before the completion date, the buyer's solicitor will send the seller's solicitor instructions as to any of the following which apply:
(i) documents to be examined and marked;
(ii) memoranda to be endorsed;
(iii) undertakings to be given;
(iv) deeds, documents (including any relevant undertakings) and authorities relating to rents, deposits, keys, etc, to be sent to the buyer's solicitor following completion; and
(v) other relevant matters.
In default of instructions, the seller's solicitor is under no duty to examine, mark or endorse any documents.
6. The buyer's solicitor will remit to the seller's solicitor the sum required to complete, as notified in writing on the seller's solicitor's completion statement or otherwise, or in default of notification as shown by the contract. If the funds are remitted by transfer between banks, the seller's solicitor will instruct the receiving bank to telephone to report immediately the funds have been received. Pending completion, the seller's solicitor will hold the funds to the buyer's solicitor's order.
7. If by the agreed date and time for completion the seller's solicitor has not received the authorities specified in paragraph 4, instructions under paragraph 5 and the sum specified in paragraph 6, the seller's solicitor will forthwith notify the buyer's solicitor and request further instructions.
8. The seller's solicitor will complete forthwith on receiving the sum specified in paragraph 6, or at a later time agreed with the buyer's solicitor.
9. When completing, the seller's solicitor undertakes:
(i) to comply with the instructions given under paragraph 5; and
(ii) to redeem or obtain discharges for every mortgage or charge so far as it relates to the property specified under paragraph 3 which has not already been redeemed or discharged.
10. The seller's solicitor undertakes:
(i) immediately completion has taken place to hold to the buyer's solicitor's order every item referred to in (iv) of paragraph 5 and not to exercise a lien over any such item;
(ii) as soon as possible after completion, and in any event on the same day,
(a) to confirm to the buyer's solicitor by telephone or fax that completion has taken place; and
(b) to send written confirmation and, at the risk of the buyer's solicitor, the items listed in (iv) of paragraph 5 to the buyer's solicitor by first class post or document exchange.'
'The matter was completed and your client still has not handed over the possession of the property yet. We also keep you liable for any interest payable on this amount to the lender and for the damages caused to our client by not handing over the premises to our client.
However, as discussed this afternoon, we will transfer the funds to your NatWest client account as in the replies to requisition as soon as we receive the transfer and our client is given the access to the property.
Please be advised that (a) if we do not receive the executed TR1 [the transfer] and (b) our client is not given access to the above property before 4 pm tomorrow (28/09/2007), we have no other alternative but to report this matter to Solicitor's Regulation Authority.
Please forward the TR1 immediately and advise your client to handover the keys to the above premises to our client without further delay.'
Please reply immediately'.
'Please refer to our telephone conversation of yesterday regarding the TR1. My clients are away until the 10th October 2007 and I undertake to forward you the duly signed TR1 on their return. Kindly remit the funds so that I may complete this transaction and forward you the DS1 soon as I receive it.
I can confirm that I have today spoken with my clients and they have agreed to let your client have possession today and the keys are to be collected from our offices.'
The judge's judgment
'18. [M&U's] case is that it held the mortgage monies on a bare trust for C&G with C&G's authority to pay away the mortgage monies in connection with the purchase by Mr Davies. This is a much more limited trust than that argued for by [C&G] which is that the money is held on trust "until completion", that is that if there is no completion then the money is still held by [M&U] on trust.
19. Mr Aylwin, on behalf of [M&U] submitted that the mortgage had been "completed" since Mr Davies had signed the mortgage documents. Miss Sandells, on behalf of [C&G], suggested that technically, there was no completion until the transaction was registered. I cannot accept that argument. Paragraph (c) of the Certificate of Title clearly distinguishes between completing the mortgage (sub paragraph (i)) and delivering the documents to the Land Registry to register the mortgage (sub paragraph (iii)) .
29. In the present case Miss Sandells' argument is very simple. It is that [M&U] did not have authority to pay away the moneys except to achieve completion and completion was never achieved. Mr Aylwin, on the other hand argues that the authority was to pay away in connection with the purchase of the Property by Mr Davies and this was what [M&U] did.
30. I cannot accept Miss Sandells' construction, particularly when she submits that it means that payment can only be made when completion has been achieved. However, Mr Aylwin's construction would allow payment to be made well in advance of completion provided that the purpose was to further the purchase of the Property. In my view, the proper construction of the instructions is somewhere between these two extremes. The authority entitled [M&U] to pay away on receipt of the documents necessary to register title or, if paying away before that stage, on receipt of a solicitor's undertaking to provide such documents.
31. In the present case [M&U] paid the money without receiving the requisite documents and without receiving a solicitor's undertaking to provide such documents. Accordingly [M&U] was in breach of the trust by paying the money in the circumstances in which the money was paid.
32. The answer to question [1(a)] is "Yes".'
' the basic equitable principle applicable to breach of trust is that the beneficiary is entitled to be compensated for any loss he would not have suffered but for the breach'.
His submission was that, had completion in this case taken place by an exchange of money for forged documents, the loss would still have happened.
Sir Mark Potter :
Lord Justice Mummery :