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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Bank of Scotland Plc v King & Ors  EWHC 2747 (Ch) (23 November 2007)
Cite as:  EWHC 2747 (Ch)
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Strand, London, WC2A 2LL
B e f o r e :
| BANK OF SCOTLAND PLC
|- and -
|1)AARON MARCELLUS KING
2) SAMUEL OKORONKWO
3) UZO ONYEMA OKORONKWO
The First Defendant did not appear
The Second Defendant In Person on behalf of Himself and the Third Defendant
Hearing dates: 13th November 2007
Crown Copyright ©
"The buyer hereby covenants with the sellers to abide (sic) the schedule of restrictive covenants as contained in the property register."
Copies of the Land Registry entries have not been provided to me but it seems clear from paragraph 12 of the draft transfer that there were some restrictive covenants registered against the title and the First Defendant was to covenant (in effect by way of indemnity) to abide by those covenants. Paragraph 13 of the draft transfer provides for the transfer to be executed by the Second and Third Defendants and also by the First Defendant, no doubt, because of the provisions of paragraph 12 of the draft transfer.
"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."
"Further to the above matter we hereby acknowledge safe receipt of the sum of £1,137,645.50.
We now enclose the following documents: -
1) Our client's part of the contract.
2) Transfer Deed dated 29th June 2004
3) Form WCT in respect of Barry David Lewis
4) Form WCT in respect of Barry Davis Lewis
5) Form WCT in respect of Jackson Rowe Associates
6) Form WCT in respect of Jackson Rowe Associates.
We can confirm that we have discharged the Charge in favour (sic) Finsbury Park Mortgage Funding Limited along with the remaining Cautions. We should therefore be obliged if you could accept this as our Undertaking to provide a duly signed END1 and form WCT as soon as received."
"We refer to the above and our many meetings and conversations since this proposed sale of the above property should have taken place during last year.
As you are aware the terms of the proposed sale has (sic) not been complied with and we are not prepared to continue suffering the uncertainty any longer. We have therefore decided to rescind the contract and cancel the transaction.
You acknowledged and accepted this fact during our last conversation and we now invite you to confirm the same by signing, dating and returning a copy of this letter."
The Procedural History
"Neither the Transfer itself, nor the contemporaneous correspondence between the sellers' and the purchaser's solicitors contains any condition or proviso that completion is not to take place until Mr and Mrs Okoronkwo have received the balance of the purchase price agreed with Mr King."
The Second and Third Defendants did not serve any evidence in
response to the application for summary judgment.
The Parties' Submissions
"It may be delivered as an escrow to an attorney acting for all parties thereto, and even to the solicitor acting for the party to benefit under the deed, provided it is handed to him as the agent of all parties for the purpose of such delivery."
Halsbury then continues in the same paragraph to discuss delivery of a deed to the party intended to benefit under it and whether there can be such delivery as an escrow and whether all stipulations as to the conditions of the escrow will or will not be repugnant to such delivery.
"The question of whether a document is delivered as an escrow or as a deed is in general one of fact, and I think that the following passage from Norton on Deeds (2nd Edition), at page 20 accurately states the law: "Whether the document was delivered as an escrow or as a deed is a question of what the parties intended, and that intention may appear either from their statements or the circumstances." The learned author then quotes the following observation of Parke B. in Bowker v Burdekin (1843) 11 M&W 128 at 147: "you are to look at all the facts attending the execution, to all that took place at the time, and to the result of the transaction; and therefore, though it is in form an absolute delivery, if it can reasonably be inferred that it was delivered not to take effect as a deed till a certain condition was performed, it will nevertheless operate as an escrow." The author goes on: "thus the delivery of a transfer of mortgage was held to be in escrow until the mortgage money had been paid ….. and of a conveyance until the purchase money has been paid….. The circumstances relied upon to show delivery as an escrow must be prior to or contemporaneous with, not subsequent to, the delivery….. Evidence is, of course, admissible as to what were the circumstances attending the delivery….. and the question is in general one of fact for the jury."
"When an instrument is delivered in escrow, that only means that it is delivered on condition (which may be expressed or implied by conduct) that it is not to be operative until some condition is performed: see Norton on Deeds 2nd Edition page 18. A good instance is where, on a proposed sale of land, only part of the purchase price has been paid, but the vendor lets the purchaser into possession and delivers the deed to the purchaser's solicitor, and tells him to hold it until the balance is paid. The deed is clearly delivered on condition that it is not to be operative until the price is paid. Whilst the condition remains unperformed, the sale is not complete and the purchaser does not get the legal title (see Watkins v Nash in 1875 and Thompson v McCullough in 1947); but as soon as the money is paid, the sale is complete. The instrument there may precede any binding contract. But when the sale is complete it is clearly a conveyance on sale and is liable to stamp duty."
said at 43:
"……the passages to which I have referred seem to establish that the intention of the maker must be made clear, at least where the deed is physically handed to the other party. Commonsense supports that view. But even if this is not so, the court is entitled to judge the maker's true intention in the light of what he did and said at the time, and would be unlikely to hold that he had an intention to deliver a deed in escrow when all his words and actions pointed to the contrary conclusion. [Counsel] submits that where, as here, a signed and sealed deed is handed first to the defendant's solicitors and then by him to the plaintiff's solicitors, the onus is upon the defendant to establish that it was a delivery in escrow. In my judgment, this is correct, but I do not propose to decide this case on the onus of proof."
The Result in the Present Case
"Where a solicitor, duly certificated notary public or licensed conveyancer, or an agent or employee of a solicitor, duly certificated notary public or licensed conveyancer, in the course of or in connection with a transaction involving the disposition or creation of an interest in land, purports to deliver an instrument as a deed on behalf of a party to the instrument, it shall be conclusively presumed in favour of a purchaser that he is authorised so to deliver the instrument."
In the present case, the Second and Third Defendants have not asserted that their solicitors, Alberts, lacked authority to deliver the transfer as a deed to the First Defendant's solicitors. If they had asserted a lack of authority, that assertion would have been met by Section 1(5) of the 1989 Act.
"A party with an equitable charge can be taken to agree to the postponement of his property against any party who was allowed to his knowledge to purchase the land on the faith that it is unencumbered."
At page 425 f to g, Millett LJ referred to the circumstances in which the unpaid vendor in that case would be taken to have subordinated his vendor's lien to a later mortgage. Applying that approach in the present case, in my judgment, the Second and Third Defendants are to be taken to have intended to subordinate their vendor's lien to the mortgage of the Claimant, which mortgage they knew that the First Defendant was granting for the purpose of obtaining the mortgage monies to pay over to the Second and Third Defendants.