Enforcement of charges by sale s 14 of the 1996 Act
Two first instance decisions involving similar principles but with very different results.
First case: Edwards v Lloyds Bank plc
 EWHC 1745 (Ch)
Mrs Edwards applied to vacate a caution placed on the registered title of the family home by Lloyds Bank. The property had been held jointly by herself and her husband subject to a mortgage, and on divorce her husband was ordered to transfer the legal estate and his beneficial interest to her, subject to the mortgage. He disappeared and the transfer was never signed. It subsequently transpired that unknown to her he had granted a second mortgage to Lloyds Bank, by forging her signature on the mortgage deed. The Bank subsequently sought to enforce the mortgage.
Park J held that the mortgage deed was not a nullity but was effective to charge the forgers beneficial interest in the property taking effect as an equitable mortgage (applying First National Bank plc v Achampong  EWCA Civ 487). The order for transfer of the husbands beneficial interest was subject to the Banks charge. Under s 14 Trusts of Land and Appointment of Trustees Act 1996 the Bank therefore had an interest in the property and could apply for an order for sale. Considering the factors in s 15 and on the particular facts, the court made an order for sale, postponed for five years.
Comment: On the facts, the Court seems to have struck a reasonable balance. Query whether it did in the next case:
Second case: Pritchard Englefield v Steinberg
 EWHC 1908 (Ch)
This case was decided less than a fortnight later. The facts were fairly complicated, but essentially it was held that X became a constructive trustee of property which he held subject to an obligation to allow S, an 83 year-old lady, to remain in the property rent-free for life. X had charged the property to a bank to secure borrowings (S having signed a Deed of Postponement), and owed the claimant solicitors P over 200,000 which P sought to enforce by way of possession of the property under a charging order. Peter Smith J held that Ss life interest constituted an overriding interest within s 70(1)(g) Land Registration Act 1925 but that it did not follow that it should have paramouncy over P. Under The Trusts of Land and Appointment of Trustees Act 1996 and applying such cases as Bank of Baroda v Dhillon  EWCA Civ 2511;(1998) 1 FLR 524 and Mortgage Corporation Ltd v Shaire  3 WLR 639, he made an order for sale postponed for only two months to enable S to see if she could find a buyer who would buy subject to her life interest. Upon a sale, the net proceeds would be paid out first to the bank, then to S on the basis that her life interest should be valued actuarially and capitalised, with the balance to P.
Comment: This case represents a hardening of judicial attitude in the exercise of discretion under s 14. The case can perhaps be explained having regard to the commercial realities of the case there were also service charge arrears with a risk of forfeiture in the background, but one wonders why relief should have been granted on Ps application if P took subject to Ss life interest.
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