Equitable charge

Matters to be taken into account under s15 TLATA 1996

Edwards v Bank of Scotland

[2010] EWHC 652 (Ch)


The effect of a forged legal mortgage over jointly owned property is to leave the lender with an equitable charge in respect of the forger’s beneficial interest. In considering whether to make an order for sale, the court will have regard to the matters in s15 Trusts of Land and Appointment of Trustees Act 1996. The interests of the bank as creditor are of “real significance”.


H and W were the joint legal and beneficial owners of a leasehold residential property. W forged H's signature on a joint legal charge to the bank as security for an advance of £637,500. H subsequently commenced proceedings against (1) W for monies had and received, damages in deceit and misrepresentation and other relief; and (2) the bank for a declaration that he was not liable under the charge and for consequential orders for rectification etc. The bank in turn claimed possession and/or an order for sale based on (a) its rights as legal chargee, alternatively (b) its rights as equitable chargee under s14 Trusts of Land and Appointment of Trustees Act 1996.

The bank conceded that H's signature on the charge had been forged and that he was entitled to appropriate relief. The issue was whether and upon what terms the court should order possession and sale on the bank’s claim as equitable chargee.


Applying s15 of the 1996 Act and having regard to the decisions in Mortgage Corporation v Shaire [2001] Ch 743 and Bank of Ireland Home Mortgages v Bell [2001] All ER Comm 920 the court made an order for possession and sale, postponed for 4 months. The judge stated that:

    “[this] strikes the right balance between the need to bring matters to a conclusion and the need to give [Mr E] an appropriate opportunity to sell [the property] and purchase a new property”.


There is no new law in this case but it is a helpful reminder of the principles. It recognises that the effect of a forged joint legal mortgage is to leave the lender with an equitable charge over the forger’s beneficial interest which it is entitled to enforce by applying for an order for sale under the 1996 Act. It also reminds us that under s15 the court has a discretion to postpone the making of an order for sale for a reasonable period – in this case to give the innocent co-owner time to sell himself.

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