England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE FC3 96/6438/H

(LORD JUSTICE NOURSE AND MR JUSTICE CAZALET )

Royal Courts of Justice

Strand

London WC2

Tuesday 15 October 1996

B e f o r e:

THE MASTER OF THE ROLLS

(LORD WOOLF)

LORD JUSTICE KENNEDY

LORD JUSTICE PHILLIPS

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BANK OF BARODA

Plaintiffs/Applicants

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SYED TALHA HAMAD RAFIQUE

SYEDA AKTHAR RAFIQUE

Defendants/Respondents

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(Computer Aided Transcript of the Palantype Notes of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

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MR G FEATHERSTON HAUGH (Instructed by Lawrence Jones, London, SE1 9LH) appeared on behalf of the Applicant.

MR G LAWRENCE QC (Instructed by William Heath & Co, London W2 1PX) appeared on behalf of the Respondents.

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J U D G M E N T

(As approved by the Court)

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©Crown Copyright

JUDGMENT

THE MASTER OF THE ROLLS: This is an application by the plaintiffs in relation to an appeal which has been brought by the second defendant. The plaintiffs are seeking the removal of a stay which was granted by this court, as then constituted, when it granted leave to appeal to the second defendant in respect of a decision which was given in the Kingston County Court.

The proceedings in the Kingston County Court were as to residential premises which were occupied by the second defendant and her husband, the first defendant, in St George's Hill. The first defendant was the registered proprietor of the property and the second defendant had an equal equitable interest in those premises. The premises were mortgaged to the plaintiffs who brought proceedings for possession against the defendants. The plaintiffs also sought an order for sale under section 30 of the Law of Property Act 1925. Those proceedings were not defended by the husband and judgment was given against him. The wife contested the proceedings on the basis that she ought not to be bound by the mortgage which was procured by undue influence.

The claim was heard over the course of three days in February of this year. The judge came to the conclusion that the wife's defence failed on the undue influence point and, accordingly, he gave judgment for possession but did not deal with the alternative claim which was put forward by the plaintiffs under section 30 of the 1925 Act.

The wife then sought leave to appeal against the judgment, and a stay of execution was granted by this court in addition to granting leave to appeal. At one time the plaintiffs were intending to pursue an application to set aside the grant of leave to appeal as well as the stay of execution. However, the plaintiffs are now only seeking to set aside the stay.

Putting the matter very shortly, which is all that is necessary in view of what I say hereafter, the plaintiffs' case is that they have an unanswerable argument in support of an order for sale; that substantial interest is being incurred in relation to a further charge which exists on the property in favour of the Bradford and Bingley Building Society; and, that unless the interest which is accruing due under that other charge ceases to accumulate in consequence of a sale, the plaintiffs' interest, in relation to their charge in respect of which they have an unsatisfied judgment against the first defendant for some £667,000, will be substantially reduced in value or even rendered worthless.

The wife contends that it would be quite wrong for the stay on a judgment for possession to be removed because the plaintiffs would enter into possession under the mortgage and would then be able to sell as a mortgagee in possession. Mr Lawrence, on her behalf, submits that that is not an appropriate course for this court to take on an application to remove a stay which has been granted by another division of the court.

The court is concerned that if no action is taken there will indeed be a squandering of the value of the property, which is the asset which is at stake in these proceedings. It is also concerned that there are separate proceedings being brought in the Kingston County Court by the Bradford and Bingley Building Society under their first mortgage; that the same defence which the wife raised in the proceedings by the plaintiffs is being raised in those proceedings; and that the outcome of those proceedings could well have an influence both on the merits of the proceedings which have been the subject of the appeal and also the value of the proceedings to the plaintiffs.

It appears clear to this court that it is in everybody's interest that two things should happen as soon as possible. The first is that there should be a proper determination of the plaintiffs' alternative claim for an order for sale upon which there has not yet been an adjudication. The second is the resolution of the proceedings which are being brought by the Bradford and Bingley.

This court is also conscious that before the present appeal is heard, a substantial period of time is inevitably going to elapse because of the other cases which are waiting to be heard. In those circumstances, this court explored with counsel the possibilities of finding some solution to the present situation which would be of benefit to all the parties involved. It appears clear to this court that if there is going to be a sale of this property, the earlier the sale takes place the better because of the incidents of interest to which I have already made reference. It is also true that it would be more satisfactory for the proceedings in the county court, brought by Bradford and Bingley, to be determined either in conjunction with, or in connection with, the determination of the plaintiffs' claim for an order for sale. Accordingly, the course that we propose to take, which is not opposed by either party to the present appeal is as follows:

1. We will remit to the Kingston County Court, if at all practicable, to His Honour Judge Hucker, who has heard the case already, to determine the issue as to whether there should be an order for sale or not.

2. We would direct the Kingston County Court to ensure that, so far as this is practical, that the other action which is still proceeding in the Kingston County Court comes to trial as soon as possible. If this is practical, the trial of that other action should proceed the determination of the issue as to sale in this action.

3. On determining the issue as to whether there should be an order for sale in this action, both parties should be at liberty to call any additional evidence which is relevant to that issue, and to make any submissions which they consider appropriate before the judge determines the same.

4. It is the hope and expectation of this court that as the nature of the issues between the Building Society and the second defendant, the wife, are well identified, the matter can come on for hearing in the relatively near future. We would hope that the court would work to a date this year.

5. If possible that action should also be determined by Judge Hucker, who is aware of the background because of having tried the present action, and that he should allow time for both matters to be disposed of, if at all practicable, in succession as I have indicated.

It may well be that in consequence of the directions I am proposing, that it will not be necessary for this appeal in the present case to proceed. However, that would be a matter which would have to be decided by the parties in the light of what happened in the County Court. In the meantime, it would seem to me, subject to anything counsel has to say, that the present appeal should not be listed until after the determination of the County Court proceedings.

The other matter we would add is that for the time being the present case should keep its place in the Court of Appeal list. This is so that the parties are not prejudiced in consequence of this initiative by this court.

LORD JUSTICE KENNEDY: I agree.

LORD JUSTICE PHILLIPS: I agree.

Order: As above. No order as to costs.