Case No. FC2 2000/5320/B3
BAILII Citation Number: [2000] EWCA Civ 3039
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON COUNTY COURT
(MR RECORDER S ISAACS QC)

Royal Courts of Justice
Strand
London WC2

Date: Monday 28 February 2000

B e f o r e:

MR JUSTICE JONATHAN PARKER

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BIRMINGHAM MIDSHIRES MORTGAGE SERVICES LIMITED
Claimant/Respondent

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SUDESH SABHERWAL
Defendant/Claimant

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(Computer Aided Transcript of the Palantype Notes of
Smith Bernal Reporting Limited, 180 Fleet Street,
London EC4A 2HG
Tel: 020 7421 4040
Official Shorthand Writers to the Court)

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MR M BEAUMONT (Instructed by Messrs Jethwa & Co, Southall UB2 4DG) appeared on behalf of the Applicant

MR P KIRBY (Instructed by Messrs Eversheds, Cardiff CF24 0EE) appeared on behalf of the Respondent

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J U D G M E N T

1.	MR JUSTICE JONATHAN PARKER: This is an application by Mrs Sudesh Sabherwal, the third‑named defendant in proceedings brought by Birmingham Midshires Mortgage Services Ltd, for a stay of execution of a possession order made by Mr Recorder Isaacs QC on 21 May 1999, ordering Mrs Sabherwal to give up possession of her home, 5 Moreland Drive, Gerrards Cross, Buckinghamshire on 21 July 1999, such order to be stayed pending her appeal to this court. 5 Moreland Drive appears to be a substantial property, which may have a market value in excess of £400,000. 
2.	Mrs Sabherwal appealed to this court and on 17 December 1999 her appeal was dismissed, the court consisting of Robert Walker LJ and Alliott J. This court on the appeal lifted the stay and refused permission to appeal to the House of Lords. 
3.	I am told by Mr Marc Beaumont of counsel (who appears for Mrs Sabherwal on this application) that the petition seeking permission to appeal was lodged with the House of Lords on or about 14 January of this year. He tells me that an assurance was sought from the claimant that it would not seek to enforce the order for possession pending the hearing of the petition by their Lordships’ House and, if permission were to be granted, pending the hearing of the substantive appeal, but the claimant declined to give such assurance. Indeed, it is understood that a writ of possession has been issued and is due to be executed on 1 March (that is to say on Wednesday of this week, today being Monday 28 February) unless a stay is granted in the meantime. 
4.	Mr Beaumont further tells me that there have been communications with the judicial office at the House of Lords with a view to securing such expedition as may be available for the hearing of Mrs Sabherwal’s petition. I have had placed before me this morning a letter from Mr Vallance White, the Principal Clerk at the Judicial Office, dated 18 February, addressed to Mr Beaumont himself, in which Mr Vallance White thanks him for his letter of 14 February explaining the circumstances of the above action and he continues: 
“... I confirm that we shall place this before their Lordships before 1 March.” 
5.	It take that to mean not that their Lordships will be considering the petition in a judicial capacity, but rather that there may be a possibility that the hearing of the petition may be expedited. 
6.	Mr Peter Kirby of counsel appears today for the claimant and opposes Mr Beaumont’s application for a stay. Before I turn to the submissions which have been made, I must set out the factual and procedural background to the matter. I do so in brief summary. 
7.	The claimant is the first mortgagee of 5 Moreland Drive (“the property”). The property is registered in the joint names of Mrs Sabherwal’s two sons, who are the first and second defendants in the proceedings. The property was purchased in May 1987. Mrs Sabherwal contributed to the purchase, in that part of the purchase price was paid with the proceeds of sale of another property in which she had an equitable interest. Thereafter, Mrs Sabherwal and her two sons lived in the property together. On 24 July 1990 the sons executed legal charges over the property in favour of the claimant, to secure advances made by the claimant. The sons had a solicitor acting for them, a Mr Radia, but he did not act for Mrs Sabherwal. The solicitor sent to the two sons a standard form of consent for signature by them and by Mrs Sabherwal. The form provided for their agreement that any interest which they might have in the property, including any overriding interest, should be postponed to the legal charges and should take effect subject to them. Mrs Sabherwal signed the form. It is her case that her elder son procured her signature to the form by undue influence.
8.	The solicitor gave evidence before the Recorder that he had never met Mrs Sabherwal and that he gave her no advice about the form of consent before she signed it. The Recorder held that the form of consent should be aside, since Mrs Sabherwal’s signature to it had indeed been procured by the presumed undue influence of her son, of which the claimant had constructive notice in the sense defined by the House of Lords in the O’Brien case ([1994] 1 AC 180), and the transaction was manifestly disadvantageous to Mrs Sabherwal. However, the Recorder went on to hold that Mrs Sabherwal’s (resurrected) equitable interest in the property could not override the interest of the claimant as chargee under section 70(1)(g) of the Land Registration Act 1925, since Mrs Sabherwal’s interest was overreached by virtue of the fact that the charges had been created by two trustees for sale who were able to give a good receipt. In reaching this conclusion, the Recorder followed the House of Lords decision in City of London Building Society v Flegg [1988] AC 54. 
9.	On the appeal to this court, Mr Beaumont (who appeared for Mrs Sabherwal on that occasion, as he does today) sought to distinguish Flegg on a number of grounds. However, Robert Walker LJ (with whom Alliott J agreed) rejected Mr Beaumont’s submissions, declined to distinguish Flegg and concluded that Mrs Sabherwal’s interest had been overreached and would attach to the equity of redemption. As I said earlier, he lifted the stay and refused permission to appeal to the House of Lords. 
10.	In order to justify the grant of a stay, Mrs Sabherwal has to demonstrate exceptional circumstances. The note at paragraph 59/13/13 of the Supreme Court Practice 1999, to be found at page 1078 in Volume 1, contains the following passage: 
“A stay pending appeal to the House of Lords will not be granted save in very exceptional circumstances, such as where execution would destroy the subject matter of the action or deprive the appellant of the means of prosecuting the appeal ...”
11.	Mr Beaumont submits that exceptional circumstances do exist in the instant case, in that if no stay is granted and the writ of possession is executed before their Lordships have the opportunity to consider whether to grant permission to appeal (and if permission be granted to determine the substantive appeal) then Mrs Sabherwal’s remedies under the justice system will have been removed from her, in that the appeal will in substance be pointless and useless. She will be required to give up her home which will then be sold. He stresses that her claim to an equitable interest in the property relates to the property specifically, and not to any other property, and that it is that right which she asserts and which she is entitled to have adjudicated upon. Mr Beaumont also stresses that the further delay which may arise by reason of any stay granted pending the hearing of the petition by their Lordships will be a relatively short one. In the circumstances he submits that Mrs Sabherwal has met the requirements set out in the passage from the White Book which I quoted. 
12.	Mr Kirby has placed before me a witness statement by a Mr Nicholas Rundle, the solicitor for the claimant, in which he sets out the present position in relation to the arrears under the legal charges. The outstanding balance amounts, it appears, to some £439,000 and interest is accruing at a rate in excess of £2,000 per month. Mr Rundle also states that he has spoken to a Mr Peter Barton, a chartered surveyor employed by Hamptons International, who has expressed the opinion that the value of the property as at 15 December 1999 was in the region of £410,000. On that footing, Mr Kirby points out there is a negative equity in the property.
13.	Mr Kirby further submits that the building society could be required by the House of Lords to provide a roof over Mrs Sabherwal’s head, not in this property but in another property. He submits that that is a result which could be achieved, notwithstanding that no stay is granted and that the property is sold prior to the hearing of the petition. 
14.	He further submits that there is material which suggests that the sons themselves are prepared and anxious to provide their mother with a roof over her head. It appears that the two sons are about to apply in the Uxbridge County Court for a stay of execution of the Recorder’s order. Although on the face of it such an application would appear to be a difficult one to sustain, Mr Kirby tells me that the claimant is nevertheless prepared to consent to a stay for a short period, say 30 days, in order to enable the sons to see whether they can accommodate their mother elsewhere.
15.	In all the circumstances, submits Mr Kirby, this is not a case in which the appeal would be rendered pointless or useless were a stay to be refused today. On that basis he opposes the application. 
16.	In my judgment, the circumstances of this case, as I have summarised them, are exceptional. If the writ of possession is executed, Mrs Sabherwal will have to give up her home which will then be sold. It is her case that she has a right to reside in that property, not in some other property. It is her case that that right arises by reason of proprietary estoppel. The promise on which she relies relates to this property and not to some other property. The facts that her sons may be willing and anxious to provide accommodation for her in an alternative property do not meet her case. Nor does it match the right which she seeks to assert. Similarly, the fact that there may be a negative equity in the property and that interest is accruing at a substantial rate, does not seem to me to outweigh the considerations to which I have just referred.
17.	I take the view, in all the circumstances, that it is appropriate in the instant case that the stay should be granted. I take the view that Mrs Sabherwal has demonstrated sufficiently exceptional circumstances to warrant that course being taken, and accordingly I propose to grant the application. 
	(Legal submissions as to costs)
18.	MR JUSTICE JONATHAN PARKER:  I am asked to deal with the costs of the application. In the first place the relevant costs are today’s costs, since, as Mr Beaumont has told me, Mrs Sabherwal has only been an assisted person, legal aid having been granted, since late on Friday. I am prepared to treat her as an assisted person, notwithstanding that formal notice of grant of legal aid has not as yet been served. 
19.	Mr Beaumont seeks the costs on an indemnity basis. In my judgment, there is no basis for such a direction. On the other hand, it seems to me that Mr Beaumont is entitled to his costs as against the claimant, whose opposition to the stay has failed. Given the nature of the order of the costs made by the Court of Appeal, however, the claimant is in a position to set off such costs and if leave is required to enable it to do so, that leave is granted. 
	ORDER: Application for a stay pending the determination of permission to appeal and, if granted, the appeal to the House of Lords. Claimants to pay the Defendant’s costs of this application. Legal aid assessment of the Defendant’s costs.
	(Order not part of approved judgment)