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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> National Westminster Bank Plc v Brunt [2001] EWCA Civ 1063 (21 June 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1063.html Cite as: [2001] EWCA Civ 1063

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(His Honour Judge Behrens)

		Royal Courts of Justice Strand London WC2 Thursday, 21st June 2001

Thursday, 21st June 2001

1. LORD JUSTICE PETER GIBSON: I will ask Maurice Kay LJ to give the first judgment.
2. LORD JUSTICE MAURICE KAY: This is an application for permission to appeal against a judgment and order of His Honour Judge Behrens, sitting as a judge of the Chancery Division in Newcastle-upon-Tyne, on 2nd May this year. The proceedings before him were in the form of mortgage proceedings, whereby the National Westminster Bank, as claimant, sought possession of property known as 88 Cleadon Close, Cleadon in Sunderland. That property is the home of Mr and Mrs Brunt, who were the defendants, although the legal title to the property was vested in Mr Brunt alone.
3. The circumstances which gave rise to the relationship between the National Westminster Bank and Mr Brunt were that Mr Brunt's son-in-law, Mr Viglianisi, ran a company known as the Sicilian Pasta Company Ltd, which in 1989 was in financial difficulties. Amongst its other problems were liabilities to Customs and Excise in relation to VAT. On 24th February 1989 Mr Brunt attended at the Peterlee branch of the National Westminster Bank. He was there to offer to assist his son-in-law and the company. The Peterlee branch were the bankers to the company. On that occasion Mr Brunt signed a document purporting to be a mortgage of the property to which I have referred. The bank advanced two sums, one of £10,000 and, soon after, one of £5,000 to enable the immediate liabilities to the Customs and Excise to be discharged. In the event the document signed by Mr Brunt at the bank was not formally correct. It could not stand as a properly executed legal mortgage, not least because at the time when Mr Brunt signed it it did not contain the details of the property purported to be mortgaged. When there was subsequently default and these proceedings were commenced, one of the points properly taken on behalf of Mr Brunt at the trial before the learned judge was that there was not a legal mortgage. That submission found favour with the learned judge. However, he went on to find that the circumstances that had arisen on 24th February 1989 were such as to give rise to an equitable mortgage enforceable as result of clear part performance on the part of the bank in the form of the loans. There was unsurprisingly a conflict of oral evidence about what had taken place some 12 years before, but the learned judge placed substantial reliance on the notes made by the bank manager at the time. By "the time" I do not mean in the course of the meeting with Mr Brunt but very soon afterwards. Those notes record:

"Mr Brunt asked if it was possible to arrange to borrow money in his own name against deeds of his hse on which there was a substantial equity as he wanted to help his daughter and his grandchildren as well as his son-in-law and it was in all their interests that the company continued trading as this was their source of income."

4. A little later the notes state:

"I told Mr B that the only possible way I could see of assisting was to lend him the money personally against a second mortgage on his house. I was asked to lend £10,000 to Mr B as the VAT authorities had said that they would accept the payment at £15,000 at this stage. Mr B was told he would have to open an account before we could lend him the money and this he requested to do.

I also told Mr B that we would need the mtge over his hse 88 Cleadon Meadows Cleadon Village even though this is expected to be a short term borrowing. I explained the purport of the form to Mr B before he signed the mtge form and he asked no questions and I agreed to assist Mr B with a £10,000 o/d facility. There will be £100 arr fee for this plus the security fees and int will be at 5% above BR. PLEASE MARK LIMIT AT £10,000 FOR ONE MONTH."

5. It seems that the reason why it was contemplated that this arrangement might only be short-term is that there was an indication that the son-in-law would soon be in receipt of substantial monies from Sicily as a result of the sale of the property there. However, in the event that money never materialised.
6. In the course of his judgment at pages 24 and 25 of the transcript the learned judge made his finding that he had come to the provisional view at least that the deed was not properly executed. He went on:

"[Counsel], however, submitted that it did not really matter because, as this was a case where, before the abolition of Section 40 of the Law of Property Act, this was a clear case of part performance pursuant to an oral agreement to grant a loan.

In my view that submission is completely unanswerable. In my view, this is a clear case, as was made clear from the file note of the 24th February, where Mr. Brunt orally agreed to take a mortgage of his property as security for the loan of £10,000, subsequently increased to £15,000. That was an oral agreement. Insofar as the document he executed was not a valid mortgage, then in my view this agreement to create a mortgage was specifically enforceable and there were sufficient acts of part performance which were clearly referable to that agreement and they included the two loans They included the obtaining of a form of consent. They included the instruction of Mr. Brown in the manner which [counsel] indicated. I am quite satisfied, notwithstanding the submissions of Mr Vane, that this is a clear case where there is effectively an equitable charge enforceable by specific performance and I am equally satisfied in those circumstances that the bank are entitled to an order for sale as against Mr. Brunt."

7. The notice of appeal against that judgment raised essentially two points. One was a pleading point to the effect that the argument about an equitable mortgage had not been pleaded; but that was an oversight and has not been pursued before us. Quite clearly the argument was foreshadowed in the amended reply to the amended defence and counterclaim, paragraph 15.
8. The point which has been pursued before us is whether or not the learned judge was entitled to find on the evidence that there had been the agreement to which I have just referred. Mr Vane (on behalf of the applicant) accepts that for him to have any prospect of success on appeal he would have to establish that either the evidence did not support the finding or that the judge was perverse in finding that it did.
9. In support of his submissions Mr Vane adopted what seems to me to be an excessively schematic approach to the reality of the evidence of what occurred on the 24th February 1989. Having decided to concentrate on what was disclosed by the file note, there were ample grounds upon which the judge could find an agreement to create a mortgage. What Mr Brunt was doing was signing a document which, if properly executed, would have been a legal mortgage. It is apparent from the note that the property that was the subject of the negotiation and discussion was his home at 88 Cleadon Meadows. It is obvious that the bank would not have advanced first of all £10,000 and soon afterwards £5,000 if it were not for the signature on that document and the essentials of what that document was meant to say.
10. In all these circumstances it seems to me that there was clear evidence upon which the judge was entitled to find that there was an agreement to mortgage the property by way of second mortgage in return for the advances of firstly £10,000 and then £5,000. In those circumstances in my judgment there is no real prospect of success in the proposed appeal, nor is there any other compelling reason as to why it should proceed.
11. LORD JUSTICE PETER GIBSON: I agree.
Order: Application dismissed.