Home Information Cases Bank of Scotland Plc v Greville Development Co (Midlands) Ltd & 15 Ors (2014)

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Bank of Scotland Plc v Greville Development Co (Midlands) Ltd & 15 Ors (2014)

Summary

A bank established on the civil standard of proof that its customer, an individual who controlled various companies, had adduced untruthful evidence and had forged documents relating to a legal charge over property. The court also considered what kind of error might fall within a "mistake of a clerical or like nature" in the Land Registration Rules 2003 r.130(2)(a).

Facts

The claimant bank (B) sought declarations concerning a legal charge over property owned by the first and/or second defendant companies (G and C). It also claimed monies allegedly owing by G and C, and damages from the third defendant (X), who controlled G and C.

C's sole asset was a plot of land which was registered under two title numbers, 818 and 916. X wanted to develop the property. Acting through G, he acquired it in May 2003 by purchasing C through a secured loan from B. A deed was executed whereby the loan was secured by a first legal charge against title 818. B, which believed that it had a first legal charge over both titles, applied to register the deed as such. When the Land Registry queried the registration, B's solicitor said the omission of the 916 title from the deed was a mistake. The Land Registry altered the deed under the Land Registration Rules 2003 r.130(2)(a) so that it referred to both titles. X disputed the alteration, asserting that only title 818 was charged, that B's solicitor was dishonest, that the mistake came within r.130(2)(b) and that the deed was void under the rule in Pigot's Case [1558-1774] All E.R. Rep. 50. In 2008, the Land Registry removed the charges from both titles after receiving notification of discharge, purportedly from B. B knew nothing about it until 2012. By that time, G had built homes on the property, long leases of which had been sold to X and to the fourth to eighth defendants, friends and relatives of X. Those leases had been funded by the 9th to 16th defendants (L), who were third party lenders. It was common ground that the leases were invalid because they had been signed by C after C had been de-registered. B's case was that X had forged the forms. X's case was that they had been signed by B's agent during the refinancing agreements with L. The court was required to determine the disputes between the parties, including an allegation by X that the claim had been settled by a compromise agreement.

Held

(1) B had established that it would have been entitled to seek rectification of the deed between its execution and the date of the Land Registry's alteration. The rule in Pigot's Case only applied when an alteration was material. In the instant case, the alteration had been immaterial because it merely gave effect to what could otherwise have been obtained by rectification. The rule in Pigot's Case did not apply, Raiffeisen Zentralbank Osterreich AG v Crossseas Shipping Ltd [2000] 1 W.L.R. 1135 applied, Pigot's Case considered (paras 27-28, 71). (2) X's case that the deed covered only title 818 made no practical sense given the layout of the buildings on the site at the time. The bank's valuation had been of the whole complex, which was a single address. The existence of the two titles had not been drawn to B's attention; it was unreal to suggest that the valuation report was limited to the 818 title. A fixed charge could not take effect against particular buildings, only against a defined estate. As far as B was concerned, it was being offered a single site as security: letters dealing with the minutiae of the transaction plainly reflected a mutual understanding that there would be a fixed legal charge over both titles. X's evidence was not only wrong, but untrue. B had satisfied the test in H (Minors) (Sexual Abuse: Standard of Proof), Re [1996] A.C. 563 for demonstrating that correspondence which X had put in evidence was forged, H (Minors) applied (paras 21, 29-36, 40, 43, 47-48, 59, 65-70). (3) What constituted a clerical mistake depended to some extent on context. Rule 130(2)(a) was confined to clerical errors in the narrowest sense; errors in documents, such as spellings, transposition of letters, names or numbers, and some omissions including "when...[a] solicitor ... omits something that he intended to insert...", Marley v Rawlings [2014] UKSC 2, [2014] 2 W.L.R. 213 applied. Other errors would fall within r.130(2)(b). There was a clear distinction between r.130 and the Administration of Justice Act 1982 s.20. On the evidence, it was to be inferred that B's solicitor's mistake was an accidental drafting error which fell within s.130(2)(a) and Marley. X's allegation of dishonesty was without substance (paras 75-78). (4) B had proved that the letter purportedly sent to the Land Registry authorising the removal of the charges from both titles was a forgery. It was safe to infer that the document had been fabricated by X (paras 82, 89-90, 100-101, 104-105, 111). (5) The signatures on the leases between G and X and the other defendants were forgeries carried out by X (paras 113-122). (6) The dispute had not been settled (paras 123-131). (7) Declarations would be made that the deed had been validly altered by the Land Registry, and that the discharge of the charges had been procured by a forged instrument. Judgment would not be entered against X until a second trial had taken place to determine loss. A copy of the instant judgment would be provided to the Director of Public Prosecutions for his consideration of whether criminal proceedings against X were appropriate (paras 133-134).

Declaration granted in favour of claimant

Chancery Division
Judge Pelling QC
Judgment date
31 January 2014
References

LTL 10/2/2014 : [2014] EWHC 128 (Ch)

Practice areas