Santander UK Plc v Fletcher & Anor, Court of Appeal - Chancery Division, October 23, 2018, [2018] EWHC 2778 (Ch)

Resolution Date:October 23, 2018
Issuing Organization:Chancery Division
Actores:Santander UK Plc v Fletcher & Anor

Case No: 7BS0086C

Neutral Citation Number: [2018] EWHC 2778 (Ch)




Order of Mr Recorder Gardner QC dated 6th November 2017

Bristol Civil Justice Centre

2 Redcliff Street

Bristol BS1 6GR

Date: 23/10/2018

Before :


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Between :

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Daniel Gatty (instructed by Eversheds Sutherland) for the Respondent

Guy Adams (instructed by Fursdon Knapper) for the Appellant

Hearing dates: 25th September 2018

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JudgmentMr Justice Birss :

  1. Ashley Fletcher was convicted of fraud. His victim was his mother, the appellant, Mrs Paula Fletcher. As a result of the fraud Mrs Fletcher's home was mortgaged to the bank (Santander, the respondent) for a much larger loan than Ashley had led his mother to believe. He represented to his mother than the loan was for a sum in the region of £32,000 whereas in fact it was for about £120,000. The loan has not been repaid. The debt stood at about £160,000 in May 2017 and has continued to increase. The bank brought a mortgage possession claim. At trial the judge accepted Mrs Fletcher's case that the mortgage should be set aside for undue influence of which the bank had sufficient notice to be on inquiry (see RBS v Etridge [2002] 2 AC 773). He held that provided she paid back to the bank the sum she had thought the mortgage was for (i.e. £31,250), the bank could not enforce the mortgage against her. However she still stands to lose her home as a result of a further point which I shall explain. The judge Mr Recorder Gardner QC felt he was constrained to decide the point against Mrs Fletcher. Nevertheless he gave permission to appeal because he was troubled by it.

  2. On appeal Mrs Fletcher changed counsel. Mr Adams now argues the case on her behalf. He abandoned the point on which the judge gave permission to appeal, recognising that the judge was right to decide the particular point he did decide in the way he did. However Mr Adams argued that the ultimate conclusion was wrong for a different reason. That argument was first raised in Mr Adams skeleton argument served (late) less than a week before the appeal hearing. When the appeal was called on the first question to decide was what to do about the new argument. Mr Gatty for the respondent argued that it was a new point, not taken before the judge, was raised far too late and that Mrs Fletcher needed permission to amend the grounds of appeal to argue it, which should be refused. Mr Adams argued that the new point was simply a different reason why the way the judge decided the case was wrong. The original grounds of appeal already challenged that way of deciding the case and so the new argument was within the grounds of appeal. He denied that it raised new facts and contended that even if it did need permission, that permission should be given in the circumstances of this case. In a judgment given during the hearing I decided that an amendment to the grounds of appeal was required but that in the circumstances the best approach in the interests of justice was to allow the amendment and hear the new argument, on the footing that if the facts and evidence were sufficient then assuming the new argument was well founded it would succeed but if not, or if the evidence was not sufficient to support it, then it would fail. The case was not one to be remitted.

  3. Mrs Fletcher's problem arises from the fact that before she signed the mortgage application, she made her son a joint owner of her home. In the relevant standard form (a TR1) which conveyed the house from Mrs Fletcher's sole name into the joint names of Mrs Fletcher and her son, Mrs Fletcher ticked the first box in section 10. That section is entitled ``Declaration of trust'' and by ticking the first box the relevant words were ``The transferee is more than one person and they are to hold the property on trust for themselves as joint tenants''. There is not (now) any dispute that as an express declaration of trust this would take effect in such a way that in the relevant circumstances of this case (which involve a severance of the joint tenancy) Ashley Fletcher and Mrs Fletcher each hold 50% of the beneficial title. Accordingly the bank argued that although the mortgage was not enforceable against Mrs Fletcher, subject to her paying £31,250, the bank separately had an equitable charge over Ashley Fletcher's beneficial interest in the house which arises even if the legal charge under the mortgage is ineffective. The judge held that the declaration of trust was conclusive (citing Stack v Dowden [2007] AC 432, Goodman v Gallant [1986] Fam 106 and Pankhania v Chandegra [2012] EWCA Civ 1438). Thus Ashley did indeed have a 50% beneficial interest. There was no dispute that if Ashley did have a beneficial interest then the bank had an equitable charge over it. Accordingly the house has to be sold and half the proceeds used to pay off Ashley's indebtedness to the bank. That is why Mrs Fletcher stands to lose her home.

  4. The argument on which the judge gave permission to appeal was whether the declaration of trust would convey to a layman that the property would be held in equal shares since it does not use those words (unlike the second box in section 10). If it was right that the conveyance could be found to be insufficiently clear to...

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