National Westminster Bank Plc v Brunt

An invalidly executed mortgage document may still support an equitable mortgage where the evidence establishes an agreement to mortgage and clear part performance referable to that agreement. On an application for permission to appeal against a factual finding, permission should be refused where the evidence supports the finding, there is no real prospect of success, and no other compelling reason justifies an appeal.

National Westminster Bank brought mortgage proceedings seeking possession of the Brunts’ home. The document signed by Mr Brunt was not a valid legal mortgage, but His Honour Judge Behrens found that the parties had agreed to create a second mortgage and that the bank’s advances constituted clear part performance. He held that an equitable charge was enforceable by specific performance and made an order for sale.

Mr Brunt sought permission to appeal. A pleading objection was abandoned. The remaining issue was whether the evidence supported the judge’s finding of an agreement to mortgage.

The Court of Appeal, giving judgment through Maurice Kay LJ with which Peter Gibson LJ agreed, dismissed the application for permission to appeal.

1. Nature of the transaction. The document signed by Mr Brunt could not operate as a properly executed legal mortgage. The lower judge nevertheless found an oral agreement to mortgage the property as security for advances of £10,000 and £5,000, supported by clear part performance. That finding gave rise to an equitable charge enforceable by specific performance and an order for sale.
2. Appellate challenge. The applicant accepted that he had to show either that the evidence did not support the finding or that the judge had been perverse. The Court rejected an excessively schematic reading of the evidence. The bank manager’s contemporaneous note recorded the proposed borrowing against the property, the intended second mortgage, and the explanation of the mortgage form. Mr Brunt signed the form, and the bank advanced the money. Those matters provided clear evidence upon which the judge was entitled to find an agreement to mortgage.
3. Disposition. The proposed appeal had no real prospect of success, and there was no other compelling reason for it to proceed. The application was dismissed.

1. Court of Appeal (Civil Division) — On 21 June 2001, the court dismissed the application for permission to appeal: [2001] EWCA Civ 1063.
2. Chancery Division — His Honour Judge Behrens, sitting in Newcastle-upon-Tyne, gave judgment and made an order for sale on 2 May 2001.