Barclays Bank v Rowley & Anor

Section 50 of the Law of Property Act 1925 permits a mortgagee exercising a power of sale to obtain an order freeing land from another encumbrance after paying an appropriate sum into court. The order may be made without notice where the court considers that appropriate. It transfers the encumbrance to the money in court but does not determine the parties’ underlying accounting rights. A dispute about the amount for which the mortgagee must account should be pursued through an account, rather than by setting aside the statutory order. Once the order has been acted upon and the property conveyed to a third party, reopening it will not affect the third party’s title.

Barclays Bank sought permission to appeal from an order made by His Honour Judge Norris QC in the High Court, Chancery Division, on 4 May 2004. The dispute arose from mortgagee possession proceedings and the sale of 24 Eggington Road. Barclays applied under section 50 of the Law of Property Act 1925 to pay the disputed balance of sale proceeds into court and convey the property free from charges held by Halifax plc. The order was made without prior service on the Rowleys.

The Rowleys applied to set aside that order, alleging procedural unfairness, an incorrect account, and lack of authority to sell. Judge Norris set aside an earlier strike-out order but dismissed the substantive application and refused permission to appeal. The central issue was whether the statutory order should be set aside or whether the underlying disputes had to be pursued separately.

Application dismissed. Lord Justice Chadwick found no prospect that the Court of Appeal would interfere with Judge Norris’s decision to deal with the Rowleys’ application on a show-cause basis and to dismiss it without requiring submissions from Barclays or Halifax.

1. Section 50(2) of the Law of Property Act 1925 expressly permits the court, after payment into court of a sum sufficient to meet an encumbrance, to declare the land free from that encumbrance and make consequential conveyancing or vesting orders. The provision also permits the court to act without notice where it considers that appropriate. Its purpose is to enable a mortgagee exercising a power of sale to make good title despite a dispute with another mortgagee about the amount payable. [4], [9], [16]
2. An order under section 50 does not settle the account between the Rowleys and Barclays. It does not determine whether Barclays paid sufficient funds into court, nor does it affect the Rowleys’ rights against Halifax. It transfers Halifax’s security from the property to the money paid into court, supported by Barclays’ undertaking to make up any shortfall within the stated limits. [6]-[8], [14]-[15]
3. The proper remedy for a dispute about the amount Barclays should account for from the proceeds of sale of the two properties was an account under section 105 of the Law of Property Act 1925. Any dispute with Halifax could be resolved through the machinery created by the section 50 order. The application to set aside the order was therefore misconceived and could not succeed. [19]
4. There was an additional reason not to reopen the order: it had plainly been acted upon, the property had been sold and conveyed, and the charges had been removed from the Land Registry. The third-party purchaser had obtained good title, and setting aside the order would not affect that title. [19]

The application was dismissed. There was no order as to costs. [20]

• Court of Appeal (Civil Division): On 1 December 2004, the application for permission to appeal was dismissed in [2004] EWCA Civ 1764.
• High Court, Chancery Division: His Honour Judge Norris QC, on 4 May 2004, set aside an earlier strike-out order but dismissed the Rowleys’ application to set aside the section 50 order and refused permission to appeal.
• Earlier Court of Appeal proceedings: Permission to appeal from the original mortgage possession order had previously been refused in [2001] EWCA Civ 2040.