Harris v Natwest

A bank holding surplus proceeds from the sale of charged property is not required to adjudicate between competing claimants to the money, even where one party’s position appears stronger. The parties claiming entitlement must resolve their dispute, after which the bank may distribute the funds in accordance with the agreed proportions. Pending resolution, retention of the surplus may be justified and may be required. An appellate court need not address limitation where the underlying claim is unsustainable.

Harris v Natwest concerned surplus proceeds from the sale of land charged to a bank as security for partnership and personal liabilities. The appellant claimed that the bank had delayed distribution unlawfully, deducted legal fees without entitlement and caused consequential financial loss. The Plymouth County Court dismissed the claim and ordered substantial costs. The appellant sought permission to appeal, contending that the bank should have determined his proper share earlier despite an unresolved dispute with the administrators of his late mother’s estate. The central issue was whether the bank was obliged to resolve that dispute and distribute the surplus before the parties had agreed the appropriate proportions.

1. Application refused. Lord Justice May refused permission to appeal against the order of HHJ Tyzack QC.
2. The principal complaint concerned the bank’s retention of surplus sale proceeds from 1995 until the parties’ respective entitlements had been resolved. The appellant argued that the bank should have concluded that his position was correct and paid him his proper share earlier.
3. The court held that this was a misunderstanding of the bank’s position. Where there was an ongoing dispute between the appellant and the co-administrator of his mother’s estate, it was not for the bank to resolve that dispute, even if the answer appeared obvious. The parties themselves had to resolve the dispute, after which the bank could distribute the proceeds in accordance with the agreed proportions. The bank’s approach was therefore justified.
4. The court also accepted that there was no reasonable prospect of disturbing the finding that lost mortgage documents had not caused the alleged delay. The trial judge was entitled to find that the bank could, and perhaps was obliged to, delay payment until the dispute had been resolved and the proper distribution ascertained. The challenge to the deduction of legal fees was likewise unsustainable.
5. The court declined to determine limitation. Since the appellant could not establish his basic claims, the limitation issue did not arise. The order was therefore that the application for permission to appeal be refused.

1. Court of Appeal (Civil Division): On 15 January 2008, permission to appeal was refused: [2008] EWCA Civ 63.
2. Plymouth County Court: On 26 July 2007, HHJ Tyzack QC dismissed the claim and ordered the appellant to pay costs summarily assessed at £34,000.