Thames Valley Housing Association Ltd & Ors v Elegant Homes (Guernsey) Ltd & Ors

A solicitor’s conveyancing undertaking to redeem or discharge a charge should generally be enforced promptly where the solicitor can procure compliance and no genuine dispute prevents performance. A purchaser is entitled to rely on such an undertaking and should not ordinarily be required to await resolution of a dispute between the solicitor and the mortgagee. Uncertainty about the sum required for discharge may justify further inquiry in an exceptional case, particularly where the demand is unreasonable or disproportionate, but no such inquiry is required where the evidence establishes no serious issue as to the mortgagee’s entitlement and the demand is reasonable.

The first two claimants purchased nine development plots from Elegant Homes (Guernsey) Ltd. Their solicitors, Willmetts Solicitors, gave conveyancing undertakings to redeem or procure the discharge of the Bank of Scotland’s charge over the plots. The purchase price was paid, but the charge was not discharged and the proceeds were not remitted to the bank.

The claimants applied for summary judgment to enforce the undertakings. Willmetts accepted that the undertakings had been given and broken, but argued that enforcement should be postponed pending an inquiry into whether the bank was entitled to demand approximately £1.35 million to release the plots. The central issue was whether that proposed inquiry disclosed a serious issue sufficient to delay enforcement.

1. Application granted. The undertakings had been given and broken. Willmetts were ordered to comply with them and procure the discharge of the nine plots from the Bank of Scotland’s charge.
2. The bank’s facility and security documents secured all monies due from Elegant and contained no provision requiring the bank to release individual plots on payment of a proportionate part of the debt. The internal reference to bullet repayments described commercial expectations and did not evidence a binding agreement between the bank and Elegant.
3. There was no sufficient evidence of a collateral agreement varying the documented security arrangements. Any agreement concerning the release of the charge would also engage the writing requirements of the Law of Property (Miscellaneous Provisions) Act 1989, and no relevant signed document was shown.
4. There was therefore no serious issue requiring an inquiry into the bank’s strict entitlement. The amount demanded was reasonable on the evidence and had not been shown to exceed the value of the plots. The proposed methodologies for calculating a lesser sum were unrelated to the transaction as documented.
5. The court accepted that enforcement of solicitors’ undertakings is essentially compensatory, though it also has a disciplinary function, as recognised in Udall v Capri Lighting Limited (in liquidation) [1988] 1 QB 907. The purchaser’s legitimate reliance on conveyancing undertakings weighed strongly against delay. Solicitors should not ordinarily postpone compliance while resolving a dispute with the mortgagee, save perhaps in exceptional circumstances.
6. The observations concerning flexibility and proportionality in L Morgan & Co v Jenkins O’Dowd & Barth [2008] EWHC 3411 (Ch) and Angel Solicitors v Jenkins O’Dowd & Barth [2009] 1 WLR 1220 were obiter and did not prevent enforcement. The approach in Clarke v Lucas LLP [2009] EWHC 1952 (Ch), including consideration of certainty and proportionality, supported enforcement on these facts.