Edwards v Edwards & Anor

An ineffective legal charge may nevertheless create an equitable charge over the chargor’s beneficial interest in land and may sever a beneficial joint tenancy. An equitable chargee has standing to apply under section 14 of the Trusts of Land and Appointment of Trustees Act 1996. The statutory factors in section 15 are inclusive, so the court must consider all relevant circumstances. A creditor’s interest in recovering overdue debt is a powerful consideration, although it must be balanced against the interests of an innocent co-owner, the purpose for which the property is held, the welfare of minors and the availability of alternative accommodation. Where the debt continues to increase, no realistic alternative means of repayment exists and suitable accommodation is available, possession and sale may be ordered.

Mr Edwards sought declarations that he was not liable for repayment of a mortgage loan and was not bound by a charge over Langley Court, because his signature had been forged by his wife. The bank accepted that he had not signed the charge and that the declaratory relief against it should be granted. It pursued an alternative Part 20 claim for possession and sale, relying on an equitable charge over Mrs Edwards’s beneficial half-share and section 14 of the Trusts of Land and Appointment of Trustees Act 1996.

The monetary and fraud claims against Mrs Edwards were not determined because she had not received sufficient notice of the trial. The central issue was whether the court should exercise its section 14 discretion to order possession and sale of Langley Court.

1. Equitable charge and standing. The bank had an equitable charge over Mrs Edwards’s beneficial half-share in Langley Court. The charge was effective notwithstanding that Mr Edwards’s signature was forged. Following First National Bank plc v Achampong [2003] EWCA Civ. 487, the instrument was capable of creating an equitable charge over the signing co-owner’s beneficial interest and of severing any beneficial joint tenancy. The bank therefore had standing to apply under section 14 of the Trusts of Land and Appointment of Trustees Act 1996.
2. Section 14 discretion. Section 15 sets out matters to which the court must have regard, but the list is inclusive. The court must consider all relevant circumstances. The bank, as equitable chargee, was a secured creditor and a beneficiary of the trust for these purposes.
3. Balancing the factors. The court treated the creditor’s overdue debt, the continuing increase in the debt and the absence of any realistic alternative means of repayment as powerful considerations favouring sale. The original purpose of the property as a matrimonial home carried limited weight because Mrs Edwards had alienated her interest by charging it and the parties were estranged. The residence of a non-minor grandchild was irrelevant under section 15(1)(c). Mr Edwards’s age justified care as to the form and timing of relief, but did not justify refusing sale; suitable alternative accommodation was available and affordable.
4. Order. Possession and sale of Langley Court were ordered. The order was to take effect after four months, on 12 July 2010, allowing Mr Edwards time to sell the property and obtain alternative accommodation. The claim against Mrs Edwards for monetary relief was left to be restored for a future hearing.

The judgment records earlier procedural orders, including judgment against Mrs Edwards for the mortgage debt, declarations concerning the parties’ beneficial interests, charging orders over other properties, and an order for sale of the nightclub property. Appeals and applications concerning those orders were dismissed or struck out. The present judgment was a first-instance determination of the remaining issues concerning Langley Court.