National Westminster Bank Plc v Hunter & Anor

Section 91(2) of the Law of Property Act 1925 gives the court jurisdiction to direct a sale at the request of a person interested in the equity of redemption. The jurisdiction should not ordinarily be used to displace a mortgagee’s valid exercise of its power of sale where the mortgagee wishes to sell, has taken effective steps to do so, and contractual rights have been acquired by a third-party purchaser.

The court may compare competing proposals by reference to price, deposit, timing, payment terms and reliable funding. Under the Torts (Interference with Goods) Act 1977, cattle are goods, and ownership is distinct from possession and control.

National Westminster Bank held legal charges over agricultural land owned by Robert Hunter. The bank had obtained possession orders and appointed receivers, who contracted to sell the charged property at auction to a company associated with a third party.

Mr Hunter sought an order under section 91(2) of the Law of Property Act 1925 permitting him to complete earlier contracts to sell the land to a company controlled by his wife. The proposed sale price was higher, but funding was not satisfactorily established and completion would have conflicted with the auction contract.

The bank also sought orders concerning cattle left on the land and Mr Hunter’s continuing interference with possession.

1. Mr Hunter remained a person interested in the right of redemption. His contracts to sell the land did not remove his equity of redemption. The court therefore had jurisdiction under section 91(2) of the Law of Property Act 1925, notwithstanding the bank’s dissent.

2. The jurisdiction was discretionary and should not be exercised to upset the existing arrangements. The bank wished to sell, had taken active steps to sell, and had obtained an effective auction contract. The third-party purchaser had acquired contractual rights and had not been given notice of the application. The court could not undo that contract or make an order which would place Mr Hunter in breach of it.

3. The auction sale was plainly the better course. Although the proposed alternative price was marginally higher, the auction contract provided a substantial deposit, earlier completion and payment of the balance on completion. The proposed purchaser’s funding was not satisfactorily demonstrated. The approach was consistent with Cheltenham and Gloucester Plc v Krausz [1997] 1 WLR 1558 and distinguished the circumstances considered in Palk v Mortgage Services Funding Plc [1993] Ch 330.

4. The application under section 91(2) was dismissed.

5. For the purposes of sections 12 to 14 of the Torts (Interference with Goods) Act 1977, cattle were chattels personal and therefore goods. Ownership did not determine possession or control. Once the cattle were under the bank’s possession and the receivers’ control, the statutory conditions for authorising their sale were met. It was unnecessary to require a further notice before making the order.

6. The bank’s application was granted. Mr Hunter was restrained from entering the property or bringing livestock or other chattels onto it, was required to deliver the cattle passports and related documents, and the bank was authorised to arrange the sale of the cattle. Costs of both applications were ordered against Mr Hunter on the standard basis, subject to detailed assessment. Permission to appeal was refused, but the time for filing an appellant’s notice was abridged to 14 days.

The judgment was a first-instance decision. It recorded that the Aylesbury County Court had made possession and payment orders on 10 August 2010 and a further order concerning removal of cattle on 31 August 2011. The High Court dismissed Mr Hunter’s section 91(2) application and granted the bank’s consequential application.