Destine Estates Ltd & Anor v Muir & Anor

A duly executed deed may bind the parties to admissions concerning the transaction it records, including an acknowledgement of indebtedness, even where the underlying payment is disputed. The defence of non est factum requires a radical difference between the document signed and the document the signatory intended to sign. Undue influence requires proof of a relationship of trust and confidence or ascendancy, together with a transaction calling for explanation. Equity may charge secured property with interest from the date when payment is demanded, but does not necessarily impose personal liability for that interest. Judgment was therefore entered for the principal debt, while personal recovery of interest was refused.

Destine Estates Ltd and David Crossley Cooke claimed £225,000 from Janet and David Muir. The claim arose from documents recording a loan said to have funded the purchase of Chowle Farmhouse and charging the property as security.

The Muirs alleged that the documents had been forged or invalidly executed, and relied alternatively on misrepresentation, undue influence and non est factum. They also disputed receiving or continuing to owe the money and resisted the claim for interest. The central issues were the validity and effect of the documents, the existence and repayment of the loan, and the availability of interest.

1. Validity of the documents. The Disputed Loan Deed and Disputed Charge Deed had been duly executed. The evidence, including the handwriting expert’s findings and the surrounding circumstances, supported that conclusion.
2. Misrepresentation and non est factum. The alleged misrepresentations were not proved. The Muirs had not shown that they misunderstood the documents or that there was a radical difference between what they signed and what they intended to sign. The principles in Saunders v Anglia BS [1971] AC 1004 therefore did not assist them.
3. Undue influence. Applying the approach in Royal Bank of Scotland plc v Etridge (No 2) [2002] 2 AC 798, the Muirs had not established the necessary relationship of trust and confidence or ascendancy. In any event, the transaction was explicable as reflecting an existing indebtedness.
4. Effect of the loan deed. The deed did more than acknowledge receipt. Read in context, it recorded the parties’ agreement that Mr Crossley Cooke had agreed to lend £225,000 for the purchase and that the sum was repayable. The Muirs were accordingly precluded from disputing that indebtedness. The receipt-clause authorities, including Greer v Kettle [1938] AC 156 and Prime Sight Ltd v Lavarello [2013] UKPC 22, were considered in that context.
5. Underlying loan. Alternatively, the evidence established that Mr Crossley Cooke had in fact funded a £225,000 loan. The subsequent transfer of £200,000 through the accountants’ account did not repay the Muirs’ debt, particularly since they were unaware of it and had not authorised it.
6. Interest. The court accepted that the property should stand charged with interest at 3% above base rate from April 2011, when payment was demanded. It was not equitable to award interest from execution of the documents, and compound interest was unjustified. The claimants had not, however, pleaded or established a basis for personal recovery of that interest.
7. Disposition. Judgment was given for the claimants for £225,000. No personal judgment for interest was entered.