Ersin Mustafa & Anor. v Asad Shamim Chaudhary

An interim mandatory injunction removing a registered charge should be approached by applying the stringent test for mandatory injunctions, rather than the more analogous principles concerning unilateral notices on the Land Register. The applicant must show a high degree of assurance of a real prospect of success, particularly where interim relief would effectively determine the dispute. The court must also consider whether damages are an adequate remedy, the prejudice to the secured party, the risk of dissipation, and the adequacy of any cross-undertaking. Where the underlying dispute is already before another tribunal, and the proposed order would materially expose or prejudice the security, relief may be refused.

The claimants, husband and wife, applied for an interim order requiring removal of the defendant’s second charge over an investment property. They intended to refinance the property and offered to place the alleged secured sum into a joint solicitors’ account pending determination of proceedings in the First-tier Property Tribunal (Land Registration).

The Tribunal proceedings concerned whether documents discharging the charges had been forged and whether the defendant remained entitled to the security. The defendant opposed the application as an abuse of process and on the basis that the proposed order would leave him inadequately secured. The central issues were whether the High Court had jurisdiction to grant the relief, what interim test applied, and whether the evidence justified removing the charge before the Tribunal determined the underlying dispute.

1. Application dismissed. The claimants were ordered to pay the defendant’s costs, subject to any further submissions on costs.
2. The court considered that there might be jurisdiction to grant an injunction requiring removal of an actual charge, but held that authorities concerning unilateral notices were not analogous. An actual charge protects a proprietary security interest, creating a qualitative distinction from a unilateral notice. The application therefore had to satisfy the more stringent test applicable to mandatory injunctions.
3. That test requires a high degree of assurance of a real prospect of success, especially where granting interim relief would effectively determine the outcome. The joint handwriting report, which provided strong evidence that signatures on the discharge documents had been forged, did not provide the necessary assurance for the claimants’ case.
4. The balance of interim justice also favoured refusal. Removing the charge would leave the defendant an unsecured creditor and might prevent recovery of costs incurred in defending his security. The claimants’ history of selling other properties without reference to the charges created a serious risk of dissipation and of making themselves judgment-proof.
5. The claimants did not establish that damages would be an inadequate remedy. The property was an investment property rather than their home, and there was insufficient evidence of imminent enforcement, current value, financial resources, or support for the proposed cross-undertaking. The defendant, by contrast, risked losing security for the whole property. The existing Tribunal proceedings also meant that the High Court application substantially sought to obtain interim relief concerning the same issue before that dispute had been determined.

First-instance decision. The judgment states that related substantive proceedings were ongoing in the First-tier Property Tribunal (Land Registration).