This is an appeal by the claimant, First National Bank plc (the bank), brought with the leave of the single Lord Justice from an order of Judge Cotran in the Shoreditch County Court dated 30 August 2002. By that order, the judge dismissed the bank’s claim for possession of 19 Knightland Road, London E5 (the property). He entered judgment for the second defendant, Elizabeth Achampong, by declaring that her execution of a legal charge dated 1st August 1989 (the legal charge) had been procured by the undue influence of the first defendant, her husband. He ordered that the legal charge be set aside and that the charges register of the property be rectified by cancelling the entry made in respect of it.

The hearing which led to the judge’s order was the culmination of extraordinarily long drawn-out proceedings brought by the bank against the Achampongs and the third and fourth defendants, Mr Anthony Owusu-Ansah and his wife Lucy. All four defendants come from Ghana. Mrs Achampong has lived in this country for many years. Her husband, the first defendant, left her to return to Ghana in September 1989 (ie shortly after the legal charge was entered into) and she last had contact with him in 1994. Mr Owusu-Ansah is Mrs Achampong’s cousin. He and his wife, the fourth defendant, have never been resident in this country. They have always lived in Ghana.

The proceedings have their origin in events which occurred in the late spring and summer of 1989 culminating in the execution of the legal charge whereby the Achampongs charged the property by way of mortgage to the bank as security for a loan by the bank of £51,500. The Achampongs were joint proprietors of the property in which they lived with their children. The purpose of the transaction was to raise money for Mr Owusu-Ansah’s business in Ghana. The loan proceeds were paid to him immediately following completion.

Mr Owusu-Ansah had come to this country in 1989 on a visit from Ghana. He stayed with the Achampongs at the property. His wife, the fourth defendant, was not with him. Although her signature appears on several documents, not least the legal charge, it was never explained how it came to be there. The supposition is that her signature was forged.

The loan - it was later increased to £51,500 to cover the bank’s expenses and administrative charges - was negotiated indirectly through a Mr Parrott of an organisation called London Trust Securities. London Trust Securities seems to have acted as a mortgage broker. Mr Parrott in turn seems to have been introduced to the defendants through a sub-broker. At all events, two applications for the loan were filled out each seeking an overdraft facility of £50,000 over a period of 25 years. One was in the name of the Achampongs and the other in the name of Owusu-Ansahs. Each form stated that the purpose of the loan was “injection into business”. Mr Parrott did not think that he saw any of the defendants. He could not recall the identity of the sub-broker.

The forms were sent to a Mr Berg, an associate director responsible at the time for the commercial new business loans department of the bank. They were accompanied by a further form offering the property as security. The property was stated to have a value of £150,000 and to be subject to a small local authority mortgage.

The application (the two separate forms were evidently treated as a single application) was approved subject to a satisfactory valuation and the completion of a building society questionnaire. Subsequently, the bank was sent a valuation report dated 14 June 1989 showing that the property had a mortgage market value of £120,000. The completed questionnaire was also provided. This resulted in the bank approving a loan for £50,000 over 25 years without calling for proof of income. It also resulted in the sending out of a formal offer letter dated 16 June. It was addressed to all four defendants. The offer was of a facility of £51,500 subject to a second legal charge over the property and the assignment of a life insurance policy for a minimum sum of £51,500. It stated the minimum monthly instalments to be £620, set out the rate of interest and invited the defendants, if they wished to take up the facility, to sign and return an attached copy together with a note of the name and address of the solicitors who would be acting for them in the matter and a cheque for £250 by way of initial deposit. A copy of the offer letter was duly returned bearing the apparent signatures of the four defendants. It was dated 29 June 1989. The offer letter duly signed together with the £250 cheque, a standing order mandate and Land Registry authority were sent to the bank under cover of a letter dated 30 June 1989 from London Trust Securities. That letter gave the name and address of the defendants’ solicitors, namely a Mr H Pallis of Howard Pallis & Co of Upper Clapton Road, London E5. On 14 July 1989 the bank wrote to Mr Pallis. Enclosed with the letter was, with other documents, a legal charge for execution in Mr Pallis’s presence.

On 26 July 1989 Mr Pallis sent the bank the legal charge duly executed by the Achampongs. The charge recited that the bank had agreed to make an advance to Mr and Mrs Owusu- Ansah upon having it secured on the terms therein set out.

It remained to obtain the Achampongs’ signature to an assignment to the bank of a life policy as part of the bank’s stipulated security. By letter dated 31 July Mr Pallis informed the bank that this was forthcoming. The following day, 1 August, the bank sent Mr Pallis a draft in his firm’s favour for £49,850 which was the net amount of the loan. On or about 3 August Mr Pallis delivered by hand a cheque for £49,621.25 which was the net amount of the loan after deduction of his firm’s fees. This money was paid to Mr Owusu-Ansah. As the judge stated:

Gradually, however, Mr Owusu-Ansah fell into arrears and the bank launched proceedings. Those proceedings - there were two separate claims - have followed a chequered course. The first proceedings were launched in March 1993. They were dismissed in September 1993 on account of the bank’s failure to attend a hearing. The bank then launched fresh proceedings - the present claim - in November 1993. It sought possession of the property and payment of all monies due. In early 1994, permission was given to serve the proceedings out of the jurisdiction on Mr Achampong and the Owusu-Ansahs. By then Mr Achampong had long since left this country and was living in Ghana.

Those proceedings were also struck out. That was in March 1994 but the order doing so was itself rescinded in June 1994. At that point the proceedings again became active for a year or so but then went to sleep for three years until August 1998, when the bank obtained leave to serve an amended pleading. The matter then went to sleep again until January 2001 when, on the court’s own motion, an order was made striking out Mrs Achampong’s defence. That order was subsequently set aside and further directions made. But, following further non-compliance with the court’s orders, the district judge in October 2001 struck out the claim and defence and gave permission to Mrs Achampong to apply for the relief sought in her counterclaim. That was for a declaration that the legal charge was null and void, alternatively that her execution of it had been procured by her husband’s undue influence together with consequential relief. This seems finally to have stirred the bank into action: it applied, successfully, to have the striking-out order set aside thereby reviving its claim. Following further directions, the matter eventually came on for trial before Judge Cotran in July 2002. As I have mentioned judgment was delivered on 30 August 2002.

In the meantime, on 17 December 2001, the district judge entered judgment for the bank against Mr Achampong and the Owusu-Ansahs “for an amount to be decided by the court”. That was on the footing, as pleaded, that each was liable to the bank on the terms of the loan agreement (constituted by their signed acceptance of the bank’s offer letter dated 16 June 1989). The amount of their liability has not yet been determined.

In her defence Mrs Achampong pleaded that she had been induced by her husband’s undue influence to enter into the legal charge. She pleaded that, having been put on inquiry by the fact that the purpose of the loan was for the business use of the Owusu-Ansahs and that she derived no benefit from it, the bank had failed to take reasonable steps to satisfy itself that her consent to the legal charge was properly obtained. No doubt prompted by this, the bank amended its particulars of claim to raise an alternative plea. This was that, by force of section 63 of the Law of Property Act 1925, the legal charge, even if ineffective to charge to the bank the whole of the Achampongs’ interest in the property, was at least effective to charge to it Mr Achampong’s beneficial share and accordingly that the bank became a person interested in the trust affecting the property. On the basis of this alternative plea, the bank claimed a declaration that it had an equitable charge over Mr Achampong’s beneficial interest in the trust for sale affecting the property, a declaration or enquiry as to the quantum of Mr Achampong’s beneficial interest under the trust for sale and an order for sale. As a result of a request for particulars it became common ground that the Achampongs each owned a beneficial half-share in the property.

There were therefore essentially five issues for decision by the judge. First, whether Mrs Achampong’s execution of the legal charge had been procured, as she claimed, by her husband’s undue influence; second, whether, if it had, the bank was put on inquiry; third, whether, if it was, the bank took reasonable steps to satisfy itself that Mrs Achampong’s consent had been properly obtained (even if, in fact, it had not); fourth, whether (on the basis of the bank’s alternative case) the legal charge was effective to give to the bank an equitable charge over Mr Achampong’s beneficial half-share in the property; and, fifth, if it was, whether there should be an order for sale and if so on what terms.

On the first issue the judge found, as he put it, that Mrs Achampong was “pressured into the transaction of mortgaging their jointly held matrimonial home by her husband”. He reached this conclusion after hearing Mrs Achampong give evidence and after hearing supporting evidence from her younger daughter and a niece. On the second issue, having earlier found that “everybody concerned knew that the loan was for the business of Mr Owusu-Ansah in Ghana” and having noted that under the terms of the legal charge the “customers” to whom the advance was made were the Owusu-Ansahs and that the loan went into the bank account of Mr Owusu-Ansah who paid the first twelve months instalments in advance, said this:

On the third issue, the judge began by observing that:

On the fourth issue, namely the bank’s alternative plea based upon section 63, the judge, after quoting from counsels’ written submissions on the point, simply said:

The fifth issue - whether a sale of the property should be ordered - did not therefore arise. However, the judge went on to say that if he had power to exercise his discretion he would not have done so.

The result therefore was that the bank’s claim against Mrs Achampong was dismissed and that, on her counterclaim, the judge made the declarations to which I referred earlier.

The bank raises three grounds of appeal. The first is that, on the evidence before him, the judge ought to have held that the legal charge was valid and that the bank was unaffected by notice of undue influence exerted on Mrs Achampong to procure the charge “because at the time of the transaction [Mrs Achampong] had a solicitor, namely Mr Howard Pallis, and [the bank] was entitled to assume that he had discharged his duties towards [Mrs Achampong] properly, and knowledge of the advice given to her, whether negligently or otherwise, was not to be imputed to the [bank]”. The second was that, even if the legal charge was voidable, the judge erred in refusing to declare that, by virtue of that charge and by reason of section 63, the bank has an equitable charge over Mr Achampong’s beneficial interest in the trust of land affecting the property, securing the amounts claimed in the proceedings. The judge ought therefore to have made such a declaration. The third is that the judge ought to have ordered a sale of the property pursuant to sections 14 and 15 of the Trusts of Land and Appointment of Trustees Act 1996 (1996 Act) and that the proceeds be applied in reduction of the debt due to the bank.

It is to be noted that, although this was an issue in the court below, the bank does not assert as part of this ground of appeal that it was not “put on inquiry” (that Mrs Achampong’s execution of the legal charge was procured by the undue influence or other wrong of her husband). In undue influence cases of this kind, the plea is typically raised where a wife offers to stand surety for her husband’s debts (or the debts of her husband’s business). The courts have recognised, however, that the O’Brien principle (Barclays Bank plc v O’Brien [1994] 1 AC 180) is not so limited but can extend to other relationships. Here, husband and wife were together agreeing to stand surety (by charging the property) for a third party (Mr Owusu-Ansah or, strictly, Mr Owusu-Ansah and his wife). Yet the complaint which is made by Mrs Achampong is of undue influence on her exerted by her husband, in effect, her co-surety. She does not complain of any undue influence or other wrongful conduct on the part of Mr Owusu-Ansah.

But, as Lord Nicholls observed in Royal Bank of Scotland plc v Etridge No 2)[2002] 2AC 773 in a section of his opinion entitled “a wider principle” (paragraphs 82 to 89):

Here, the relationship between debtor and guarantor was, on its face, non-commercial. The bank, as the judge held, was put on inquiry. The fact, that, as it happened, the undue influence which the judge found to have existed came not from Mr Owusu-Ansah (in effect the debtor) but from Mr Achampong (as one of the co-guarantors) did not the less put the bank on inquiry. Why Mr Achampong should have pressured his wife into executing the legal charge, as the judge held had happened and against which finding there is no appeal, is and must remain a matter of speculation. It may be no more than a coincidence that, shortly after the transaction was completed, Mr Achampong left this country for Ghana as did Mr Owusu-Ansah.

The bank’s principal line of attack was on the judge’s failure to find that, knowing that Mr Pallis was acting for all four defendants (including therefore Mrs Achampong), the bank was entitled to assume that Mr Pallis had discharged his duty to her by bringing home to her the consequences of executing a legal charge over the property. The fact that Mr Pallis may not have properly discharged his duty (assuming that he did not) or even that his retainer did not extend to advising her of the consequences of what she was being asked to do (assuming that it did not), could not prejudice the bank.

Relevant to this, said Ms Hayes on behalf of the bank, was the judge’s reference at page 9 of his judgment to Mr Pallis saying in his evidence that, as solicitor for the four defendants, he was responsible for giving them advice and to Mr Berg’s evidence that “we as a bank just assumed that the solicitor acting for them [the four defendants] will give them correct advice”. Ms Hayes referred also to the correspondence passing between the bank and those representing the defendants, beginning with London Trust Securities’ letter to the bank dated 30 June naming “the clients’ [all four defendants’] solicitors”. That letter, she said, was to be understood in the context of the offer letter from the bank which had asked for the name and address of the solicitors who would be acting for the defendants. The correspondence culminated in the action of the bank on 1 August in sending the loan cheque to Mr Pallis.

Ms Hayes submitted that, on a proper application of the principles established in Etridge(No 2), the bank was unaffected by notice of any undue influence that may have been exerted on Mrs Achampong in that it appeared to the bank that the Achampongs had the benefit of professional legal advice. The fact that Mr Pallis was acting for others, including in particular Mr Achampong and Mr Owusu-Ansah, as well as for Mrs Achampong could make no difference in principle. There is no requirement that the creditor should understand or insist that the wife is receiving legal advice independent of others involved in the transaction including, in particular, the person for whose benefit the transaction is being entered into. Unless the creditor knows or ought to know from information available to him that the wife has not in fact received the appropriate advice he is entitled to assume that she has been properly advised, even if, in fact, she is not separately advised or, if she is, if she has not been properly advised. The question, she said, is not what was actually happening as between Mr Pallis on the one hand and Mrs Achampong on the other but whether the bank could reasonably have thought that Mr Pallis was properly advising her. There was nothing to alert the bank to the possibility, let alone the fact, that Mr Pallis was not properly advising her.

In issue here is whether, when a lender is put on inquiry by the non-commercial relationship between surety and debtor - typically a wife who agrees to join in granting a charge over the jointly owned matrimonial home to secure her husband’s borrowings - the lender will be able to avoid having constructive notice imputed to it of any impropriety by the debtor in procuring the surety’s consent by showing that a solicitor acted for the surety notwithstanding that the solicitor also acted for the debtor in the transaction. Underlying this is that where a lender is put on inquiry, it must take reasonable steps to satisfy itself that the surety understands the practical implications of the proposed transaction. Etridge (No 2) makes clear that it is not necessary that the lender should conduct a personal meeting with the surety to explain these matters. Instead it is entitled to rely on the fact that the surety has had the benefit of independent legal advice about the transaction. It assumes that the lender has had no knowledge of any facts indicating to it or which ought to have indicated to it that the surety had not received the appropriate advice.

There was considerable discussion in Etridge (No 2) on whether it was necessary in such a case that the solicitor should act for the surety alone or whether he may also act for the debtor (or even for the lender as well). Lord Nicholls, with whose analysis of the general principles involved the other members of the House agreed (see paragraphs 3, 91, 100 and 192), concluded (his analysis was in the context of a bank extending credit to a husband for whom the wife acts as guarantor) that separate representation was not necessary and therefore that a solicitor could act for both husband and wife in the transaction (see paragraph 74). In reaching that view he stated (in paragraph 70) that the question could not be answered by reference to reported decisions and (in paragraph 71) that a simple and clear rule was needed, avoiding - as lacking any principled base and unworkable in practice - any distinction based upon whether the bank takes the initiative in requiring the wife to obtain legal advice or whether the bank deals throughout with solicitors already acting for husband and wife.

But the question also arose: what if the solicitor fails properly to advise the surety? To what extent would the lender be affected by this? To this, Lord Nicholls gave the following answer:

It is clear, however, that this is subject to an important qualification, namely that if, having been put on inquiry, it is to be protected, the bank must take steps to ensure, so far as practicable, that the wife has been properly advised independently by a solicitor. In paragraph 79, Lord Nicholls outlined what form those step should take. They were steps applicable to future transactions. For past transactions (including, therefore, the legal charge executed by Mrs Achampong) he said this:

It is plain that such a confirmation was not forthcoming from Mr Pallis. Ms Hayes submitted, however, that the obtaining of such confirmation was a sufficient but not a necessary step. She pointed to the observation of Lord Nicholls (at paragraph 54 of Etridge (No 2), echoing what was said by Lord Browne-Wilkinson in O’Brien[1994] 1AC 180 at 196G) that:

She submitted that the bank having “specified” (as she put it) in the offer letter dated 16 June that the borrowers must act by a solicitor, which they did, and, being under the impression from the correspondence passing between itself and Mr Pallis that Mrs Achampong had available to her legal advice from Mr Pallis acting as her solicitor, it was entitled, like the defendant bank in Forsyth, to proceed without being fixed with constructive notice of any undue influence. She pointed out that there was no evidence, and certainly no finding, that the bank knew that the position was otherwise or that it knew facts from which it ought to have realised that the position was otherwise. The bank, she submitted, had no need to take any further steps to protect itself. The judge, she submitted, was wrong to come to a contrary view.

I do not agree. The emphasis in Lord Nicholls’ speech is that where, to avoid being fixed with constructive notice of undue influence or other wrongful conduct, a bank relies on the fact that a wife has had a solicitor acting for her in the transaction, it must have proper grounds for thinking that the solicitor has advised her on the risks she runs from entering into the transaction whether or not, in fact, the solicitor has properly discharged his duty to her. The particular steps outlined by Lord Nicholls in paragraph 79 of his speech as applying to future transactions are practical guidance to enable the bank to have reasonable grounds for believing that the wife has been properly advised by a solicitor. The underlying need - applicable as much to past as to future transactions - is for the bank to have taken reasonable steps to ensure that the nature of the risks to her arising out of the transaction have been brought home to her.

Previous decided authority had not been explicit in this respect. Indeed, in some cases it would appear that the mere fact that the bank knew that the wife had a solicitor may have sufficed to afford it protection. See, for example, Bank of Baroda v Rayarel [1995] 2FLR 376.

In my judgment, however, the House of Lords in Etridge (No 2) has now made clear that the fact alone that the bank knows that a solicitor is acting is not sufficient. Thus, Lord Hobhouse, who also examined the issue, described the problem thus:

Lord Scott took up the same theme in the following passages of his speech:

Does the fact that, to the knowledge of the bank, a solicitor for is acting for the wife in the security transaction entitle the bank reasonably to believe that the solicitor will have given her an adequate explanation of the nature and effect of the security document she is to sign?

If so, are there, in the ordinary case, ie where there is no special reason for the bank to suspect undue influence or other impropriety, any other steps that the bank ought reasonably to take?

If the answer to question (1) is ‘yes’ and to question (2) is ‘no’, does the fact that the solicitor is also the husband’s solicitor and is acting for the bank in arranging for completion of the security bar the bank from relying on the solicitor’s role in acting for the wife?”

In the course of answering those questions Lord Scott said this:

Lord Scott’s remarks were not directed simply to future transactions. One of the appeals before the House, UCB Home Loans Corporation Ltd v Moore, concerned a mortgage entered into in 1989. The mortgage was over the matrimonial home of the defendant, a Mrs Moore, and her husband. Mrs Moore’s defence to UCB’s possession claim was that her signature to the mortgage application form and her consent to the grant of the legal charge to UCB had been procured by the undue influence of and misrepresentations by her husband. UCB applied to strike out those parts of her defence that resisted a possession order. Central to UCB’s application was that a firm of solicitors, Quiney & Harris, acted for the Moores in the transaction (the firm had been named in the mortgage application as the solicitors acting for them) and that UCB had believed that the solicitors had been instructed by, and were acting, for both Mr and Mrs Moore. UCB contended that if there had been undue influence or misrepresentation they had no notice of it. Mrs Moore denied, however, that the solicitors had been instructed by her or had given her any advice.

The strike out application, although it failed before the district judge, succeeded on appeal before the county court judge. An appeal against the judge’s decision was dismissed by the Court of Appeal but Mrs Moore’s further appeal to the House of Lords succeeded. For the purpose of the appeals, it was assumed that Mrs Moore’s various assertions in her pleading were correct. In giving reasons for allowing the appeal Lord Scott (with whose reasons Lord Bingham agreed - see paragraph 4) said this:

Lord Hobhouse gave his own reasons (with which Lord Nicholls agreed: see paragraph 90) for allowing Mrs Moore’s appeal. He said this at paragraph 127:

I would summarise the position in this way. The bank was put on inquiry by Mrs Achampong’s offer to join in granting a charge over the property to secure the loan to Owusu-Ansahs. Having been put on inquiry the bank had to take reasonable steps to satisfy itself that Mrs Achampong’s consent to the transaction was properly obtained. If it failed to take such steps, it would be taken to have constructive notice of the right of Mrs Achampong (if established on the evidence) to have the transaction set aside. It is a question of fact whether in such a situation a creditor in the position of the bank has taken reasonable steps. Following the decision of the House of Lords in Etridge (No 2) it is not in general enough that the bank knows merely that the wife has a solicitor acting for her; that would not normally be sufficient to constitute the taking of reasonable steps to ensure that the nature of the risks to her arising out of the transaction have been brought home to her. On the other hand, in the absence of special circumstances, it would be sufficient if the bank knew that the wife's solicitor had been instructed to give independent advice to her on the nature and effect of the transaction and had received confirmation that such advice had been given.

The question then is whether the bank had reason to assume that Mr Pallis’s instructions extended to giving Mrs Achampong advice about the nature and effect of the legal charge over the property and that his role was not simply to agree the form of the legal charge and other security documents and attend to their execution. There is nothing in the judge’s findings, and Ms Hayes has not suggested otherwise, to indicate that the bank had any knowledge of what Mr Pallis’s instructions were or any reason to assume that their instructions extended to giving Mrs Achampong advice about the nature and effect of the legal charge. It was not a requirement of the offer letter dated 16 June that Mrs Achampong be independently advised about the nature and effect of the transaction. It was not even a requirement that solicitors be instructed: the letter merely assumed they would be and asked to be informed of their name and address. Although the bank understood - and the judge found - that Mr Pallis acted for the four defendants, there was nothing in the communications which passed to suggest that the bank was told that Mrs Achampong had been independently advised. The bank’s only requirement of Mr Pallis, in its letter dated 14 July, was with the form and execution of the security documents, including the legal charge, and a query over whether an earlier second mortgage of the property had been discharged.

In my judgment, on the evidence before him, the judge was correct to hold that the bank had not done sufficient to avoid having constructive notice of any undue influence or other misconduct concerned with the obtaining of Mrs Achampong’s execution of the legal charge. It follows that the bank’s principal line of attack fails.

Ms Hayes also submitted that, contrary to the judge’s conclusion, Mrs Achampong was indeed properly advised by Mr Pallis. The facts - as found by the judge - relevant to his conclusion on this issue was as follows.

On 21 July 1989, Mr Pallis wrote to the Achampongs asking them to attend at his offices to sign the legal charge. He asked them to bring along proof of their identity. He had not seen them before. Indeed, all of his instructions had come from Mr Owusu-Ansah. In his letter of 21 July Mr Pallis went on to suggest that, as they were mortgaging their property for Mr and Mrs Owusu-Ansah, they should reach a separate agreement with them “to cover the monies” in question. He warned that, in the absence of such an agreement, which, he advised, should be registered at the Land Registry, there would not be a record of the transaction and “there may be difficulties later on with whatever arrangements you reach”. A day or so later the Achampongs together with Mr Owusu-Ansah had a meeting with Mr Pallis at which, according to an attendance note made by Mr Pallis, they signed the documents. The attendance note stated that “they again said that it was an arrangement between them and Mr Owusu and that they had no problems with it”. Mr Pallis then sent the legal charge duly executed to the bank.

But, as the judge described it in his judgment, “it is obvious that by then [26 July] Mr Pallis was getting cold feet”. He deduced this from a letter which Mr Pallis sent the Achampongs the next day, 27 July 1989. The letter read as follows:

The next day, Mr Pallis wrote a further letter to the Achampongs and Mr Owusu-Ansah asking them to attend at his offices to sign a further document. That was a reference to a life policy. On 31 July, there was a handwritten letter from the Achampongs to Mr Pallis, which was as follows:

There was also another letter from the Achampongs, also in handwritten form, this one dated 2 August which was as follows:

The previous day Mr Pallis had received from the bank a draft for £49,850 made out in his firm’s favour. On 2 August 1989, he wrote to the Achampongs enclosing a completion statement together with a cheque for £49,621.25. He delivered by hand the cheque and its accompanying letter.

It is plain that Mrs Achampong was never separately advised by Mr Pallis. He dealt with Mr and Mrs Achampong together. Even then there is nothing to suggest that he advised what the consequences were of the transaction into which they were entering. Instead, he appears to have taken the line of advising the Achampongs that they should obtain independent legal advice from elsewhere. There was no finding that they did.

The judge referred (at page 15 of his judgment) to an assertion by Mr Pallis in his witness statement that:

In my view, the judge having heard the evidence (in particular Mr Pallis and Mrs Achampong) was entitled to come to those conclusions. This further ground of attack also fails. It therefore follows that the first ground of appeal fails.

As I have mentioned the judge did not give any reasons for dismissing the bank’s alternative case. Even if, as he found, Mrs Achampong was not bound by the legal charge, it is not correct to say, as Mr Adenekan on behalf of Mrs Achampong contended, at any rate in his skeleton argument, that the legal charge should be regarded as having no effect at all and should be set aside not only as against Mrs Achampong but as against Mr Achampong as well.

In my judgment the legal charge, although ineffective as against Mrs Achampong, was apt to achieve two things: first, to create an equitable charge in the bank’s favour over Mr Achampong’s beneficial share in the property to secure, so far as the share was able, the bank’s advance; and, second, as a consequence of the first and assuming that the Achampongs did not already hold as beneficial tenants in common, a severance of the beneficial joint tenancy subsisting in relation to the property. See Ahmed v Kendrick and anr (1987) 56 P&CR 120 in which the Court of Appeal followed the view of Lord Wilberforce in Williams & Glyn’s Bank v Boland [1981] AC 487 at 507 that Cedar Holding Ltd v Green [1981] Ch 129 was to be regarded as wrongly decided. In Ahmed v Kendrick, the husband had forged the wife’s signature on a transfer to a purchaser. The Court of Appeal (Slade and Nicholls LJJ) held that the transfer, although ineffective to affect the wife’s share, was nevertheless effective on the true construction of section 63(1) to sever the beneficial joint tenancy of the husband and wife in the property and to pass to the purchaser all of the equitable interest under the trust for sale which the husband had power to convey. Similarly here. Section 63(1), which applies as much to a mortgage or legal charge as to a conveyance (or transfer), was apt to ensure that the legal charge in this case was effective to create an equitable charge in the bank’s favour over Mr Achampong’s beneficial half-share of the property and thus to sever any beneficial joint tenancy of himself and Mrs Achampong in the property. The judge was therefore wrong to dismiss the bank’s alternative case.

Having regard to the judge’s conclusions on the other issues, the question of any exercise of discretion under section 14 of the 1996 Act (ie whether to make an order for sale and if so on what terms) did not arise. But the judge said that he would have refused to exercise his discretion anyway. After referring to section 15(1) of the 1996 Act, which sets out the matters to which the court is to have regard in determining an application for an order under section 14, he said this:

The matters referred to in section 15(1) are:

the purposes for which the property subject to the trust is held,

the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home, and

the interests of any secured creditor of any beneficiary.”

Ms Hayes submitted that the judge’s exercise of discretion was open to challenge for the following reasons. First, he wrongly attached weight to the bank’s delay in pursuing its claim; second, he failed to recognise that, following Mr Achampong’s departure to Ghana in 1989 and certainly since the cessation of any further contact between him and Mrs Achampong from 1994 onwards, the purpose for which the property is held, namely as their matrimonial home, had come to an end; third, although section 15(1)(c) is capable of extending to the welfare of occupying grandchildren who are minors, there was no evidence before the court directed to the welfare of Mrs Achampong’s grandchildren who, it was accepted, were in occupation of the property; fourth, he failed to have regard to the interests of the bank as a secured creditor (and in effect the person beneficially entitled to the other half-share in the property) in that, by refusing the sale, he condemned the bank to carry on waiting for its money with no prospect of recovery and with its debt increasing all the time; fifth, he was wrong to attach weight to any prospect of recovery from Mr Achampong and/or Mr Owusu-Ansah.

Mr Adenekan, in support of the judge’s refusal to exercise his discretion to order a sale, submitted that the purpose for which the property was held, and the intention of Mr and Mrs Achampong in creating the trust, was that it should be their matrimonial home. He submitted that, despite their separation, it was not clear that the Achampongs might not one day resume their married life together since they were still man and wife. But in any event, he said, the property was acquired not just as a matrimonial home for Mr and Mrs Achampong but also as a home for their family. This purpose was still capable of achievement not least since two of the three children of the marriage were still living there, along with Mrs Achampong and the three infant children of the elder daughter, Rosemary. Although Rosemary is herself an adult, she continues to live in the property and is a person under mental disability. He referred also to the fact (as accepted by the judge) that Mrs Achampong had made a payment (of £13,000) to the bank after her husband’s departure and to the absence of any evidence that there was no prospect of recovery from Mr Achampong and Mr Owusu-Ansah.

Mr Adenekan also submitted that as Mrs Achampong was in actual occupation of the property she had an overriding interest in it within the meaning of section 70(1)(g) of the Land Registration Act 1925 to which interest the bank’s equitable charge over Mr Achampong’s half share was subject. The consequence, he submitted, was that the court could not make an order which would deprive her of possession. He referred to Williams & Glyn’s Bank Ltd v Boland. Finally he submitted that the decision in Thomas Guaranty Ltdv Campbell & ors[1985] 1QB 210 should lead the court to refuse to make an order.

In my judgment, to deal with the two last matters first, the references to section 70(1)(g) and to the decision in Williams & Glyn’s Bank Ltd v Boland are not in point. Mrs Achampong’s half-share in the property is protected by her registration as one of the joint proprietors of the freehold estate in the property. It is a misconception to refer to her interest as an overriding interest. Nor is Thomas Guaranty Ltd v Campbell in point. That case concerned whether the court should order a husband to execute a charge on his interest in a property in circumstances where he had agreed to give an equitable charge but where his wife, a co-owner of the property, had not. That case has no bearing on the exercise of any discretion under section 14.

I come then to the particular reason given by the judge in explanation of why he would not have ordered a sale. Although the exercise of a discretion of this kind must turn on the particular facts of the case, I find valuable what was said in Bank of Ireland Home Mortgages Ltd v Bell & anr [2001] 2AER (Comm) 920. In that case the husband was found to have forged his wife’s signature on various documents pertaining to the mortgage of their matrimonial home. The husband had left the property by the time possession proceedings were brought by the claimant bank following default under the terms of the mortgage. The judge below held that the bank had an equitable charge on the husband’s share in the property to secure the sums which it had lent but he refused to order a sale. In coming to that conclusion the judge took into account the fact that the property was purchased as the family home, that it was still occupied by the wife and her son and that the wife was in poor health. He also took into account the fact that there was a second charge. There had also been several years of delay between the commencement of the possession proceedings and the matter coming on for trial. The refusal of the judge to order a sale was the subject of an appeal. Giving the principal judgment, Peter Gibson LJ (with whom Sir Christopher Staughton agreed) held that, as the husband and wife were divorced by the time of the hearing before the judge, the use of the property as a family home, (treating the matter as relevant to section 15(1)(a) or to section 15(1)(b)) had ceased to be operative. He also disregarded as irrelevant the fact that there was a second charge. He then went on to consider the bank’s position as an equitable mortgagee of the husband’s beneficial share of the property. He said this:

So also here. The effect of refusing a sale is to condemn the bank to wait - possibly for many years - until Mrs Achampong should choose to sell before the bank can recover anything. In the meantime its debt continues to increase. (It was £180,000 at the date of the trial as against a value of the property of £195,000.) Nor does it lie with Mrs Achampong to complain of delay since she has had the use of the whole property in the meantime. True it is that, as the judge found, she made a single payment of £13,000 sometime before February 1994 (she refers to the payment in an affidavit that she swore at that time). But that sum can be brought into account on a division of the proceeds following sale.

Nor, in my view, is it a consideration of any weight that the bank has not taken steps to recover anything from Mr Achampong or Mr Owusu-Ansah. Those two persons are now in Ghana. There is no evidence as to their wealth or as to the steps open to the bank to pursue them in Ghana with a view to recovering anything from them. Given their default over many years, it is entirely possible that they are substantially without means. It was for Mrs Achampong to adduce evidence to suggest otherwise if she was to place reliance on this as a relevant consideration.

It follows that the exercise of discretion by the judge is plainly open to review: he failed to take into account under section 15(1)(d) the bank’s position as an unpaid creditor entitled, in the events that have happened, to the whole of Mr Achampong’s half share; he wrongly attached weight to the bank’s delay in pursuing these proceedings; failing any evidence relevant to the matter, he was wrong to attach any weight to the bank’s failure to pursue Mr Achampong and/or Mr Owusu-Ansah in Ghana.

Over and above that, I regard it as plain that an order for sale should be made. Prominent among the considerations which lead to that conclusion is that, unless an order for sale is made, the bank will be kept waiting indefinitely for any payment out of what is, for all practical purposes, its own share of the property. While it is relevant to consider the interests of the infant grandchildren in occupation of the property, it is difficult to attach much if any weight to their position in the absence of any evidence as to how their welfare may be adversely affected if an order for sale is now made. It is for the person who resists an order for sale in reliance on section 15(1)(c) to adduce the relevant evidence. Insofar as the Achampongs’ intention in creating the trust of the property was to provide themselves with a matrimonial home, and insofar as that was the purpose for which the property was held on trust, that consideration is now spent. Given the many years’ absence of contact between Mr and Mrs Achampong, the fact that there has not yet been a divorce cannot disguise the reality that theirs is a marriage which has effectively come to an end. The possibility, therefore, that the property may yet serve again as the matrimonial home can be ignored. Insofar as the purpose of the trust - and the intention of the Achampongs in creating it - was to provide a family home and insofar as that is a purpose which goes wider than simply the provision of a matrimonial home, I am unpersuaded that it is a consideration to which much if any weight should be attached. The children of the marriage have long since reached adulthood. One of them is no longer in occupation. It is true that the elder daughter, Rosemary, is a person under mental disability and remains in occupation but to what extent that fact is material to her continued occupation of the property and therefore to the exercise of any discretion under section 14 is not apparent.

In all of the circumstances, I would exercise the discretion by ordering a sale of the property to enable the bank to realise its charge over Mr Achampong’s beneficial half-share. What practical steps need to be taken to achieve a sale, and what directions should therefore be made, are matters, in my view, which can best be left to the county court to determine. This assumes, as I take to be the case, that there is no realistic prospect of Mrs Achampong acquiring the half share in the property which now stands charged to the bank.

I agree.