C Putnam & Sons v Taylor & Anor

This is an application to enforce a final charging order dated 10^th February 2005. The charging order was made in respect of the interest of the first defendant, Mr Taylor, in 15 Seagrave Road, Beaconsfield, Buckinghamshire. That interest was charged with payment of the sum of £47,675.44 then owing under a judgment of 13^th January 2004, together with any interest becoming due, and £202, the costs of the application. The debt today is closer to £60,000.

The second defendant, Mrs Taylor, is married to Mr Taylor. 15 Seagrave Road is their family home. They are registered as joint proprietors. That raises the presumption that they acquired their home as beneficial joint tenants as well (see Stack v Dowden [2007] 2 AC 432, in particular the speech of Lady Hale at paragraph 56). Mrs Taylor now claims to be solely beneficially entitled. I shall examine that claim later in this judgment.

These proceedings were issued, seeking possession and sale, on 28^th February 2006. They have taken some time to reach a conclusion. Mr Taylor was diagnosed with cancer in June 2006. A number of stays of the proceedings were agreed to thereafter, down to the end of January 2007, to accommodate Mr Taylor’s need for treatment. A final hearing first came on before me for hearing on 16^th November 2007. I granted an adjournment on that occasion which I had previously refused on paper. Amongst other things, the adjournment was granted to allow Mr Taylor to explore the possibility of unlocking the development value from other land owned by Mr Taylor at Carrington Road, High Wycombe. This land was said to have real development potential but was landlocked. Had the land been unlocked it would have provided another source from which to pay off the judgment debt. However, the adjournment I granted did not bear fruit and the Carrington Road land remains landlocked so far as any meaningful development is concerned. There is no evidence that this is likely to change in the foreseeable future.

Mr Taylor is a pensioner and no longer works. He has no significant assets apart from his interest in the matrimonial home out of which to satisfy the judgment. The land at Carrington Road is, as I have mentioned, landlocked and therefore has no significant value at present.

Mrs Taylor is also a pensioner. As well as claiming to be the sole beneficial owner of the family home, she says, if she is wrong about that, that the charging order should not be enforced as that will be very unfair to her. The debt which the claimant seeks to recover has nothing to do with her and was incurred by her husband behind her back in pursuit of his own business activities. It is wrong that her home should be sold over her head, she says, to satisfy her husband’s private debts. This is not a case where she has lived through the good times of her husband’s business activities and now refuses to face up to the bad times. Her husband’s business activities appear to have been consistently unsuccessful, and their practical effect has been to turn her into the mainstay of their domestic finances.

15 Seagrave Road was bought by the Taylors in 1979. It is a detached, double-storey, three-bedroom house with tarmac drive, double garage and garden. There is a charge in favour of the Halifax Bank who were owed approximately £60,000 in February 2006. On the evidence, 15 Seagrave Road then had a value of £450,000 to £475,000. It might be thought that the value today would be less. However, an October 2008 valuation suggested that the value was in the region of £500,000. Even if that is an exaggerated valuation and even if the value has gone down since then, there is still ample equity to pay off the judgment debt from Mr Taylor’s half share, if he has one. Moreover, if Seagrave Road was sold sufficient equity would remain to purchase another property. Another property would not be as desirable as 15 Seagrave Road or in such a pleasant location; downsizing might be necessary and the Taylors might have to accept a semi-detached or terraced property, or even a flat. They would not, however, be homeless.

Mrs Taylor particularly wishes to remain where she is as the house is ideal for receiving her children and grandchildren, is convenient for her allotment and is home not only to herself and Mr Taylor but to her cat, who comes from a refuge and would, she fears, be traumatised by a move. The cat dislikes strangers but loves the house and back garden. She also has settled arrangements for medical, dental and optician’s support, all of which would be disrupted by a move. Mrs Taylor has at times expressed doubts as to whether she would still wish to live with Mr Taylor were her house sold. Nevertheless, she is manifestly a very moral person who instinctively regards marriage as a lifetime commitment. As she comments in her evidence, “I am just not the divorcing kind”. I think she probably would remain with Mr Taylor even were the home sold. If she did not, their housing needs would be more difficult but still not impossible to meet.

I now consider Mrs Taylor’s claim that she is beneficially entitled to 15 Seagrave Road. It was bought on 29^th January 1979 for £45,000. The transfer contained no declaration of trust but did contain a declaration that the survivor could give a valid receipt for capital money. Though not conclusive, this is consistent with joint beneficial ownership which is, as I have said, presumed anyway. Mrs Taylor told me that her understanding was that the house belonged to the both of them and that the survivor would take all. That is a classic statement of a beneficial joint tenancy and I have no doubt that that is what was intended at the outset.

It appears that there was originally a mortgage of some £17,000. There is no evidence before me of how the balance of £45,000 was funded. Later, in 1995, a further mortgage was taken out through Birmingham Midshires to support Mr Taylor’s business activities. All these mortgages were paid off by February 2000 largely by endowment policies which, in the events which happened, had been funded largely by Mrs Taylor through their joint account.

As I have said, it is plain to me that the original intention was that the parties should be beneficial joint tenants. In the case of Stack v Dowden, to which I have referred, at paragraph 70, Lady Hale acknowledged that the parties’ intentions as to their beneficial interests in a property may change post-acquisition. However, the subsequent decisions of the Court of Appeal in James v Thomas [2007] 3 FCR 696 and Morris v Morris [2008] Fam Law 521 show that a court will be slow to infer from conduct alone that parties intended to vary beneficial interests established at the time of acquisition. There is no evidence here that before the charging order the parties intended to vary the beneficial joint tenancy to which I have referred. There is evidence, to which I shall come, that the parties turned their minds to that after the charging order.

Down to 1987 the family needs, including mortgage payments and endowment payments, were apparently met out of Mr and Mrs Taylor’s salaries. After 1987, when Mr Taylor branched out unsuccessfully into business, Mrs Taylor appears to have paid for just about everything, including the mortgage interest and endowment payments. The details are set out in paragraph 7 of her first witness statement which I shall read:

“To demonstrate that my salary only was deposited into our joint current account from 1987 to January 2000 extracts from the bank statements...show deposits of my salaries alone totalling £168,568.72, while the first defendant’s salaries contributed £6,175.04 for the same period. Other entries generated by me include endowments and redundancy payments totalling £72,323.68 to the end of 1999, with one more endowment maturing in January 2000. Extracts for demonstration purposes for months of December only showing standing orders, direct debits and cheques going out from the current account are also at AKT3. Only telephone bills and petrol were paid for by the first defendant since he was the main user by far of both these expenditures for his business. I was effectively the sole contributor of the family’s upkeep for many years from 1987 to 2000 and beyond and ensured stability, at least from a housing point of view, in our children’s teenage years and during their grammar school and university education. Our three-bedroom house was stretched to its limits while the children were growing up, but as they left, one by one, the size and location became ideal from all points of view for me and for them to access and use when required.”

As that passage indicates, Mrs Taylor exhibited to her witness statement supporting evidence and I am satisfied on the basis of that supporting evidence that the statement I have quoted is broadly accurate.

After the mortgages were paid off in 2000, Mr Taylor promised that he would indulge in no further high-risk business activities. He nevertheless applied for the Halifax mortgage for his own business purposes. Mrs Taylor was persuaded to join in with him in getting that mortgage, though in truth it appears to have been presented as a fait accompli in 2002 and she really had no effective choice.

Mr Taylor also became involved with the claimant at about the same time. The claimant was engaged with carrying out demolition and site clearance work at the Carrington Road site. The affected part of the site has since been sold, leaving the unlocked land to which I have referred. The result of the work done by the claimant led to an adjudication, which went against Mr Taylor, on 7^th November 2003. He rues the fact that his lack of experience in building contracts meant that he had not served a withholding notice which might, he feels, have averted that course of events.

The adjudication led ultimately to the judgment of 13^th January 2004 and the charging order of 10^th February 2005. There is considerable evidence on the Taylors’ side before me suggesting that the judgment may have been challengeable and suggesting also that a counterclaim would be available at the instigation of Mr Taylor. However, no steps have been taken to challenge the judgment or to progress any independent claim. The reason for that, I am told, is lack of funds, and for that I have every sympathy. Nevertheless, sitting here I cannot ignore a regular judgment of the court which was entered as long ago as January 2004.

On 16^th January 2006 (that is to say, after the final charging order), Mr and Mrs Taylor signed the following letter. The letter is in terms a letter sent by Mrs Taylor to Mr Taylor and reads as follows:

“I regret very much after nearly 39 years of marriage that I have no option but to claim our so far jointly owned property as wholly my own. We have talked about it for at least a year now and the time has come when registering it in my name can be delayed no longer. I have disagreed with your business activities since 1987 and before, all of which have put our home in jeopardy through mortgages you required but I had no wish to take on. We have only remained in this house because I have paid for all outgoings. You made occasional, unexpected contributions, but the family could not have remained here but for my regular upkeep. I even paid for our two endowments which eventually matured around the Millennium. I did not do all this over many years in order then to give it up to your creditors especially since, whenever I heard a hint of what you were doing, I always voiced my objections unequivocally. It is very regrettable that you did not choose to take any notice. You have admitted during the past year that you no longer deserve a share in this property, and I will ask you to sign below to confirm your agreement to the transfer. I will then go ahead and do what is necessary to ensure our agreement is legally binding.

Your wife.”

It is then signed by Mrs Taylor. Beneath her signature Mr Taylor’s signature appears against the following words:

“My signature above is to confirm that I understand and agree with the above.

Archibald Taylor.”

I am prepared to accept that that letter is a sufficient agreement to change the beneficial interests. However, it comes after the charging order which by then had been registered. That being so, any change of the beneficial interest is subject to the charging order. The letter in many ways reflects both the strength and weakness of Mrs Taylor’s case. The strength of her case is that she has a high moral claim against her husband for a greater interest. The downside is that the request for a transfer is based upon the premise that he “no longer deserves a share”. That presupposes that he did then have a share, albeit an undeserved one, which needed to be transferred.

I am not able to conclude from this and the other evidence before the court that there was before 16^th January 2006 an inferred or imputed intention of the kind necessary to alter the beneficial interests which crystallised initially upon acquisition in 1979. There was, however, a clear agreement in January 2006, but by then it was too late to defeat the interests of the claimant.

I accordingly find that, at the time of the charging order, Mr and Mrs Taylor each had a joint beneficial interest in 15 Seagrave Road. The effect of the charging order has been to sever that joint beneficial interest, so that the shares are now held equally as tenants in common. It follows from that that Mr Taylor’s share is, in principle, liable to satisfy the claimant’s debt but Mrs Taylor’s share, of course, is not.

Should I now enforce the charging order? That is a discretionary matter and it is accepted by Miss Gowling, for the claimant, that, in so approaching the matter, I should have regard to the discretionary factors set out in sections 14 and 15 of the Trusts of Land and Appointment of Trustees Act 1996. Accordingly, in determining this application for sale, I have to have regard, under section 15(1)(a), to the intentions of the person or persons (if any) who created the trust. The intentions of Mr and Mrs Taylor were to provide themselves with a family home. That intention, despite the statements of exasperation and despair sometimes emanating from Mrs Taylor, has not changed.

Section 15(1)(b) requires me to consider the purposes for which the property subject to the trust is held. That also reflects the family home point. That purpose has not changed.

Section 15(1)(c) requires me to consider the welfare of any minor who occupies or might reasonably be expected to occupy any land. That does not apply now that the children have grown up and flown the nest, though Mrs Taylor certainly regards it as important that she should have a home which is sufficiently accessible to her children and grandchildren when they come and stay.

Section 15(1)(d) is the problem from the Taylors’ point of view. That refers to the interests of any secured creditor of any beneficiary. The result of the charging order is that C Putnam & Sons, the claimant, are a secured creditor of a beneficiary, Mr Taylor.

Subsection (2) provides that the court is also to have regard to the circumstances and wishes of each of the beneficiaries who is entitled to occupy the land. That, of course, includes Mrs Taylor as well as Mr Taylor.

The factors which are set out in section 15 are not exhaustive but they give the flavour of the factors that the court regularly does take into account.

Mrs Taylor says that any suggestion of a sale would be completely wrong, partly because of her entire innocence in relation to the debt for which her husband is liable, and relies also upon the fact, as I have said, that that indebtedness was incurred against an agreement she reached with her husband and behind her back. She says, in addition to the factors referred to in TLATA (as I shall call the 1996 Act for short), that any order for possession and sale would contravene her human rights. In particular, she refers to and relies upon the European Convention on Human Rights, which has now been incorporated into English law, and the right to respect for family and private life under Article 8 of the Convention. She also relies upon Article 1 of the First Protocol.

I considered these provisions in the decision of Close Invoice Finance Limited v Pile & Anor [2008] BPIR 1465, and concluded that, in the exercise of the court’s discretion, the provisions of the European Convention did have to be taken into account and the court’s discretion had to be applied compatibly with the Convention rights. However, I also noted (borrowing language from the First Protocol) that it was in accordance with the law when a charging order was made and, to the extent that it is enforced, that also is in accordance with the law. I also said:

“It will also be in the public interest to enforce charging orders generally because of the economic importance of ensuring that there is an efficient machinery for the enforcement of debt obligations, even though, unlike in the case of a legal mortgagee, this is not a debt obligation which was voluntarily provided as a secured obligation.”

In those circumstances, I was quite satisfied that the power to enforce a charging order is compatible with the Convention. That was a case where both of the legal owners were also debtors. In this case, of course, Mrs Taylor is not a debtor at all and her interests have to be taken into account under section 15. In my judgment, section 15 is human rights compliant. Mrs Taylor’s human rights are to be taken into account (as indeed are Mr Taylor’s). It does not follow from this that Mrs Taylor’s interests are necessarily to prevail over the interests of the secured creditor; nor is the reverse true. A balance has to be struck between the various competing interests.

In that respect, I was referred by Miss Gowling to Bank of Ireland Home Mortgages v Bell [2001] 2 FLR 809. This was an appeal from His Honour Judge Cox sitting in the Lambeth County Court. He had refused an order for possession, allowing an appeal from the district judge granting such an order.

In reversing Judge Cox, the Court of Appeal took into account a number of factors, one of which was that the bank in that case would take all the proceeds on a sale. That was a most material consideration, the Court of Appeal held, to which the judge should have given great weight. That is not a factor which is present in this case. Nevertheless, what is present in this case is the absence of any prospect whatsoever that the claimant will be paid except out of Mr Taylor’s share.

Another factor which was taken into account by the Court of Appeal was Mrs Bell’s poor health. She, at the time of trial, was facing an operation. The Court of Appeal accepted that the judge could properly have regard to that, but it would provide a reason for postponing a sale rather than refusing sale. That might be material in a case such as the present where Mr Taylor was inflicted with the onset of cancer in 2006. However, there have been substantial stays to enable him to recover and to receive treatment. He, rather disarmingly, told me that he was surprised he was here at all. I am very pleased that he is, but I do not think that his unfortunate health history can be a reason for keeping the claimant out of the money to which it is entitled indefinitely.

Most importantly of all, at paragraph 31 of the judgment of the Court of Appeal, Peter Gibson LJ, having contrasted the position under TLATA with the previous position under section 30 of the Law of Property Act 1925, said this:

“A powerful consideration is and ought to be whether the creditor is receiving proper recompense for being kept out of his money, repayment of which is overdue (see The Mortgage Corporation v Shaire, a decision of Neuberger J … [now reported at [2001] Ch 743]. In the present case it is plain that by refusing a sale the judge has condemned the bank to go on waiting for its money with no prospect of recovery from Mr and Mrs Bell and with the debt increasing all the time, that debt already exceeding what could be realised on a sale. That seems to me to be very unfair to the bank.”

Apart from the fact that the debt does not exceed what would be realised on a sale, it is plain in this case that, by refusing a sale, I would be condemning the claimant to go on waiting for its money with no prospect of recovery from any other source and with the debt increasing all the time. The claimant has in fact been waiting now for several years, judgment having been entered nearly four years ago in respect of an adjudication which dates back even further.

The reference to The Mortgage Corporation v Shaire does, incidentally, also highlight the significance of the need, that the Taylors would have to face up to were I to order a sale, to downsize in relation to the property that they would then, in consequence of a sale, have to move to. Neuberger J, whilst not belittling the significance of requiring the wife in that case to move out of her family home, did not consider that downsizing was a vital consideration.

I stand back and look at the overall picture in the light of all the matters to which I have referred. In my judgment, despite the very powerful submissions that Mrs Taylor in particular has made and the considerable sympathy that I have for her position, as well as that of Mr Taylor, I do not consider it is right to put off the evil day indefinitely and effectively keep the claimant out of its money with no prospect of any recovery in the near future. There is no suggestion of payment on account or payment by way of interest. There is a dogged refusal to accept, on Mrs Taylor’s part, that her property, as she sees it, should be made available in any respect for the payment of this debt.

As I say, I have considerable sympathy for her, but it is not entirely her property (or at any rate was not at the time of the charging order). It is (or was) her and her husband’s property, and her husband owes the claimant a considerable amount of money. Were it the case that a family home were immune from an order for sale in such circumstances, then a large number of debts would never be paid because husbands could always hide behind their wives or wives behind their husbands. Mrs Taylor complained that the law’s approach is discriminatory against wives because it is husbands, she says, who rack up debts to their wives' disadvantage rather than the reverse. I do not think any research has been undertaken in that regard, though certainly in the conventional family unit (which is less and less the case these days) it is the husband who is usually the more entrepreneurial of the two. Nonetheless, even wives rack up debts, some more than others, and the law is in this respect gender-neutral: the court does not give any less or greater weight to the interests of a wife than the interests of a husband.

In this case, the court has to balance all the interests and, in my judgment, even after giving due weight to all the factors on which Mr and Mrs Taylor rely, the proper exercise of the court’s discretion requires a sale. I do not think, however, that it would be right to order now an immediate sale by public auction, which is what the claimant seeks. I consider that the defendant should have the opportunity to sell the property by private treaty. There must, however, be a mechanism which enables the claimant to come in and effect a sale if the defendants unduly drag their feet. I shall therefore order a sale but will not require possession to be given up to the Claimant until June 15^th of this year. The purpose of this deferment of possession is to enable the defendants to take steps to market the property and find themselves an alternative property in which to live. If the property is not sold by that date then possession is to be given up to the claimant who will have the conduct of any sale from that point on. There will be liberty to apply so that if a sale is truly imminent the 15^th June deadline can if appropriate be extended.

Finally, I record that after delivering this judgment, my attention was drawn to up-to-date evidence concerning Mr Taylor’s health. It appears that he will be in need of further treatment for his cancer as an outpatient over the coming months. I do not consider that this justifies any alteration of my order. He will be able to attend as an outpatient after as well as before a move. Mrs Taylor can put the house on the market and look for a replacement house without significant input from Mr Taylor. She is likely to take the lead in that regard anyway. Moreover, there have, as I have mentioned, been considerable delays to date, including adjournments on account of Mr Taylor’s health. It seems to me that the further period of delay that I am willing to countenance (until June this year) to enable an orderly sale to be effected is fair to Mr Taylor, as well as Mrs Taylor.