Destine Estates Ltd & Anor v Muir & Anor

In this case, the claimants seek to recover the sum of £225,000 which, they allege, was lent to the defendants when the first defendant, Mrs Janet Muir (“Mrs Muir”), bought a property known as Chowle Farmhouse in Great Coxwell, Oxfordshire.

Mr David Crossley Cooke, the second claimant, is now in his mid-70s and retired. He formerly farmed, but he has also been involved in numerous business ventures. Many, though not all, of these have involved property, sometimes on a sizeable scale. His business interests have largely been run from the Estate Office on the Little Coxwell Estate in Oxfordshire, which is close to Chowle Farmhouse and, I gather, in the ownership of Mr Crossley Cooke’s family.

Mr Crossley Cooke’s career has had its ups and downs. In 1968, he was bankrupted, and much more recently, in late 2010, he entered into an individual voluntary arrangement (“IVA”).

I was told of several other pieces of litigation in which Mr Crossley Cooke has been involved. The earliest of these involved proceedings in which Mr Crossley Cooke sought possession of some flats in a block in Chelsea. When dealing with costs, His Honour Judge Phelan, sitting in the West London County Court, said that he had concluded that “Mr Crossley-Cooke on balance appears not to be a person whose word is to be trusted”. When the matter reached the Court of Appeal in July 1990, Staughton LJ observed that Mr Crossley Cooke had based his belief that he had a prospect of success in the actions on “tenuous material which objectively may not have justified it”. A second case arose from the service of a statutory demand on Mr Crossley Cooke in 2009. A district judge declined to set the demand aside, but Roth J allowed an appeal from that decision (see Crossley-Cooke v Europanel (UK) Ltd [2010] EWHC 124 (Ch), [2010] BPIR 561). In the course of his judgment, Roth J noted that Mr Crossley Cooke, who had appeared before him in person, had accepted that, “with hindsight”, it would have been sensible to make contact with the alleged creditor about a cheque in its favour that he had stopped. Finally, Mr Crossley Cooke played a part in a claim that a Mr and Mrs Horsey brought against a company called Gale Valley Limited. This turned on whether a particular area of land had been sold to the Horseys. Mr Crossley Cooke took the view that it had not, but His Honour Judge Denyer QC, sitting in the Bristol County Court, decided otherwise on 26 May 2010.

Mr Crossley Cooke has not generally undertaken transactions in his own name. He said in evidence that he preferred not to. He has, however, been associated with a number of companies. These have included Drumoss Limited (“Drumoss”) and Tapecrown Limited (“Tapecrown”).

Destine Estates Limited (“Destine”), the first claimant, is owned by one of Mr Crossley Cooke’s daughters, Mrs Nicola Cammack.

Chowle Farmhouse has been owned by members of the Muir family for a good number of years. It once belonged to Mr Billy Muir (“Mr Muir Senior”), the father of the second defendant, Mr David Muir (“Mr Muir”). In 1993, Mr Muir Senior went bankrupt and a mortgagee took steps to recover what it was owed. However, with the help of Mr Crossley Cooke, Chowle Farm was bought by Mr Muir and his first wife, to whom I shall refer simply as “Hetty”. No disrespect is intended.

For some time, Mr Muir enjoyed considerable success with a business exporting livestock. The business was, however, badly damaged by the restrictions that were imposed on imports of beef and beef products from the United Kingdom following the BSE crisis in the mid-1990s. Mr Muir eventually admitted defeat in July 1997, at which point he began to work as a lorry driver.

By now, Mr Muir’s marriage had also failed. He left Chowle Farmhouse in May 1998, and later in the year he moved into a cottage rented by Mrs Muir (as the first defendant was to become). Hetty continued to live in Chowle Farmhouse with the Muirs’ children, and she was joined there by Mr Sam Stratford, who had become her partner. In 2000, Hetty and Mr Stratford purchased together an area of land adjacent to Chowle Farmhouse that came to be registered at HM Land Registry under title number ON223573. Chowle Farmhouse itself, which was registered under title number ON162730, continued to be registered in the joint names of Hetty and Mr Muir.

Mr and Mrs Muir married in 2000. By then, Mr Muir was working for Mr Crossley Cooke as the manager of an antiques centre in Wantage and overseeing information technology programmes for businesses with which Mr Crossley Cooke was associated. During the period with which I am primarily concerned, Mr Muir was working for Mr Crossley Cooke (and companies associated with him) at the Little Coxwell Estate Office.

In 2003, Mr Muir entered into an IVA.

Mr Muir Senior died some four or so years ago.

In 1999-2000, Drumoss lent Mr Muir money and was registered as the proprietor of a second charge over Chowle Farmhouse. The charge appeared to have been signed by both Mr Muir and Hetty.

In 2003, Drumoss took proceedings to recover its loan and interest and to enforce the charge registered in its favour. Mr Muir did not resist the claim, but Hetty did. She claimed that she had not signed the deed in question.

The proceedings came on for trial, but they were settled by a Tomlin order of 15 November 2005 (“the Tomlin Order”). The schedule to this provided for Hetty, Mr Muir and, to the extent applicable to him, Mr Stratford to transfer all their interests in Chowle Farmhouse and ON223573 to Drumoss or its nominee(s). In return, Drumoss was to pay £320,000 to Hetty, up to £95,000 to discharge a mortgage held by Bristol and West Building Society and £45,000 to the supervisor of Mr Muir’s IVA.

Mr Crossley Cooke told me, and I accept, that Mr Muir Senior instigated the negotiations that resulted in the Tomlin Order and that Mr Crossley Cooke understood from Mr Muir Senior that the Muirs wished to buy Chowle Farmhouse.

Following the Tomlin Order, the Muirs were given the chance to buy Chowle Farmhouse. Mr Muir said that Mr Crossley Cooke told him that purchasing Chowle Farmhouse would get the Muirs back on the property ladder and that the opportunity was too good to miss.

Then, as now, Mr Crossley Cooke was hoping to develop neighbouring land, and at the time he thought that it would be beneficial if Chowle Farmhouse were included in the scheme. The idea, Mr Crossley Cooke explained in cross-examination, was that, when the time came, the Muirs would join in. Mr Crossley Cooke said that this was the “whole reason” he was willing to lend money for the purchase of Chowle Farmhouse. For her part, Mrs Muir explained in cross-examination that Mr Crossley Cooke had been quite open about his plans and that she knew that he wanted to develop land in the area, including Chowle Farmhouse, at some point in the future.

On 7 December 2005, Mrs Muir met a Mr Francis Smith of Ascot Assured Limited about obtaining a mortgage. In the course of the meeting, a “mortgage fact find” document was completed and signed by Mrs Muir. Among other things, this gave the price of the property being purchased as £650,000 and the amount Mrs Muir wished to borrow as £500,000. Mrs Muir also said that the difference between these figures was to be funded from an inheritance and that she earned £150,000 a year as an industrial cleaning contractor.

Similar information was given in a mortgage application form addressed to Kensington Mortgages that was completed on the same occasion. This spoke of Mrs Muir having earned £150,000 in 2004-2005 as the proprietor of an industrial cleaning business. It also put the purchase price at £650,000 and the loan required at £500,000. Mrs Muir signed the form to confirm the accuracy of the information given in it.

Mrs Muir accepted that information given in the “mortgage fact find” document and mortgage application form was false. More specifically, she said that she did not have an industrial cleaning business, did not earn anything like £150,000 a year and did not have an inheritance she could use for the purchase of Chowle Farmhouse. As Mrs Muir said in a witness statement, she had virtually no income.

When in the witness box, Mrs Muir maintained that she was told to provide the incorrect information by Mr Smith with the endorsement of Mr Crossley Cooke, who, she said, was in the room. However, Mr Crossley Cooke himself denied having even known about the false information or been present at Mrs Muir’s meeting with Mr Smith. Moreover, the account Mrs Muir had given in a witness statement was both vaguer and significantly different. She said:

The Muirs hoped to be able to fund their mortgage instalments by setting up a bed and breakfast business at Chowle Farmhouse. Mr Crossley Cooke indicated that he would help the Muirs with their mortgage instalments while they got the business up and running.

On 16 December 2005, a Mr Newport of Allied Surveyors plc prepared a mortgage valuation of Chowle Farmhouse for Kensington Mortgages. He put the value of the property at £600,000. A second mortgage valuation was prepared by a Mr Savalio of Wolton Chartered Surveyors on 3 January 2006. This gave a £500,000 figure. On 6 January, Mr Smith asked Professionals Finance Centre Limited (PFC”), packagers for Kensington Mortgages, whether it was possible to obtain an increase in the valuation, making the point that:

Mr Crossley Cooke said, and I accept, that he was informed at the time by Mr Matthew Green, a local estate agent who was a friend of Mr Muir, that he (Mr Green) had told Mr Muir that Chowle Farmhouse might be worth as much as £700,000.

Mr John Mant, a solicitor who was practising in Wantage, was instructed to act for Drumoss in relation to the Chowle Farm conveyancing. On 21 December 2005, he sent Morrison & Masters, the solicitors then acting for Hetty, three draft transfers. These provided respectively for the transfer of Chowle Farmhouse to Mrs Muir for £225,000, for the transfer of a field comprised in ON223573 to Mrs Muir for £20,000 and for the transfer of the remainder of ON223573 to Tapecrown for £75,000. The £225,000, £20,000 and £75,000 totalled £320,000, giving Hetty the sum to which she was entitled under the Tomlin Order.

Mr Mant prepared a contract for the sale to Mrs Muir, and this was signed by Mrs Muir and Drumoss’ director and dated 10 January 2006. The contract recited that Drumoss and Mrs Muir had:

In cross-examination, Mr Mant accepted that the contract might have been backdated slightly. It was probably in existence by 16 January 2006 and was clearly so ten days later.

The 7 December mortgage application form had named Mr Mant as Mrs Muir’s solicitor. On 20 December 2005, however, Mr Muir sent Mr Smith a fax identifying Mr Scott Robinson of Patrick Smith & Co, another firm of Wantage solicitors, as his wife’s solicitors. On 11 January 2006, Mr Mant sent Mr Robinson a letter that included the words, “we act on behalf of Mrs J Muir in respect of her purchase of land at Chowle Farmhouse”. A revised version of the letter was, however, sent soon afterwards in which “you” was substituted for “we”.

Mr Robinson’s recollection was that he was first contacted about acting for Mrs Muir on about 11 January 2006, when he was telephoned by Mr Mant. While Mr Mant’s own recollection was somewhat different, the chances are, I think, that Mr Robinson’s account is substantially accurate.

Mr Robinson explained in evidence that he did not have much direct contact with Mrs Muir herself during the purchase of Chowle Farmhouse. In fact, he could not remember having seen or spoken to her in the course of the transaction.

On 17 January 2006, Mr Smith sent Mrs Muir a letter which began as follows:

Completion was planned to take place on Friday 27 January 2006. In anticipation of it, Patrick Smith & Co prepared a completion statement showing a “balance required to complete transaction” of £251,644.13, and Kensington Mortgages transferred to Patrick Smith & Co the £425,000 that it was to lend to Mrs Muir. At this stage, however, Patrick Smith & Co realised that the parties were not envisaging that the balance of the purchase money would pass through their hands. They duly reported this fact to Kensington Mortgages, as a result of which they were required to return the mortgage advance. At 7.17 pm on 27 January, Patrick Smith & Co faxed to Mr Mant a letter in which they said:

Mr Mant referred to the £225,000 having been “satisfied” to Drumoss in several other letters at this stage. In, for example, a letter dated 1 February 2006 to Morrison & Masters, Mr Mant referred to money being “satisfied by arrangement with … Drumoss Limited”, and in a further latter to Morrison & Masters of 2 February Mr Mant said:

The £225,000 that needed to be passed through Patrick Smith & Co’s account was in part obtained from a sum of £30,000 that had been transferred to Mr Mant from Tapecrown on 27 January 2006. According to the claimants, the balance came from the proceeds of a house that a Mr and Mrs David Jones sold for £218,500 on 3 February. Since Mr Mant was acting for Mr and Mrs Jones, the £218,500 was paid into his client account, and, on Mr Jones’ instructions, he transferred £200,000 of the money to the client account of Goddard & Broadley, a firm of chartered accountants that numbered Mr Crossley Cooke among its clients. On the claimants’ case, Goddard & Broadley transferred the £200,000 back to Mr Mant on 7 February, and that same day Mr Mant paid £225,000 to Patrick Smith & Co. A few days earlier, Mr Mant had sent Patrick Smith & Co a letter in which he had explained:

Completion took place on 22 or 23 February 2006. Patrick Smith & Co transferred £650,000 to Mr Mant, and he then paid £319,211.14 to Morrison & Masters as Hetty’s solicitors, some £95,000 to Bristol and West Building Society and £200,000 to Goddard & Broadley. Hetty and Mr Muir transferred Chowle Farmhouse to Mrs Muir, Hetty and Mr Stratford transferred part of ON223573 to Mrs Muir, and the balance of ON223573 was transferred to Tapecrown. In time, the part of ON223573 that was now owned by Mrs Muir was re-registered at HM Land Registry under title number ON263812.

A completion statement prepared by Patrick Smith & Co is to be found in the bundles. This referred to receipts of £424,930 from Kensington Mortgages, £225,000 from “Mrs J. Muir (re funds sent by John Mant)”, £670 “Ex You” and £662.63 “Ex Mrs Muir (sent by John Mant)”. As regards the £670, a memo from Mr Muir to Mr Crossley Cooke of 10 March 2006 stated:

On 3 March 2006, the supervisor of Mr Muir’s IVA sent Mr Muir a fax in which he asked when he would be receiving payment. Mr Muir passed the fax to Mr Crossley Cooke having written on it:

According to the claimants, deeds of loan and charge were executed by Mrs Muir and (in the case of the loan deed) Mr Muir. The documents on which the claimants rely both bear the date 11 April 2006. Given their importance, I should set out the terms of both documents fully.

The loan deed (“the Disputed Loan Deed”) recites as follows:

The charge deed (“the Disputed Charge Deed”) reads as follows:

For their part, the Muirs deny having signed the documents quoted in the last two paragraphs either in the presence of Mr Mant or at all. They maintain that the only such documents that were signed by them are (a) a deed of loan also dated 11 April 2006 but which does not purport to bear any signature from a witness (“the Muir Loan Deed”) and (b) an undated deed of charge which, again, does not include any signature from a witness (“the Muir Charge Deed”). Both documents have been disclosed by the Muirs.

The Muir Loan Deed carries the signatures of both Mrs and Mr Muir. The operative part is in the same terms as the Disputed Loan Deed, but the recital omits the words, “as registered at H M Land Registry under Title Numbers ON263812 and ON162730”. It states:

The Muir Charge Deed bears Mrs Muir’s signature. The body of the document precisely corresponds to the Disputed Charge Deed, except that it refers to “Title Number” (in the singular) where the Disputed Charge Deed speaks of “Title Numbers”. The heading gives the material title number as ON263812, and nothing has been entered where there is provision for the date of the document to be specified.

I should add that I use the word “deed” in relation to the Disputed Loan and Charge Deeds and the Muir Loan and Charge Deeds for convenience. The Muir Loan and Charge Deeds were clearly not executed as deeds, and the Muirs allege that the Disputed Loan and Charge Deeds were not validly executed either.

As intended, the Muirs set up a bed and breakfast business at Chowle Farmhouse. Mr Crossley Cooke helped them with their mortgage payments for the first three or four months, while the business was being established. The Muirs later repaid him.

On 30 May 2006, Kensington Mortgages notified Patrick Smith & Co that it had transferred Mrs Muir’s mortgage with it to Derbyshire Home Loans Limited.

In 2008, Mrs Muir re-mortgaged with The Mortgage Business, this time borrowing £445,000. As before, Mrs Muir stated in her application that she was an industrial cleaning contractor with an income of £150,000 a year (up, according to the form, from £142,900 in 2006). She estimated the present value of Chowle Farmhouse at £700,000. Mr Mant, who acted for Mrs Muir on the re-mortgage, sent Mr Crossley Cooke a document to confirm (as he did) his approval of the increased mortgage.

By deeds dated 28 May 2009, Mr Crossley Cooke transferred to Mrs Cammack “the Charge dated 11^th April 2006” (i.e. the Disputed Charge Deed) and “the benefit of a Deed made 11^th April 2006 between himself and Janet Elizabeth Muir and David Muir” (i.e. the Disputed Loan Deed). The transfer was stated to be in consideration of £95,000.

On 9 September 2009, The Mortgage Business wrote to Mr Mant to give its “formal consent to a subsequent charge on [Chowle Farmhouse] in favour of Mr David Crossley Cooke”. Mr Mant had, it seems, asked for such consent in a letter dated 21 August.

In August of the following year, Mr Mant submitted to the Land Registry on behalf of Mrs Cammack an application for the registration of the Disputed Charge Deed. Registration was effected with effect from 13 August, and in the following month Mr Mant sent a copy of the entry to Mr and Mrs Muir. Mr Crossley Cooke said that he had decided to have the Disputed Charge Deed registered because Mr Muir Senior had warned him that he (Mr Muir Senior) no longer trusted Mrs Muir and did not want to see Mr Crossley Cooke stitched up.

At about the same time, Mr Mant asked The Mortgage Business to confirm its consent to the assignment of the Disputed Charge Deed to Mrs Cammack.

In early 2011, Mr Crossley Cooke and Mrs Muir fell out. Mr Crossley Cooke, whose account of this I take to be broadly accurate, explained in evidence that Mrs Muir said that she was happy running Chowle Farmhouse as a bed and breakfast, did not want to participate in any development and had no intention of letting her husband do anything with Chowle Farmhouse. She also said that Mr Crossley Cooke was not to come to the property in future.

In February or March of 2011, Mr Muir ceased to work for Mr Crossley Cooke.

On 18 March 2011, Patrick Smith & Co wrote to Mrs Muir on Mr Crossley Cooke’s instructions “concerning monies [lent] to you for the purposes of the purchase of Chowle Farmhouse and its land”. Patrick Smith & Co explained that their client would very much like a meeting to be arranged with him, Mrs Muir’s husband if she so wished and any other advisor she felt appropriate together with the writer and Mr Crossley Cooke “to discuss the development plans of his neighbouring property and repayment of the charge”. The letter was, however, addressed to Mrs Muir at her former address rather than Chowle Farm.

On 1 April 2011, Patrick Smith & Co wrote to Mrs Muir again, this time at Chowle Farm, enclosing a copy of their previous letter and requiring “the return of the £225,000 secured by [their client’s] Charge, plus reasonable interest”. Patrick Smith & Co warned that proceedings would be issued in the absence of a satisfactory response to their 18 March letter, but said that their client remained “open to a suitable meeting to agree another direction as originally stated in our earlier letter”.

On 11 April 2011, Mrs Cammack assigned the benefit of the Disputed Loan and Charge Deeds to the first claimant, Destine, in return for the shares in the company. Destine was registered at the Land Registry as the proprietor of the Disputed Charge Deed with effect from 5 September 2011. Mr Crossley Cooke explained that his daughter had not wanted to bring proceedings against the Muirs in her own name.

In a letter dated 13 April 2011, Patrick Smith & Co told Mr and Mrs Muir of the assignment to Destine and demanded payment of the principal money and interest said to be due under the Disputed Charge Deed.

On 26 April 2011, Patrick Smith & Co re-sent their letters of 18 March, 1 April and 13 April to the Muirs because they understood that the Muirs had not received the letters.

Mr and Mrs Muir now instructed Morrison & Masters, who objected to Patrick Smith & Co’s involvement as well as denying that Mrs Muir was indebted to either Mr Crossley Cooke or Destine.

The present proceedings were issued on 2 September 2011. By them, Destine claims to recover £225,000 plus interest. At a later stage, Mr Crossley Cooke was added as second claimant. Hallmark Hulme Solicitors formerly acted for the claimants, but the claimants have more recently been represented by counsel alone.

Mr Mant and Patrick Smith & Co were joined as third parties by the Muirs, but matters were settled as between the Muirs, Mr Mant and Patrick Smith & Co before the trial began.

Drumoss has now been dissolved.

The main issues to which the parties’ submissions give rise can be summarised as follows:

Were the Disputed Loan and Charge Deeds forged?

If not, are they nevertheless unenforceable because the Muirs were induced to enter into them by (a) misrepresentation or (b) undue influence? Or can the Muirs disavow the documents by relying on the defence of non est factum?

If the Disputed Loan and Charge Deeds are binding on the Muirs, does that preclude them from (a) disputing that Mr Crossley Cooke lent them £225,000 and (b) arguing that any loan made by Mr Crossley Cooke was repaid?

If not, (a) did Mr Crossley Cooke lend the Muirs £225,000 and (b) was any such loan repaid?

Are the claimants entitled to recover interest on any sum for which the Muirs are liable and, if so, for what period and at what rate?

I address these matters in turn below.

It is the Muirs’ case that neither of them signed the Disputed Loan Deed and that Mrs Muir did not sign the Disputed Charge Deed.

Mrs Muir said in her witness statements that Mr Crossley Cooke brought the Muir Loan Deed to Chowle Farmhouse on 11 April 2006 where she and her husband both signed it and she dated it (to the annoyance of Mr Crossley Cooke) and copied it. The document was then, Mrs Muir stated, taken away by Mr Crossley Cooke. This, Mrs Muir said, was the only relevant loan/charge document she signed, and she never went to Mr Mant’s office to sign any charge document.

Mr Muir endorsed his wife’s account in his own witness statements. He similarly said that he did not recall signing any document put to him by Mr Crossley Cooke or Mr Mant other than the Muir Loan Deed.

During her oral evidence, Mrs Muir accepted that, although she could not remember doing so, she must have signed the Muir Charge Deed as well as the Muir Loan Deed. She continued to maintain, however, that she had not signed the Disputed Loan Deed or the Disputed Charge Deed and said that she had only ever been to Mr Mant’s office once, for an unconnected purpose. For his part, Mr Muir explained in cross-examination that he had no recollection of how his wife had come to sign the Muir Charge Deed.

Mr Crossley Cooke gave evidence to rather different effect. He, too, referred to a visit to Chowle Farmhouse, but he said that he took copies of both the Muir Loan Deed and the Muir Charge Deed and that he told the Muirs that they would need to go into Mr Mant’s office to sign the originals. He also said:

The Muirs’ account was disputed by Mr Mant as well. Mr Mant said that he had been asked to prepare documentation by Mr Crossley Cooke and that the drafts were subsequently amended “to include the Chowle Farm and Additional Land title numbers”. Mr Mant was adamant that he would not have signed the Disputed Loan and Charge Deeds as a witness if the Muirs had not themselves signed in his presence. He said that he thought he could dimly remember the Muirs coming to his office and some jocularity about a pen, and he noted that an entry in his diary for 11 April 2006 “could have been an appointment with Janet and David Muir for them to sign these documents in my presence at the office”.

The other witness evidence comes from Mr Michael Handy, a handwriting expert whom the parties instructed jointly to prepare a report. Summarising his findings, he said:

It is, I think, relevant to note also at this stage that the application for the registration of the transfer to Mrs Muir of the land comprised in what became title number ON263812 was not lodged until 5 June 2006. That suggests that no one will have known until then that the land would be given that title number and, hence, that the Muir Charge Deed, the Disputed Loan Deed and the Disputed Charge Deed (all of which refer to title number ON263812) came into being in their present forms no earlier than June 2006.

Mr Charles Auld, who appeared for the Muirs, argued that the Muirs’ evidence that they did not sign the Disputed Loan and Charge Deeds is more compelling than the evidence in the other direction. Mr Handy’s report, Mr Auld pointed out, merely represents his opinion, and he (Mr Handy) has himself recorded that Mrs Muir’s signature is susceptible to simulation. Mr Auld also noted that the Disputed Loan and Charge Deeds cannot have been executed on the date they bear (viz. 11 April 2006) and that no reason has been given for the documents to have been backdated.

While, however, Mr Handy referred to the relative ease with which Mrs Muir’s signature could be copied, he nevertheless considered there to be strong evidence that she signed the Disputed Loan and Charge Deeds, and he found there to be very strong evidence that Mr Muir signed the Disputed Loan Deed. Further, the Muirs’ account, if correct, would suggest that Mr Crossley Cooke and Mr Mant (a solicitor) had been guilty of, or at least complicit in, very serious misconduct. On top of that, it cannot be said to be inherently improbable that the Muirs should have signed: after all, it is now common ground that they did sign the Muir Loan and Charge Deeds, which contain similar terms. It is, moreover, of some significance that the Muirs are unable to provide any real explanation even of the Muir Charge Deed, which it is accepted that Mrs Muir signed.

The truth, I think, is likely to be that Mr Crossley Cooke brought the Muir Loan Deed to Chowle Farmhouse on 11 April 2006, where it was signed by both the Muirs and dated by Mrs Muir; that somewhat later, once the new title number was known, Mr Mant prepared the Muir Charge Deed, Mr Crossley Cooke gave it to Mr Muir and Mrs Muir signed it; and later still, after it been realised that the documentation needed to refer to both title number ON263812 and title number ON162730, Mr Mant drew up revised drafts which Mrs Muir and (in the case of the Disputed Loan Deed) Mr Muir signed in Mr Mant’s presence. This version of events does not, of course, precisely accord with the evidence given by any of the relevant witnesses of fact, but it is unsurprising that witnesses’ recollections should be poor when so much time has now passed.

In short, I find that the Disputed Loan and Charge Deeds were each duly executed.

The Muirs contend that, if they signed the Disputed Loan and Charge Deeds (as I have found that they did), they were induced to do so by misrepresentation on the part of Mr Crossley Cooke.

According to the Muirs, Mr Crossley Cooke told them when he visited Chowle Farmhouse on 11 April 2006 that he wanted them to sign the document he had brought with him for his own purposes and internal records and that it would not be used as a charge on the property. In contrast, Mr Crossley Cooke denied saying that any of the relevant loan/charge deeds was simply for his own internal records or would not be used: the suggestion, he said, was “bunkum”. He accepted that he might have indicated that he was in no particular hurry to register the charge, but that, he maintained, was the truth at the time.

To my mind, the misrepresentation allegations have not been made out. I accept Mr Crossley Cooke’s evidence that he did not tell the Muirs that he wanted any of the relevant loan/charge deeds merely for his own internal purposes. At most, Mr Crossley Cooke would have told the Muirs that he wanted documentation for his records but had no immediate intention of registering or enforcing it. That would not be surprising in circumstances where Mr Crossley Cooke probably thought in terms of the £225,000 referred to in the documents being paid when his development plans came to fruition. It would have made no sense for Mr Crossley Cooke to go to the trouble of taking the Muir Loan Deed to the Muirs, and then having the Muir Charge Deed and the Disputed Loan and Charge Deeds prepared, just so that he would have the documents for his internal records, and I do not think he indicated to the Muirs that that was his intention.

Chitty on Contracts, 31^st ed., says the following when introducing the defence of non est factum (at paragraph 5-102):

Non est factum was considered by the House of Lords in Saunders v Anglia BS [1971] AC 1004. It is apparent from the judgments in that case that, for the defence of non est factum to succeed, it must be shown that there was a radical difference between the document that was signed and what the signatory thought he was signing (see e.g. 1017, 1021, 1026 and 1039). Lord Wilberforce explained (at 1026):

Mr Auld realistically accepted that the plea of non est factum adds little or nothing in the present case. Had I taken the view that the Muirs had been induced to sign the relevant documents by misrepresentation, they would not have needed to rely on non est factum as well. Absent, however, misrepresentation, there can be no sound foundation for the defence of non est factum.

In short, I have not been persuaded that the Muirs misunderstood what they were signing, let alone that there was a radical difference between what they were signing and what they thought they were signing.

Next, the Muirs contend that, if they signed the Disputed Loan and Charge Deeds, their signatures were procured by the undue influence of Mr Crossley Cooke over them.

The law on undue influence was reviewed by the House of Lords in Royal Bank of Scotland plc v Etridge (No 2) [2002] 2 AC 798. It is apparent from that decision that undue influence can potentially be established by showing (a) a relationship of trust and confidence or ascendancy and (b) that the transaction in question calls for explanation. Thus, Lord Nicholls said (at paragraph 14):

Have, then, the Muirs proved that the relationship between them and Mr Crossley Cooke involved the requisite trust and confidence or ascendancy? I do not think they have. Mrs Muir did not testify to such a relationship in either of her witness statements. When giving oral evidence, she said that, when she met Mr Smith in December 2005, Mr Crossley Cooke told her that he would handle everything for her, but I cannot accept her evidence on the point as reliable: she had not made the allegation in her witness statements, and Mr Crossley Cooke denied persuading her to let him run the transaction for her. In any event, Mrs Muir also said that she could not remember any other relevant communication from Mr Crossley Cooke, that it had been entirely up to her whether she bought Chowle Farmhouse and that it was her husband who generally dealt with the acquisition. For his part, Mr Muir said in one of his witness statements (when referring to Mr Crossley Cooke’s visit to Chowle Farmhouse on 11 April 2006):

Turning to Mr Muir, in 2005-2006 he was effectively working for Mr Crossley Cooke, was on friendly terms with him and had in the past been helped by him financially. However, neither Mr Muir’s witness statements nor his oral evidence contained any real evidence of a relationship of trust and confidence or ascendancy. Further, it is to be noted (a) that Mr Muir had experience of dealing with financial matters (in fact, had run his own business), (b) that he said in cross-examination that Mr Crossley Cooke had presented the opportunity to buy Chowle Farmhouse as one for his wife to accept or not as she wished and (c) that his explanation for signing the Muir Loan Deed on 11 April 2006 was based on the alleged misrepresentations I have already discussed (and rejected) rather than undue influence.

Since the evidence does not, in my view, show there to have been a relevant relationship of trust and confidence or ascendancy with Mr Crossley Cooke, I do not strictly need to consider whether the Disputed Loan and Charge Deeds call for explanation or are “not readily explicable by the relationship of the parties”. In the light, however, of the conclusions I arrive at in paragraphs 95-98 below, I do not think they do. To the contrary, they seem to me to reflect indebtedness that the Muirs had already incurred.

The claimants contend that, as a result of signing the Disputed Loan and Charge Deeds, the Muirs are estopped from denying both that they had been lent £225,000 by Mr Crossley Cooke and that that sum had not been repaid to him.

On this aspect of the case, I was referred to the decision of the House of Lords in Greer v Kettle [1938] AC 156 and that of the Privy Council in Prime Sight Ltd v Lavarello [2013] UKPC 22, [2014] AC 436. In Greer v Kettle, Lord Maugham said (at 171):

In Prime Sight Ltd v Lavarello, the Privy Council likened estoppel by deed to estoppel by convention. In the course of giving the judgment of the Board, Lord Toulson endorsed (at paragraph 45) a passage from Spencer Bower, “Estoppel by Representation”, 4^th. ed., in the following terms:

On the facts, the Privy Council held that a winding up order made against a party to a deed of assignment on the petition of the Official Trustee of the other party to the deed should be set aside. The winding up order had been made against the company in question on the footing that, as was common ground, it had not paid the price for which the deed provided. The Privy Council concluded, however, that the company had “substantial grounds for disputing the claimed debt on the basis that the Official Trustee is estopped by the terms of the deed of assignment from asserting that the purchase price has not been paid” (paragraph 55). The deed had provided for an assignment:

There may be room for argument as to how far the Lavarello case detracts from equity’s traditional reluctance to allow a party to a deed to rely on a receipt clause when payment has not in fact been made. However, the Disputed Loan Deed does not merely contain a receipt clause. It also recites that Mr Crossley Cooke had agreed to lend the Muirs £225,000 “[t]o enable the purchase of Chowle Farmhouse” and provides for the repayment of that sum. In the context, it seems to me that the Muirs must be taken to have agreed to admit that Mr Crossley Cooke had agreed to lend them £225,000 for their purchase of Chowle Farmhouse, that the acquisition had been effected on that basis and that the loan had not been repaid. That being so, I agree with Mr Sinclair Cramsie, who appeared for the claimants, that it is not open to the Muirs to dispute that they were indebted to Mr Crossley Cooke in the sum of £225,000 when the Disputed Loan and Charge Deeds were executed and that it does not matter whether the Muirs would otherwise have owed Mr Crossley Cooke £225,000. It follows, as there is no suggestion that the Muirs have paid any of the £225,000 since the execution of the Disputed Loan and Charge Deeds, that the claimants must be entitled to judgment against the Muirs for £225,000.

The conclusions I have arrived at thus far mean that there is no strict necessity to consider what the position would have been if the Disputed Loan and Charge Deeds had not been executed. It nonetheless seems best that I should comment on (a) whether Mr Crossley Cooke did in fact lend the Muirs £225,000 and, if so, (b) whether the loan was repaid.

The Muirs’ case is along the following lines. All that the Muirs had to pay for Chowle Farmhouse was the £425,000 borrowed from Kensington Mortgages. The difference between that figure and the £650,000 given as the property’s “purchase price” was, as Mr Mant said in a number of letters, taken as “satisfied”. There was no question of the Muirs needing to borrow any of the £225,000 from either Drumoss or Mr Crossley Cooke. In any event, the £225,000 that Mr Mant paid to Patrick Smith & Co on 7 February 2006 represented Drumoss’ money. On top of that, any loan Mr Crossley Cooke might have made would have been repaid immediately after the Muirs’ purchase of Chowle Farmhouse had been completed, when Mr Mant transferred £200,000 back to Goddard & Broadley.

The claimants’ case, on the other hand, is to the following effect. The true purchase price was that specified: £650,000. The idea was originally that the Muirs should owe Drumoss the £225,000 difference between the £650,000 and the amount lent by Kensington Mortgages. When, however, it transpired that £225,000 needed to be paid to Patrick Smith & Co, Mr Crossley Cooke found the money and lent it to the Muirs. The £200,000 that Mr Mant returned to Goddard & Broadley was credited to a ledger account that was used for a variety of purposes, not just Mr Crossley Cooke’s personal expenditure, and fell to be taken into account as between him and Drumoss. It did not constitute repayment of Mr Crossley Cooke’s loan to the Muirs, who were unaware of the payment.

I accept the claimants’ submissions. My reasons include these:

The contract for the sale of Chowle Farmhouse provided for Mrs Muir to pay sums totalling £650,000. That figure was also given as the purchase price in, for example, the “mortgage fact find” document (paragraph 19 above), the mortgage application form (paragraph 20 above), the mortgage offer (paragraph 32 above) and the completion statements that Patrick Smith & Co prepared. Further, the Muirs’ re-amended defence stated, “the purchase price was £650,000”;

Although Mr Mant spoke of the £225,000 difference between £650,000 and the £425,000 loan from Kensington Mortgages being “satisfied”, he also said that the money was being “satisfied” “by arrangement with … Drumoss Limited” and “by way of agreement”. These words are apt to refer to an “arrangement” or “agreement” for the £225,000 to be owed to Drumoss;

It is inherently improbable that Mr Crossley Cooke (or Drumoss) would have been prepared to sell Chowle Farmhouse to Mrs Muir for just £425,000 when the property was evidently worth substantially more than that (see paragraph 24 above);

Mr Auld attributed Mr Crossley Cooke’s willingness to sell for only £425,000 to the fact that Drumoss desperately needed to obtain whatever money it could to fulfil its obligations under the Tomlin Order. However, Mr Crossley Cooke said in evidence that he could, if necessary, have made other arrangements, notably through Tapecrown;

There is no good reason to doubt that the £200,000 that Goddard & Broadley transferred to Mr Mant on 7 February 2006 represented the £200,000 that (as Mr Jones and Mr Mant confirmed) had just been paid to them on Mr Jones’ instructions for the benefit of Mr Crossley Cooke. No other source is apparent;

I cannot see how Mr Mant’s transfer of £200,000 to Goddard & Broadley (on 27 February 2006) can have served to discharge any indebtedness the Muirs had to Mr Crossley Cooke. Apart from anything else, the Muirs did not even know of the transfer, and the general rule is that a debt cannot be discharged without the debtor’s authority (see e.g. Goff & Jones, “The Law of Unjust Enrichment”, 8^th ed., at paragraph 5-57). Further, I accept Mr Crossley Cooke’s evidence that the purposes for which the account with Goddard & Broadley was used were not limited to his personal expenditure;

The Muirs are unlikely to have signed either the Disputed Loan and Charge Deeds or the Muir Loan and Charge Deeds unless they understood that Mr Crossley Cooke had lent them £225,000 for the purchase of Chowle Farmhouse;

The explanations of events that the Muirs gave in their pleadings and witness statements were both rather vague and, to an extent, inconsistent with their present case. Even in its re-amended form, the defence asserted that the £225,000 difference between the £425,000 borrowed from Kensington Mortgages and the £650,000 “purchase price” “was to reflect [Mr Muir’s] existing interest in the property”, and Mrs Muir similarly said in her first witness statement that “part of the purchase price was represented by my husband’s share in [the property]”. The Muirs did not, however, maintain this position at trial; and

Mr Auld sought to make much of certain aspects of the way in which Mr Mant handled matters (for example, the fact that the £200,000 that was transferred to Mr Mant by Goddard & Broadley was recorded in his account for Drumoss). However, Mr Mant and Mr Robinson both frankly accepted that they had not been as meticulous as they might have been in every respect.

The final matter I have to consider is interest. The re-amended particulars of claim seek interest at the rate of 6% a year with quarterly rests. The Muirs, however, dispute that they should be ordered to pay any interest.

As is explained in Chitty on Contracts, at paragraph 38-279, “At common law, the general rule was that interest was not payable on a debt or loan in the absence of express agreement or some course of dealing or custom to that effect”. Equity, however, will sometimes award interest where the common law would not. In particular, “the chargee or mortgagee of property, given as security for repayment of a debt, may be awarded interest for late payment, either as ancillary relief, if he brings proceedings to enforce the security, or as an item in the settlement of accounts if the property is sold”, although “the award is not made unless it is equitable to do so in the circumstances of the case” (to quote from Sir Anthony Evans’ judgment in Al-Wazir v Islamic Press Agency Inc [2001] EWCA Civ 1276, [2002] 1 Lloyd’s Rep 410). In In re Drax [1903] 1 Ch 781, Romer LJ said (at 794):

Mr Cramsie contended that this principle applies in the present case and that the Muirs should therefore be ordered to pay interest even though none of the deeds made any reference to it.

One of Mr Auld’s answers focused on Romer LJ’s use of the words, “from the date fixed for payment”. It can be seen, Mr Auld argued, that no interest is payable until “the date fixed for payment”. Here, none of the deeds identified any such date and so no interest should be awarded.

For his part, Mr Cramsie submitted that interest should run from the date the Disputed Loan and Charge Deeds were executed. He pointed out that, where no date for payment is specified, a mortgage debt is payable on demand (see Fisher and Lightwood’s Law of Mortgage, 13^th ed., at paragraph 7.4). If, he suggested, Mr Crossley Cooke was entitled to demand payment as soon as the Disputed Loan and Charge Deeds were executed, there is no reason why interest should not be payable from that point. Mr Cramsie also referred to Ezekiel v Orakpo [1997] 1 WLR 340, where, he said, a charging order was taken to secure the payment of interest from the date it was made. Mr Cramsie’s fallback position was that the Muirs should pay interest from 13 April 2011, when payment was demanded.

My own view, on balance, is that the Muirs should not be required to pay interest from the date of the Disputed Loan and Charge Deeds’ execution. To my mind, it would not be equitable for interest to be awarded on that basis when (a) the documents made no mention of either interest or a date for payment, (b) the likelihood is, as it seems to me, that Mr Crossley Cooke is mistaken in thinking that he discussed interest with Mr Muir, (c) whether or not the £225,000 was strictly payable on demand, the parties probably envisaged that no payment would be made until Mr Crossley Cooke’s development plans proceeded and (d) no demand was in fact made for payment until 2011. I should add that Ezekiel v Orakpo does not seem to me to help Mr Cramsie since the interest that was held to be secured by the charging order in that case was already payable on the relevant judgment debt.

Subject, however, to the point I address in paragraphs 107-108 below, I can see no reason why the Muirs should not be liable for interest from April 2011. The demand served at that point will have operated to fix a date for payment, and there can by then have been no question of waiting for development plans to come to fruition. Mrs Muir had made it clear that she was not prepared to include Chowle Farmhouse in any such scheme.

As regards the rate of interest, it seems to me that the appropriate rate is 3% above base rate. I do not think the circumstances justify compound interest.

However, Mr Auld argued that, even if Chowle Farmhouse is charged with the payment of interest, none can be awarded in the present proceedings. What, Mr Auld said, is alleged in the claimants’ pleadings is that the Muirs are personally liable for interest, not that it can be recovered from proceeds of Chowle Farmhouse, yet the equitable principle on which Mr Cramsie relies does not give rise to personal liability. Sir Anthony Evans summarised the relevant law in these terms in Al-Wazir v Islamic Press Agency Inc (at paragraph 35):

In my view, Mr Cramsie had no convincing answer to Mr Auld’s argument. While, therefore, I consider that Chowle Farmhouse should be taken to stand charged with interest at 3% above base rate from April 2011, the claimants are not entitled to judgment against the Muirs for interest in the present proceedings.

I shall give judgment in favour of the claimants for £225,000.