IN THE SUPREME COURT APPEAL NUMBER:……………
BETWEEN
The Trustees of FAMILY TRUST – Appellant (A)
&
(1) BANK OF SCOTLAND – 1st Respondent (R1)
(2) DTZ HOLDINGS PLC – 2nd Respondent (R2)
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INFORMATION ABOUT THE DECISION BEING APPEALED
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Background to the case
1. Following the expiry of a “Facility Letter” [see enclosed “Exhibit A”] in December 2007 (relating to the terms of a GBP £3M overdraft facility, apparently secured by the legal mortgaging of certain properties held in trust), protracted negotiations of new terms were on-going between Family Trust (A) and Bank of Scotland (R1) until early 2010, after a dispute over the purchase of a substantial London property, which resulted in R1 making an out-of-court six figure payment to A in compensation for its failure to adhere to its initial commitment to finance the acquisition.
2. Subsequent to written proposals for and final agreement of a settlement in favour of A, upon which R1 reneged on certain terms, in the good faith that a loan of money had been made by R1 pursuant to its offer of such in the “Facility Letter”, on 19/02/10, A delivered a Promissory Note made payable to bearer to the bank’s director, MR S, for the purpose of settling all outstanding balances on A’s accounts, with a view to either consolidating its relationship with R1 or moving its business elsewhere, in the event that R1 would not deposit the Promissory Note and other negotiable securities held by A.
3. After a lengthy meeting between the parties at R1’s Edinburgh offices, S stated that to the very best of his knowledge, following telephone consultations with “head office”, “legal advisers” and “the Banking Council”, nobody at LLOYDS or BANK OF SCOTLAND had any knowledge of the type of financial transaction proposed by A. In other words, the Bank was claiming that it had no knowledge of or expertise in the business of depositing notes for the proposed purpose, which seemed, even on the face of it, somewhat unlikely, as far as the Trustees were concerned.
4. R1 twice formally refused to accept tenders of payment over the next ten days, resulting in an exhaustive administrative process being initiated by A, during which R1 failed to provide disclosure with regard to the alleged transaction of the loan and any instrument of deposit that was used to create the credit in A’s account. R1 also failed to provide a legally enforceable mortgage contract and adequate assurance of due performance with regard to the alleged loan, despite repeated requests by A, putting forward the unsigned “Facility Letter” and the “Secured Liabilities” described therein as the evidence upon which it was seemingly entirely reliant.
5. Thus, in effect, since the “Facility Letter” was not signed or duly witnessed by R1, the Bank could conceivably argue that it made no contractual commitment to lend A any money, whether under that document or otherwise, giving rise to reasonable cause for A to suspect that, given the Bank’s unequivocal refusal to disclose the instrument of deposit, A might have entered a nudum pactum with R1; a contract to perform without due consideration, which is void in law, ab initio, under which no Court can compel a party to perform.
6. In accordance with the applicable Laws of Negotiable Instruments, the dishonour of the note by non acceptance was duly protested by a notary public, thereby discharging any existing debt under s43 of the Bills of Exchange Act 1882. Any existing or previously existing contracts and their related documents were then rescinded by notice on 25/06/10, in accordance with the well established principles of English law regarding rescission for non performance or breach, as well as the UNIDROIT Principles of International Commercial Contracts 2004, under which A terminated any and all apparently naked contracts and their related documents.
7. Notwithstanding this action, R1 withheld, without A’s consent or authorisation, FIVE HUNDRED & THIRTY SEVEN THOUSAND, SIX HUNDRED & EIGHTY EIGHT POUNDS STERLING, the credit balance on A’s accounts, following the sale of one of its properties, flatly refusing to issue a banker’s draft upon the reasonable request of the Trustees, which A regards as prima facie evidence of R1’s unlawful withholding of A’s funds.
8. Shortly after its receipt of “NOTICE OF TERMINATION” on or around 27/06/10, and purportedly under the terms and conditions of the now rescinded “Facility Letter”, R1 then appointed a subsidiary of DTZ Holdings plc (R2) as LPA Receiver for the Trust’s properties, demanding repayment of an alleged liability that A now considered legally discharged under the provisions of s43 of the 1882 Act.
9. R2 was duly informed by A about the perceptibly false representations of R1 and was reasonably requested to cease and desist from acting as A’s alleged “agent”, in order to comply with its duty of good faith to the Trust, pending the outcome of soon to be issued legal proceedings, on the basis that A could not be in default of a non-existent mortgage contract, and therefore, mortgage money could not be said to have become due, as is the unambiguous requirement of the Law of Property Act 1925.
10. This request was refused without discussion on two separate occasions and R2 was duly named as 2nd Defendant in the matter, having informed A by solicitor’s letter that it was more than satisfied that it could proceed to act as Receiver, in spite of being notified by the Trustees that they had reason to believe R1 had misrepresented or falsified the facts and that it had refused to accept payment of the alleged debt.
11. A was also informed that R2 had taken “independent legal advice” from Shepherd Wedderburn, the legal representatives of R1, the party that appointed them as LPA Receivers, which gives rise to an obvious question: could A’s solicitor’s firm ever be employed by R1 and R2 to represent their interests in a matter in which it was already representing A’s interests, without necessarily creating a conflict of interests? It is A’s contention that Shepherd Wedderburn were and remain clearly incapable of providing “independent legal advice” to R2, simply because of the firm’s representation of R1’s interests in the same matter. By way of emphasising the point, it is somewhat unlikely that R1 would not have strenuously objected on the ground of conflict of interests if R2 had agreed to cease and desist in the light of “independent legal advice” received from A’s solicitors, of which one of the Trustees is a partner.
12. It appears that a conflict of interests is apparent between Shepherd Wedderburn’s duty to offer R2 truly independent legal advice and their obligation to act in the best interests of R1, which might have involved, at least conceivably, collusion and/or deception, with regard to the portrayal of the allegedly “independent” relationship between the Defendants’ respective legal representatives, as was represented to A by Barlow Lyde & Gilbert for and on behalf of R2 during pre-action discussions. The fact that it now appears that Shepherd Wedderburn are representing both Respondents, as expressed in a recent letter to the Trustees, would seem to compound this tangible lack of consistency, which also stands as strong evidence of the bad faith shown to A by R2.
13. On the ground of the lack of good faith shown to A following due notice of its genuine and well founded concerns about the lawfulness of R1’s actions, R2 was and continues to be held jointly and severally liable for the damages incurred by A as a result of R1’s negligent misrepresentation and/or fraudulent representation of the facts, in the service of its own financial benefit and that of its partners, shareholders and stakeholders, to the serious detriment of A’s once burgeoning property portfolio.
History of Proceedings
14. A originally filed a claim for damages in the High Court of Justice, Chancery Division, in the Newcastle upon Tyne District Registry, following various apparent and unlimited statutory breaches by the Defendants, including the Fraud Act 2006, along with an emergency application for an ex-parte injunction, intended to prevent the dissolution of the commercial and residential properties held in trust by A for the benefit of other parties.
15. On 06/08/10 [the date the claim and application for injunctive relief were filed], A was called to appear before HHJ Walton, who drew attention to a minor jurisdictional matter, which was easily resolved, resulting in the Order of 13/08/10, granting permission to serve the Claim Form on the Defendants.
16. Twenty one days later, in a brief hearing on 27/08/10, HHJ Kaye QC heard the emergency application for an ex-parte injunction, during which it was established that the Court File did not yet contain sufficient evidence in support of the application. The judge ordered that it be left open and treated as if A had decided not to proceed with the application at that juncture and gave oral directions on how the writer might proceed with this claim.
17. The issues put before the Court below were as follows: Does R1 have an enforceable contract with which to support its counterclaim, as well its appointment of R2 as LPA Receiver? Can R1 substantiate its losses with the disclosure of the actual accounting of the bookkeeping entries associated with the alleged loan(s)? If the answer to those questions is “yes”, was the alleged liability discharged/set-off by notice under the provisions of the Bills of Exchange Act 1882?
18. On 22/10/10, there was a Summary Judgment hearing of the Defendants’ applications to have the claim struck out, along with the Claimant’s applications for Summary Judgment and Orders of Conditional Disclosure and injunctive relief, held at Newcastle Law Courts before HHJ Walton. Following the submissions of A and counsel for the Defendants, the Claim Form and Particulars of Claim were struck out as disclosing no reasonable grounds and the claim was dismissed, along with A’s applications, as being “totally without merit”. Costs were awarded to the Defendants and A was ordered to make an interim payment, subject to the detailed costs assessment of another Court.
19. HHJ Walton stated he was satisfied that the “Facility Letter” was an enforceable contract; the Court considered A’s tender of payment and previous payments made by the Trustees to the Bank sufficient proof of A’s indebtedness and of R1’s performance of the alleged loan of money; the judge ruled that s43 of the 1882 Act does not apply to Promissory Notes, which he did not consider an acceptable method of payment under the rescinded “Facility Letter”, the unilateral terms of which stipulated that R1 would only accept payment in “cleared funds”.
20. With regard to the form of the “Facility Letter” and with all due respect to the Court, HHJ Walton mistakenly stated in his judgment that: “it bears the signature of the Trustees as well as a representative from the bank.” However, as discussed in A’s skeleton argument, the evidence in the bundle clearly showed that the document was not signed by R1, as the Supreme Court will observe upon examination of the enclosed “Exhibit A”.
21. C considers this to be a fatal error in the judgment of the Court below, since the mere acknowledgement of the lack of a signature alone would render the document void under s2 of the Law of Property (Miscellaneous Provisions) Act 1989, in the event that the points made in the judgments in Lloyds Bank v Bryant [1996] NPC 31 and United Bank of Kuwait v Sahib CA [1996] 3 All ER 215 were applied to this case, as A believes they should have been.
22. Despite this clearly arguable position, an oral application for permission to appeal on the ground that the law had not been applied correctly was refused by HHJ Walton without a hearing, on the ground that A did not have any reasonable chance of success, as was a subsequent application for permission to appeal to the Court of Appeal by Lloyd LJ, on a very similar basis and once again without a hearing of the application.
23. It is also worthy of note that neither judge in the Courts below dismissed A’s interpretation of the law of negotiable instruments, and it would seem to be implicit in the reasons given in the dismissal of the permission application by Lloyd LJ that he agrees that the tender of a “general promissory note” is as an acceptable form of payment under certain circumstances.
Treatment of the issues
24. Had permission been granted, the issues in the appeal would have been:
a. whether or not the Law of Property (Miscellaneous Provisions) Act 1989 applies to the A’s mortgages; b. whether the legal charges must fall in the absence of a mortgage contract compliant with s2 of the 1989 Act; c. whether the terms of the “Facility Letter” are legally enforceable; d. if the terms are enforceable, whether the refusal of the note discharged any outstanding liability under s43 of the Bills of Exchange Act 1882.
25. Since both judges refused leave to appeal without a hearing, A has not been given the opportunity to properly argue this point of law or any of the others raised, which the Trustees regard as incompatible with Article 6 and the First Protocol of the Human Rights Act 1998, as well as the Magna Carta, thereby giving rise to the extraordinary circumstances which provide grounds for this appeal to the Supreme Court.
26. Access to justice and the right to a fair trial in a competent tribunal have been denied to A, in that the Supreme Court rules and the laws of the United Kingdom do not provide a route of appeal for an injured party who is refused permission to appeal, in both the High Court and then the Court of Appeal, without a hearing of either application, save for an application to the Supreme Court under the 1998 Act in exceptional circumstances.
27. Notwithstanding the opinion of Lloyd LJ, as expressed in his resounding dismissal of the permission application on paper, that the “Facility Letter” is not governed by the 1989 Act; in the case of Lloyds Bank v Bryant [1996] NPC 31, CA, the recently retired Lightman J stated in his written judgment: “An agreement for a loan to be secured by a charge on land is in my view a contract for the disposition of an interest in land.” This eminent opinion is clearly not one that could rightly be dismissed as “totally without merit”.
28. It should also be noted that A was not aware of the honourable Mr Justice Lightman’s verdict or the Sahib case at the time of the Summary Judgment hearing on 22/10/10. Wherefore, A submits that it is reasonable to assume that had HHJ Walton’s attention been drawn to the provisions of s2 of the 1989 Act and the supporting authorities in the hearing on 22/10/10, it is somewhat unlikely that he would have dismissed the claim as “totally without merit”, since there was at least one arguable and potentially binding point of law in A’s favour.
29. In the alternative and at the very least, in such circumstances permission to appeal would surely have been granted by HHJ Walton and the application to the Court of Appeal would not have been filed by A, in which case the High Court would have been bound by Sahib to uphold the core of A’s claim: the Bank does not have an enforceable security on the ground that there is no valid mortgage contract in existence.
30. The opinion of Lightman J casts serious doubt over the safety of the original judgment [as well as the Court of Appeal’s dismissal of A’s permission application, which included the rather excessive threat of a Limited Civil Restraint Order], since it stands as a clear endorsement of the position stated by A from the outset. Moreover, A’s claim cannot be held to be “totally without merit” when at least one significant aspect of it concurred with the view of Lightman J in Lloyds v Bryant, on appeal to the High Court.
31. HHJ Walton dismissed the treatment of the note as a valid tender under the terms of the “Facility Letter”, which required any repayment to be in “cleared funds”. Once again, with the greatest respect to the Court below, a Promissory Note made payable to bearer on demand is the epitome of “cleared funds”, since it is negotiable upon signature and delivery to the holder and the instrument’s inherent unconditional promise to pay in currency is not contingent upon a clearing system or funds deposited in a bank account; it is valuable consideration in and of itself, as prescribed by s5 of the Factors Act 1889 and the Bills of Exchange Act 1882. Therefore, even if the court ruled that the debt was due and outstanding, the note should have been declared to be a good tender.
32. In consideration of the dispensing of the claim as “totally without merit”, it is somewhat contradictory that A’s interpretation of the law of negotiable instruments was excepted from that unequivocally dismissive judgment. It is A’s contention that even if the judge only concurred with one of the points made in the claim, it would be much more accurate to describe it as “not entirely without merit”, in which case permission to appeal could have been granted, in which case A would have had the opportunity to fully argue the points, emphatically supported by the eminent authorities cited herein.
The issues before the Supreme Court
33. Whether, in the absence of a mortgage contract, signed by both parties and containing all of its terms, the effect of the provisions of s2 of the Law of Property (Miscellaneous Provisions) Act 1989 is to render null and void any charges that arose out of that which purports to be a mortgage but fails to comply.
34. Whether the charges also fall foul of section 117 and the Fourth Schedule of the Law of Property Act 1925, since they do not comply with the prescribed form of legal charge, in that they do not contain a statement of the money loaned by R1 to be redeemed by A.
35. Whether, in any event, all the terms of the “Facility Letter” are void under s5 of the Unfair Terms in Consumer Contracts Regulations 1999, simply because they were drawn up in advance by R1 and not individually negotiated between the parties.
36. Whether the “Facility Letter” is also unenforceable under s44 of the Companies Act 2006, in that it has neither been signed by R1 or duly witnessed.
37. Whether R1 created a clog in the equity of redemption by refusing to accept deposit of a Promissory Note made payable to bearer on demand, whilst claiming the right to do so for its own benefit within the terms it imposed upon the other party and pretending that it was not cognisant of the mechanics of such a transaction.
38. Whether a Promissory Note made payable to bearer on demand is on the same legal footing as a Bank Note and is to be treated as “cleared funds” in the hands of a banker.
39. Whether R1 has deliberately misrepresented or falsely represented the facts for its own financial gain, in denying that it was capable of accepting the note tendered in satisfaction of the alleged debt, and whether in so doing, it has breached the Misrepresentation Act 1967 and/or the Fraud Act 2006 and should pay damages to A for the injuries caused.
The Statutory Framework
Law of Property (Miscellaneous Provisions) Act 1989
40. “2 Contracts for sale etc of land to be made by signed writing
(1) A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each.
(2) The terms may be incorporated in a document either by being set out in it or by reference to some other document.
(3) The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract.”
41. In the absence of a document containing all of its terms and the signatures of both parties, the provisions of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 render unenforceable any legal charges granted by a mortgagor to a mortgagee, save for the exceptions of those which have arisen through proprietary estoppel and constructive trusts. By way of a compelling authority in support of this assertion, the learned Peter Gibson LJ in Sahib [1996]: “…a contract for a mortgage of or charge on any interest in land or in the proceeds of sale of land can only be made in writing and only if the written document incorporates all the terms which the parties have expressly agreed and is signed by or on behalf of each party.”
42. Furthermore, Chitty (2008) 30th edition, page 417, clearly states: “iii. The effect of failure to comply with formal requirements – Effect of non compliance…any agreement not complying with the requirements of s2 of the 1989 Act is a nullity.”; whilst, Cousins Law of Mortgage (2010), page 610-611 says: “…notwithstanding any oral agreement or deposit of title deeds, the creditor will have no interest in or rights over the debtor’s land. It follows that the failure to comply with section 2 will provide a defence to any claim for possession pursuant to a mortgage.”
43. R1 has argued in a letter from its solicitors dated 22/03/11 that it is not intending to rely upon the “Facility Letter” as a contract for the disposition of legal charges over land in any future proceedings. From the outset, A has taken the position that there is no valid mortgage contract in existence, in which case, R1 has neither an enforceable security or the right to appoint R2 as LPA Receiver, whether under the Law of Property Act 1925 or otherwise.
44. Based upon the contents of the letter of the 22nd of March, it would appear that R1 is now relying upon the enforceability of the charges registered under the protection of the Land Registry, the legal effect of which, as the foregoing authorities affirm, is nullified by the absence of a valid mortgage contract, rendering any defence that solely relies upon the charges deposited as deeds somewhat insubstantial.
45. R1 has stated that the 1989 Act does not apply to any aspect of this case. Indeed, until very recently R1 has been consistent in its insistence upon its reliance upon the “Facility Letter” and its related documents, which would render somewhat dubious any subsequent claims of proprietary estoppel or constructive trust. However, any claims that the legal charges granted to R1 are valid and enforceable in the absence of a valid and enforceable mortgage contract are unsustainable in law, as the authorities given forcefully demonstrate. Furthermore, since an equitable mortgage naturally arises from a legal mortgage, it was obviously the intention of the Law Commission that s2 would apply to all mortgages, notwithstanding the fact that there is no mention of the latter in the 1989 Act.
46. A also wishes to draw the Court’s attention to section 2 of the legal charge granted over REDACTED ADDRESS [see enclosed “Exhibit T”], which reads: “You charge with full title guarantee as security for “Secured Liabilities:- 2.1 by way of legal mortgage the Property”. Since the form of this document is virtually identical to the other legal charges granted to R1 by A [when it had no reason to believe that R1 had not performed a loan of money], there can be little doubt that those charges were dependant upon the existence of a valid and enforceable mortgage contract. Since the deposit of title deeds is no longer sufficient and the doctrine of part performance has been abolished, the legal charges deposited as deeds must be regarded as nullities and removed from the register by the Land Registry at the earliest opportunity.
Law of Property Act 1925
47. In appointing R2 without a valid mortgage contract, and therefore, without sustainable evidence that “mortgage money has become due”, R1 has failed to comply with the provisions of s101(1)(iii) of the Law of Property Act 1925: “101(1) A mortgagee, where the mortgage is made by deed, shall, by virtue of this Act, have the following powers, to the like extent as if they had been in terms conferred by the mortgage deed, but not further (namely):— (iii) A power, when the mortgage money has become due, to appoint a receiver of the income of the mortgaged property, or any part thereof; or, if the mortgaged property consists of an interest in income, or of a rentcharge or an annual or other periodical sum, a receiver of that property or any part thereof;”.
48. The charges also fall foul of s117 and the Fourth Schedule of the 1925 Act, on the basis that they do not conform with the prescribed form of legal charge, in that [without limitation] they don’t comply with the requirement that the amount of mortgage money loaned by the mortgagee and to be redeemed by the mortgagor must be written on the charge:
“117(1) As a special form of charge by way of legal mortgage, a mortgage of freehold or leasehold land may be made by a deed expressed to be made by way of statutory mortgage, being in one of the forms (Nos. 1 or 4) set out in the Fourth Schedule to this Act…
Schedule 4 – Form No 1 – Statutory Charge by Way of Legal Mortgage
This Legal Charge made by way of Statutory Mortgage the .. .. .. .. .. day of .. .. .. .. .. 19 .. , between A. of (etc) of the one part and M. of (etc) of the other part Witnesseth that in consideration of the sum of £ .. .. .. .. now paid to A. by M. of which sum A. hereby acknowledges the receipt A. As Mortgagor and As Beneficial Owner hereby charges by way of legal mortgage All That (etc) with the payment to M. on the .. .. .. .. day of .. .. .. .. .. .. .. 19 .. , of the principal sum of £ .. .. .. .. .. .. as the mortgage money with interest thereon at the rate of .. .. .. per centum per annum. In witness etc.”
49. An appeal to common practice in defence of this aspect of the claim would appear to be entirely without merit in English law, especially when the Land Registry cannot determine from the document alone the amount to be redeemed on the mortgage, thereby determining that both the Mortgagor and the Registrar are dependent upon the veracity of an amount claimed by the Bank, which has already reneged on a previous agreement with the Trust.
50. There is simply no sustainable defence for deliberately omitting to sign and duly witness mortgage contracts and/or charges executed as deeds, especially when R1 is obliged to do so under a statute that was enacted more than two decades ago. Following further research, this seems to represent the common policy of R1, rather than an unfortunate accident of ignorance, in relation to the law of mortgages and its statutory obligations and responsibilities.
Unfair Terms in Consumer Contracts Regulations 1999
51. “5 Unfair Terms
(1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. (2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term. […] (5) Schedule 2 to these Regulations contains an indicative and non-exhaustive list of the terms which may be regarded as unfair.”
52. Even in the unlikely event that the unsigned “Facility Letter” is deemed sufficient proof of the Trust’s indebtedness, A contends that: 1) each contractual term was not individually negotiated, contrary to R1’s good faith requirement, thereby causing significant imbalance in the parties’ rights and obligations, to the detriment of A; and 2), all of the terms were drafted in advance by R1, thereby preventing A from influencing the substance of their content, which clearly comprises breaches of s5(1), (2) and Schedule 2 of the 1999 Regulations, in which case, all of those terms are rendered void and legally unenforceable.
Companies Act 2006
53. “44 Execution of documents.
(1) Under the law of England and Wales or Northern Ireland a document is executed by a company—(a) by the affixing of its common seal, or (b) by signature in accordance with the following provisions. (2) A document is validly executed by a company if it is signed on behalf of the company— (a) by two authorised signatories, or (b) by a director of the company in the presence of a witness who attests the signature.”
54. In any event, the “Facility Letter” does not comply with the requirements of s44(1) and (2) of the Companies Act 2006, in that it is neither signed on behalf of the company by a director in the presence of a witness or by two authorised signatories, and as such, the document cannot be considered to be duly executed or legally enforceable, notwithstanding the judgment of HHJ Walton.
A Clog in the Equity
55. It is well established that a condition in a mortgage or charge that is repugnant to the contractual right to redeem and/or the equitable right to redeem is null and void. A contends that R1’s refusal to accept the Promissory Note in payment of the alleged debt comprises such a clog in the equity, which is somewhat compounded by the fact that R1 sought to retain the right to deposit the same type of negotiable instruments in A’s name, for its own benefit and without disclosure, under the power of attorney that was conferred under the terms of the “Facility Letter”, a condition that A now regards as unconscionable, on the basis that the Trustees were denied this right under the terms of the apparently naked contract.
56. Furthermore, it has been held by the Courts since the time of Miller v Race [1758] that Promissory Notes made payable to bearer on demand, whilst differing in certain respects, are generally considered to be on the same legal footing as bank notes. On this basis, the note would still be a valid tender for any proven indebtedness to R1, and the right to make such a payment is enshrined in the equity of redemption, as well as prescribed under statute by s5 of the Factors Act 1889: “The consideration necessary for the validity of a sale, pledge, or other disposition, of goods, in pursuance of this Act, may be either a payment in cash, or the delivery or transfer of other goods, or of a document of title to goods, or of a negotiable security, or any other valuable consideration…”
____________________________________________________________________GROUNDS OF APPEAL
In an application for permission to appeal under Article 6 and the First Protocol of the Human Rights Act 1998.
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1. Since the “Facility Letter” upon which it has consistently relied is not signed by R1, nor does it contain all of the terms and conditions, A takes the position that there is no mortgage contract that complies with s2 of the Law of Property (Miscellaneous Provisions) Act 1989 in existence, in which case R1 has neither an enforceable security or the right to appoint R2 as LPA Receiver. In so doing without a valid contract, it would seem that both Respondents have offended section 101(1)(iii) of the Law of Property Act 1925, in that mortgage money cannot be deemed to have become due in the absence of a legally enforceable mortgage of property.
2. On the basis that the judgment of HHJ Walton, by his own admission in the Summary Judgment hearing on 22/10/10 at Newcastle Law Courts, relied almost entirely upon the validity and enforceability of the “Facility Letter”, A contends that permission to appeal could be granted, and indeed, should have been granted by the Courts below, solely on the strength of A’s consistent allegation that the unsigned document was legally unenforceable, as was clearly expressed in the Particulars of Claim and Skeleton Arguments put before the Courts.
3. As an additional authority in support, in the case of Lloyds Bank v Bryant [1996] NPC 31, CA, Lightman J stated that in his judgment: “An agreement for a loan to be secured by a charge on land is in my view a contract for the disposition of an interest in land.”, which casts further doubt over the safety of the original judgment appealed, on the basis that the learned judge in the Bryant case concurred with the main argument put before the Courts below by A; that an unsigned, incomplete “Facility Letter” is void and unenforceable, as are any legal charges which arose out of it. At the very least, it should have been conceded by the Courts below that A’s claim cannot be fairly and reasonably deemed “totally without merit” if it contains at least one arguable point of law, which it very clearly does.
4. Furthermore, with regard to execution of the “Facility Letter”, HHJ Walton mistakenly stated in his judgment that: “it bears the signature of the Trustees as well as a representative from the bank”, when the evidence in the bundle proved beyond doubt that the document was not signed by R1, which is also a breach of s44 of the Companies Act 2006. A takes the position that this error is a fatal flaw in the judgment handed down, since the recognition of this point alone would substantiate a fundamental part of A’s claim; that there is no valid, enforceable mortgage contract and the legal charges are null and void. This point is vigorously vindicated by Sahib, Lloyds v Bryant, Chitty and Cousins.
5. HHJ Walton also commented upon how there doesn’t seem to be any dispute over the Trust’s alleged indebtedness to the Bank, on the basis that: 1) it tendered the note in payment of a debt; and 2) s43 of the Bills of Exchange Act 1882 does not apply to Promissory Notes.
6. The first point does not take into account the fact that at the time the note was delivered the Trustees were not cognisant of the possibility that the Bank may have extended electronic credit rather than depositing its own negotiable security in the mortgage account. In other words, A tendered the note in the good faith that R1 had fulfilled its offer to perform a loan of actual money. It was only the subsequent refusal by R1 to deliver adequate assurance of due performance of that loan of money that A became concerned that the it might have entered a nudum pactum, resulting in the rescission of the “Facility Letter” and its related documents by notice on 25/06/2010, an action which was not recognised by the Courts below, despite its long established validity in both English and international law.
7. The second point is heavily reliant upon interpreting section 89(3) of the 1882 Act as including the provisions for “Dishonour by Non Acceptance” within the meaning of “Acceptance”, which A respectfully considers to be an incorrect and unreasonable application of the law, since it is akin to arguing that accepting payment and not accepting it are one and the same thing, when each action is in fact the opposite of the other. In short, the correct interpretation of s89(3) is that the rules of non acceptance do not fall within its parameters.
8. In addition, the existing mechanism for the depositing of Promissory Notes by R1, whether for the purposes of creating credit and/or satisfying liabilities, is clearly described by “Schedule 1” of the HBOS GROUP REORGANISATION ACT 2006, as was explained by A in great detail to the Courts below. A regards any and all claims by Mr S that no executive in the banking group was aware of the existence of such instruments of deposit to be a misrepresentation or falsification of facts, which Mr S, being a director of the Bank, should have known, as well as evidence of a clog on the equity of redemption, given the detailed description of the very same type of financial transaction in the 2006 Act, which would appear to offend s2 of the Fraud Act 2006 and/or s2 of the Misrepresentation Act 1967. A believes that this particular issue should be decided by a jury in a competent court, since it has all the necessary components of such a proceeding.
9. A’s interpretation of the law of negotiable instruments was not dismissed by either judge in the Courts below, and it would seem to be implicit in the opinion of Lloyd LJ is his dismissal of the permission application to the Court of Appeal as “totally without merit”, that the tender of a “general promissory note” is an acceptable form of payment under certain circumstances. However, both judges dismissed the treatment of the note as a valid tender under the terms of the unsigned, incomplete “Facility Letter”, which dictated that any repayment must be in “cleared funds”, in this case intending bank notes or cheques drawn on bank accounts.
10. Even in the seemingly unlikely event that the Supreme Court rules that the “Facility Letter” stands as an enforceable contract, s5 of the Factors Act 1889 prescribes that negotiable securities [such as the Promissory Note tendered by A] are considered valuable consideration, with regard to the sale or purchase of goods and/or the use of property for the purposes of securing a loan of money. Therefore, on this purely statutory basis, the note would still be a valid tender for any proven indebtedness to R1.
11. It is also arguable that a condition in a mortgage or charge that is repugnant to the contractual right to redeem and the equitable right to redeem is void. In any event, it is A’s contention that R1’s restrictive term with regard to the redemption of the A’s mortgages also offends s5(1) of the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999 No. 2083), thereby rendering the terms and conditions of the “Facility Letter” void and unenforceable.
Conclusion
12. It is painfully obvious that there are clearly arguable grounds for this appeal, permission for which has been refused by both the High Court of Justice and the Court of Appeal without a hearing of either application. Since there is no available route of appeal for A under the Supreme Court rules and the laws of the United Kingdom, notwithstanding these arguable points of law, A has been forced to conclude that the refusals comprise breaches of Article 6 and the First Protocol of the Human Rights Act 1998, as well as the Magna Carta, in that A has been denied the right to a fair trial, access to justice and its property has not been afforded the protection prescribed by law, in favour of a failing bank that is partly-owned by Her Majesty’s Government.
13. It is not in the least bit melodramatic to state that the British Justice System needs to demonstrate to the public that it has not been monopolised by private interests. The Courts will be increasingly inundated with this type of claim, should this and other miscarriages of justice be upheld, such is the growing anger of the British public towards the banks, which many legal researchers believe to be committing fraud on an international scale.
14. Therefore, in the genuine hope that reason, law and equity will prevail, A humbly invites the Supreme Court to grant permission to appeal without a hearing, ordering that the Order appealed be varied, granting Summary Judgment and costs to “the Claimant”, in addition to costs mistakenly paid to “the Defendants”, as well as the funds unlawfully withheld by R1, which must be restored to the Appellant within 14 days by a payment method of its choosing.
15. It should be further ordered that since there is no valid mortgage contract in existence, the Bank are therefore disentitled to pursue possession of the Trust’s properties and/or enforcement of the invalid, unenforceable contract, and the appointment of the LPA Receiver was and remains unlawful, which stands as prima facie evidence that the facts were either falsified or misrepresented by R1 in order carry out the appointment of R2 under such circumstances., notice of which the Receivers were duly served by A as a pre-action protocol.
16. A therefore invites the Court to grant the Order of Specific Disclosure and to further order a new trial by jury, to be listed in Newcastle-upon-Tyne District Registry, Chancery Division, to determine whether damages are due to A under the Fraud Act 2006 or the Misrepresentation Act 1967 or otherwise. In addition, it should be further ordered that the legal charges granted to R1 are now considered null and void and should be removed from the register by the Land Registry at the earliest opportunity.
17. Or, in the alternative, should the Court not be minded to grant the foregoing, the Order appealed should be varied, retrospectively granting permission to appeal to the High Court before a different Chancery judge.
18. It is self-evident that no legal argument is capable of being dismissed as “totally without merit” if it contains at least one arguable point of law, which, in the s2 point alone, as supported by Sahib, Bryant and the other authorities given, A’s argument most certainly does, even before one takes into account the strength of the points made in relation to the Acts of 1882, 1889 and 1925, as well as the 1999 Regulations.
19. For this reason and the points made in the foregoing, permission to appeal should be granted and the Order appealed should be varied accordingly, with or without a hearing.
Advocate for the Appellant
18/05/2011
The Registrar of the Supreme Court has repeatedly refused to put this application for permission to appeal before the most senior Lord Justices, claiming that the Supreme Court does not have jurisdiction to ontervene, despite the fact that it is authorised under statute to make the rules up as it goes along if it done in the name of truth and justice. The Registrar fulfills the same role on the Queen’s Privvy Council.
