Clark & another v Lucas Solicitors LLP

[2010] 2 All ER 955; [2009] EWHC 1952 (Ch)

31st July 2009

High Court


Cs purchased a residential property, being one newly built property out of a small development. D solicitors provided an undertaking in the usual form to discharge charges on completion of the transaction. There were two all-monies charges secured over the whole site, one in favour of a bank and one in favour of K, an individual who had provided finance for the development. D had not sought a redemption figure from either the bank or D; it did not appear that D had communicated in any way with K prior to giving the undertaking to discharge his charge. D paid the entire proceeds of sale to the bank which sealed a discharge of its charge. K received nothing. K’s charge secured in excess of £1 million which was significantly in excess of the value of the property, £560,000. K refused to seal a discharge without payment of the entire sum secured. C applied for summary enforcement of D’s undertaking. D admitted giving the undertaking and breach of the undertaking, but contended that D should not be ordered to perform the undertaking and there should be an inquiry as to damages instead. D submitted that the undertaking was impossible to perform; that there was uncertainty as to the amount which K could properly insist upon; that ordering performance of the undertaking would be disproportionate to Cs’ true loss; and that, as a relevant matter in assessing Cs’ true loss, C may be entitled to be subrogated to the rights of the bank under their prior charge.

The undertaking was not impossible to perform. There was no evidence of a real dispute as to the amount which K could properly require as a condition of sealing a discharge. Ordering performance was not disproportionate: D should be taken to have contemplated, when undertaking to discharge an all-monies charge, that he might be required to pay all the monies secured thereunder. The Court considered obiter dicta in the cases of L Morgan & Co v Jenkins O’Dowd & Barth [2008] EWHC 3411 (Ch) and Angel Solicitors v Jenkins O’Dowd & Barth [2009] 1 WLR 1220.

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