Thames Valley Housing Association Limited & others v Elegant Homes (Guernsey) Limited & others

[2009] EWHC 2647 (Ch)

27th October 2009

High Court


Ts purchased for £575,000 plots of land for 9 units from E from a development site of 30 units. W were solicitors acting for E who during the course of the conveyance to Ts gave undertakings to discharge a charge affecting the land. The charge secured all monies owed by E to B (a bank): that borrowing comprised not only E’s borrowing for the present site (approx. £1.3m at the time of the hearing) but also for another development site. Ts paid E a further approx. £1m under build contracts entered into at the same time as the conveyances to have the dwellings built. W did not obtain a redemption figure from B before giving the undertaking. In breach of the terms of E’s facility, B was not told at the time of the sale or the build contract. B required repayment of an amount approximately equivalent to the outstanding facility referable to this site (approx. £1.3m), much less than E’s full indebtedness, as a condition of releasing the charge. On Ts’ application for summary enforcement of the undertakings, W contended that there should be an inquiry as to what B could properly require to discharge the charge: there was a reference to ‘bullet repayments’ in an internal bank document which W argued should be taken to be evidence of an arrangement whereby B could be compelled to discharge the charge upon payment of what B might have received if the sale had been undertaken with B’s knowledge and consent.


Held: There was no evidential basis for W to argue that B could be compelled to discharge the charge for anything less than it demanded. The arrangement between B and E was fully documented; it did not provide any right for E to compel B to release any part of the charge other than by redemption in full; it did not contemplate a sale by E without B’s consent or a sale of plots of land which had not been built on. Since there was no real issue as to what B could properly require to discharge the charge, W was ordered to perform its undertakings. Even if there had been such an issue, the Court would almost certainly have ordered performance in any event. A purchaser who accepts an undertaking should be entitled to rely on it and to know that the solicitor giving it will have to comply with it. The Court considered dicta in Clarke v Lucas LLP [2009] EWHC 1952 (Ch) and 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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