Trimble & Anor v Cassidy & Anor

Factual and Procedural Background

This appeal arises from a decision of the learned trial judge ("the LTJ") concerning the protection afforded to a purchaser buying from a mortgagee or fixed charged receiver under section 21(2) of the Conveyancing and Law of Property Act 1881.

The First Defendant/Appellant ("JPC") was the registered legal owner of approximately 30 acres of farmland ("the lands"). JPC initially granted an equitable mortgage over the lands to a bank ("the Bank") and later executed a legal mortgage dated 14 August 2017. JPC defaulted on the mortgage obligations, prompting the Bank to obtain a court order for possession and sale and to appoint a fixed charged receiver ("FCR") under the mortgage and statutory powers.

The FCR marketed the lands and entered into a contract for sale with the Plaintiffs/Respondents ("the Purchasers") in January 2019. The sale completed, and the Purchasers sought registration of title. JPC challenged the validity of the FCR’s appointment and the sale, resulting in proceedings for a declaration of ownership and summary judgment application by the Purchasers.

The LTJ found the appointment of the FCR was irregular and invalid due to the absence of a valid demand under the mortgage but held that the Purchasers were entitled to rely on the statutory protection in section 21(2) of the 1881 Act, as they had no actual or constructive knowledge of irregularity. The appeal concerns the correctness of these findings and whether summary judgment was appropriate given unresolved factual and legal issues.

Legal Issues Presented

1. Whether the appointment of the fixed charged receiver was regular or irregular.
2. If irregular, whether the Purchasers' title is unimpeachable by reason of the protection afforded by section 21(2) of the Conveyancing and Law of Property Act 1881.
3. Whether the Purchasers had actual or constructive knowledge of any irregularity in the appointment of the fixed charged receiver.
4. Whether summary judgment was appropriate given the unresolved issue of whether the power of sale had arisen under the mortgage.

Arguments of the Parties

Appellant's Arguments

• Section 21(2) of the 1881 Act did not apply because the deed did not demonstrate a professed exercise of the statutory power of sale.
• The terms of the Deed of Appointment put the Purchasers on notice that the FCR’s appointment was defective and that the power of sale had not arisen.
• The Purchasers had notice, actual or constructive, of the irregularity and thus could not rely on the statutory protection.

Appellee's Arguments

• The conveyance was made in the professed exercise of the power of sale, with "professed" given a broad meaning including "alleged" or "ostensible".
• The Purchasers had no actual or constructive knowledge of any irregularity because the Deed of Appointment did not make any irregularity obvious on its face.
• Section 21(2) of the 1881 Act, read with section 5 of the Conveyancing Act 1911, relieves purchasers of the obligation to make inquiries beyond the face of the documents.
• The Purchasers were entitled to rely on the statutory protection as bona fide purchasers without notice.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court of Appeal analyzed the nature of the mortgage and the statutory powers conferred by the Conveyancing and Law of Property Act 1881 and the Conveyancing Act 1911. It emphasized the distinction between when a mortgagee's power of sale arises and when it becomes exercisable, noting that a valid demand under the mortgage is a prerequisite for the power of sale to arise.

The Court observed that the only demand relied upon predated the legal mortgage by several years, casting doubt on whether the power of sale had properly arisen. The LTJ had found no evidence of a valid demand under the 2017 legal mortgage, rendering the appointment of the fixed charged receiver irregular and invalid.

Despite this, the LTJ held that the Purchasers were protected by section 21(2) because the appointment was made in "professed exercise" of the power of sale and the Purchasers lacked actual or constructive notice of irregularity. The Court of Appeal agreed with the LTJ’s interpretation of the statutory protection but concluded that the unresolved factual and legal issues concerning the validity of the demand and the arising of the power of sale rendered summary judgment inappropriate.

The Court stressed that the case required fuller investigation, including evidence from the Bank, which was not a party to the proceedings and had not provided evidence. The Court found the summary judgment application to be a "treacherous shortcut" given the complexity and factual uncertainties.

The Court also briefly addressed a related argument about alleged uncertainty in the mortgage interest provisions, finding no merit in that challenge.

Holding and Implications

The Court of Appeal REFUSED TO GRANT SUMMARY JUDGMENT to the Purchasers. It held that:

• The issue of whether the mortgagee's power of sale had arisen was a significant unresolved legal question unsuitable for summary determination.
• The statutory protection under section 21(2) of the 1881 Act applies to purchasers acting in the professed exercise of the power of sale who lack actual or constructive knowledge of irregularity.
• The Purchasers’ entitlement to statutory protection was correctly analyzed by the LTJ, but this did not resolve the preliminary question of validity of the power of sale.
• The matter is remitted for a full trial to determine the factual and legal issues, including the validity of the demand and the appointment of the fixed charged receiver.

No new precedent was established. The decision underscores the importance of distinguishing between the arising and exercisability of the power of sale and affirms the cautious use of summary judgment in complex mortgage disputes.