Success for Rachel Coyle at First Tier Tribunal (Land Registration)
February 19, 2025
Rachel Coyle from Exchange Chambers has secured a comprehensive success for her client at the First Tier Tribunal (Land Registration).
In Spirit Commercial -v- Skybridge & Others, the Applicant sought to set aside documents pursuant to section 108 of the Land Registration Act 2002.
Rachel Coyle, instructed by Brabners, acted for the first and second Respondents (Skybridge Lending Limited and Paddington Street Limited), the lenders.
The third, fourth and fifth Respondents were ‘the purchasers’ who applied to register the relevant transfers of ownership in respect of each of the title numbers. The Applicant objected to this.
The issues were centred round whether there was a mistake when the borrower Applicant applied for secured lending. He stated that he did not intend to have the security (the charge) against the entirety of 3 plots of land registered at HMLR. Instead, he intended only to charge part of the 3 plots because he allegedly had planning permission on parts of them, and so, he averred, there was a mutual mistake or alternatively, non est factum, a principle that allows a party to avoid a contract if it does not understand its content or consequences. The Applicant also alleged misrepresentation and undue influence.
Receivers were appointed when the Applicant failed to repay the loan of £433,508.11 plus interest at the standard rate of 3%.
In a detailed judgment, the First Tier Tribunal dismissed the application and ruled in favour of Rachel Coyle’s clients.
As to mistake, and upon considering The Great Peace [2003] QB 679 para 76, the Judge found that it was clear that the Applicant investigated with his solicitor the possibility of splitting the titles of two plots so that they could be separated from the charge. The judge concluded that “there is no doubt that the director initially intended to split the titles. This would, of course, be something which only the Applicant could have done but it took no steps to do so.”
The Judge also found that there was no mistake in relation to the terms of the Legal Charge. The Applicant intended to charge the whole of the three titles and that was what was charged. Both the Facility Letter and the Legal Charge referred to charging the whole of the three respective plots by reference also to their respective title numbers.
Turning to misrepresentation, the Judge ruled that the Applicant’s Statement of Case and Witness Statements did not state what the alleged misrepresentation was.
In terms of undue influence, the Judge ruled that that the Applicant was offered two sources of lending and was not under any obligation to take either. There was no evidence of any pressure having been placed on the Applicant to take out the loan by the first or second Respondents. The Applicant’s argument in relation to non est factum was also dismissed with the Judge saying it was “particularly unconvincing”.
Commenting on the decision, Rachel Coyle said:
“This case reinforces how important it is for lenders to ensure appropriate disclaimers are signed at the relevant time.
“If there are delays in finalising security documents and the facility agreement by the borrower and, because of such delays, the deal may have to be withdrawn or amended, that is a matter for the borrower. Lenders cannot be seen to put borrowers under pressure.
“Furthermore, this is another case in which non est factum has failed to succeed. It reinforces that the test is a high bar to reach as set out in Saunders and Yedina v Yedin [2017] EWHC 3319 (Ch).”
Providing further guidance, Rachel Coyle concluded:
“When drafting pleadings or statements of case, it is important to plead the alleged misrepresentation and the detrimental reliance. If mistake is being pleaded, plead the alleged mistake, the point in time of the mistake, and whether it is a mutual or unilateral mistake. Potential claimants should also heed the warning that delay can be a bar to recission before embarking on potentially expensive proceedings.”
