Practice and Procedure


PUBLISHED October 16, 2003

A claimant who had fraudulently obtained three mortgages was ordered to pay all the sums arising from his default on loan payments together with the costs of the action and counterclaims on an indemnity basis. A post-judgment order freezing his assets was accompanied with an order requiring him to remain within the jurisdiction and to surrender his passport, in order to effect an order for disclosure of his assets.Claim to establish beneficial title to a property ('the cottage'), for an order to transfer legal title in the cottage to the claimant ('R'), and for a declaration that the first defendant ('G') held the proceeds of sale of a second property ('Rowlett Road') on trust for R. The defendants brought Part 20 counterclaims for payment of money disbursed on R's behalf and for the costs of the action and counterclaims on an indemnity basis. The second defendant ('E') sought a declaration that she was entitled to be indemnified by R for any further payments she might make on a third property ('Nelson Road'). R, G and E were siblings. In 1988 their parents allowed the legal title to their home, Nelson Road, to be transferred to E as security for a mortgage loan of ?30,000 to her, which was then to be lent to R. It was agreed that R would repay the loan within five years. In 1991, the same mortgagee advanced a further £16,000 secured on Nelson Road, which E said R obtained by fraud. In 1995 and 1996, R procured the purchase of the cottage and Rowlett Road. The registered owner of both properties was G and all the relevant mortgage and purchase documents were in G's name. G claimed that he knew nothing of the matter until 1997. Both G and E accepted liability for the loans on the basis that R would indemnify them, but R defaulted persistently on payments. In 2000, G sold Rowlett Road and from its proceeds redeemed the mortgage and repaid money disbursed on the other two mortgages. R then registered a caution at the Land Registry in respect of the cottage. G applied to warn off the caution and R began the present action. Both R and the defendants accused the other side of lying. On the second morning of the hearing, just before R was due to give evidence, his solicitor issued a notice of discontinuance and R disappeared. The defendants proceeded with their Part 20 counterclaims and applied for appropriate post-judgment freezing orders against R, who was resident in the United States.HELD: (1) G was entitled to sell the two properties bought in his name, both under the terms of the agreement made with R, and as trustee with a right to be indemnified out of trust assets. G was entitled to an order to cancel the caution on the cottage, an order for the sale of the cottage, and an order that out of the proceeds of that sale he was to be at liberty to pay E what was owed to her. (2) E was entitled to a declaration that she should be indemnified by R for any payments she might have to make subsequently in respect of Nelson Road and to an order for payment of sums arising from the loans in her name. (3) An order for costs on an indemnity basis was justified in view of R's unsubstantiated allegations of lying and conspiracy against the defendants and their witnesses, and his discontinuance of his claim just before he was due to give evidence. An interim order for payment of £60,000 on account of those costs was also appropriate. (4) A freezing order was granted in respect of R's assets, both within and outside the jurisdiction, in the sum of £100,000. An order that he should not leave the jurisdiction until service of the affidavit and should deliver up his passport was appropriate. The objection that the latter order was post-judgment and thus outside the court's jurisdiction or inappropriate as aiding execution was not sustainable. The order was necessary to effect the order for disclosure of assets and was made the more necessary by the fact that R had checked in for a flight to the United States on the morning following his departure from court.Judgment accordingly.