A legal charge was made void when a solicitor deliberately amended it without checking with any of the parties involved, the High Court has ruled.
In Boult v Together Personal Finance Ltd Mr Justice Michael Green said it was ‘somewhat extraordinary’ that a solicitor had changed the legal charge to include another property without the consent of the owner or their own client.
The court heard that Myranna Boult had wanted to repay the existing borrowing secured against her house in 2018 and took out a bridging loan with her house - but expressly not the neighbouring field - as security. Boult first discovered the field had been wrongly included in the charge when she attended her solicitors and she declined to sign the documents. She then returned the following day and signed a legal charge that was only over the house.
An unidentified individual from Priority Law, solicitors for the lender, then added in the deed that the field was included with the house as security for the loan. That amended legal charge was registered at HM Land Registry, with Boult having no idea this had happened.
The charge on the field was removed a few months later but the loan was never repaid and the lender issued possession proceedings.
Boult relied on the 400-year-old rule in Pigot’s Case to say that the legal charge was void and of no effect because of the unauthorised amendment. At first instance, His Honour Judge Porter-Bryant decided the amendment to the legal charge was an ‘innocent mistake’ or ‘administrative error’ that was therefore outside the rule in Pigot’s Case. Boult appealed, submitting that the post-execution alteration of the deed was a ‘material alteration’ that should render the whole thing void.
Mr Justice Michael Green said the judge appeared to have found that the alteration was deliberate and intentional but also the result of a mistaken belief that the parties had agreed the charge would cover the house and field.
He added: ‘I do find it somewhat extraordinary that a solicitor would just amend a signed legal charge in that way, without going back to the appellant, the chargor, and making sure that this was what had been agreed. I would imagine that such an alteration would normally be initialled by the parties at least. One can well see that if instruments like this can be altered in such a way, without going back to the other party, that it would be ripe for fraudulent conduct of the type that the rule in Pigot’s Case is designed to prevent.’
Whether or not the solicitor was acting under a mistaken belief about what the legal charge was to cover, Green said they deliberately added a new property to the deed after it had been signed by Boult and without checking with her, or seemingly their client, that this was what was agreed. They then made it potentially enforceable against the field by registering it against the field’s title number.
He concluded that the judge had therefore been wrong to hold that the alteration was both deliberate and an innocent mistake, and set aside the possession order.
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