Boult v Together Personal Finance Ltd

Together Personal Finance Limited, a finance company, had lent money to Ms Myranna Boult on the security of her home. It brought possession proceedings. Ms Boult defended the proceedings, relying on the rule in Pigot’s Case, on the basis that the legal charge which the finance company was seeking to enforce had been altered in manuscript after execution to include another property owned by her, a field to the west side of her house with a separate title number. That was indeed the position. The alteration had been made in the erroneous belief that the field was to be included with the house as security for the finance company’s loan to Ms Boult.  The amended legal charge was then registered at HM Land Registry on the titles of both the house and the field.

At first instance, the judge in the County Court found in favour of the finance company, concluding that the rule in Pigot’s Case was not engaged because (a) the alteration was an accident or mistake and (b) was not material. He made a possession order and gave a money judgment in favour of the finance company.

By reference to Chitty on Contracts (36th edn) Michael Green J identified two elements to the rule: first, the alteration must have been made deliberately (the promisor is not discharged if the alteration is made by accident or by mistake); second, the alteration must have been material.

He held that the first limb of the rule was not satisfied:

“The simple fact of the matter is that, whether or not the solicitor was acting under a mistaken belief as to what the Legal Charge was to cover, they deliberately added a new property to the Legal Charge after it had been signed by the Appellant 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. This was therefore a deliberate alteration, on behalf of the Respondent, designed to affect the rights and obligations under the Legal Charge, in that another property was made subject to the security.

He also held that the judge below had erred on materiality: he had been wrong to be influenced by the fact that the finance company had reversed the alteration when it found out about it and had only sought to enforce its rights against the house, so that Ms Boult had not suffered any actual or potential prejudice:

“At the time the alteration was made by the solicitor and the Legal Charge was registered against the Field, there was clearly ‘potential prejudice’ to the Appellant. She was at risk of enforcement action being taken by the Respondent against the Field. Because of her experience with Blemain Finance, she thought that she had been the victim of a fraud. It was only by chance that she discovered what had happened; and it was only actually reversed after the police had become involved.”

He went on to say:

“The point of the rule in Pigot’s Case is to deter people from doing this sort of thing. The Judge should have found that the alteration was material at the time it was made and the Legal Charge was accordingly void at that point. Whatever happened subsequently, such as the Respondent removing the charge over the Field and only seeking to enforce against the House, is irrelevant to the question of whether this was a material alteration at the time it was made.”

The appeal succeeded as regards the order for possession, but, on the basis of the limited grounds of appeal relied on by Ms Boult, the money judgment was allowed to stand.

The rule in Pigot’s Case may be old, but its application and the policy informing it reflect what many would regard to be common sense. Michael Green J’s decision supports the obvious proposition that it is unwise to fiddle with any legal document once it has been signed. This is particularly the case when it comes to a mortgage or charge and is almost certainly applicable with equal force to any deed.

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

Meet the team:

1. 

   • Robert Paterson

   • Partner
   • Insolvency & Restructuring

   Visit Robert's profile

View the whole team