Midland Bank Plc v Pike

Midland Bank Plc v Pike [1988] 2 All E.R. 434

Charging Order – Locus Standi of a creditor with a charging order

Facts

The Midland Bank Plc were owed a sum of £55,000 by Mr Pike.  Midland Bank secured a judgment debt against Mr Pike for this figure, and in order to secure it obtained a charging order over Mr Pike’s matrimonial home, which he owned with his wife as joint tenants.  The bank then applied for a sale of the property.  This application was denied by a Master in chancery, on the grounds that the bank lacked locus standi to make an application for sale.  This was appealed to the High Court.

Issues

Whether the holder of a charging order has an ‘interest’ in land that entitles them to have the necessary standing to apply for a sale of land over which they have a charging order or not.

Decision/Outcome

The holder of a charging order does have sufficient ‘interest’ to apply for a statutory sale of property under s30 Law of Property Act 1925.  This is now replaced by s14 Trusts of Land and Appointment of Trustees Act 1996 (TOLATA) which again allows the holder of a charging order the necessary ‘interest’ to be able to apply for a statutory order for sale.  This will allow the holder of a charging order to apply for a sale of the co-owner’s beneficial interest.  This was necessary to allow the bank to realise their security for the debt owed by Mr Pike.  A charging order would otherwise be useless if it could not be realised.  The bank was therefore allowed to proceed and make an application for sale of Mr and Mrs Pike’s property, and this was duly done.  The house was ordered to be sold.