Timothy Carlisle represents successful defendant in High Court loan security enforcement dispute involving equitable charge holder

18 June 2024

Timothy Carlisle acted for the defendant company which successfully resisted the 2 claimant companies’ application to enforce their third-tier loan security against its development site in southern England.

The claimant companies applied for an order for sale of the land to enforce their third-tier loan security against the defendant, against its wishes and those of the top-tier chargee.

Why is this case significant?

The circumstances in which an equitable charge holder can enforce its security with an order for sale remain at times uncertain. This case demonstrates that to enforce a security that has not been perfected by registration, the charge holder would have to show an unarguable case to summary judgment level. In other words, that any ‘defence’ was merely fanciful.

Background to the High Court proceedings

In May 2019, the claimants entered into an initial agreement for a loan advance and exclusivity arrangement with the defendant company over the site.

However, their legal charge (equivalent to a legal mortgage) was unregistered on the title register at the Land Registry.

Disputes began in March 2022 following negotiations over the price of the loan facility in the final agreement.

Subsequently, email exchanges between the defendant and both claimants highlighted delays and the claimants’ withdrawal of reserved funds as well as their changing the terms of the agreement.

In January 2023, a purported termination notice was issued for the loan agreement.

Legal argument about equitable charges

An unregistered legal charge takes effect in equity, as an equitable charge.

Notwithstanding the equitable nature of such a charge, it is possible for the lender to enforce a sale and pass a good legal title. See:


The judge, Master McQuail accepted Timothy’s arguments, on the defendant company’s behalf, that there were sustainable inter party defences, namely:

  • the purported termination of the loan agreement was invalid
  • the claim for the order of sale be dismissed therefore, as being without cause

She also accepted the argument that she could take into account the wider equities such as the wishes of the top tier lender (which also opposed a receiver-led enforced sale of the development land).

Therefore, she ordered that the case should proceed to trial as a Part 7 claim.