Where Is The Money?

SELLING a property such as a house can be a simple affair as long as the buyer has the money and the seller has the property. Usually, a solicitor will be engaged who will act as a stakeholder for the money as well as the documents of title. The solicitor is entrusted with the responsibility of ensuring that the buyer gets the house and the seller gets his money. Simple though the transaction may appear, problems can arise. Such is the situation narrated by a reader: “A couple co-owned a house which was auctioned off and there was a surplus amount from the sale. The surplus amount was paid to the lawyer who, after deducting his legal fees, said that the balance was paid to the husband. The wife had not given any consent to the lawyer for this course of action. The wife is now separated from her husband and does not know his whereabouts. What are her options in relation to her share?” Here we need to look into who is actually entitled to the balance that is left from the proceeds of the auction after paying off the creditor and the lawyer has deducted his fees. The fact that there was an auction suggests that the land was held as security by way of a charge over it or its assignment to someone from whom money was borrowed or a debt was owed. Such a person would then have proceeded to have the property auctioned off to recover the debt upon a default having occurred, whether by way of foreclosure or execution pursuant to a judgment. We can call this person a creditor, whether he is a lender of money or supplier of goods or services. Who was the lawyer acting for – the creditor, or the husband and wife jointly? Even if he were acting for the husband and the wife, he would still need her consent to release her share to him. The question posed here seems to suggest that the lawyer was acting on behalf of the creditor who initiated the proceedings, which would have culminated in the auction and the subsequent sale. As such, the lawyer would be in the position of an agent and the creditor the principal as far as the transaction is concerned.

If the problem is viewed in the context of Contract law principles, then only the principal can be sued. This is because by virtue of S.183 of the Contracts Act 1950, in the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. On this basis, it would appear that the wife’s share was wrongly paid to the husband, and the husband had therefore wrongfully received the money that belonged to the wife. However, the problem is that the couple are now separated and the wife does not know her husband’s whereabouts. This last aspect is a practical problem that needs to be addressed. If money is to be recovered from a person, it is necessary to locate him or her. But the fact remains that the money which is the wife’s share, was wrongfully paid to the husband and she should have recourse against someone for depriving her of the money that belonged to her. However, if the land was auctioned at the behest of the creditor for whom the lawyer was acting, then the creditor would be the principal and the lawyer merely his appointed agent. In such a case, there would also be a right to recover the amount from the creditor because of the wrongful act of his appointed agent. The creditor’s duty to the charger of the land would be based on a contract. By reason of this, pursuant to the sale, it would be the duty of the creditor to pay, or arrange to be paid, whatever is left or whatever amount is appropriate. However, should this happen and the creditor is held liable, he may be entitled to seek indemnity from his lawyer. This is because the payment of the money, to which the wife is entitled, to the husband instead would amount to negligence. The option of proceeding based on negligence against the lawyer could also be available to the wife. The lawyer could in turn seek a refund from the husband on account of money having been paid wrongfully or on account of a misrepresentation made. This would mean having to locate the husband. In the course of going through this exercise, it would be wise for the wife to try to recollect and be sure that she had not at any time signed any document authorising any payment due to her to be paid to her husband. If there was such consent, then the lawyer would not be wrong if he released the balance representing her share to the husband. Of course, authorisation can also be verbal though differences on account of the strength of evidence will arise if this is relied upon. [By BHAG SINGH /ARTICLES OF LAW / THE STAR]