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Where’s the money?
15/05/2007 The Star ARTICLES OF LAW By BHAG SINGH
Money which is due to one person cannot be paid to another. Explicit
consent, whether in writing or otherwise, is required.
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. |
