Attorney General v Parsons

THE MASTER OF THE ROLLS: Some few years ago ingenious persons conceived the idea of transferring, or purporting to transfer, the unexpired residues of terms of years in residential property in London to companies incorporated in Eire, which companies had neither a licence to hold land in England nor had they availed themselves of the appropriate provisions of the Companies Act, 1948, as to registration which would have enabled them so to do. One result was an action of Morelle Ltd. v. Waterworth, an action in the County Court in which the plaintiff company, Morelle Ltd. being a company with the characteristics that I have indicated, sought to recover alleged arrears of rents from occupants of property in London. By way of answer the defendants asserted that by virtue of Section 1 of the Mortmain and Charitable Uses Act, 1888, as amended, the interest in the property which the plaintiff company had purported to acquire had been absolutely and automatically forfeited to Her' Majesty and that therefore the plaintiff company was disabled from suing. The defense succeeded in the County Court. The result, according to Mr, Justice Harman, was to startle the legal profession. It may also have startled the plaintiff company, Morelle Ltd. who thereupon appealed to this Court.

The case in this Court is reported in 1955 1 Queen's Bench Division at page 1, and, since it is in my view important to arrive at a conclusion what this Court decided and what was inherent in the reasoning of the decision, I will read certain passages from the Judgments. Lord Justice Singleton who delivered the first Judgment dealt first with the question whether a leasehold term of years, of which a short residue remained unexpired, was within the provisions of the Mortmain and Charitable Uses Act at all, and. at page 9 he concluded this part of his judgment thus: "This case falls within the provisions of section 1 (1). The plaintiff company was a company registered in Sire and not in this country; it had nolicence or authority, and consequently there was a breach of the terms is of section 1 (1) of the Act, It follows from the wording of the; Act that if the land is so assured otherwise than as aforesaid, 'the land shall be forfeited to Her Majesty from the date of the assurance, and Her Majesty may enter on and hold the land accordingly'. The appeal of the plaintiff company fails."

Then later at page 10 he recited the following passage; from the Judgment of the County Court Judge: "I am invited to dismiss these actions on grounds urged by Mr. Bagnall that the plaintiff Irish companies have no right to own the properties. Before a company can hold land as part of its permanent possessions a licence in mortmain is necessary: the principal Act are those of 1888 and 1891. Under those Acts land may not be held by a corporation save by licence from the Crown unless the company is incorporated or registered under the Companies Act. Companies not incorporated or registered have no right to hold land unless chey have a licence.' 11 Lord Justice Singleton said:: I agree with the County Court Judge and in my view the Appeal should be dismissed."

Lord Justice Denning said this at page 12- "I cannot help observing that in this particular case we have a modern instance of a dead hand, here is a foreign company which does not establish any business office in "England and door not register itself in any way. By so doing, it puts itself in a position, if not to defeat its obligations entirely, at least to make it most difficult for its dues to be collected from it. It makes it difficult for the enant to recover on the landlord's covenants. It makes it difficult for the rating authority to obtain rates, or the housing authority to see that the houses are kept in proper condition, revenue for the revenue authorities to obtain their proper taxes. So far as all those matters are concerned, it is like unto a dead hand. Who havea modern application of the law of nearly 700 years ago. The transfer to this company is void without a licence from the Queen, and no licence has been granted."

I should here interpolate that (as Mr. Buckley pointed out) by "void" the learned Lord Justice must have meant that it was liable to be forfeited, because nobody has suggested that the transfer was void in the sense that the estate remained in the transferor. That appears I think from the next paragraph which says. "In the old days the forfeiture was to automatic, but under the wording of this statute it is clear that the forfeiture is from 'the date of the a durance,' so that it operates at once without any entry by the Crown; and the tenant can take advantage of it, because he is liable to the Crown for the rent from that date. I agree, therefore, that the appeal should be dismissed."

My brother Morris confined himself to expressing his full concurrence with the two Judgments already delivered.

In my judgment this Court in the first Morelle case, then, held that, whatever the effect of the old la-.- as to mortmain way, Parliament had so enacted by the Act of 1968 as amended that (1) a short unexpired residue of a term: of years in land was within the scope of the. Act; (2) that the interest in the land which the plaintiff company had purported to acquire had been automatically and immediately from the date of the purported assurance forfeited so as to vest in Her Majesty without any necessity for any inquisition held or office found, as would or might have been requisite under the old law, and without any other step on the part of Her Majesty by way of acceptance, entry or otherwise. In my judgment it was also inherent in the reasoning of the decision of this Court in the first Morelle case, (3) that by virtue of the Act of Parliament the Crown thereupon became, without more, entitled to all the benefits of the leases under which the land was held and also subject to all the burdens by way of

plaintiff company in the present case and in the first Morella case are interests in the unexpired residue of terms of years.

Reading further the Judgment of the Court I summarized the arguments which were put forward or intimated by the Attorney General which included (and I read from page 679 the following); "(c) the penalty for infringing the provisions of the law relating to mortmain was liability to forfeiture (following a distinct and established procedure) and not an automatic forfeiture; (d) moreover, the right of forfeiture in the Grown was subject to the prior like rights, in gradation, of the means lords, if any; (e) the subject-matter forfeited was in all cases the fee itself."

The Judgment then proceeded to state the conclusion that, notwithstanding that these points were points of great difficulty upon which on the former occasion it had been suggested that Counsel had not been fully instructed, none the-less we could not.; ay that the first Morella decision had been arrived at per incurred.

The Judgment then passed "Do a consideration of the second point raised, which I have already mentioned, namely that there was a distinction in the second Merella case by virtue of the fact that the land was registered. At page 692 the Judgment states as follows: For these reasons the fact that the present case concerns registered land does not in our opinion afford any valid ground for distinguishing the first Morella case. The express provisions of the Act relating to the effect of registration of a disposition for valuable consideration, that is to say (so far as leaseholds are concerned) the provisions of section 23, include no provision which can properly be construed as freeing the land from the forfeiture incurred by the registered transfer to the plaintiff company. Accordingly, by virtue of section 80 of the Act, such forfeiture took effect upon the registration of the transfer, just as it would have done on the execution and delivery of an assignmentof unregistered leaseholds, and, as we are bound to hold following the first Morella case, took immediate and automatic effect without any act or proceeding on the part of the Crown to assert or establish it. This forfeiture being, as we have held, unaffected by the provisions of the Land Registration Act, it follows that it took effect without rectification of the register and was not suspended pending an order for rectification or contingent upon such an order being obtained," The result of the two Morella cases has been unfortunate for the Grown, for it clearly appears, in my view, that as a consequence in all cases in which the unexpired residues of terms of years have been transferred, or purport to have been transferred, to Irish companies having "no license in mortmain and not having availed themselves of the powers of registration under the Companies Act, the Crown would be held or would be likely to be held liable to the reversionary upon the covenants is to rents,...