Capital Finance Company Ltd v Stokes
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE HARMAN,LORD JUSTICE SACHS |
| Judgment Date | 30 July 1968 |
| Judgment citation (vLex) | [1968] EWCA Civ J0730-3 |
| Date | 30 July 1968 |
| Court | Court of Appeal (Civil Division) |
[1968] EWCA Civ J0730-3
In The Supreme Court of Judicature
The Court of Appeal
(Civil Division)
(From: Mr. Justice Pennycuick)
Lord Justice Harman
Lord Justice Danckwerts and
Lord Justice Sachs
In the Matter of Cityfield Properties Limited
In the Matter of the Companies Act 1948
Re Cityfield Properties Ltd.):
Mr. ALLAN HEYMAN (instructed by Mr. Sidney Pearlman) appeared on behalf of the Appellant (Liquidator).
Mr. E.I. GOULDING, Q.C. and Mr. GAVIN LIGHTMAM (instructed by Messrs. Nye & Donne, Agents for Messrs. Perham & Sons, Bristol) appeared on behalf of the Respondent (Joseph William Stokes).
Capital Finance Co. Ltd. & c.):
Mr. E.I. GOULDING, Q.C. and Mr. GAVIN LIGHTMAN (instructed as above) appeared on behalf of the Appellant (First Defendant).
Mr. C.A. SETTLE, Q.C. and Mr. GEORGE HESKETH (instructed by Mr. Sidney Pearlman) appeared on behalf of the Respondents (Plaintiffs).
These two appeals were called on together. We heard first the final appeal, which was an appeal by the first defendant, the vendor of the property in question, against an order of Mr. Justice Pennycuick made on the 14th December, 1967, which declared that the first defendant had neither a legal nor an equitable charge valid against the property nor a vendor's lien upon it. The plaintiff in the action was a debenture holder seeking to enforce a charge upon all the property of the second defendant the purchaser of this property from the first defendant, but since the order here was made another order has been made for the winding up of the second defendant by the Court, with the result that the plaintiff's debenture, having been made within a year of the beginning of the winding up, is altogether void. The plaintiff thus becomes an unsecured creditor in the winding up and takes no further part in these appeals. The cudgels are, however, taken up by the liquidator of the second defendant, who argues that the first defendant also has no security and must rank like the plaintiff as an unsecured creditor in the winding-up. This arises out of the second matter before us, which is an application by the liquidator by summons under the Companies Act in the winding-up. The two applications really cover the same ground and it is agreed that the decision on the first appeal will govern the second.
The first appeal was heard on an agreed statement of facts, so that the pleadings may be ignored. The following facts emerged: By a contract of the 27th July, 1965 the first defendant, who was the absolute owner of a freehold property known as Laurel Nursery at Nailsea, in Somerset, agreed to sell it to the second defendant for £37,900. It is upon the terms of this contract that the case depends, so it must be looked at with a little particularity. It is an adapted form of the General Law Society Conditions of Sale. Clause 2 describes the parties; clause 3 the parcels. Clause 5 states the purchase money as £37,900. Clause 10 describes the vendor as absolute owner; and clause 11states the date for completion. Clause 14 reads as follows: "(i) The deposit to he paid on exchange of contracts is the sum of £500 and the balance of deposit, amounting to the sum of £3,290, will he paid to the vendor as soon as the vendor hands over to the purchaser Outline Planning Permission for the premises; if the purchaser shall fail to pay the balance of the deposit on the said due date the vendor will on repayment of the sum of £500 to the purchaser be entitled to rescind the contract, (ii) The vendor will leave with the purchaser 75 per cent, of the purchase money to be secured on a First Mortgage of the premises and to carry interest at the rate of 7-½ per cent, per annum and to be repayable by instalments of £600 with interest on the sale of each plot by the purchaser, and it will be a term of the said mortgage that the whole of the moneys secured thereby will be paid to the vendor within two years of completion hereof and the directors of the purchaser will join in as sureties"
The contract was completed by a conveyance of the 23rd February, 1966, whereby the first defendant conveyed the property to the second defendant in fee, the consideration being stated to be the sum of £37,900. Of that sum, however, only £9,475 was in fact in cash. The balance was, as the contract stipulated, provided by a legal charge of the same date, in which document, as provided by the contract, two directors of the second defendant joined as sureties.
The legal charge contained a covenant to pay the sum of £28,425. No particulars of this legal charge were ever delivered to the Registrar of Companies nor was it registered in accordance with either section 95 or section 97 of the Companies Act, 1948.
The debenture already referred to was made on the 27th October, 1966, and crystallised on the appointment of a received on the 1st December, 1966, and it was he who started this action claiming the transfer to him of the title deeds. The winding up of the company, which came within a year of the date of thedebenture, avoided that instrument. The petition was dated the 14th February, 1967, and the winding-up order followed on the 3rd October, 1967. The first defendant retained possession of the property and of the title deeds but both these were subsequently claimed by the liquidator, who alleges that the first defendant is a mere unsecured creditor for the balance of the purchase money. The property has been sold by arrangement and is represented by a sum of money.
It was admitted below that if the first defendant was entitled to an unpaid vendor's lien on the property that would give, him priority over the debenture and in this Court it is conceded that if the first defendant had at the relevant date, namely the commencement of the winding-up (14th February, 1967). a valid unpaid vendor's lien, that would entitle him to priority over the liquidator.
The first question, therefore, is whether the legal charge of the 23rd February, 1966, required registration under section, 95 of the Companies Act, 1948, and, not having been so registered, is void against the liquidator and the creditors in the winding-up. Section 95, so far as relevant, is in these terms: "Subject to the provisions of this Part of this Act, every charge created after the fixed date by a company registered in England and being a charge to which this section applies shall, so far as any security on the company's property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge together with the instrument, if any, by which the charge is created…. are delivered to or received by the registrar of companies…. in manner required by this Act within twenty one days…."; and so on. Then (2): "This section applies to the following charges….(d) a charge on land, wherever situate, or any interest therein…." It will be seen that this applies to a charge created by a company.
Section 97, on the other hand, is in different terms: "Where a company registered in England acquires any propertywhich is subject to a charge of any such kind as would, if created by the company after the acquisition of the property, have been required to be registered under this Part of this Act, the company shall cause the prescribed particulars of the charge….to be delivered to the registrar of companies for registration…." This refers to the converse proposition and means, I think, that the charge is already to be in existence when the property is acquired; but there is no such...
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