Exeter Trust Ltd v Screenways Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NOURSE,SIR ROGER ORMROD,LORD JUSTICE STUART-SMITH |
| Judgment Date | 08 May 1991 |
| Judgment citation (vLex) | [1991] EWCA Civ J0508-10 |
| Court | Court of Appeal (Civil Division) |
| Date | 08 May 1991 |
| Docket Number | 91/0479 |
[1991] EWCA Civ J0508-10
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COVENTRY COUNTY COURT
(HIS HONOUR JUDGE MICKLEM)
Royal Courts of Justice
Lord Justice Nourse
Lord Justice Stuart-Smith (Not Present)
Sir Roger Ormrod
91/0479
MR ROBERT A.K. WRIGHT, Q.C., and SIR THOMAS STOCKDALE, instructed by Messrs Bond Pearce (Exeter), appeared for the Appellant (Applicant).
MR JOHN MCDONNELL, Q.C., and MR ROBIN F. HOLLINGTON, instructed by Messrs Bretherton Turpin & Pell (Rugby), appeared for the Respondent (Respondent).
MR MICHAEL BRIGGS, instructed by the Treasury Solicitor, appeared for the Registrar of Companies.
This appeal raises a question on section 401(2)(b) of the Companies Act 1985, which provides that a certificate of the registration of a charge created by a company to which section 395 of the Act applies:
"is conclusive evidence that the requirements of this Chapter as to registration have been satisfied."
In a series of cases culminating in the decision of this court in re C.L. Nye Ltd [1971] Ch. 442 it was held that the corresponding provision of the Companies Act 1948 had the effect which it was expressed to have, even where, for example, the date of the charge had been incorrectly stated in the particulars required to be delivered to the registrar. In the present case the particulars delivered were correct, but registration was effected and a certificate issued in reliance on an order extending the time for registration which was later set aside on appeal. Was the certificate nevertheless conclusive evidence that the requirements as to registration had been satisfied?
Both principle and authority would suggest that it ought not to have been too difficult for that question to be answered in the affirmative, as indeed it was by the High Court of Australia in Wilde v. Australian Trade Equipment Co. Pty. Ltd (1981) 5 A.C.L.R. 404. However, the point was not taken by the chargee in the court below. Moreover, in this court the company, while accepting that the express power of rectification in section 404(2) of the 1985 Act is inapplicable, has nevertheless contended that the court has an inherent power to rectify the register or to order the chargee to procure the cancellation of the entry.
By a legal charge dated 12th August 1989 Screenways Limited ("the Company") charged certain freehold properties with the repayment to Exeter Trust Limited ("Exeter Trust") of the sum of £250,000 then advanced by Exeter Trust to the Company together with interest thereon. Under section 395(1) of the 1985 Act the charge was rendered 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 or evidenced, are delivered to or received by the registrar of companies for registration in the manner required by this Chapter within 21 days after the date of the charge's creation."
The charge was not registered within the 21 day period. Since it is agreed that that omission was due to inadvertence on the part of Exeter Trust within section 404(1) of the 1985 Act, it is unnecessary to go into that matter in detail.
On 5th December 1988, by which date the charge had still not been registered, the Company, pursuant to section 98 of the Insolvency Act 1986, caused a meeting of its creditors to be summoned for 21st December 1988 at 11.30 am. No doubt notice of the meeting was sent to Exeter Trust. On 14th December it applied to the Coventry County Court for an order under section 404(2) of the 1985 Act, which, so far as it is material to such an application, is in these terms:
"The court may, on the application of the company or a person interested, and on such terms and conditions as seem to the court just and expedient, order that the time for registration shall be extended…"
The application came before Mr Registrar Donaldson on 19th December. Notice having been duly given to the Company, the application was technically inter partes, although the Company was not represented by solicitors or counsel. Exeter Trust was represented by Coventry solicitors acting as agents for its Exeter solicitors. The application was supported by an affidavit sworn on 14th December by the responsible partner in the Exeter firm. That affidavit fully explained the circumstances in which the omission to register the charge had occurred, but it made no mention of the proposed creditors' meeting. However, the hearing was attended by one of the directors of the Company, who on the same day swore an affidavit in which reference to the meeting was duly made.
By his order dated 19th December 1988 the registrar ordered that the time for the registration of the charge should be extended to 21 days from the date thereof, i.e. to 9th January 1988. The order contained this paragraph in common form:
"AND this Order is without prejudice to the rights of any person acquired between the date of the creation of the said Legal Charge and the date of its actual Registration."
At 10.10 am on 21st December 1988, pursuant to the requirements of section 395(1) of the 1985 Act, the prescribed particulars of the charge, together with the instrument by which it was created, were delivered to the registrar of companies for registration. At 11.30 am on the same day the creditors' meeting was held, the Company was put into creditors' voluntary liquidation and a liquidator was appointed. Accordingly, as Judge Micklem later found, the charge was registered before the commencement of the winding up. On 9th January 1989 the registrar of companies gave a certificate pursuant to section 401(2) of the 1985 Act in these terms:
"I hereby certify that a mortgage or charge dated the 12th August 1988 and created by SCREENWAYS LIMITED for securing £250,000 and all other moneys due or to become due from the Company to Exeter Trust Limited was registered pursuant to Chapter I Part XII of the Companies Act 1985, on the 21st December 1988."
On 13th January 1988 the Company, acting by the liquidator, applied to the county court for a rehearing of the application heard on 19th December 1988, apparently on the ground that it had not been present at that hearing. That application was dismissed by Mr Registrar Collis on 15th February. On 20th February the Company, acting by the liquidator, issued a notice of appeal against Mr Registrar Donaldson's order of 19th December. The appeal came before Judge Micklem on 10th April 1989, when he granted the Company's application for an extension of time for appealing and allowed its appeal against the order of Mr Registrar Donaldson. He set that order aside and ordered the charges register to be rectified. The judge treated both questions as being matters for the exercise of his discretion. In deciding the second he referred at some length to the decision of this court in re Ashpurton Estates Ltd [1983] Ch. 110. No argument was addressed to him as to the effect of section 401(2)(b) of the 1985 Act. The judge refused Exeter Trust leave to appeal, but leave was subsequently given by the single judge of this court.
Exeter Trust has been represented on the appeal by Mr R.A.K. Wright, Q.C., and Sir Thomas Stockdale, neither of whom appeared before Judge Micklem. Although the point was raised in the notice of appeal, they have not argued that the judge erred in principle in extending the Company's time for appealing against the order of Mr Registrar Donaldson. Their primary submission is that the certificate of 9th January 1989 is, by virtue of section 401(2)(b), conclusive evidence that the requirements as to registration have been satisfied, so that the charge is not invalidated as against the liquidator and the creditors of the Company. Secondly and in the alternative, they submit that the judge, in allowing the Company's appeal against the registrar's order, erred in principle or gave a decision which was plainly wrong. Their primary submission has been adopted and supported by Mr Briggs, for the registrar of companies.
In re C.L. Nye Ltd [1971] Ch. 442 the particulars of a charge which this court assumed had in fact been created on 9th March 1964 at the latest wrongly stated that it had been created on 18th June of that year. The chargee delivered the particulars to the registrar on 3rd July 1964, within 21 days after the stated date of the charge's creation but not within 21 days after its actual creation. On 16th July 1964 the company was put into creditors' voluntary liquidation. On 16th November 1967 the registrar gave a certificate under the corresponding provision of the 1948 Act, in which the date of the charge was stated to have been 18th June 1964. In April 1968 the joint liquidators of the company started proceedings seeking to have the charges register rectified and a declaration that the charge was void against them and the creditors of the company. Plowman J. acceded to the application, holding that the chargee could not rely on the certificate because, if it did so, it would be taking advantage of its own wrong. On an appeal by the chargee to this court, the judge's decision was reversed and the liquidators' application dismissed.
Both the conclusiveness of the certificate and the reasons for it are clearly stated in the judgments of Harman and Russell L.JJ. Harman L.J., after reviewing the earlier decisions starting with re Yolland, Husson & Birkett Ltd [1908] 1 Ch. 152, continued [1971] Ch., 469H:
"The whole point of creating the register under section [395] is to give security to persons relying on the certificate. If it were possible to go behind the...
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