Irani Finance Ltd v Singh

I will ask Lord Justice Cross to deliver the Judgment of the Court.

This is an appeal from an order of Buckley J. made on 8th October, 1969, dismissing a summons by the Plaintiffs, Irani Finance Ltd., which asked for a declaration that they were entitled to redeem a legal charge dated 3rd January, 1964, on 11, Cambridge Road, Southall, and an account of what was due under it.

The facts are very simple. On the 3rd January, 1964, the house in question (the title to which is registered at the Land Registry) was bought by the first and secondDefendants, two brothers Terlochan Singh and Gursewak Singh, with the aid of a building society mortgage and was conveyed to them as joint tenants at law and in equity. It does not appear whether the transfer contained an express trust for sale. If it did not, then a trust for sale was imposed by Section 36(1) of the Law of Property Act 1925. In either case the beneficial interests of the transferees was an equitable joint tenancy in the proceeds of sale and in the net rents and profits until sale.

The evidence does not show for what purpose the Singhs bought the house, but in January, 1969, when the originating summons was issued, the first Defendant was apparently living in it while the second Defendant was living at another address in Southall. At some date after the purchase the mortgage was transferred to the third Defendants, Montex Ltd. On 5th August, 1968, the Plaintiffs recovered judgment in the Queen's Bench Division against the first Defendant for £1,472 odd and on 22nd August they obtained a charging order directing that "the following land or interest in land of the Defendant Terlochan Singh namely 11, Cambridge Road, Southall in Greater London stand charged with the payment of £1,472.1.0. the amount due from the said Defendant to the Plaintiffs, Irani Finance Ltd., on a judgment of the High Court of Justice dated 5th August, 1968, together with" the further sums mentioned.

On 12th September, 1968, the plaintiffs recovered judgment against the second defendant for £1,072 odd and on 7th November, 1968, they obtained another charging order directing that "the following land or interest in land of the defendant Gursewak Singh namely one-half share in 11, Cambridge Road, Southall, in Greater London, stand charged with the payment of £1,072.14.2. the amount due from the said Defendant to the Plaintiff Irani Finance Ltd., on a judgment of the High court dated the 12th day of September, 1968" together with the further sums thereinmentioned.

Having obtained these charging orders the Plaintiffs took the view that they were entitled to redeem the mortgage of the legal estate of 11, Cambridge Road, vested in the third defendants, but the third defendants challenged their right to do so and accordingly on 16th January, 1969, the plaintiffs issued this summons in the Chancery Division,

Buckley J. held that the Plaintiffs had no locus standi to redeem the mortgage and this appeal is brought from that decision.

In the course of the argument the Court asked counsel for the respondents why his clients objected to having their mortgage paid off by the Plaintiffs. The answer given was that the respondents wished to realise their security as soon as they could and that they saw no reason why they should submit the accounts between themselves and the first and second defendants to the scrutiny of the plaintiffs who, they considered, had no right to see them, though they recognised that if the plaintiffs obtained the appointment of receivers by way of equitable execution under the judgments it would be their duty not to pay over any surplus proceeds of sale to the first and second defendants but hold it for the plaintiffs.

The answer to the question at issue depends on the construction of sections 35(1) and (3) of the Administration of Justice Act 1956, but those provisions cannot in our view be construed without reference to the earlier law. The history of charges in favour of judgment creditors on the land of judgment debtors starts, for present purposes, with section 13 of the Judgments Act, 1838, which enacted that "a Judgment already entered up or to be hereafter entered up against any Person in any of Her Majesty's Superior Courts at Westminster shall operate as a Charge upon all Lands, Tenements, Rectories, Advowsons, Tithes, Rents, and Hereditaments (including Lands and Hereditamentsof Copyhold or Customary Tenure) of or to which such Person shall at the Time of entering up such Judgment, or at any Time afterwards, be seised, possessed, or entitled for any Estate or Interest whatever, at Law or in Equity, whether in Possession, Reversion, Remainder, or Expectancy."

In 1865 Vice Chancellor Kindersley, held in Thomas v. Cross, 2 Drewry & Smale, 423, that the judgment debtor's interest in the proceeds of sale of land subject to a trust for sale was not charged by the section. The Land Charges Act, 1900, Section 2, provided that a judgment should not operate as a charge on land or on any interest in land unless or until a writ or order for the purpose of enforcing it was registered under the Land Charges Registration Act, 1888. Section 13 of the Judgments Act, 1838, and section 2 of the Land Charges Act, 1900, were repealed in 1925 and replaced by section 195 of the Law of Property Act, 1925. Sub-section (1) of that section provided: "Subject as hereinafter mentioned a judgment entered up in the Supreme Court (whether before or after the commencement of this Act) against any person (in this section called a 'judgment debtor') shall operate as an equitable charge upon every estate or interest (whether legal or equitable) in all land to or over which the judgment debtor at the date of entry or at any time thereafter is or becomes (a) beneficially entitled; or (b) entitled to exercise a power of disposition for his own benefit…" and sub-section (3) (i) contained a proviso that a judgment "shall not operate as a charge on any interest in land or on the unpaid purchase money for any land unless or until a writ or order, for the purpose of enforcing it, is registered in the register of writs and orders at the Land Registry."

In the case of Stevens v. Hutchinson, 1953, Ch.299 Upjohn J. held ( inter alia) that the interest of a judgment debtor under a trust for sale of land was not subjected to a charge by Section 195. He pointed out that an interestunder a trust for sale of land, though within the definition of "equitable interest" in the Law of Property Act, Section 205, was not within the definition of "equitable interest in land" in that Section, and further that no writ or order for the purpose of enforcing a charge-on an interest under a trust for sale of land could be registered under the Land Charges Act, 1925, since Section 6(1) (a), which was the relevant provision, referred only to writs or orders affecting "land", and "land" was defined by Section 20(b) in such a way as to exclude interests in proceeds of sale of land held on trust for sale. Where the title to the land was registered the position was the same. Section 59(1) of the Land Registration Act, 1925, provides that a writ, order, deed, of arrangement or other interest which in the case of unregistered land may be protected by registration under the Land Charges Act, 1925, shall, where the land affected or the charge securing the debt...