N3 Living Ltd v Burgess Property Investments Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 02 July 2020 |
| Neutral Citation | [2020] EWHC 1711 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: PT-2020-000380 |
| Date | 02 July 2020 |
[2020] EWHC 1711 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURT OF ENGLAND AND WALES
PROPERTY TRUSTS AND PROBATE LIST (Ch. D)
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Mr Justice Morgan
Case No: PT-2020-000380
Paul de la Piquerie (instructed by Freeths LLP) for the Claimant
Maurice Rifat (instructed by MHHP Law LLP) for the First Defendant
Samuel Laughton (instructed on the Bar Public Access Scheme) for the Second Defendant
Hearing date: 29 May 2020
Approved Judgment
Introduction
This is a vendor and purchaser summons under section 49 of the Law of Property Act 1925 (“ LPA 1925”). The Claimant is the purchaser and the First Defendant is the vendor under a contract for the sale of 44–46 Victoria Road, New Barnet, EN4 9PF, which is registered at the Land Registry under Title Number NGL216785. I will refer to the Claimant as “the Purchaser”, to the First Defendant as “the Vendor” and to the property as “the Property”.
The Second Defendant, Ms Bennett, has made a claim to have an interest in the Property and has applied to the Land Registry for the registration of a restriction in Form A. The application for the registration of a restriction has caused a difficulty between the Vendor and the Purchaser as to what should be done, if anything, to deal with the fact of the application for a restriction and to achieve completion of the sale.
Mr de la Piquerie appeared on behalf of the Purchaser, Mr Rifat appeared on behalf of the Vendor and Mr Laughton appeared on behalf of Ms Bennett. The principal argument was between the Vendor and the Purchaser and Mr Laughton did not take sides in relation to that argument but provided the court with information as to the background to the claim made by Ms Bennett.
The facts
At all material times, the Vendor has been the registered proprietor of the Property.
On 26 July 2019, the Vendor and the Purchaser entered into a contract of sale of the Property and an adjoining property, 48 Victoria Road. The Vendor agreed to sell the Property and 48 Victoria Road with full title guarantee and also agreed to sell the Property and 48 Victoria Road with vacant possession and free from incumbrances other than certain matters which included matters which were unregistered interests which override registered dispositions under schedule 3 to the Land Registration Act 2002 (“the 2002 Act”). The contract provided for completion on 27 January 2020.
On or about 22 November 2019, Ms Bennett applied to HM Land Registry for the entry of a restriction against the registered title of the Property. I have not seen the full application but I have seen paragraph 12 of it which set out what Ms Bennett said was the nature of her interest in the Property. I will explain the basis of the application, relying on paragraph 12 of the application and supplemented by certain matters described to me by Mr Laughton. I emphasise that, at this stage, these matters or alleged matters are disputed by the Vendor.
Prior to his death on 21 September 1996, Daniel O'Neill was the registered proprietor of the Property. He died testate, leaving a will dated 21 May 1984. Pursuant to the terms of his will, Mr O'Neill left the Property to his widow, Elizabeth O'Neill. I was not shown the will but, as I understand it, the Property formed part of the residue of the estate which was left to the widow and was not the subject of a specific devise. The will named Daniel O'Neill's son, Sean O'Neill, as the executor of the will. Sean O'Neill obtained probate of the will on 28 October 1999 and on 10 April 2002, he transferred the Property to the Vendor. The transfer was for no monetary value. The Vendor was, and is, a company in which Susan Burgess, the daughter of Daniel O'Neill and Elizabeth O'Neill, has an interest.
Elizabeth O'Neill died on 2 November 2006. She died intestate. The persons entitled to take on her intestacy were her three children, Sean O'Neill, Susan Burgess and Patricia Bennett. Patricia Bennett has since died leaving two children, Ms Bennett and her brother. In 2018, Ms Bennett obtained letters of administration in relation to the estate of Elizabeth O'Neill.
Ms Bennett's case is that the Vendor holds the Property on trust for the estate of Daniel O'Neill and that the estate of Elizabeth O'Neill, now represented by its administrator, Ms Bennett, is entitled to have the estate of Daniel O'Neill duly administered. That right to have the estate of Daniel O'Neill duly administered is a chose in action and a proprietary right: see Commissioner of Stamp Duties (Queensland) v Livingston [1965] AC 694 at 707–708 and Marshall v Kerr [1995] 1 AC 148 at 165–166. The administration of the estate of Daniel O'Neill and the administration of the estate of Elizabeth O'Neill would lead to the Property being realised for the benefit of Sean O'Neill, Susan Burgess and Ms Bennett and her brother.
Ms Bennett says that Sean O'Neill acted in breach of his duty as an executor by failing to vest the Property in Elizabeth O'Neill. Ms Bennett asserted in her application that the Vendor knew that the transfer to it on 10 April 2002 involved a breach of trust or fiduciary duty by Sean O'Neill. Ms Bennett also asserted that the Vendor held the Property on trust for Elizabeth O'Neill during her lifetime and now held the Property on trust for Ms Bennett as the representative of the estate of Elizabeth O'Neill. As I have explained, that is not exactly the legal position but it was not suggested that anything in this case turned on that distinction.
The nature of the restriction for which Ms Bennett applied appears from the notice, dated 16 January 2020, given to the Vendor by the Land Registry. This notice stated that the restriction applied for was that:
“No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.”
This shows that the form of the restriction applied for by Ms Bennett was one of the standard forms in Schedule 4 to the Land Registration Rules 2003, namely, Form A. The Land Registry's notice dated 26 January 2020 contained a detailed explanation of the effect of the registration of a restriction in this form. The notice stated that the restriction made it clear that there must generally be at least two people to share the responsibility of making sure that the money received on a sale or other dealing with the Property is correctly dealt with. The notice also explained that if a sole registered proprietor wished to sell the Property, it would have to arrange for a second person to become a joint proprietor to act as a joint trustee and then:
“… a purchaser could safely complete a purchase because a transfer would be by two or more proprietors so that the restriction would not prevent registration.”
Before 20 January 2020, the Purchaser was taking steps to prepare for completion of the purchase of the Property and 48 Victoria Road on 27 January 2020. In particular, a proposed lender to the Purchaser carried out a priority search of the registered title of the Property. On 20 January 2020, the lender received a search certificate which revealed the existence of Ms Bennett's application for the registration of a restriction. The certificate stated that the Land Registry was not yet in a position to approve the application and complete the registration of a restriction but, nonetheless, the pending application had priority over the disposition which would be protected by the search certificate. The obtaining of this search certificate appears to have been the first time that the Purchaser became aware of the application for a restriction in relation to the Property.
The immediate reaction of the parties to the Purchaser's discovery of the pending application for a restriction was that, on 24 January 2020, they entered into a Deed of Variation of the contract. This provided for separate transfers of the Property and of 48 Victoria Road. The completion date for the latter property was to remain as 27 January 2020 (and the transfer of that property was completed on that date). The completion date for the Property was re-fixed as 18 May 2020. The combined purchase price of £980,000 for the Property and 48 Victoria Road was re-apportioned so that the price for the Property was increased from £430,000 to £500,000 and the price for 48 Victoria Road was reduced from £550,000 to £480,000.
On 31 January 2020, the solicitors for the Vendor wrote to the Land Registry stating that the application for the registration of a restriction should be dismissed and taking issue with some of the matters relied upon by Ms Bennett in her application. I am told that the application for a restriction remains a pending application and has been neither acceded to nor dismissed.
The solicitors' correspondence
I was shown email correspondence from April 2020 between the solicitors for the Vendor and the Purchaser. Although that correspondence dealt with a large number of suggestions and although I have had regard to everything which was stated, I will attempt to summarise the main points which were made.
On 21 April 2020, an email from the solicitor for the Vendor stated:
i) he had attempted to resolve the matter with Ms Bennett but she was “fairly belligerent”;
ii) there were various difficulties about a suggestion that the...
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Mistakes, mispleading and overreaching: understanding title registration and correcting the register
...4 LRA 2002.20. Cases where this is a possibility have either not, in the end, involved a breach of trust (N3 LivingvBurgess Property, [2020] EWHC 1711 (Ch)), or discussion has focused on the liability of thepurchaser personally, rather than the validity of the transaction (Byers Samba Finan......
-
Mistakes, mispleading and overreaching: understanding title registration and correcting the register
...4 LRA 2002.20. Cases where this is a possibility have either not, in the end, involved a breach of trust (N3 LivingvBurgess Property, [2020] EWHC 1711 (Ch)), or discussion has focused on the liability of thepurchaser personally, rather than the validity of the transaction (Byers Samba Finan......