R v Chief Registrar of Friendly Societies, ex parte New Cross Building Society
| Jurisdiction | England & Wales |
| Date | 1984 |
| Court | Court of Appeal (Civil Division) |
Building Society - Chief registrar - Powers - Revocation of designation and suspension of borrowing - Application for judicial review - Hearings in camera - Extent of registrar's discretion - Unpaid interest arrears and insurance premiums - Whether “debts of any description (whether immediately repayable or not)” -
A building society which was established in 1866 had remained a relatively small society until 1974. In 1977 a plan for controlled growth was formulated and the society's business expanded rapidly. At the end of both 1979 and 1981 the society's reserves were below the minimum prescribed by the Building Societies (Designation for Trustee Investment) Regulations 1972 (S.I. 1972 No. 1577)F1 and there was doubt whether the society might not have exceeded its power to make “special advances” under section 22 of the Building Societies Act 1962.F2 The annual report of the society for 1982 stated that the “ascertained proportion” for special advances under that section had again ceased to fulfil the requirements of the Regulations.
On 17 August 1983 the Chief Registrar of Friendly Societies, who had been concerned about the society's control, revoked the designation of the society under section 1(1) of the House Purchase and Housing Act 1959F3 so that it ceased to be an acceptable repository for most trust funds and, considering that it would be expedient in the interests of investors and depositors, he applied section 48(2) of the Act of 1962 to the society thereby in effect preventing it from accepting money for investment. The chief registrar followed the procedure laid down in section 49 of the Act of 1962. Of the eleven considerations which led him to make the two orders, six related to failure to comply with statutory requirements including five relating directly or indirectly to “special advances.” He considered, inter alia, that the society had conducted its business imprudently and that its board had singularly failed to avoid the potential consequences of revocation of designation.
On 1 December 1983 Webster J. granted the society's applications for judicial review and quashed the chief registrar's orders of 17 August 1983. The whole of the proceedings before the judge and the subsequent appeal by the chief registrar to the Court of Appeal up to and including the delivery of the judgments were heard in camera. The in camera orders were subsequently lifted.
On the chief registrar's appeal: —
Held, allowing the appeal, (1) that the chief registrar had a discretionary power to revoke the designation of a society under section 1 of the House Purchase and Housing Act 1959 where the society ceased to be a suitable repository for trust funds (post, pp. 382B–C, 401H–402A, C, 407D–E).
(2) That section 48(1) of the Building Societies Act 1962 gave the chief registrar a discretionary power to apply subsection (2) to avoid risk of loss whenever he considered it expedient to do so in the interest of present and future investors and depositors (post, pp. 383A, 403A, E–F, 408E–F).
(3) That the words “all other debts of any description (whether immediately repayable or not)” in section 21(2) of the Act of 1962 and “is indebted to the society (taking into account any kind of debts, whether immediately repayable or not)” in section 22(2)(b) of that Act included unpaid arrears of interest and also, since the society insured all mortgaged property by declarations under a master policy the premium for which was payable annually and the borrower's obligation was to pay punctually to the society all necessary premiums, included unpaid insurance premiums as soon as the property had been declared under that policy, whenever the premium might be payable; and that the chief registrar had not misdirected himself in law regarding what was a “special advance” within the meaning of section 21 of the Act (post, pp. 398E, H–399D, 404A–B, 410F–H, 411C–D, 412A–B).
(4) That the chief registrar's decisions under section 1(1) of the Act of 1959 and section 48(1) and (2) of the Act of 1962 were amenable to judicial review, but, since they were made in good faith and he had not misdirected himself as to the scope of his powers or exceeded or abused those powers, there were no grounds on which the court was entitled to interfere with the exercises of his discretions and his orders should stand (post, pp. 383C–E, 405C, 416G–H).
Per curiam. (i) It is only in wholly exceptional circumstances where the presence of the public or public knowledge of the proceedings is likely to defeat the paramount object of the courts which is to do justice according to the law that the courts are justified in proceeding in camera. The protection of the interests of the society which might have been deprived of relief to which it was entitled constituted such wholly exceptional circumstances as justified the proceedings before Webster J. and the Court of Appeal being heard in camera and for steps to be taken to safeguard the interests of depositors during the hearing of the appeal (post, pp. 377C–D, E–G, H–378B, 400D, 405D).
(ii) Parliament intended that the public should have a high degree of protection when investing in building societies and the chief registrar was given wide discretionary powers under the Act of 1962 such as he had been given by the Act of 1959 for the protection of trust funds (post, pp. 382A, C, 383A, 401H–402A, 403G–H, 407D–E).
(iii) It is for the chief registrar and not for the courts to establish the facts and to draw conclusions from those facts (post, pp. 396G, 404H, 412H–413A).
The following cases are referred to in the judgments:
Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation [
Reg. v. Registrar of Building Societies, Ex parte A Building Society [
Scott v. Scott [
Secretary of State for Education and Science v. Tameside Metropolitan Borough Council [
Stock v. Frank Jones (Tipton) Ltd. [
Webb v. Stenton (
No additional cases were cited in argument.
APPEAL from Webster J.
On 1 September 1983 Mann J. granted the New Cross Building Society (“the society”) leave to issue an originating summons for judicial review in accordance with
On 1 December 1983 Webster J. ordered that the chief registrar's orders be removed into the Queen's Bench Division and quashed. The judge said that in his view
“the apparently wide power under section 48(1) of the Act of 1962 only enables him to make an order under the section where there is a breach of a provision of that Act or where the registrar reasonably foresees actual loss to investors or depositors if no order is made.”
The judge concluded
“As against … certain loss to present investors and depositors there is said to be no more than a risk of a loss, within a few years, to present and future investors and depositors, of an unspecifiable amount. In these circumstances in my view the decision by the registrar to exercise his discretion to make the orders was a decision which no registrar, acting reasonably on the material before him or which ought to have been before him, would have made. I accordingly set aside each of the two orders ….”
The chief registrar appealed on the grounds that the judge erred in law in holding that (1) on the true construction of section 48 of the Act of 1962, the chief registrar could only make an order thereunder (a) if there had been a failure by the society to comply with the express or implied requirements of the Act, or (b) if he reasonably perceived actually foreseeable loss to investors and depositors of the society if no order were made; (2) on its true construction, the power to revoke designation under Act of 1959 only arose where there had been a failure on the part of the society to comply with one or more of the requirements of the
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