Re Ashpurton Estates Ltd

JurisdictionEngland & Wales
JudgeLORD JUSTICE LAWTON,LORD BRIGHTMAN
Judgment Date07 May 1982
Judgment citation (vLex)[1982] EWCA Civ J0507-3
Docket Number82/0207
CourtCourt of Appeal (Civil Division)
Date07 May 1982

[1982] EWCA Civ J0507-3

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION COMPANIES COURT

MR. ALLAN HEYMAN, Q.C.

Royal Courts of Justice

Before:

Lord Brightman

Lord Justice Lawton

Lord Justice Oliver (Not Present)

82/0207

In the Matter of Ashpurton Estates Limited

and

In the Matter of the Companies Act 1948

MR. J. E. F. LINDSAY, Q.C. and MR. G. C. VOS (instructed by Messrs. Travers Smith & Braithwaite) appeared on behalf of the Appellant/Applicant.

MR. V. A. BLACKBURNE (instructed by Messrs. William Prior & Co.) appeared on behalf of the Respondent.

LORD JUSTICE LAWTON
1

The judgment which Lord Brightman will read is the judgment of the court. The text of the judgment has been seen and, of course, approved by Lord Justice Oliver.

LORD BRIGHTMAN
2

This is an appeal against the refusal of Mr. Allan Heyman Q.C. sitting as a deputy High Court judge of the Chancery Division to extend under section 101 of the Companies Act 1948 the time allowed by section 95 for registering a charge created by a company.

3

Under section 95 of the Act a company is required to register a charge within 21 days of its creation. Nothing turns on the wording of the section. It is sufficient to say that, unless duly registered, the charge will "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". In this context "any creditor of the company" does not mean just any creditor, but only a creditor who has acquired a proprietary right to or an interest in the subject matter of the unregistered charge; see In Re Ehrmann Brothers Ltd. (1906) 2 Ch. 697.

4

Under section 96 the legal duty to register is imposed on the company. However, registration may be effected on the application of any person interested in the charge. If the company makes default, and registration is not effected at the instance of anyone else, the company and every officer implicated is liable to a fine.

5

Section 101, with which this appeal is concerned, contains machinery for remedying an omission to register and for remedying a faulty registration. It is in the following terms:

6

"The court, on being satisfied that the omission to register a charge within the time required by this Act or that the omission or mis-statement of any particular with respect to any such charge or in a memorandum of satisfaction was accidental, or due to inadvertence or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders of the company, or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any 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, or, as the case may be, that the omission or mis-statement shall be rectified."

7

It will be observed that the power of the court under section 101 arises in five cases, namely, (1) if the omission or mis-statement was accidental, or (2) if it was due to inadvertence, or (3) if it was due to some other sufficient cause, or (4) if it was not of a nature to prejudice the position of creditors or shareholders of the company, or (5) if on other grounds it is just and equitable to grant relief. If one of those conditions is satisfied, then the court has a discretion to order that the time for registration shall be extended, or that the omission or mis-statement be rectified, in either case "on such terms and conditions as seem to the Court just and expedient".

8

In the instant case the chargee is a company known as Ashpurton Estates Limited ("Ashpurton"). The chargor is an industrial and provident society registered in Northern Ireland and known as Victoria Housing Estates Limited ("Victoria"). The charge in question was not registered in due time. Victoria applied to the Companies' Registrar for an extension of time. The application was dismissed. Victoria moved before the deputy High Court judge to vary the Registrar's order. The motion was dismissed. Hence this appeal.

9

We will summarise the facts from the affidavit evidence, which was supplemented before the deputy High Court judge and further supplemented before us.

10

The property charged consisted of some fifty dwellings at King's Lynn in Norfolk. The title to part was registered at the Land Registry. The land was bought by Ashpurton in April 1976. Part of the purchase price, almost £100,000, was advanced to Ashpurton by Victoria against the deposit of documents. The matter was handled on behalf of Victoria by Mr. Tughan, then a member of a firm of Belfast solicitors and a director of Victoria. The matter was handled on behalf of Ashpurton by Messrs. Macfarlanes, a firm of solicitors in the City of London.

11

Towards the end of 1977 Victoria turned its attention towards obtaining a legal charge. A letter was written to Mac-farlanes by one of the directors of Ashpurton at the request of Mr. Tughan, asking them to "make the necessary arrangements". Messrs. Macfarlanes prepared a form of legal charge and sent copies to Ashpurton and to Mr. Tughan. Correspondence ensued, which proceeded on the basis that Messrs. Macfarlanes would see to the registration of the charge at the Land Registry. The charge was ultimately executed on 18th April 1978. The amount secured was just under £148,000. The final letter in this part of the correspondence is dated 20th April, the penultimate sentence of which reads: "We will now submit the Deed to the Land Registry for registration against that part of the title that is registered". There was no mention of registration under section 95. The requirement for such registration was overlooked by both sides.

12

Registration of the charge against the title of the relevant properties took place on 19th May 1978. The entry in the Register contained the note: "This charge is subject to the provisions of section 95 of the Companies Act 1948". The title deeds were left with Messrs. Macfarlanes, the solicitors for the chargee Ashpurton, although perhaps a correct view would be that the solicitors held them to the order of Victoria as chargee.

13

In or about November 1978 Mr. Tughan ceased regular practice as a solicitor and became chairman of Victoria.

14

It will be convenient to say a little about Ashpurton. The company was registered in England. Its registered office is in London. It was part of a group of companies headed by International Land Investments Limited ("I.L.I."). Most, but not all, of the companies in the group were 100 per cent subsidiaries or sub-subsidiaries of I.L.I. Drum Developments Ltd. was a 100 per cent subsidiary of I.L.I. Ulster Land Developments Ltd. was a 100 per cent subsidiary of Drum. Ashpurton was a 99 per cent subsidiary of Ulster Land. The shares in I.L.I. were owned by Mr. Selwyn Midgen, Mr. Michael Curran and Mr. William Montgomery. The directors of I.L.I, were Mr. Midgen, Mr. Curran, Mr. Montgomery and Mr. Derek Hayes, a member of the firm of Macfarlanes. It appears from the correspondence that the directors of Ashpurton were Mr. Selwyn Midgen, Mr. Michael Curran and (in 1978) Mr. Derek Hayes and Mr. Dickson. The two latter left the Board in or before 1980 and Mr. Montgomery joined it.

15

I.L.I. ceased to trade at the beginning of October 1980 and went into liquidation. Mr. Tughan was so informed by a letter dated 7th November from Mr. Midgen.

16

At regular intervals down to the end of 1980 sales of the King's Lynn properties took place, thus reducing the amount outstanding on the mortgage. At some time during 1980 Messrs. Travers Smith were instructed to negotiate the sale of the remaining properties to Anglia and General Developments Ltd., a company which was owned partly by companies in which Mr. Tughan was involved and partly by I.L.I. The sale had been agreed in principle but Mr. Tughan took the view that Mr. Midgen was dragging his feet and this precipitated the calling in of the loan.

17

In November 1980 Victoria consulted Messrs. Travers Smith with regard to the money outstanding under the legal charge, then amounting to about £68,000. By a letter dated 20th November 1980 Messrs. Travers Smith formally demanded repayment of the money due to Victoria. This was not forthcoming. On 6th January 1981 Victoria appointed a receiver and manager and sent the appropriate form to the Companies Registration Office for filing. This was received by the office on 8th January, but it was seven weeks before the Companies Registration Office replied. On 27th February the form was returned unfiled with an intimation that the legal charge had never been registered.

18

This was the first moment at which it was appreciated by those advising Victoria or by anyone else that the charge was unregistered.

19

Victoria then sought advice. The advice given was that two courses were open to Victoria. One course was to apply under section 101 to extend the time for registration. The other course was to proceed with sales of the properties. Quoting from the evidence of Mr. Tughan: "He (counsel) felt that if an application to extend the time were made, it might alarm the company and precipitate a liquidation…Victoria chose, with that advice in mind, to follow the second course and sell the properties".

20

On 6th April 1981 Messrs. Travers Smith, who also acted for Anglia, sent to Mr. Midgen the engrossment of a contract for sale of the properties by Ashpurton to Anglia, and a form of transfer. However, negotiations still continued with regard to both price and purchaser, and these were still in progress down to 8th May.

21

On 6th May the Board of...

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