Re Nye (C. L.) Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE HARMAN,LORD JUSTICE RUSSELL,LORD JUSTICE MEGAW |
| Judgment Date | 14 May 1970 |
| Judgment citation (vLex) | [1970] EWCA Civ J0514-2 |
| Docket Number | No, 00623 of 1968. |
| Court | Court of Appeal (Civil Division) |
| Date | 14 May 1970 |
[1970] EWCA Civ J0514-2
In The Court Of Appeal
On Appeal From The High Court Of Justice
Chancery Division
Companies Court
Lord Justice Harman
Lord Justice Russell
Lord Justice Megaw
MR. MAURICE FINER, Q. C. and MR. P. M. MOTTERSHEAD (instructed by Waltons, Bright & Co.) appeared on behalf of the Respondents (Appellants).
MR. C. J. SLADE. Q. C. and MR. J. R. SYKES (instructed by Slaughter & May) appeared on behalf of the Liquidator- Respondent).
This was a question of priority between creditors of a company named C. L. Nye Limited (which I shall call "the Company"); it has been in liquidation since the 15th July, 1964. The application was by originating summons taken out in April, 1968 by the liquidators against the Westminster Bank (which I shall call "the Bank") claiming that a charge, on which the Bank relied as being a secured creditor (dated the 18th June, 1964), was void against the liquidators and the general body of creditors because not registered in pursuance of Section 95 of the Companies Act, 1948 within 21 days of its creation. The learned Judge acceded to this application with the result that if he be right the Bank has no priority as a secured creditor, but ranks merely as one of the general body of creditors.
Such of the facts as are known are within a comparatively small compass. The Company carried on a construction business with its registered office at Potters Bar and was at the end of 1963 in financial difficulties and heavily indebted to its then bank, the National Provincial, which was "unwilling to extend further credit. The Company occupied and carried on its business from a factory called Caxton Works which was the sole property of a company called Arnold Drive Limited (which I will call "A. D. I, ") the whole share capital in which was owned by the managing director of the Company, Mr. C. L. Nye, and his wife. His son Peter Nye was a director of the Company as was Mr. Tench, a solicitors managing clerk who was also secretary. Mr. Nye senior was about to retire and desired that his son should assume responsibility and it was agreed between the two Nyes, representing the Company and A. D. I., that in order to finance the Company A. D. I. should sell to it the Caxton Works at a price of £36, 700 of which however only £15, 000 should be paid on completion, the rest remaining until the Caxton Works should be sold.
The National Provincial Bank was Hot willing to give further credit and accordingly the Company applied to the Bank, the appellant here, at its Watford branch and opened an account there on or about the 24th February, 1964. On that date there was a meeting at the Watford branch at which were present Mr. Nye junior and Mr. Tench representing the Company, a Mr. Gait the manager of the Bank, and one Brand a partner in the solicitors' firm of Brand Montague & Co. who had been summoned by the bank manager to act for the Bank in this matter. At this meeting it was agreed that if given security over the Caxton Works the Bank would provide a loan and an overdraft to pay off the National Provincial Bank and the vendors A. D. I. so far as £15, 000 of the purchase price of the factory was due on completion.
This property was held under two instruments registered at the Land Registry in the name of A. D. I. and at this meeting there were handed to Mr. Brand on behalf of the Bank two documents of transfer, covering the registered title of A. D. I., in favour of the Company, and an instrument of charge by the Company in the Land Registry form whereby the Company was expressed to charge in favour of the Bank the Caxton Works comprised in the two registered titles MX 394153 and MX 407545 with all the liabilities of the Company repayable on demand including liabilities on current account or for further advances. All these three instruments (the two registered transfers by A. D.I, and the charge by the Company) were undated, but duly executed. The Company employed no solicitor on its own behalf but arranged that Mr. Brand as well as acting on behalf of the Bank as mortgagee to investigate the title should complete the necessary document to perfect the transaction. Mr. Brand's instructions were put into writing and are to be found in a letter of the 2nd March, 1964 exhibited to Mr. Brand's affidavit, fromwhich I think it is clear that he was Acting for the Bank alone and not for the Company, although he described himself as so doing in one of the documents which, he used in making application to the registrar. Mr. Brand in his affidavit swears that he assumed that the three instruments were handed over to him in escrow, the condition being that they should be acted upon if he found the title in order and the security good.
On the 9th March, 1964 Mr. Brand did report to the Bank that the title was valid and a good security and on that same day the Bank started to lend money to the Company, two cheques being drawn, one for the sum due to clear the indebtedness to the National Provincial Bank and the other for £15, 000 being the agreed part of the purchase money immediately payable to A. D. I, for the factory, I think it inevitably follows from this that the date of the creation of the security, that is to say the date when the charge became effective, was the 9th March, 1964 and if necessary I would so hold.
It remained to complete the transaction, first by stamping the documents, next by registering the two transfer deeds from A. D. I, to the Company with the Land Registry and third by registering the charge at the Companies Registry in accordance with Section 95 of the Companies Act. The stamping was effected by the 19th of March, but at this point there was a contretemps which has been the source of all the subsequent trouble. According to Mr. Brand he sent the documents to be stamped on the 10th March still undated and they were returned duly stamped on the 19th of March, but at this point they were in some way mislaid for a time, though for how long does not appear, for Mr. Brand after procuring the Land Registry fees on the 9th April from the Bank, did nothing about it until in June the bank manager telephonedto ask for the documents and Mr. Brand on enquiring in his office found the documents still there which he thought had been sent to the Bank completed two months before.
Mr. Brand, still not in a hurry, dated the three instruments the 18th June (the date when he found them) and sent the two transfers to be registered at the Land Registry, and the transfers were registered on the 29th June so that then for the first time the Company had the legal estate in the Caxton Works and could have dealt with it accordingly.
On the 3rd July Mr. Brand sent in particulars to the Companies Register under Section 95 of the Act and the charge was registered on the same day, thus being within 21 days of the date it bore, namely the 18th June.
The Company went into creditors voluntary winding-up on the 15th July and it was not till April, 1968 that the liquidators instituted these proceedings asking to have the charge register rectified by deleting all particulars of the charge dated 18th June, 1964 and a declaration. that the charge created over the Caxton Works is void against the liquidators and the creditors of the Company.
Two points thus emerge: First what was the true date of the "creation of the security"?; and, second: Whatever the answer be, does the registrar's certificate remedy any defect and conclude the matter in favour of the chargee? It is therefore necessary to look at the Act of Parliament,
Part III of the Act of 1948, which is headed "Registration of Charges") provides by Section 95 so far as relevant: "… every charge… by a company registered in England… to which this section applies shall, 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, unless the prescribed particulars of the charge together with the instrument, if any, by whichthe charge is created or evidenced, are delivered to or received by the registrar of companies for registration in manner required by this Act within twenty-one days after the date of its creation…".
"(2) This section applies to the following charges:- (c) a charge created or evidenced by an instrument which, if executed by an individual, would require registration as a bill of sale; (d) a charge on land…. or any interest therein …".
Section 96 obliges a company to send to the register particulars of every charge created by the company but registration may be effected by any person interested and sub-section (3) of that section provides for a default fine on any company required to send particulars.
Section 98 provides: "(1) The registrar of companies shall keep, with respect to each company, a register in the prescribed form of all the charges requiring registration under this Part of this Act and shall enter in the register the following particulars: - (b)(i) if the charge is a charge created by the company, the date of its creation …. (ii) the amount secured by the charge; and (iii) short particulars of the property charged; and (iv) the persons entitled to the charge".
Sub-section (2) reads: "The registrar shall give a certificate… of the registration of any charge registered in pursuance of this Part of this Act, stating the amount thereby secured, and the certificate shall be conclusive evidence that the requirements of this Part of this Act as to registration have been complied with".
Sub-section (3) makes the register open to inspection by the public. Sub-section (4) confers on the Board of Trade power to make the appropriate regulations.
It follows from this, first, that a charge of theappropriate kind...
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