Re Overseas Aviation Engineering (G. B.) Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal
Judgment Date07 June 1962
Judgment citation (vLex)[1962] EWCA Civ J0607-5
Date07 June 1962

[1962] EWCA Civ J0607-5

In The Supreme Court of Judicature

Court of Appeal

From Mr. Justice Pennycuick


The Master of The Rolls (Lord Denning)

Lord Justice Harman and

Lord Justice Russell

In the Matter of Overseas Aviation Engineering (G. B.) Ltd.
In the Matter of the Companies Act, 1948

MR K. W. MACKINNON, Q. C. and MR L. J. MORRIS SMITH (instructed by Messrs Holt, Beever & Kinsey) appeared as Counsel for the Appellants.

BR JCHH FOSTES, Q. C. and MR PAUL SIEGHART (instructed by Steals Campbell & Co.) appeared as Counsel for the Respondents.


The facts are simple. On the 16th August 1961 Jarvis & Sons, Ltd., obtained judgment against Overseas Aviation, Ltd., for £ 8,310. I win call Jervis & Sons, Ltd. the "judgment creditors, and Overseas Aviation Ltd., the "judgment Debtors". The Judgment debtors were leaseholders of land at Gatwick Airport, and the judgment creditors wished to enforce the judgment by getting hold of this leasehold interest. To do this, they took advantage of the new procedure laid down by the Administration of Justice Act, 1906. They applied to the High Court for a charge on the leasehold property at Gatwick Airport. On the 4th September, 1961, they obtained a charging order nisi. On the 80th September, 1961, the order was made absolute. It was registered land, so they protected their charging order by registration a caution on the Land Registry. A fortnight later, on the 4 in October, 1961, the Judgment debtors went into liquidation. The liquidators now want the leasehold interest to be brought into the general pool of assets of the Company and made available to the whole body of creditors. But the judgment creditors say that their charge on the leasehold interest gives them priority over all other creditors and they are entitled to take It all for themselves to satisfy their own Judgment.


Two points are raised by the liquidators: First, they say that the charge should have been registered with the Registrar of Companies within twenty-one days of its creation, and as It vas never so registered, it is void. second, they say that in obtaining the charging order the judgment creditors issued "execution" against the judgment debtors, and, as this execution was not completed before the commencement of the winding-up, the judgment creditors are not entitled to retain the benefit of it against the liquidators, These points depend to a great extent on the true construction of Sections 34,35 and 36 of the Administration of Justice Act, 1956, Those sections revolutionized the whole law relating to the enforcement of judgments against land. The previous practice is stated in the ReportOf the Committee on Supreme Court Practice and Procedure (Command 8878, paragraph 411 to 417). By the 1956 Act the two former methods of enforcement were abolished. The write of elegit was abolished. So was the "blanket charge" on all the land of the debtor. (This used to be available for the benefit of a judgment creditor at the end of a year after entering up his judgment). In lieu thereof two new methods of enforcement were given: in the first place the judgment creditors was enabled to get a specific charge on specific land of the debtor. (This was to be available for his benefit at once without waiting a year). In the second place he could get a receiver appointed of a legal estate or interest in land owned by the debtor. (This had only been available for equitable interests previously).


Seeing that such great alterations have been made by Parliament, I do not myself think it right to construe the new sections by reference to the previous state of the law. Parliament deliberately set out to change the law: and we should ascertain the effect of the changes by considering the words actually used rather than thumbing laboriously through the dusty pages of the action of 1838, 1864, 1888, 1900 and 1925, as we were any rate all the relevant parts of them and has made a new Act to tell people what they are to do operate the new processes. I should have thought it work of supererogation to ask of judgment creditors, or even of their lawyers: "Now go through all the old statues in order to see what is the effect of this new one". I well know the familiar argument that Parliament cannot have intended to alter the laws unless it says so clearly and expressly. That has often been the means of defeating the intention of the legislature. But that arguments does not apply to an Act such as we have here. This is an amending or remedial Act. "It is wrong", said Lord Wright of such an Act, "to construe it in a niggardly and technical spirit, with an eye fixed on the old law", see Earl Fitzwilliam's Collieries Co. v. Phillips 1943 Appeal Cases at page 550.


The first point' Section 35(3) prescribes the effect of the new specific charge on land conferred by section 35(1). It says that: "The Land Charges Act, 1925, and the Land Registration Act, 1925, shall apply in relation to orders under subsection (1) of this section as they apply in relation to other writs or orders affecting land issued or made for the purpose of enforcing judgments, but save as aforesaid, a charge imposed under the said subsection (1) shall haw the like effect and shall be enforceable in the same courts and in the case Banner as an equitable charge created by the debtor by writing under his hand".


It is said that, as a result of this sub-section, when a Judgment creditor gets a charging order against a company. It must be registered within SI days with the Registrar of Companies under Section 96 of the Companies Act, 1948. If not registered it will be void. This is said to be the result of the words "the like effect". We all know, of course, that Section 95 requires every charge "created" by a Company to be registered with the Registrar else it is void against creditors and the argument is that, as the charging order is to have the like effect "as an equitable charge created by the debtor", the charging order must Itself be registered. This argument found favour with Mr. Justice Pennycuick but I have cone to the conclusion that it is erroneous, and for these reasons:


First, to anyone reading the Act simply by itself, the opening words of subjection (3) would clearly convey that the only form of registration with which the judgment creditor had to comply was registration under the Land Charges Act, 1985, or if the land was registered land. the Land Registration Act, 192S" He would not imagine that he would in addition have to register his charging order under Section 98 of the Companies Act, 1949. Surely if the legislature had Intended him to do so it would have mentioned it expressly. Otherwise the subsectionwould be most misleading.


Secondly, the words "the like effect" are ambiguous. They are capable of meaning that the charging order is to have "the like effect as a valid equitable charge." They do not compel the judgment creditor to males any formal registration of the charge is order to give It validity, save fop the registration undo? the Land Charges Act, 1098, ex, the Land Registration Act, 1920, I know that the of foot of no registration is different under the various Acts, Under the Land Charges Act non registration makes the changing order void against purchasers. Under the Companies Act. non-registration mates it void against creditors. But still the only registration contemplated by the 1956 Act is registration under the Land Charges Act or the Land Registration Acts and that is the only registration needed to give It validity.


Thirdly, any other view would give rise to difficulties which the legislature cannot have Intended. For instance, Section 96 of the Companies Act, 1948, says it is the duty of the Company to register the charges created by the Company under pain of a default fine. I do not see how the Company can be under a duty to register a charging order obtained by a judgment creditor of which it may have no notice. at any rate not when the order nisi Is obtained. And for another instance, what is to be done about stamp duty? is the judgment creditors to pay stamp duty on his judgment charge? I should hardly have thought so.


Fourthly, I do not think the legislature would have mafia a change affecting companies and no other debtors except by an amendment of the Companies Act, 1948. It made a specific amendment on another point in Section 3S(S) of the 198S Act and it would have made an amendment to deal with Section 95 if it intended it to apply? just as It did in Section 10(5) of the Land Charges Act, 1925.


I differ, therefore, from Mr. Justice Pennycuick on this point and hold that registration under Section 95 of theCompanies Act was not necessary to give that charge validity.


The effected point: The operative section here Is Section 325 of the Companies Act, 1948 (as amended by Section 86(3) of the Administration of Justice Act, 1986) which says that "(1) whoa a creditor has issued execution against the goods or lands of a Company or has attached any debt due to the Company, and the Company is subsequently wound up, he shall not be entitled retain the benefit of the execration attachment against the liquidator in the winding-up of the Company unless he has completed the execution or attachment before the commencement of the winding-up". But It goes on to say (8) for the purposes of this section, an execution against goods shall be taken to be completed by seisure and sale, end an attachment of a debt shall be deemed to be completed by receipt of the debt, and an execution against land shall be deemed to be completed by seisure or by the appointment of a receiver"


In the light of what I said earlier in this Judgment I propose to approach that section as it now stands without recourse to the previous state of the law. So approaching it. I am clearly of opinion that when a judgment creditor obtains a...

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