Red River UK Ltd v Sheikh
| Jurisdiction | England & Wales |
| Judge | Mr Justice David Richards,MR JUSTICE BRIGGS,Mr Justice Briggs,MR JUSTICE HENDERSON,THE HONOURABLE MR JUSTICE HENDERSON,Mr Justice Henderson |
| Judgment Date | 09 March 2009 |
| Neutral Citation | [2007] EWHC 1038 (Ch),[2007] EWHC 2654 (Ch),[2009] EWHC 431 (Ch) |
| Docket Number | Case No: HC07CO2257,Case No: HC07CO921,Case No: HC07C02257 |
| Court | Chancery Division |
| Date | 09 March 2009 |
[2007] EWHC 1038 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Justice David Richards
Case No: HC07CO921
Mr Robert Deacon (instructed by Isadore Goldman)appeared on behalf of the Applicant
Mr Hugo Page QC (instructed by Ashley & Co) appeared on behalf of the Second Respondent
The First Respondent did not appear and was not represented.
APPROVED JUDGMENT
This is an application for an order in the following terms:-
“That the restrictions, dated 19th October 2005 and 9th June 2006, placed upon the land situated at 37–47 Stoke Newington Road, 90 Pellerin Road and 91 Barratts Grove, London N15 8BJ in favour of the Respondents be cancelled forthwith.”
The Applicant is the registered proprietor of the property in question (“the property”). It is a company in which the shares are held as to 65% by Mr Ismail Dogan and as to 35% by the First Respondent, Mrs Rabia Sheikh, on behalf of her daughter, the Second Respondent, Miss Anal Sheikh. Miss Sheikh is a solicitor and Ashley & Co is her firm.
The restriction dated 19th October 2005 (the first restriction) is in the following terms:-
“No disposition of the registered estate by the proprietor of the registered estate is to be registered without a written consent of Rabia Sheikh c/o Ashley & Co, 49 Blackbird Hill, London NW9 8RS.”
The other restriction, registered on 9th June 2006, is as follows:-
“No disposition of the registered estate by the proprietor of the registered estate is to be registered without a certificate signed by Anal Sheikh of 49 Blackbird Hill, London NW9 8RS that she is satisfied that the person who signed the consent required by the above restriction registered on 19th October 2005 is Rabia Sheikh.”
The present application is made as a matter of urgency because the company has an offer of finance, subject to the creation of a charge over the property, which expires at the end of this month. Miss Sheikh will not consent to the creation of the charge for reasons which it is unnecessary to consider on this application.
The first restriction was entered as a result of an application signed on behalf of the Claimant company by Mr Dogan and lodged with the Land Registry by Miss Sheikh. The second restriction was entered on the application of Miss Sheikh. The present application was initially put on a simple basis. Because the first restriction had been entered on the company's application, it was open to the company to withdraw it. Because the Defendants had no standing under section 43(1) of the Land Registration Act 2002 or under the rules made under section 43(2) to apply for its registration, they had no standing to object to its withdrawal. The second restriction was entirely dependent on the first restriction, and the Defendant had no standing to apply for its registration.
The Defence to this application on the facts is that there was an enforceable agreement between the company and Miss Sheikh for the creation of the first restriction and any attempt to withdraw it is contrary to such agreement and should not therefore be permitted.
In October 2006, the company applied to the Land Registry for the withdrawal and cancellation of the restrictions. The Defendants objected to the application and, in accordance with its practice as provided in the Act and the rules, the Land Registrar referred the application to the Adjudicator. It will take some time for the Adjudicator to consider the matter, and he may well refer it to the court.
The present application for an order cancelling the restrictions raises the issue, which has been the subject of general discussion, as to whether the inherent jurisdiction of the court to cancel entries registered under the previous land registration system survived the introduction of the new system by the Land Registration Act 2002. The jurisdiction under the previous system was recognised in a number of decisions, including in particular The Rawlplug Co Ltd v Kamvale Properties Ltd [1968] 20 P&CR 32 and Calgary and Edmonton Land Co Ltd v Dobinson [1974] Ch 102, following the decision of the Court of Appeal in Heywood v BDC Properties Limited [1963] 1 WLR 975 as regards entries under the Land Charges Act 1925.
These authorities establish that the court could exercise its jurisdiction in a clear case on a summary application. Danckwerts LJ said in the Heywood case, at page 979:-
“If there was really an arguable point, of course, I think it is clear —and Vaisey J's decision established that —that it would not be proper to dispose of the land charge summarily in this manner, and the matter should be left to be dealt with at the hearing of the action. In this case, if that were the situation, it would be right and proper, I should have thought, to adjourn the application and to direct it to come on at the hearing of the action which had been begun by the plaintiffs.”
In the Rawlplug case, Megarry J said at page 40:-
“Accordingly, it seems to me that the speedy form of remedy by way of a motion ought to be available to a landowner in all cases where there are no substantial grounds for supporting the registration. I would thus favour a certain robustness of approach in these motions, of the type to be found in the administration of R.S.C., Ord. 14. If there is a fair, arguable case in support of the registration, then the matter must stand over until the trial. But if, though not cloudless, the sky has in it no more than a cloud the size of a man's hand, I would clear the register and leave the purchaser to seek such remedy by way of specific performance or damages as he may be advised. Judged by this standard, I have had no doubt about this case. If I am wrong and the right approach is less robust, I think, though with a little hesitation, that there is not really an arguable point within the phrase of Danckwerts LJ and so the result is the same.”
As a result of the view I take of the facts in this case, it is unnecessary for me to decide whether the jurisdiction to cancel an entry does survive. I will assume in favour of the Applicant that it does still exist. I should mention that, following discussion, counsel for the Applicant confirmed that the application was only for an order for cancellation, as set out in the application notice, and was not for an injunction, whether interim or final, restraining the Defendants from objecting to the company's application to the Land Registrar for cancellation of the restrictions.
By way of background, I should mention that there is already a significant amount of litigation between the parties. By a claim issued in September 2006, Mr Dogan sought an order, under section 371 of the Companies Act 1985, for an extraordinary general meeting of the company to be convened for the purpose of proposing resolutions for the removal of Miss Sheikh as a director and for the appointment of Mr Dogan's daughter as a director, with a direction for a quorum of one shareholder. Miss Sheikh was declining to attend any general meeting convened for that purpose, hence the application under section 371. Substantial evidence was filed by both parties and, following a contested hearing, Chief Registrar Baister made the order sought on 29th March 2007. Mr Dogan has issued proceedings against Miss Sheikh for alleged breach of her duty as his solicitor, including both negligence and undue influence, and Miss Sheikh has either presented or intends to present a petition under section 459 of the Companies Act 1985 in relation to the company.
The facts so far as relevant to the present application are as follows. The company was formed in 2002 for the purpose of acquiring the property. The two shares in issue were held by Mr Dogan and a business associate until April 2004, when the business associate transferred his share to Mr Dogan and resigned as a director. A contract for the purchase of the land was made in 2002, with completion delayed pending an application for planning permission. The vendor later asserted that it was entitled to terminate the contract by reason of the alleged failure of the company to comply with the contractual conditions for making the necessary planning application. Proceedings against the vendor were compromised in or about July 2004 on terms that the vendor would sell the property to the company on payment of an additional consideration of £305,000. Miss Sheikh acted for the company on the original purchase and in the proceedings and also in the purchase following the compromise.
The company and Mr Dogan were in fact unable to raise the full amount of the consideration under the new contract for the purchase of the property. Miss Sheikh offered to lend the required sum, something in the order of £400,000. It is common ground that her offer was accepted and that her terms included an agreement by Mr Dogan to procure the issue of shares in the company to her, later determined at 35%. The shares were duly issued to her mother on her behalf, with Mr Dogan holding the balance of 65%. The relevant dispute is whether the terms also included an agreement for the creation and registration of the first restriction.
Mr Dogan accepts that it looks as if it is his signature on the application for the registration, but he has no recollection of signing it and believes that Miss Sheikh must have put it before him for signature with other documents but with no explanation as to its purpose or effect. He says that he did not agree to the restriction. As he put it in paragraph...
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