Williams (Respondent - plaintiff) v Burlington Investments Ltd (Appellants Defendants)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CAIRNS,LORD JUSTICE BRIDGE |
| Judgment Date | 09 July 1976 |
| Judgment citation (vLex) | [1976] EWCA Civ J0709-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 09 July 1976 |
[1976] EWCA Civ J0709-2
In The Supreme Court of Judicature
Court of Appeal
(Appeal of Defendants from order of vice Chancellor Blackett - Ord, Manchester, May 26, 1976.)
Lord Justice Cairns
Lord Justice Scarmen and
Lord Justice Bridge
MR MICHAEL MARK, (instructed by Messrs. Cowan, Liposon & Rumney)appeared on behalf of the Appllants (Defendants).
MR MICHAEL BROWNE, Q,C. and MR IAN LEEMING, (instructed by Messrs. Foyster & Fifth of Manchester) appeared on behalf of the Resqondent (PLAINTIFF).
We need not trouble you further, Mr Mark. This is an appeal from a decision of vice Chancellor Blackett - Ord sitting at Manchester granting an interlocutory injunction to restrain the sale of land. The issue before the learned judge and before this court is which of two mortgages has priority.
The land concerned is a farm in Derbyshire which at one time belonged to the plaintiff and his mother. On the 19th november, 1971, they entered into a coutract to sell the land to a company called Twoncliffe Development company Ltd. That contact was completed by conveyance on the 18th February 1971, But there are two sqecial provisions so - called in the November, 1971, contract which are relevant in these proceedings. The first is Special Condition 13, to be found at page 31 of our bundle, whih provides as follows: "(1) If and whenever the purchaser shall obtain an outline Town planning permission which(A) Relates to the whole or any part of the Land"- I need not read (B) or (C)-" Then a further sum of money shall become payable to the vendors in respect of each acre or part of an acre to which the permission shall apply…" Then there are provision for calculating the sum to be paid.
Special provision 15, on page 37, says: "The purchaser aggress that it will, if requested by the vendors, enter into a legal charge not supported by the deposit of title deeds, in favour of the vendors, of such of the land as the purchaser shall still own when the request is made, to secure any monies due to the vendors under Sqecial condition No. 13. It is, however, agreed that such charge and any equitable charge will rank in priority immediately after any other charges which the purchaser may create in order to finance the development of the purchaser may create in order to finance the development of the land hereby agreed to be sold regardless of thetime of execution." I do not think it is necessary to read the remainder of the condition.
That contract was, on the 10th april, 1973, registered under the Land charges Act 1925 as estate contract, but it was not remainder of the condition.
That contract was, on the 10th April, 1973, registered under the Land charges Act 1925 as an estate contract, but it was notregistered under Section 95 of the companies, but it was not registered under Section 95 of the companies Act 1948.
In july,1973, the derendants lent a large sum to the Towncliffe Development company ltd. and got a charge on the land. They thought that the purpose was to finance the development of the land which would bring it within the exception in clause 15, but it is accepted for the purpose of these proceedings that it is to be assumed that that was not the purpose of it. The defendants did register that charge under Section 95 of piaintiff's companies act.
At some time before 1975 the plaintiff's mother died. Then planning permission was obtained in relation to the land, and in 1974 or early 1975 the plaintiff, learning of that requested the granting of a legal charge in accordance with Special Provision 15. That was refused. Proceedings were taken to compel the grant of it. The plaintiff was successful in those proceedings. An order was made in his favour and a legal charge was granted on the 7th May, 1976.
At that time the defendants were planning to sell the land by action as mortgages under their power of sale. The date of the action was fixed for the the defendants not to sell without protecting his interest. The defendants declined to give any such undertaking. Accordingly the defendants decilined to give any such undertaking Accordingly the plaintiff issued his write, and on the 24th May applied ex parte before the Vice Chancellor for an injunction which was grantedthe defendants appeal to this court. In fact, since the Vice Chancellor's order was made the land has been sold in pursuance of an agreement between the plaintiff and the defendants on the terms of the proceeds of sale being paid into a joint account to await the decision of this court on this appeal.
In deciding the priorities between this plaintiff and these defendants the first question is: Did the contract of November, 1971, create a charge on the land? If it did, then it required to be registered under Section 95 of the Companies Act 1948. That section provides: "Subject to the provisions of this Part of this Act, every charge created, after the fixed date by a company registered in England and being a charge 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 which the 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, but without prejudice to any contract or obligation for repayment of the money thereby secured, and when a charge becomes void under this section the money secured thereby shall immediately become payable." Then subsection (2): "This section applies to the following charges" - and the relevant one is: "(d) a charge on land, wherever situate, or interest there in…." - and the rest of the paragraph is not relevant.
In considering whether the agreement did create a charge or not the Vice Chancellor referred to a passage in Buckley on theCompanies Acts, 27th edition, at page 213. The passage there is quoted from a decision of Mr. Justice Buckley (as he then was) in a case called In re ( Jackson and Basford 1906 2 Ch. p. 467), and I think it is convenient to read from the authority itself. At the foot of page 476 it says: "The object of that legislation is that those who are minded to deal with limited companies shall be able, by searching a certain register, to find whether the company has incumbered its property or not. An agreement to give security may be either one of two things. It may be so expressed as to create a present equitable right to a security. If it does that, then it would seem to me that it must be registered under Section 14 of the Act of 1900," - that is the section corresponding to the present Section 95 - "otherwise it is void as against the liquidator and any creditor of the company. Or it may be so expressed as to be merely an agreement that in some future circumstances a security shall in future be created. In the latter case, the agreement not creating a present security will not require registration. But if an agreement of the latter kind were allowed to be employed for the purpose of excluding the doctrine of fraudulent preference, it is obvious that that would be a means of enabling the company, in point of fact, to give a right to incumbrances upon its property which would be outside Section 14 as not requiring registration, and yet would escape the doctrine of fraudulent preference by reason of the pre-existing promise."
The...
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