Land Registration Act 1925 and Land Charges Acts 1925 and 1972 — Receiver appointed by court in tenants’ action complaining of landlords’ alleged breaches of repairing covenants — Hart v Emelkirk Ltd procedure — Caution registered under Land Registration Act in respect of order appointing receiver — Landlords’ application for removal of caution as a blot on their title — Present appeal from decision of Goulding J dismissing landlords’ summons — Goulding J’s reasoning was that section 59 of the Land Registration Act indicated that any order which, in the case of unregistered land, could be registered under the Land Charges Act in the register of writs and orders could be protected by a caution in the case of registered land; an order appointing a receiver was registrable in the case of unregistered land; hence such an order could be protected by a caution in the case of registered land — Appellant landlords argued that cautions were intended to protect interests which would bind a purchaser; that the order in the present case appointing a receiver on the Hart v Emelkirk Ltd basis, as distinct, say, from an order appointing a receiver by way of equitable execution, did not give rise to any such interest; and accordingly it was not registrable by a caution — Court of Appeal did not accept this restricted interpretation of the wording in the Land Charges Act, applied by the Land Registration Act, ‘any order appointing a receiver or seqestrator of land’ — The purpose of registering a caution against dealings was very largely a purpose of obtaining notice of proposed dealings rather than a purpose of overriding purchasers — Observations by Dillon LJ on the functions and benefits to tenants of the Hart v Emelkirk Ltd type of receiver — Landlords’ appeal against Goulding J’s refusal to order removal of caution dismissed
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The following cases are referred to in this report.
Calgary & Edmonton Land Co Ltd v Dobinson [1974] Ch 102; [1974] 2 WLR 143; [1974] 1 All ER 484; [1974] EGD 734; (1973) 232 EG 1215
Hart v Emelkirk Ltd [1983] 1 WLR 1289; [1983] 3 All ER 15; (1982) 267 EG 946, [1983] 2 EGLR 41
Regan & Blackburn Ltd v Rogers [1985] 1 WLR 870; [1985] 2 All ER 180
Vine v Raleigh (1883) 24 Ch D 238
Whiteheart, Re (1971) 116 SJ 75
This was an appeal by landlords, Clayhope Properties Ltd, from the decision of Goulding J dismissing their application by originating summons for an order removing a caution lodged by Rudolph Bayfield Evans, a tenant of a flat in the landlords’ block of flats at 1-20 Dover Mansions, Canterbury Crescent, Brixton, London SW9. Mr Evans was a statutory tenant and the second respondent, Mrs Sharon Lenore Jennings, was the owner of a leasehold flat in the block. The main action, in which Mr Evans, suing on behalf of all tenants of the property, claimed damages, specific performance and other relief in respect of the landlords’ alleged breach of repairing covenants, had not yet, at the date of the present proceedings, come to trial.
John Mowbray QC and Roger Cooke (instructed by Bernstein & Co) appeared on behalf of the appellants; Patrick Ground QC and Anthony Padman (instructed by Zelin & Zelin) represented the respondents.
Giving the first judgment at the invitation of Dillon LJ, NICHOLLS LJ said: This appeal raises some points on the construction of the Land Registration Act 1925 and the Land Charges Act 1925. The plaintiff in the present proceedings, Clayhope Properties Ltd, is the registered proprietor of a freehold block of flats known as 1-20 Dover Mansions, Canterbury Crescent, Brixton, London SW9. Some of the flats are let on long leases and others are subject to statutory tenancies. The first defendant, Mr Evans, is a statutory tenant and the second defendant, Mrs Jennings, is the owner of a lease.
In 1983 the property was in a state of disrepair, and by a writ issued on July 12 1983 Mr Evans, suing on behalf of all tenants of the property, commenced an action against Clayhope claiming damages, specific performance and other relief in respect of alleged breaches by Clayhope of the repairing covenants. On November 4 1983 the Master made an order appointing as receiver a Mr Johnson, he being replaced by Mr Richard Denis Collins by a further order made on February 9 1984. The material part of the latter order reads as follows:
THE COURT APPOINTS Richard Denis Collins (hereinafter called the Receiver) of 107/109 Lewisham High Street London SE13 6AT Chartered Surveyor to receive the rents and profits and other moneys payable under the leases of 20 Flats in Dover Mansions Brixton London SW9 and to manage the same in accordance with the rights and obligations of the Defendant the reversioner thereof
AND IT IS ORDERED
1 that the tenants of the said flats do pay their rents in arrear (if any) and ground rents to the said Receiver.
2 that the Receiver is to be at liberty to receive any grants payable in respect of Dover Mansions aforesaid from any Local Authority and to give a good receipt therefor
3 that the Receiver do each month report to the Defendant on the progress of his receivership and managership
4 that the Receiver do submit his accounts to the Plaintiff and the Defendant on like dates as the said William Arthur Johnson that is to say six monthly intervals commencing on May 4 1984 and subsequently thereon November 4 and May 4 of each year.
That action has not yet come to trial. Apparently pleadings are closed, but by agreement between the parties no further steps are being taken at present to proceed to trial.
Mr Johnson lodged a caution against the property under the Land Registration Act in respect of the order appointing him. Subsequently Mr Collins did likewise. Both these cautions were later withdrawn. Mr Collins, apparently, did not wish to become involved in litigation on the question of whether such a caution was properly registrable by him. So Mr Evans, the plaintiff in the breach of covenant action, himself lodged a caution against the property on April 2 1984.
Clayhope objected, contending that this was unauthorised by the legislation. Mr Evans, in turn, objected to the removal of the caution, saying that he wished to avoid seeing the freehold sold, because such a sale would frustrate the intention of the court in appointing a receiver (namely, to have the property put into repair), that Clayhope wished to sell the freehold so as to divest itself of a tangible asset and then dissipate the proceeds in order to have no money to satisfy any judgment, and that such a sale would constitute an interference with the receiver and usurp the authority of the court.
By an originating summons issued on August 2 1984 Clayhope sought an order for the removal of the caution from the register. On January 29 1985 Goulding J dismissed the proceedings, and this appeal is from that decision.
It will be convenient if I refer at this stage to the relevant legislation. Section 54 of the Land Registration Act 1925, which is the primary authority for the registration of cautions against dealings, provides in subsection (1) as follows:
Any person interested under any unregistered instrument, or interested as a judgment creditor, or otherwise howsoever, in any land or charge registered in the name of any other person, may lodge a caution with the registrar to the effect that no dealing with such land or charge on the part of the proprietor is to be registered until notice has been served upon the cautioner:
Provided that a person whose estate, right, interest or claim has been registered or protected by a notice or restriction shall not be entitled (except with the consent of the registrar) to lodge a caution in respect of such estate, right, interest or claim, but this provision shall not operate to prevent an incumbrancer or assignee of a life interest, remainder, reversion or executory interest, from lodging a priority caution in a specially prescribed form.
The effect of lodging such a caution is set out in section 55(1):
After any such caution against dealings has been lodged in respect of any registered land or charge, the registrar shall not, without the consent of the cautioner, register any dealing or make any entry on the register for protecting the rights acquired under a deposit of land or charge certificate or other dealing by the proprietor with such land or charge until he has served notice on the cautioner, warning him that his caution will cease to have any effect after the expiration of the prescribed number of days next following the date at which such notice is served; and after the expiration of such time as aforesaid the caution shall cease unless an order to the contrary is made by the registrar, and upon the caution so ceasing the registered land or charge may be dealt with in the same manner as if no caution had been lodged.
Thus, unless he consents to a dealing being registered, the cautioner has to be given notice of any intended dealing to give him an opportunity of preventing it being registered.
Section 59(1) of the Land Registration Act reads as follows:
A writ, order, deed of arrangement, pending action, or other interest which in the case of unregistered land may be protected by registration under the Land Charges Act 1925 shall, where the land affected or the charge securing the debt affected is registered, be protected only by lodging a creditor’s notice, a bankruptcy inhibition or a caution against dealings with the land or the charge.
Subsection (5) reads:
The foregoing provisions of this section shall apply only to writs and orders, deeds of arrangement, pending actions and land charges which if the land were unregistered would for purposes of protection be required to be registered or re-registered after the commencement of this Act under the Land Charges Act 1925; and for the purposes of this section a land charge does not include a puisne mortgage.
Section 6 of the Land Charges Act 1925* concerns registration in the register of writs and orders. Subsection (1) reads:
There may be registered in the register of writs and orders —
(a) any writ or order affecting land issued or made by any court for the purpose of enforcing a judgment, statute or recognizance, whether obtained on behalf of the Crown or otherwise, or for the purpose of enforcing any inquisition finding a debt due to the Crown, or any obligation or specialty made to the Crown;
(b) any order appointing a receiver or sequestrator of land;
(c) any receiving order in bankruptcy made after the commencement of this Act, whether or not it is known to affect land.
*Editor’s note: See first paragraph of Dillon LJ at p 37 post.
Subsection (2) reads:
Every entry made pursuant to this section shall be made in the name of the estate owner or other person whose land, if any, is affected by the writ or order registered.
And section 7(1):
Every such writ and order as is mentioned in the last preceding section, and every delivery in execution or other proceeding taken pursuant to any such writ or order, or in obedience thereto, shall be void as against a purchaser of the land unless the writ or order is for the time being registered pursuant to this Part of this Act:
Provided that as respects a receiving order in bankruptcy, this subsection only applies in favour of a purchaser of a legal estate in good faith, for money or money’s worth, without notice of an available act of bankruptcy.
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The thrust of the case in favour of lodging the caution accepted by Goulding J can be stated shortly. Section 59 of the Land Registration Act manifests a clear intention that every writ and order, which in the case of unregistered land may be registered in the register of writs and orders affecting land, may in the case of registered land be protected by a caution against dealings. One such order, under section 6(1)(b) of the Land Charges Act 1925 (now replaced by the Land Charges Act 1972), is an order appointing a receiver of land. The order of February 9 1984 was an order appointing a receiver of land and, that being so, section 6 plainly indicated that it might be registered in the register of writs and orders affecting land.
In this court Mr Mowbray told us that Clayhope wishes to have the blot on its title represented by the caution removed. Clayhope would not be interfering with the receiver by granting a mortgage under which the mortgagee did not at once go into possession, but the presence of the caution may make obtaining such a mortgage more difficult. Also Clayhope wishes to be free to sell long leases (granting leases for a premium) when flats in the property become vacant.
Mr Mowbray presented a closely reasoned argument to the following effect. Receiverships of the kind represented by the order of February 9 1984 are of comparatively recent origin and stem from the decision in Hart v Emelkirk Ltd [1983] 1 WLR 1289*. In that case Goulding J, in exercise of the power of the court under section 37 of the Supreme Court Act 1981, appointed a receiver, it being just to do so in support of the enforcement by the court of covenants affecting property and convenient to do so because the properties there were in a condition that demanded urgent attention. He held that the court had a wide jurisdiction to invest a receiver with such powers as the court considered necessary for the preservation of the property, the income of which he was to receive. Mr Mowbray submitted that an order of this kind appointing a receiver creates no interest in the land binding a purchaser, and that such a receivership gives the receiver no interest in the land in the sense of property law. That, I interpose, was accepted by Goulding J in the instant case citing a passage from the judgment of Chitty J in Vine v Raleigh (1883) 24 Ch D 238 at p 243. The respondents have not challenged the correctness of that view. Hence, the submission continued, the order appointing Mr Collins would not bind a purchaser of the property, although for Clayhope to grant leases for premiums, with Clayhope receiving the premiums, might be an interference with the possession of Mr Collins as a receiver appointed by the court. Since the order gave the receiver no interest in the land itself, a fortiori the order gave the tenants no interest in the land.
*Editor’s note: Also reported at (1982) 267 EG 946, [1983] 2 EGLR 41.
On that base Mr Mowbray then built the next piece of the edifice, namely that cautions are intended to protect interests which bind a purchaser. The scheme underlying the registration of cautions presupposes that when the caution is warned the person who has lodged the caution is able to come in and assert an interest in the land having priority to the interest sought to be registered. Accordingly, as the order of February 9 1984 created no estate or interest which could bind a purchaser, it cannot sensibly be registered. Registration would protect from being void against a purchaser something that never could have bound him.
Turning to the wording of the statutes, Mr Mowbray pointed out that orders can only be protected if, in the words of section 59(5), registration is required ‘for purposes of protection’. Section 59(5), it was submitted, limits what is registrable under section 59(1) to writs and orders which require protection in that in the absence of registration they would thereby be void against a purchaser. An order that of its nature cannot bind a purchaser cannot be required to be registered ‘for purposes of protection,’ and the order of February 9 1984 is such an order. Thus section 59(5) excludes the present order from registration, since it is not an order which, because of non-registration, would be void against a purchaser under section 7 of the Land Charges Act in the case of unregistered land. It was further submitted that it follows from this that ‘any person interested’ in section 54 of the Land Registration Act must be limited to a person having a true interest in the land which would bind a purchaser, and that section 6 of the Land Charges Act, with its reference to ‘any order appointing a receiver or sequestrator of land’, must necessarily be limited to a receivership which could bind a purchaser. It was submitted that some receiverships of land do create an interest in land and others, of which the present case is an example, do not. Examples of the former class, which could bind a purchaser, are a receiver appointed by way of equitable execution and a receiver appointed to enforce an equitable charge created upon a judgment debtor’s land by section 195 of the Law of Property Act 1925.
In my view, the starting point in this case has to be section 6(1)(b) of the Land Charges Act. The difficulty I have with Mr Mowbray’s submission on that section is that I can really see no adequate justification for cutting down the width of the expression ‘any order appointing a receiver or sequestrator of land’ in the way suggested. The terms of section 6(1)(b) are very specific and are unqualified. Mr Mowbray’s construction would leave little scope for the operation of that provision with regard to receivers of land despite its intended width and generality as shown by the use of the introductory word ‘any’. That the paragraph was intended to apply principally, if not exclusively, in cases where a receiver has been appointed by way of equitable execution or in proceedings to enforce a charge on a judgment debtor’s land is not attractive to my mind, especially if, as appears from the decision of Ungoed-Thomas J in Re Whiteheart (1971) 116 SJ 75, an order simply appointing a receiver by way of equitable execution creates no charge on the property. On that basis, even in the case of a receiver appointed by way of equitable execution, the order would have to contain some additional specific provision, such as a direction to the receiver to hold the money for the execution creditor, before an interest in land would be created and the order would be registrable.
If that view on the construction of section 6 is correct, and the present order, as an order appointing a receiver of land, would therefore be registrable under the Land Charges Act in the case of unregistered land, I can see no reason why section 59 or section 54 of the Land Registration Act should be construed in such a way that if the land happens to be registered land, the order should not be capable of being protected by the lodging of a caution against dealings. The evident intention of section 59(5) was in this respect to equate the systems of registered and unregistered land, and I can see no reason for construing the statutory provisions set out in section 59 or section 54 in a way which would give them a narrower ambit than section 6(1)(b) of the Land Charges Act in the case of unregistered land. For these reasons I agree with Goulding J’s conclusion.
That the order made in this case should be registrable is not without an underlying sensible and reasonable basis. If, for example, Clayhope should intend to grant a lease at a premium, keeping the proceeds itself, so that the possession of the receiver would or might be interfered with, it seems to me sensible and reasonable that notice of the intended transaction should be given before the deal proceeds. This is exactly what would be brought about by a caution being lodged in respect of the order.
I should add that Mr Mowbray prayed in aid by way of analogy the decision of Megarry J in Calgary and Edmonton Land Co Ltd v Dobinson [1974] Ch 102. There what was in issue was whether a claim in proceedings to restrain the sale of various pieces of land was registrable as a caution or, in the case of unregistered land, as a pending land action. The outcome of that issue turned on whether the proceedings fell within the definition of section 17(1) of the Land Charges Act 1972 of a pending land action meaning ‘any action or proceeding pending in court relating to land or any interest in or charge on land’. Megarry J said at p 107:
What is protected is some substantive right adverse to the owner, rather than a mere fetter on the owner’s rights of disposition. That being so, it is not surprising that an expression as wide and general in its literal meaning as ‘any action or proceeding pending in court relating to land or any interest in or charge on land’ should be given a narrower meaning more in conformity with the generality of rights registrable under the Act. What is registrable as a pending land action is an action or proceeding which claims some proprietary right in the land, and not an action merely claiming that the owner should be restrained from exercising his powers of disposition.
In line with that decision was the subsequent decision of Scott J in Regan & Blackburn Ltd v Rogers [1985] 1 WLR 870. In that case lessees commenced an action claiming a mandatory order that specified work of repair be carried out, and the question was whether that action was registrable as a pending land action, and Scott J decided that it was not.
Mr Mowbray submitted that it would be odd if an action (such as the pending breach of covenant action brought by Mr Evans against Clayhope) seeking an order for specific performance of a repairing covenant or damages were not registrable but an order made in the same action appointing a receiver were registrable.
In my view those two decisions do not assist in the present appeal. In those cases the court was concerned with statutory language of such generality that it was evident that some limitation had to be|page:37| implied. That is not the present case where the words are very specific, and where some implication does not have to be made in any event.
Mr Mowbray put forward a further submission based on the fact that the caution now on the register was lodged by Mr Evans and not, as previously, by the receiver himself. Referring to the opening words of section 59(1), he submitted that Mr Evans had no standing to lodge the caution as he was not a person interested in any land under the order in respect of which he lodged the caution. Mr Evans was not a person who, by virtue of that order, had an interest in the property.
On this aspect of the case Goulding J decided that Mr Evans, as a tenant, was a person interested in the property, that the order appointing the receiver was obtained in protection of his interests along with those of his fellow tenants, and that gave him the necessary status as a person interested under section 54 of the Land Registration Act 1925 construed by reference to section 6 of the Land Charges Act. I agree. If a caution can properly be lodged in respect of the order, I can see no reason why Mr Evans, as the tenant at whose behest the order was made, should not be a person interested under that order in the property for the purposes of section 54. I can see no reason for giving the language of section 54 a narrower meaning than the learned judge.
For these reasons, for my part I would dismiss this appeal.
Agreeing, LLOYD LJ said: Despite Mr Mowbray’s careful argument, I can see no justification for cutting down the plain language of section 6(1)(b) of the Land Charges Act 1972 as applied to the case of registered land by section 59 of the Land Registration Act 1925.
For the reasons given by my lord, I, too, would dismiss the appeal.
Also agreeing, DILLON LJ said: I add a few words on a few points only. The first is that my lord, Nicholls LJ, has referred to the provisions of sections 6 and 7 of the Land Charges Act 1925. These were the sections with which section 59 of the Land Registration Act 1925 had initially to be read, and no doubt it was for that reason it was on those sections that Mr Mowbray opened this appeal. They have in fact been replaced by provisions in subsections (1) and (4) of section 6 of the Land Charges Act 1972, but that was a consolidating Act and the change makes no difference to the point at issue on this appeal.
The second point is this. Mr Mowbray submits that the whole purpose of the registration of cautions is to protect interests binding on purchasers, as the registrar will permit the cautioner to come in and assert his estate in priority to the purchaser. At first blush, at any rate, that does not harmonise with the provision of subsection (3) of section 101 of the Land Registration Act 1925. That provides that minor interests, which take effect only in equity and are capable of being overridden by registrable dispositions for valuable consideration, may none the less be protected by entry on the register of notices, cautions, inhibitions and restrictions as provided for by the Act or rules. The purpose of registering a caution against dealings is, as it seems to me, very largely a purpose of obtaining notice of proposed dealings rather than a purpose of overriding purchasers.
Finally, the procedure provided by Goulding J in Hart v Emelkirk Ltd, which my lord has mentioned and applied in this case is, as it seems to me, a very valuable procedure for the protection of tenants who find that their landlords, particularly in blocks of flats, whether the landlords be companies or individuals, are wholly failing to perform vital repairing obligations under the terms of the relevant leases. The landlords can often not easily be traced. They collect rents, they are prepared to sell off long leases for premiums, but they allow the premises to fall into serious disrepair without regard to their repairing obligations. In such circumstances, the appointment of the receiver is a valuable protection for the tenant who has a tenancy or lease of the flat. The receiver, as here, is given power to manage the flats in accordance with the rights and obligations of the reversioner. The object is that he should have the necessary repairs carried out, which will involve incurring commitments to builders and other tradesmen, and very possibly, besides collecting rents, arranging for grants from local authorities. This is not a mere ephemeral matter which can be overridden at the drop of a hat by the reversioner transferring his interest; it is a matter in which the tenant who has obtained the appointment is also very much interested, and I can see no reason why such an appointment of a receiver should be excluded from the protection by way of caution which, on the face of the wording of the Land Charges Act, be it of 1925 or 1972, and of section 59 of the Land Registration Act 1925, is available when an order has been made for the appointment of a receiver.
Therefore I, too, would dismiss this appeal.
The appeal was dismissed with costs. Legal aid taxation of defendants’ costs was ordered.
