#6878 - Barclays Bank V. Guy - Restitution of Unjust Enrichment BCL

Barclays Bank v. Guy

Facts

On 22nd June 2004 the property was transferred by the defendant to Ten Acre. On 30th July 2004 the transfer was registered against each of the registered titles to the property, the price being recorded as 15m.

On 8th March 2005 Ten Acre, Lexi Holdings Plc, which I will refer to as Lexi, a related company, and the claimant entered into the charge. By clause 2, Ten Acre charged the property as security for the payment or discharge of all monies and liabilities for the time being due, owing or incurred to the claimant, whether by Ten Acre or Lexi. By clause 5 of the charge the statutory power of sale was exercisable at any time after demand. Accordingly, the charge was an all monies charged, which explains why such a large amount of money, well in excess of the value of the property, is apparently secured by the charge. On 11th March 2005 the same parties entered into a deed of priorities by which the charge was granted priority over an earlier charge in favour of Lexi.

Proceedings for sale by Barclays Bank: On 5th October 2006 the claimant demanded repayment by Lexi of the sum of 102m odd due under a credit facility. Lexi failed to satisfy that demand. On 5th October 2006 the claimant appointed insolvency practitioners from KPMG as joint administrators of Lexi. By an administration order made on 18th October 2006 the same insolvency practitioners were also appointed joint administrators of Ten Acre. By letter dated 9th August 2007 the joint administrators of Ten Acre consented to these proceedings and to the sale of the property by the claimant.

Defendant’s argument: The defendant's draft defence and counterclaim seeks to defend the claimant's claim on two bases. First, it asserts that the charge is not a genuine legal document. I refer to paragraphs 1 and 2 of the draft defence, although no reasons are given for the assertion in the draft defence. Secondly it asserts that the transfer of the property by the defendant to Ten Acre on 22nd June 2004 by a document, which I shall refer to as the transfer, was fraudulently procured by Ten Acre. As a result the Defendant contends that the transfer is void, at paragraphs 3 and 4 of the draft defence, and that the charge is invalid or ineffective, and that he is entitled to rectification of the register as against the claimant.

Holding

Property is deemed to be vested in the registered owner

The claimant contends that assuming in the defendant's favour that the transfer was fraudulently procured by Ten Acre, which is not a matter I can determine, which is a matter to be determined in Ten Acre proceedings, that cannot affect the claimant's right as registered chargee. It does not provide the defendant with any basis for rectification of the register as against the claimant.

The grounds for rectification of the register pursuant to 65 of the Land Registration Act 2002, which I shall refer to as the 2002 Act, are set out in section 65 and paragraph 2 of schedule 4 and include the alteration of the register for the purposes of correcting a mistake. By paragraph 1 of schedule 4, references to rectification of the register, in relation to alteration of the register are to alterations which involve the correction of a mistake and which prejudicially affects the title of a registered proprietor.

The starting point is that at the date of the charge and its registration against the property Ten Acre was the registered proprietor of the property. It was entitled to exercise its power to charge the property. By sections 23 sub-section 1 and section 24 of the 2002 Act the registered proprietor of a registered estate is entitled to make a disposition of any kind permitted by the general law, subject to various exceptions. This includes under section 23 (1) (b) a power to charge the estate at law with the payment of money, Section 58 sub-section 1 of the 2002 provides under the heading “Conclusiveness”: “If on the entry of a person on the register as the proprietor of a legal estate the legal estate would not otherwise be vested in him, it shall be deemed to have been vested in him as a result of the registration.”

It follows that at the time the property was charged to the claimant Ten Acre was the registered proprietor. The legal estate was deemed to be vested in it, and it was entitled to exercise its owner's powers to charge the property. It follows that there can be no mistake in the claimant's registration as chargee.

Transfer to Ten Acre was voidable – had not been avoided at the time of registration

I am satisfied that the transfer to Ten Acre was voidable and not void. The reason I am so satisfied is that Mr Guy completed the transfer in the sense of signing it and in effect delivered it to the solicitor to hold as his agent. Albeit, that the solicitor may have released that transfer without authority and as a result of being induced to release it by a fraud, the transfer is not void. It is voidable. At the date that the...