REF/2009/258/259/260

 

 

THE ADJUDICATOR TO HER MAJESTY’S LAND REGISTRY

LAND REGISTRATION ACT 2002

 

 

IN THE MATTER OF A REFERENCE FROM HM LAND REGISTRY

 

 

 

BETWEEN

(1)   DR ALEXANDER MAXIM VALORI

(2)   MRS CLARE MARY GABRIELLE VALORI

(3)   SOUTH NORFOLK DISTRICT COUNCIL

APPLICANTS

 

and

 

(1)   CHRISTOPHER PATRICK ELLIOTT

(2)   CLIFFORD JAY

 

RESPONDENTS

 

Property Address: Land on the East Side Of Middle Road, Denton

Title Number: NK302196, NK302149, NK355955

 

 

Before: Mr Michael Michell Deputy Adjudicator to HM Land Registry

 

Sitting at: Victory House, Kingsway, London

 

 

 

Applicant Representation: Mr Clive Moys, counsel, instructed by Sprake & Kingsley

Solicitors

 

Respondent Representation: Mr Stuart Hardwicke Caruthers, lay representative

 

 

 

 

 

 

 

___________________________________________________________________________­

 

DECISION

___________________________________________________________________________

 

APPLICATION TO REGISTER TRANSFER – TRANSFER BY LOCAL AUTHORITY- SECTION 55 OF LAND REGISTRATION ACT 2002- CHARGE NOT REGISTERED

 

Cases referred to

 

Westminster City Council v Iran [1986] 3 All ER 264

Nykredit Mortgage Bank plc v. Edward Erdman Group (House of Lords 27^th November 1997)

Lewis and Lewis v. Metropolitan Property Realisations [2009] EWCA Civ 448

 

1. Mr Christopher Elliott applied to HM Land Registry to register a transfer of part dated 3 July 2007 of land comprised in title number NK302196. The application form was dated 31^st August 2008 for reasons which appear below but the application was not made until 29^th September 2009. The transferor was Mr Clifford Jay. The land the subject of the transfer was a narrow strip of a parcel of approximately 1.9 acres of grazing land situated off Middle Road, Denton, Harleston, Norfolk, which parcel is registered under title numbers NK302196, NK302149 and NK355955 (“the Land”). The registered proprietor of NK302196 is Mr Clifford Jay. The registered proprietor of NK302149 is Mr Joseph Coates. The registered proprietor of NK355955 since 14^th March 2007 has been Lisa Smith. At the time that Mr Elliott made his application, an official search with priority had been entered on the day list to protect a purchase of the whole of the land in title number NK302196 by Dr and Mrs Valori. On 2^nd October 2008 Dr and Mrs Valori applied to HM Land Registry to register a transfer of the Land. The transfer was made by South Norfolk District Council (“the Council”) and was dated 25^th September 2008. The application by Dr and Mrs Valori was made within the priority period of the official search. Dr and Mrs Valori applied on 15^th October 2008 to HM Land Registry to register title to 2 local land charges on the Land. Mr Elliott objected to the application of Dr and Mrs Valori by letters dated 7^th and 26^th October written on his behalf by Mr Caruthers. Mr Clifford Jay also objected to that application. Dr and Mrs Valori themselves objected to Mr Elliott’s application on 11^th December 2009. Both disputed applications were referred to the Adjudicator to HM Land Registry for determination. The Adjudicator directed that both matters be heard together and designated Dr and Mrs Valori as the Applicants and Mr Elliott and Mr Jay as the Respondents. The South Norfolk District Council was added as a party to all three references on 10^th September 2009. I heard evidence and argument on 11^th and 12^th January 2010 and subsequently received further written submissions on behalf of both the Applicants and the Respondents.

 

2. The Council’s case is that it had power to sell and transfer the Land as mortgagee in possession. It is said on behalf of the Council that the failure to register title to the local land charge did not deprive the Council of power to execute a valid transfer of the Land to Dr and Mrs Valori and that the transfer should be registered. The Respondents dispute that there was any effective transfer to Dr and Mrs Valori.

 

Facts

3. The Council is the planning authority for the area in which the Land is located. In October 2003 Mr Clifford Jay and other members of a group of Romany gypsies occupied the Land for use as a caravan site. On 30^th October 2003 the Council served a planning enforcement notices; these were operational development notices and stop notices. There were two operational development notices; one described the land affected as “adjacent to Kingsland Farm, Middle Road, Denton” and the other described the land affected as “north of Kingsland Farm …”. Each described the breach of planning control as the formation of concrete pads on land. The work required to be done was the removal of concrete pads and restoration of the surface of the land to its former state. Concrete pads had been constructed on the ground to provide bases for the caravans. Each notice was expressed to take effect on 29^th November 2003 unless an appeal was made against it beforehand. They were signed by John Tomlinson, Head of Planning Services and as “the Council’s authorised officer”. There were 2 stop notices, referring to the land adjacent to Kingsland Farm and land north of Kingsland farm respectively. The stop notices described the activity that was to cease as “the formation of concrete pads in the open countryside”. Each stop notice was signed by John Tomlinson, Head of Planning Services and as “the Council’s authorised officer

 

4. On 12^th November 2003 the Council issued enforcement notices in respect of a material change of use and related stop notices. Separate notices were issued in respect of the land to the north of Kingsland Farm and land adjacent to Kingsland Farm. The enforcement notices described the alleged breach of planning control as the change of use of agricultural land from agricultural land to

“use of land for residential caravan site including ancillary depositing and storage of road planings, hardcore and other ballast materials”

and to

“use for the depositing and storage of road planings and other ballast materials otherwise than as ancillary to the use of the land for a residential caravan site”.

The enforcement notices required

(i) cessation of use of the land as a residential caravan site;

(ii) removal of all caravans and ancillary cabins, objects and materials;

(iii) removal of all road planings, hardcore, and other ballast materials;

(iv) restoration of the surface of the land as meadow land by

(a) importing and applying appropriate top soil; and

(b) cultivating the soil to a depth of at least 5 cm and sowing with an appropriate meadow grass mix, excluding clover, at the rate of 13.5 kilograms per acre.

The periods for compliance were respectively Steps (i) and (ii) 3 months; step (iii) 4 months; step (iv)(a) 5 months and step (iv)(b) 12 months. The notices were signed by Paul Witham as “the Council’s authorised officer”.

 

5. The notices issued on 30^th October 2003 were issued by the Planning Officer after consultation with a councillor, who was not the chairman or vice-chairman of the planning committee. The notices issued on 12^th November 2003 were issued after the South- West Area Planning Committee of the Council had resolved on 11 November 2003 that, subject to legal advice, enforcement action be authorised to secure the removal of caravans and to restore the land to its original condition and that a stop notice be authorised to secure the cessation of the importation and storage of hardcore. An application for planning permission to retain the caravans had been made and a report on the application was included on the agenda for the meeting on 11 November 2003 but the application was withdrawn prior to the committee meeting.

 

6. Mr Jay and other members of the group appealed all 4 enforcement notices under section 174 of the Town and Country Planning Act 1990 (as amended). Section 174 provides for an appeal to the Secretary of State against an enforcement notice on any of the grounds set out in subsection (2). Section 285 of the 1990 Act provides that the validity of an enforcement notice shall not be appealed on any of the grounds on which an appeal can be brought under section 174 except by an appeal under that section. The appeal was brought on two grounds – that consent should be granted for what was alleged in the notices and that the time to comply with the notices was too short. The first ground did not proceed but the second did. The Planning Inspector visited the site on 16^th August 2004 and on 19^th August 2004 gave his decision, extending the time for compliance with the notices to 13 months for the removal of the concrete pads and 12, 13, 14 and 21 months respectively for the steps set out in the enforcement notices relating to material change of use.

 

7. In March 2004 members of the group (Messrs C Jay, R Smith, S Coates and P Foster) made an application to the Council for the retention of the use of the land adjacent to and to the north of Kingsland Farm as a caravan site with hardstanding and existing access. The Council refused the application on 30^th April 2004. The group appealed. The Planning Inspector held an inquiry and decided for the reasons set out in her decision letter dated 22 June 2005, that the appeal should be rejected.

 

8. On 7^th December 2005 the Council’s Head of Planning Services wrote giving notice that unless by not later than 24 July 2006 all caravans and ancillary cabins, objects and materials were removed from the land adjacent to and north of Kingsland Farm, the Council would take direct action and recover from the person who was then the owner of the land any expenses reasonably incurred by them in so doing. The notice referred to the 12^th November 2003 enforcement notices.

 

9. In March 2006 the group applied for temporary planning permission to use the Land as a caravan site for three years. On 15^th May 2006 the Council resolved to authorise funding for the removal of the group from the Land by direct action. On 23^rd May 2006 the Planning Committee of the Council refused the application for temporary planning permission.

 

10. Lisa Smith brought proceedings for judicial review of the Council’s decision to take direct enforcement action. Ouseley J. on 10^th November 2006 rejected all the grounds on which the decision was challenged. However, he did indicate that as circumstances had changed, in particular as planning permission had been given for another gypsy caravan site within the Council’s area, the Council should reconsider its decision to take direct action.

11. On 12^th February 2007 the Council’s cabinet reconsidered the matter and resolved again to take direct action. On 6^th March 2007 the Council gave notice under section 178 of the 1990 Act requiring compliance with the enforcement notice by 22^nd April 2007 in default of which it would take the steps required by the notice issued on 12 November 2003 and would recover from the person who was then the owner of the land any expenses reasonably incurred by them in so doing. Notice was served by the Council’s gypsy liaison officer, Mr Cooke.

 

12. On 3 July 2007 Clifford Jay executed a transfer of part of NK302196 to Christopher Elliott for a consideration expressed in the transfer to be £2,000. Mr Elliott made an application to register the transfer on 15^th August 2007. On 10^th September 2007 the Croydon Office of the Land Registry wrote to Mr Elliott’s solicitors stating that there was insufficient detail on the plan with the transfer to enable them to map the application accurately and asking the solicitors to mark the location of the land transferred on an enclosed map print. The letter referred to rule 16 of the Land Registration Rules and gave the cancellation date for the application as 8^th October 2007. Rule 16 (1) provides that if an application is not in order the registrar may raise such requisitions as he considers necessary, specifying a period within which the applicant must comply with the requisitions. Rule 16(2) provides that if the applicant fails to comply with the requisitions within the specified period, the registrar may cancel the application or extend the period. There was no reply to the Land Registry’s letter. There is no evidence that the registrar extended the specified period; it appears that the registrar cancelled the application on 8^th October 2007.

 

13. On 4^th September 2007 the Council commenced direct action. The Council’s contractors started work on the Land. The Council put up a notice stating that it had entered into possession of the Land in exercise if its powers as mortgagee in possession under a local land charge arising by operation of law in respect of expenses incurred by the Council pursuant to section 178 of the Town and Country Planning Act as amended for taking direct action to take steps to comply with the planning enforcement notices dated 30 October 2003, those steps not having been taken by the owners or occupiers of the land within the time period required for compliance. It also did some work to secure the land from incursion. This involved digging a trench along the edge of the land beside the adjacent highway. The Respondents do not deny that the Council’s contractors did substantial works on the Land but they say that the Council damaged property of significant value belonging to the gypsy group on the Land. The Council deny this.

 

14. On 28^th November 2007 the Council registered specific financial charges in the register of local land charges in respect of £58,514.78 and £2,100. The first financial charge was recorded on the register of local land charges as relating to expenses recoverable in respect of direct action taken to take steps “to cease to use the land as and for a residential caravan site, remove all caravans and ancillary cabins, objects and materials from the land and remove all road planings, hardcore and other ballast materials from the land”. The second financial charge was expressed to be for expenses in respect of direct action in restoring damage cause to the surface of the land as meadow land by the importation and application of appropriate top soil and cultivating the soil and sowing meadow grass mix. Both charges were expressed in the register of local land charges as being “to comply with planning enforcement notices dated 30 October 2003” (though the steps expressed to have been taken were the steps required to be taken by the enforcement notices dated 12 November 2003).

 

15. On 7^th December 2007 the Council served on Mr C Jay, Mrs L Smith, Mr J Coates and Mr A Kidd demands for payment of the sums of £58,514.78 and £2,100. The notices of demand said that the Council had exercised its powers to take direct action “to take the steps required for compliance in the enforcement notices dated 30 October 2003” but then went on to set out the steps required in the enforcement notices dated 12 November 2003. The notices stated that if payment was not made within 28 days, the Council would exercise its statutory power of sale of the land. Attached to the notices and referred to in them were copies of invoices from the Council’s contractors, Constant & Co. dated 18^th October 2007. There was an invoice for £58,514.78 which referred to direct action to comply with the enforcement notices issued on 12 November 2003. The invoice described the amount charged as being for the removal of road planings, hardcore and other ballast materials and rubbish; importing and applying top soil; security guards, accommodation and plant hire. The other invoice was for £2,100 and was for re-seeding the land. The Respondents do not deny that Constant & Co. as contractors for the Council did the works set out in the narrative to the two invoices.

 

16 On 20^th February 2008 the Council served a notice “requiring payment of legal charge money prior to exercise of statutory power of sale”, requiring the payment of the total sum of £60,614.78 “being the capital money now owing under charges arising and registered as local land charges on 10 September 2007 (general financial charge) and 28 November 2007 (as to two specific financial charges) together with interest.

 

17. On 19 June 2008 the Council instructed NPS Property Consultants to market the Land for sale. It was offered for sale by tender. Dr and Mrs Valori, who live on an adjacent house called Kingsland Farm, expressed an interest in purchasing. On 12^th August 2008 they submitted a tender form, offering to buy the Land for £40,500. The tender conditions provided for completion to be 28 days after the date of acceptance of the tender offer and for the purchase price to be payable on completion. Dr and Mrs Valori’s tender offer was accepted on 12^th August 2008.

 

The Applications

18. Mr Christopher Elliott sent an application form dated 31^st August 2008 to HM Land Registry applying to have himself registered as proprietor of all the land in titles NK302196, NK302149 and NK355955. The application was supported by a statutory declaration made by Mr Elliott and dated 1^st September 2008. The Land Registry returned the application on the grounds that Mr Elliott had shown no evidence as to why he was entitled to be registered as proprietor of the land in the three titles. Mr Elliott responded by sending the Land Registry a second statutory declaration, being one dated 15^th September 2008 but stating on its face that it was drawn on 1^st September 2008. The application was accepted by the Land Registry on 29^th September 2008 as an application to register the transfer by Mr Jay to Mr Elliott dated 3 July 2007.

 

19. Dr and Mrs Valori’s solicitors, Messrs Sprake and Kingsley, on 17^th September 2008 made a protective search of the register. The priority period given by the search expired on 28^th October 2008. A transfer of the Land by the Council to Dr and Mrs Valori in Form TR2 was executed on 25^th September 2008 and on 1^st October 2008 Dr and Mrs Valori applied to register the transfer. The Kingston upon Hull office of the Land Registry raised a requisition on 7^th October 2008 referring to section 55 of the Land Registration Act 2002 and setting out what was required to accompany an application to register a local land charge.

 

20. On 15^th October 2008 Messrs Sprake and Kingsley applied to have the Council’s local land charge registered at HM Land Registry. That application was made on the instructions of Dr and Mrs Valori. Sprake and Kingsley did not have any separate instructions from the Council.

 

Statutory Provisions

21. Section 7 of the Local Land Charges Act 1975 provides

“A local land charge falling within section 1(a) above shall, when registered, take effect as if it had been created by a deed of charge by way of a legal mortgage within the meaning of the Law of Property Act 1925, but without prejudice to the priority of

the charge”

A mortgagee under a charge by deed expressed to be by way of legal mortgage has the same powers and remedies as if a mortgage term for 3000 years had been created (Section 87(1) of the Law of Property Act 1925). Those powers include a power, when the mortgage money is due, to sell the mortgaged property (section 101(1)). The power of sale does not become exercisable unless and until notice requiring payment of the mortgage money has been served on the mortgagor and default has been made in payment of the mortgage money for three months or some interest is in arrear and unpaid for two months. A mortgagee exercising the power of sale has power by deed to convey the land sold – section 104(1). Section 104(2) contains the following important provisions

“Where a conveyance is made in exercise of the power of sale conferred by this Act, or any enactment replaced by this Act, the title of the purchaser shall not be impeachable on the ground

(a)    that no case had arisen to authorise the sale; or

(b)   that due notice was not given; or

(c)    where the mortgage is made after the commencement of this Act, that leave of the court, when so required, was not obtained; or

(d)   whether the mortgage was made before or after such commencement, that the power was otherwise improperly or irregularly exercised;

and a purchaser is not, either before or on conveyance, concerned to see or inquire whether a case has arisen to authorise the sale, or due notice has been given, or the power is otherwise properly and regularly exercised; ….”

 

22. The creation of a local land charge over registered land does not require to be completed by registration – section 27(5) of the Land Registration Act 2002. However, section 55 of the Land Registration Act 2002 provides as follows

“A charge over registered land which is a local land charge may only be realised if the title to the charge is registered”

 

Did the Council have a charge?

23. I have evidence that the enforcement notices issued on 12 November 2003 were issued with the authority of the relevant area planning committee of the Council. Mr Caruthers referred to the constitution of the Council as set out in the Council’s Members Handbook. The Constitution provides for the Area Planning Committees to determine whether to authorise the taking of enforcement action and for a general delegation to the Head of Planning Services of power where enforcement action has been authorised by a planning committee, to serve enforcement notices and to arrange for entry on land and the taking of steps required by such an enforcement notice and for the recovery of costs incurred in relation thereto. The South-West Area Planning Committee authorised the taking of enforcement action on 11 November 2003 as confirmed by the minutes of the meeting held on that day, which were in evidence. The 12 November 2003 notices were then issued and served by the Head of Planning Services. The works required to be done by the notices were to be done by 12 August 2005 (being 21 months from 12 November 2003). It is not disputed that the required works were not done by those dates. The Council had power under section 178 of the Town and Country Planning Act 1990 to take direct action since the enforcement notices had not been complied with. Section 178(1) of the 1990 Act provides

“Where any steps required by an enforcement notice to be taken are not taken within the period for compliance with the notice, the local planning authority may-

(a)    enter the land and take the steps; and

(b)   recover from the person who is then the owner of the land any expenses reasonably incurred by them in doing so”.

There is no statutory obligation to give notice before commencing direct action. It is therefore not relevant whether the Council did effectively serve the notices of direct action. The work that was done by the Council’s contractors in September 2008 was the work required by the enforcement notices. I have evidence that the works were done and of the cost of those works. There is no doubt that some cost was incurred in doing the works. Regulation 14(2) of the Town and Country Planning General Regulations 1992 (SI No. 1492), made under the power given by section 178(5) of the 1990 Act provides as follows

The expenses recoverable by a local authority under section 178(1) of the 1990 Act are, until recovered, a charge that is binding on successive owners of the land to which the enforcement notice relates and the charge shall take effect as from the date of completion by the local planning authority of the steps required to be taken by the enforcement notice.”

As the Council entered the land to which the enforcement notices issued in November 2003 related and took the steps required to be taken, it has a charge for the expenses incurred in taking those steps.

Did the Council have power of sale and was it exercisable?

24. The effect of section 7 of the Local Land Charges Act 1975 is that the local authority has a power of sale when the local land charge is registered. Here, the Council registered charges in the register of local land charges, referring to the land affected, describing the works done and specifying the amount of the charges. However, the Council as part of the registration gave the wrong dates for the enforcement notices under which the works were done. It referred to the enforcement notices dated 30 October 2003 and not to the notices dated 12 November 2003. I was not referred to any authority as to whether this mistake invalidated the registration of the local land charges so as to deprive the Council of the powers it would otherwise have by virtue of section 7 of the 1975 Act.

 

25. How a local land charge is to be registered is governed by the Land Registration Rules 1977. Rule 6 (2) provides

“Subject to rule 7, the registration of a charge shall be effected by entering in the part of the register appropriate for that charge the particulars specified in schedule 2 in relation to that part”.

The particulars required of specific financial charges are specified in part 2 of schedule 2 and include

“description of the charge (including reference to appropriate statutory provision”.

Rule 2(2) provides that unless the context otherwise requires

“”description” in relation to a charge means a description which is sufficient to indicate-

(a)    the nature of any agreement, certificate, notice, order, resolution, scheme or other instrument or document (not being a statute or an instrument embodying statutory provisions) which comprises the charge or in connection with which the charge came into existence;

(b)   where apparent from the instrument or document, the date on which the charge came into existence;

(c)    any statutory provision (other than section 1(1)(e) of the act or a provision specified in the part of Schedule 2 appropriate for the charge) under or by virtue of which the charge is a local land charge or registrable, or which comprises the charge;..”

The Rules therefore require a description of the charge to be entered on the register, being a description which is sufficient to indicate the nature of the notice in connection with which the charge came into existence. Here, the notices in connection with which the charges came into existence were the planning enforcement notices issued on 12 November 2003 and not the notices issued on 30 October 2003. However, the nature of the notices was in my view sufficiently indicated; the notices were planning enforcement notices and they were notices which required work of the description specified in the register. The fact that an incorrect date was entered for the planning enforcement notices requiring the work of the description set out in the register did not mean that there was no sufficient description of the nature of those notices.

 

26. In my judgment, the local land charges were registered on the local land charges register and accordingly, the Council had a power of sale of the land charged. The power became exercisable three months after the Council gave notice requiring payment of the sums secured by the charge. Notice was given on 20^th February 2008. Payment was not made and so the power of sale became exercisable, subject only to the effect of section 55 of the Land Registration Act 2002, on 21^st May 2008.

 

Interpretation of S. 55

27. Neither representative was able to draw my attention to any decision in which the meaning of the term “realised” in this section has been considered. From my own researches I have been unable to find any case in which the meaning of the term in the context of section 55 has been considered. There was a requirement under the Land Registration Act 1925 that a local land charge be registered before it is “realised”; section 59(2) provided as follows

“Registration of a land charge (other than a local land charge) shall, where the land affected is registered, be effected only by registering under this Act, a notice caution or other prescribed entry:

Provided that before a land charge including a local land charge affecting registered land (being a charge to secure money) is realised, it shall be registered and take effect as a registered charge under this Act in the prescribed manner, without prejudice to the priority conferred by the land charge”

Neither the researches of the parties’ representatives nor my own researches have found any case in which section 59(2) has been considered. The section would have arisen for consideration in Westminster City Council v Iran [1986] 3 All ER 264 but as the proceedings had not been served on the Iranian government, Peter Gibson J. decided that he could not rule on the substantive questions raised.

 

28. The Oxford English Dictionary gives as one definition of “realise” the following

“To convert (securities), paper money etc.) into cash or (property of any kind) into money”

The word has been used in that sense in cases concerning mortgages; for example, in Nykredit Mortgage Bank plc v. Edward Erdman Group (House of Lords 27^th November 1997) where the issue was when does a mortgagee who has acquired property as security as a result of negligent advice, suffer loss, Lord Nicholls spoke of the charge being realised when the property was sold.

 

29. Mr Moys, counsel for the Applicants referred me to Lewis and Lewis v. Metropolitan Property Realisations [2009] EWCA Civ 448. That case concerned the meaning of “realises” within section 283A(3)(a) of the Insolvency Act 1986. Section 283A provides (so far as is material)

“(1) This section applies where property comprised in the bankrupt’s estate consists of an interest in a dwelling house which at the date of the bankruptcy was the sole or principal residence of:

(a)    the bankrupt,

(b)   the bankrupt’s spouse or civil partner, or

(c)    the former spouse or former civil partner of the bankrupt.

(2) At the end of the period of three years beginning with the date of the bankruptcy the interest mentioned in subsection (1) shall

(a) cease to be comprised in the bankrupt’s estate, and

(b) vest in the bankrupt (without conveyance, assignment or transfer).

(3) Subsection (2) shall not apply if during the period mentioned in that subsection –

(a) the trustee realises the interest mentioned in subsection

….”

The bankrupt had a beneficial interest in a dwelling house he owned jointly with his wife. Before the end of the period of three years from the date of the bankruptcy, the trustee in bankruptcy executed an assignment of the bankrupt’s interest in the property. The assignment was, in the words of Law LJ “somewhat oddly worded”. The Court of Appeal treated the assignment as one made in exchange for an obligation to pay £1 immediately and a proportion of what the assignee received from the assigned property at a future date. The issue for the Court of Appeal was whether in selling the interest for a deferred contingent consideration, the trustee “realises” the interest within the meaning of section 283A.

 

30. Laws LJ, in giving the judgment of the court, quoted the Oxford English Dictionary definition of “realise” being “convert into cash or money” and said (at paragraph 11) that those words “import the general impression of a completed transaction as opposed to one where the price is still outstanding”.

31. Laws LJ also considered Re Oxford Benefit Building and Investment Company (1886) 35 Ch D 502 and Board of Trade v. Block (1888) 13 App Cas. 570 and said (at paragraph 15)

“Those cases, like the first dictionary definition, are both cases in which the judges accepted that the concept of realising something involved the reduction into cash, and strongly suggest that it does not happen until the cash is actually available. These cases do not determine what “realise” means in subsection (3)(a) but they are helpful pointers towards an application of the normal English meaning of the word.”

His Lordship then turned to a detailed consideration of the context in which the words were used. The Court of Appeal concluded that “realises” in subsection 283A(3) involves getting in the full cash consideration for the deal and did not include effecting a sale for future cash consideration, at the stage before the cash is got in. (see paragraphs 29 and 35).

 

32. Mr Moys submitted that since the consideration obtained for the sale by the Council to the Applicants was a sum less than the total sum secured by the local land charge, the council did not get in the full consideration and thus did not “realise” the local land charge within the meaning of section 55 of the Land Registration Act 2002. I cannot accept that submission. The local land charge may have secured the payment of a sum of more than £40,000 but once the property the subject of the charge was sold then there was no further sum that could be got in from the charge. Here the council purported to sell the land the subject of the local land charge for a sum of £40,000. It did not purport to leave any consideration outstanding to be paid at a later date.

 

33. On execution of the transfer, the Council received the consideration in money form for the land charged. It then received the entirety of the consideration it was going to receive. It had at that point converted the security interest into cash. In my judgment, if it had power to do so, it would have at that point “realised” the local land charge. As the local land charge was not registered, the council did not at that point have power to execute the transfer.

 

34. Mr Moys further submitted that the council did not realise the local land charge until the transfer was registered. I cannot accept that argument. A transferor does all that is required of him and receives the consideration when he executes the transfer. Obtaining registration of the transfer is an obligation of the transferee. It seems to me that the transferor has realized the charge at the time he receives the purchase monies.

 

35. It seems to me that section 55 would serve no purpose if it were possible to lodge an application to register a local land charge at the same time as an application to register a transfer made in purported exercise of powers under the local land charge. The Law Commission in its report Land Registration for the Twenty-First Century at paragraph 7.42 commented on the provision in the Land Registration Bill that was enacted as section 55 of the Land Registration Act 2002. It said that reason for including this provision in the bill was that

“under a land registration system, it is desirable that, if any person has dispositive powers over registered land, that fact should be apparent on the face of the register”.

That is the same reason as given by the Law Commission in its Consultative Document (Number 254) for recommending that a local land charge that is a charge over registered land to secure the payment of a sum of money should not be capable of being enforced until it is registered as a registered charge. The explanation is there expanded as follows

“The register must be as complete a statement of the title as is possible, particularly when there is a financial charge affecting the property. It should not be necessary to deduce such a fundamental matter from an entry on the local land charges register”.

For the registration of the title to a local land charge to serve any purpose, the registration must precede the registration of a transfer so that it is possible to see from the register that there is a local land charge which has not been realised.

 

36. In the alternative, Mr Moys submitted that if the transfer was not effective because the council could not execute it, the defect can be cured by the subsequent registration of the local land charge. I cannot accept that argument. The registration of the transfer would have effect from the time and date the application to register is entered on the day list – Land Registration Act 2002 Section 74 and Land Registration Rules 2003 rule 15(1). The question must therefore be whether the transfer was an effective transfer at the date of entry of the application. The application was entered on the day list on 2 October 2008. On that date, the local land charges had not been registered and so at that date the council had no power to execute the transfer. The application to register the local land charges was made on or after 15 October 2008. Hence, if the application succeeds, the local land charge will be registered with effect from a date several days after the date on which the application to register the transfer was entered on the day list. The registration of the local land charge will not date back to the date of entry on the day list of the application to register the transfer. I conclude that registration of the local land charge will not save the current application to register the transfer.

 

Should the local land charge be registered?

37. The application by Dr and Mrs Valori dated 15 October 2008 to register title to the local land charges is one to which the Respondents objected. Although the Case Summary from the Land Registry dated 10 February 2009 gives as the date of the application 2 October 2008 being the date of the application by Dr and Mrs Valori to register the transfer to them, the Case Summary does refer to the application to register the local land charge. Whether the local land charge should be registered was the subject of argument before me and the matter is plainly one that requires determination. Reading the Case Summary as a whole, I find that the application to register the local land charge was referred to the Adjudicator for determination by HM Land Registry together with the application by Dr and Mrs Valori to register the transfer to them.

 

38. I should note that no point was taken before me that only the Council can apply to register title to the local land charges. Mr Caruthers took a more substantive point, namely that the charges were for unreasonable amounts. Mr Caruthers submitted that on an application to register title to the local land charge, it was for HM Land Registry to consider the reasonableness of the amount of the charge and that it could refuse to register title to the charge if the amount was unreasonable. I do not accept this submission. I do accept that the Council can under section 178 of the 1990 Act only recover amounts “reasonably incurred”. However, the Council has established that it has incurred expenses in taking direct action when the works required by enforcement notices were not carried out within the time specified for completion of the works. Mr Caruthers may submit that the amounts expended were unreasonable (although there was no evidence that the invoices from Constant & Co. were excessive) but he cannot submit that the works done could have been done by the Council at no cost. Once it is established that the Council has incurred some expense in carrying out works required to be done by the enforcement notices then a local land charge exists and title to it can be registered. HM Land Registry is only concerned to be satisfied that some expense was incurred by the local authority because if there was some expense incurred, then the Council is entitled to a charge. It is not for HM Land Registry to investigate or rule upon the reasonableness of the expense or the amount secured by the charge. When title to the charges is registered, the amount of the charges will not appear on the register. The register will show that the Council has charges. If the owners of the land affected by the charges wish to challenge the reasonableness of the expenses incurred by the Council and therefore the amount secured by the charges, they must bring court proceedings. It was also submitted that the Council had destroyed or damaged property on the Land of a value in excess of the cost of the works. If a member or members of the group has or have a claim or claims against the Council then those claims will have to be established in court proceedings.

 

39. I have found that the Council does have local land charges. They are local land charges the title to which can be registered under section 55 of the Land Registration Act 2002. The application to HM Land Registry to register title to the local land charges should be given effect to.

 

Application of Mr Elliott

40. The application by Mr Elliott to register the transfer to him dated 3^rd July 2007 must succeed, subject to the registrar being satisfied that there is now a sufficient plan to enable him to identify the land transferred. It was not submitted that the registration should not proceed if the transfer to Dr and Mrs Valori was not effective.

41. I should note that Mr Elliott will take the land transferred to him by the transfer dated 3^rd July 2007 subject to the rights of the Council under the local land charge. The local land charge is within Schedule 3 to the Land Registration Act 2002 and so is an interest which overrides registered dispositions.

 

 

 

Conclusions

42. I shall direct the Chief Land Registrar to cancel the application to register the transfer to Dr and Mrs Valori. I shall direct the Chief Land Registrar to give effect to the application to register title to the local land charge as if the objection thereto by the Respondent had not been made. I shall direct the Chief Land Registrar to give effect to the application of the Respondent, Mr Elliott to register the transfer of part to him dated 3^rd July 2007 as if the objection thereto of the Applicants, Dr and Mrs Valori thereto had not been made.

 

Costs

43. My preliminary view is that the Applicants must pay the costs of the Respondents to be assessed on the standard basis (if not agreed). Any party who wishes to submit that some different order as to costs should be made, must serve submissions in writing on the Adjudicator and on the other parties by 4.30 pm on 19^th June 2010.

 

 

 

BY ORDER OF THE ADJUDICATOR

 

 

 

 

 

DATED 7^TH JUNE 2010