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GAZETTE
sepTemBER
1986
National Provincial and Union Bank of England
-v-
Charnley
u
the property charged was incorrectly stated.
The Bank which was the proprietor of the charge as a
mortgage of leasehold properties, omitting the fact that
it was also a charge over certain chattels which also
required registration. This made the registered
particulars highly misleading and a judgment creditor
sought to execute judgment against the chattels on the
basis that there was no charge against them. In the
ensuing proceeding the Court of Appeal held that the
Registrar's certificate showed that the requirements of
the Act had been complied with in spite of the omission
of the chattels from the particulars delivered. As the
certificate identified the instrument of charge, and
stated that the mortgage or charge thereby created by
the instrument, including that of chattels, and that it
was conclusive evidence of the due registration of the
charge over the chattels even though the register, in
omitting to mention them, was not merely defective but
misleading.
The rationale of the conclusiveness provision
The effect of section 104 of the Companies Act, 1963
is that the accuracy of the particulars delivered to the
Registrar is not a condition precedent to the enforce-
ment of a charge. Even if a company sending particulars
of a charge misstates it, or the Registrar misunderstands
it, when once a certificate is given identifying the
instrument of charge, the chargees are safe. The
certificate of the Registrar is conclusive that the
necessary preliminaries for registration have been
complied with and that the prescribed particulars have
been delivered.
The reason for having a rule which can cause such
hardship to subsequent creditors relying upon the
accuracy of the register has been explained judicially.
The rationale is essentially that of commercial
convenience. In
Re Yolland, Husson and Birkett Ltd
J
2
,
Cozens Hardy MR said
13
"It was quite obvious that in the case particularly
of debentures, and indeed of all securities
requiring registration under the sections, it would
be so difficult as almost to be impossible for the
person entitled, or claiming to be entitled, to the
charge to prove that all the requirements in this
section had been complied with: it would have
been almost worse than pursuing an abstract of
title to a freehold or a leasehold estate. The legis-
lature thought that it would be an unendurable
state of things."
Similar views were expressed in
Re C.L. Nye Ltd)
4
Commenting on the equivalent provisions in the English
Companies Act, 1984 Russell LJ said
15
"it seems to me that section 98(2) should be taken
as meaning what it says. There is a good reason for
this. Section 95 puts into a charge by a company a
weakness: this weakness limits a chargee of the
company in dealing with his charge: it is to be
expected that the group of sections should not
sterilise a chargee of a company in dealing with his
charge.
16
It is, therefore, to be expected that the
group of sections should provide an absolute trust
for a marketable security, which cannot be
achieved unless a certificate of the Registrar is, in
every respect, conclusive and unassailable."
Harman L.J. reinforced this view, observing that in
his opinion the certificate of the Registrar had to be
conclusive in whole and not merely conclusive in part as
the liquidators had argued.
"The whole point of creating the Register under
section 95 is to give security to persons relying on
the certificate. If it were possible to go behind the
certificate and show that the date of creation of a
charge made it out of time, no lender on the faith
of the charge could be secured and sure that it
would not thereafter be attacked by somebody
who could successfully prove that there was, in
fact, an interval of more than 21 days between the
charge's creation and its registration. This would
be disastrous in my opinion and is not a view to be
taken unless the language positively compels it. I
find no such compulsion and I see no reason why
the word "conclusive" should not mean what it
says."
17
This view was unequivocally echoed by Hamilton J.
in
Lombard and Ulster Banking (Ireland) Ltd.
-v-
Amurec Ltd)*,
holding that the same conclusion had to
be reached on the wording of section 104 of the Irish
Act of 1963.
Challenge by Judicial Review
A fresh attempt to assail the bastion of the Registrar's
certificate, at first successful, was made in
R.
-v-
Registrar of Companies ex parte Central Bank of
India
.'
9
The chosen weapon was an application for
judicial review by
certiorari.
A bank submitted to the
Registrar of Companies what purported to be the
prescribed particulars together with a copy of the
instrument creating the charge. The documents
submitted did not satisfy the Registrar because the
particulars as entered on the official form were
incomplete. These errors were made good by the Bank,
but not until more than 21 days from the creation of the
charge. The Registrar, however, accepted the re-
submitted particulars as if they had been lodged at the
date of the first application and accordingly registered
the charge and issued his certificate. A petition for the
winding-up of the company having been presented, the
company and a number of creditors sought to quash the
Registrar's decision to register the charge. They claimed
that the Registrar had no jurisdiction to register a
charge where the prescribed particulars had not been
properly lodged in the 21 day period; that there was an
error of law on the face of the record in that the register
disclosed the existence of the defective particulars; and
there had been a failure of natural justice in that the
company and its other creditors had not been consulted
before the registration of the charge.
In the Queen's Bench Division of the High Court the
claim of the company and its creditors succeeded.
Mervyn Davies J. held that the Registrar had plainly
acted outside his jurisdiction in accepting fresh
particulars after the. 21-day time limit had expired. It
was an excess of jurisdiction which usurped the power
282