The Gazette 1986

GAZETTE

sepTemBER

1986

National Provincial and Union Bank of England

-v-

Charnley

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

Cozens Hardy MR said

"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)

Commenting on the equivalent provisions in the English

Companies Act, 1984 Russell LJ said

"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.

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."

This view was unequivocally echoed by Hamilton J.

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

-v-

Registrar of Companies ex parte Central Bank of

India

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

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