Blemain Finance Ltd v Goulding [2013] EWCA Civ 1630

Case No B5/2013/1728[2013] EWCA Civ 1630
IN THE COURT OF APPEAL (CIVIL DIVISION)
Venue ON APPEAL FROM BRISTOL COUNTY COURTCase No 8PC38920
Mr Recorder Stead
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 17/12/2013
Before
LORD JUSTICE RIMER
Between
BLEMAIN FINANCE LIMITEDClaimant//RespondentIAN KEITH GOULDINGAppellant//Second Defendant
Mr Guy Adams (instructed by Lyons) for Applicant, Mr GouldingMr Neil Levy (instructed by Cantor Law Limited) for RespondentHearing Hearing date: 11 November 2013
JudgmentLord Justice Rimer :
[1]This is a renewed application for permission to appeal. Sir Stanley Burnton refused permission on the papers on 25 July 2013. The applicant is Ian Goulding, the second defendant to a claim by Blemain Finance Limited (‘Blemain’). The first defendant is Mr Cugley, who is not an applicant.[2]Mr Cugley is the registered proprietor of Green Pastures, Churchend Lane, Charfield, Wootton-under-Edge, Gloucestershire. On 27 July 2007, he granted a second legal charge to Blemain. Blemain’s title as chargee is also registered. The property is occupied by the applicant and was so occupied at the grant of the charge. Blemain brought proceedings for possession of the property against Mr Cugley and, on 20 January 2009 in Bristol County Court, Deputy District Judge Cronin ordered possession by 17 February 2009.[3]Possession was not given, and the applicant applied to be added as a defendant to Blemain’s claim with a view to arguing for the setting aside of the possession order. He was formerly the registered proprietor of the property. A bankruptcy petition was presented against him on 24 October 2002. On 12 February 2003, he transferred the property to Mr Cugley, he was adjudicated bankrupt on 14 February 2003, Mr Cugley’s title to the property was registered on 20 February 2003 and the applicant’s trustee in bankruptcy was appointed on 17 June 2003.[4]The applicant’s case was that his disposition of the property to Mr Cugley in the circumstances related was avoided by section 284 of the Insolvency Act 1986, with the consequence that Mr Cugley was stripped of his title to the property, which vested in the trustee under sections 283 and 306 of the 1986 Act. That is a consequence that the trustee has not asserted, although he is aware of these proceedings.[5]If right so far, the applicant challenges Blemain’s title as a chargee, and asserts a right to, and to occupy, the property binding on Blemain. He claims he was occupying the property as his sole or principal residence at the date of his bankruptcy in February 2003 and that upon the lapse of three years since then the property ceased to be vested in the trustee and vested in him: see section 283A of the Insolvency Act 1986. Alternatively, if, as is apparently the case, the trustee knew nothing of the applicant’s claimed interest in and occupation of the property at the date of the bankruptcy, the applicant says the three-year period began to run on the date when the trustee first learnt of these things, whenever that was (if it has yet happened), and so he has a prospective reversionary interest in the property under section 283A(5).[6]Mr Recorder Stead’s careful judgment set out his reasons for dismissing the applicant’s application by an order of 3 June 2013. Taking the applicant’s last point first, the Recorder, who regarded the applicant as an unreliable witness, found he was not occupying the property as his sole or principal residence in February 2003 but that he only began so to occupy it in 2005. There is no real prospect of the Court of Appeal taking a different view on this finding of fact and so the applicant’s case founded on section 283A has no better prospect of success on appeal than before the Recorder.[7]Another factual issue the Recorder decided was that when it came to the grant of the legal charge to Blemain, the applicant signed a letter of consent to it on 18 July 2007, which expressly postponed any interest he had in the property to Blemain’s interest as a chargee. The applicant’s case is that, once he put in issue the validity of his signature to that document, it was for Blemain to prove that it was valid, not for him to prove that it was not. The Recorder held that it was for the applicant to prove the forgery, if that is what he was asserting. I am disposed to agree with that, but as the applicant anyway has no interest in the property as against Blemain, there can be no point in permitting him to argue against this part of the Recorder’s conclusions.[8]That being so, all that is left in the application is the applicant’s argument that Blemain’s title as a chargee is a nullity, that the only person with a title to the property is the trustee and that the applicant is entitled to assert the trustee’s better title in answer to Blemain’s possession claim based on a void title.[9]I do not regard that argument as having any real prospect of success on an appeal. Whatever the precise effect of sections 283 and 306 of the Insolvency Act 1986 in relation to property the title to which is registered, I do not regard it as seriously arguable that they can undo the effect of sections 23 and 58 of the Land Registration Act 2002. The scheme of the 2002 legislation contemplates that a trustee in bankruptcy may and will apply to be registered as the proprietor of property that vests in him (see rule 168 of the Land Registration Rules 2003), and it would be odd if the trustee’s omission to do that can mean that someone like Mr Cugley, a registered proprietor of the property, cannot make a registered disposition of it under which the transferee will take a title in accordance with section 29.[10]Mr Adams, for the applicant, recognises that; and Mr Cugley granted Blemain its registered charge. The key provision for present purposes is section 86(5) of the Land Registration Act 2002, which provides:
‘(5) Where the proprietor of a registered estate or charge is adjudged bankrupt, the title of his trustee in bankruptcy is void as against a person to whom a registrable disposition of the estate or charge is made if – (a) the disposition is made for valuable consideration, (b) the person to whom the disposition is made acts in good faith, and (c) at the time of the disposition – (i) no notice or restriction is entered under this section in relation to the registered estate or charge, and (ii) the person to whom the disposition is made has no notice of the bankruptcy petition or the adjudication.’
[11]Blemain gave valuable consideration for the grant of the charge. The Recorder found that Blemain had no notice of the bankruptcy and recorded that no suggestion had been made that it had acted other than in good faith. There is no basis for permitting the applicant to argue against these conclusions on an appeal. The net result is that Blemain acquired a good title as against the applicant’s trustee. The further suggestion that the applicant has been and is occupying the property on behalf of the trustee is groundless. The net result is that the trustee’s title is void as against Blemain and the applicant has no title to occupy the property at all.[12]I agree with Sir Stanley Burnton’s earlier decision to refuse permission to appeal. I too refuse it.