3PLR – CAPITAL FINANCE CO. LTD. V STOKES AND ANOTHER

POLICY, PRACTICE AND PUBLISHING, LAW REPORTS  3PLR

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CAPITAL FINANCE CO. LTD.  

V

STOKES AND ANOTHER

[COURT OF APPEAL]

 [1967 C. NO. 780]

1968 JULY 15, 16, 30

 

 

 

OTHER CITATIONS

[1968] 3 W.L.R. 899

 

 

BEFORE: HARMAN, DANCKWERTS AND SACHS L.J.

 

REPRESENTATION

1. I. Goulding Q.C. and Gavin Lightman for the vendor.
2. A. Settle Q.C. and George Hesketh for the debenture holder.

Nye & Donne for Perham & Sons, Bristol; Sidney Pearlman

 

MAIN ISSUES

COMPANY LAW: – Charge – Registration – Validity of unregistered charge

REAL ESTATE/LAND LAW:– Part of purchase money left on mortgage – Whether created before or after property acquired

COMMERCIAL LAW – CONTRACT – SALE OF GOODS/PROPERTIES:- Vendor and Purchaser – Lien of vendor – When arises – Effect on lien if property charged to vendor – Lien for part of unpaid purchase money at date of contract – Whether impliedly abandoned on completion – If charge subsequently avoided – Whether vendor not entitled to lien

DEBTOR AND CREDITOR – LIEN – WINDING UP AND RECEIVERSHIP:- Lien of vendor for unpaid purchase moneyat date of contract – When deemed properly exercised  – Unsecured creditor – Right of lien over property

INTERPRETATION OF STATUTE: – Companies Act, 1948 (11 & 12 Geo. 6, c. 38), ss. 95, 97.¹

1 Companies Act, 1948, s. 95 (1): “Subject to the provisions of this part of this Act, every charge created after the fixed date by a company registered in England and being a charge to which this section applies shall, so far as any security on the company’s property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the proscribed particulars of the charge together with the instrument, if any, by which the charge is created or evidenced, are delivered to or received by the registrar of companies for registration in manner required by this Act within 21 days after the date of its creation, but without prejudice to any contract or obligation for repayment of the money thereby secured, and when a charge becomes void under this section the money secured thereby shall immediately become payable. (2) This section applies to the following charges:- … (d) a charge on land, wherever situate, or any interest therein …”

 

1. 97: “(1) Where a company registered in England acquires any property which is subject to a charge of any such kind as would, if it had been created by the company after the acquisition of the property, have been required to be registered under this part of this Act, the company shall cause the prescribed particulars of the charge, together with a copy (certified in the proscribed manner to be a correct copy) of the instrument, if any, by which the charge

 

 

 

 

SUMMARY AND HISTORY

By an agreement in writing dated July 27, 1965, the first defendant agreed to sell to the second defendant, a company, a plot of land for £37,900, the terms of sale providing inter alia, that 75 per cent. of the purchase money should be secured by a first mortgage of the property repayable as provided therein. On February 23, 1966, the property was conveyed to the second defendant and £9,475 was paid towards the purchase price, leaving a balance of £28,425 to be secured by a legal charge. On the same day the second defendant charged the property to the first defendant with the payment of the balance outstanding with interest and other moneys covenanted to be paid. The first defendant retained possession of the property and the title deeds at all material times. By a debenture dated October 27, 1966, the second defendant charged all its undertaking, property, assets and rights to the plaintiff. Particulars of the legal charge in favour of the first defendant were not delivered to the registrar of companies under section 95 of the Companies Act, 1948.¹ The plaintiff as debenture holder appointed a receiver of the undertaking and all the property of the second defendant and the receiver asked the first defendant to deliver up the title deeds of the property on the ground that the legal charge in his favour was void against the plaintiff for want of registration. The first defendant refused, claiming that as an unpaid vendor he had a lien on the property and was entitled to retain possession of the title deeds; and that, alternatively, the legal charge fell within section 97, and not section 95, of the Companies Act, 1948,¹ and was not void, notwithstanding that it had not been registered.

 

On October 3, 1967, the second defendant was ordered by the court to be wound up. The debenture charge, having been created within twelve months of the winding up of the second defendant, became void under section 322 of the Act of 1948, and the plaintiff was accordingly reduced to being an unsecured creditor.

 

 

On the question whether the first defendant was also an unsecured creditor Pennycuick J. held that the first defendant had not obtained an implied vendor’s lien on the property and that, since the charge in his favour fell within section 95 of the Act of 1948, and not section 97, it was void for want of registration.

 

 

On appeal by the first defendant:-

 

Held, dismissing the appeal,

(1)     that although at the date of the contract an implied vendor’s lien could be implied in the first defendant’s favour in respect of one quarter of the purchase money, since the equitable mortgage created by the contract only covered three quarters of the purchase money, that lien was impliedly abandoned on completion, for on the happening of that event the first defendant obtained all that he bargained for, namely one quarter of the purchase money in cash and the balance by way of legal charge, which charge being a higher interest than the lien must have excluded it (post, pp. 907D, 908D).

In re Emery, ex parte Harvey (1839) 2 Mont. & Ch. 261, and Vibart v. Coles (1890) 24 Q.B.D. 364, C.A., distingushed.

 

 

(2)     That since the ordinary conveyancing practice had been was created or is evidenced, to be delivered to the registrar of companies for registration in manner required by this Act within 21 days after the date on which the acquisition is completed.”

followed whereby the entirety of the property was conveyed to the second defendant which then charged it by way of mortgage, for which purpose the second defendant had to have the legal estate in the property before it could grant the legal charge, the second defendant had not acquired the property subject to the charge within section 97 of the Companies Act, 1948, but had created the charge within section 95, and that, therefore, the charge and any equitable charge which merged in it was void against the liquidators and creditors (of whom the plaintiff was one) for want of registration (post, pp. 905F, G, 906F, 908A, B); accordingly the first defendant was no more than an unsecured creditor in the winding up.

 

Church of England Building Society v. Piskor [1954] Ch. 553; [1954] 2 W.L.R. 952; [1954] 2 All E.R. 85, C.A., applied

 

In re Connolly Brothers Ltd. (No. 2) [1912] 2 Ch. 25 distinguished.

 

Decision of Pennycuick J. [1968] 1 W.L.R. 1158; [1968] 1 All E.R. 573, affirmed.

 

APPEAL from Pennycuick J.2

The following statement of the facts, paragraphs 1 to 11, was agreed between the plaintiff and the first defendant:

1. By an agreement in writing made July 27, 1965, between the first defendant, Joseph William Stokes, hereinafter called “the vendor,” and the second defendant, Cityfield Properties Ltd. of Belmont House, 16-18 Westcote Road, Reading, Berks, hereinafter called “the company,” the vendor agreed to sell to the company the property known as Laurel Nursery, Silver Street in the parish of Nailsea in the county of Somerset therein particularly described and hereinafter referred to as “the property” for the sum of £37,900 upon the terms therein set out which included a provision that the vendor would leave 75 per cent. of the purchase-money with the company to be secured by a first mortgage of the property and to be repayable with interest as therein mentioned.
2. By a conveyance made on February 23, 1966, between the vendor and the company the property was conveyed to the company in fee simple in consideration of the sum of £37,900, of which the sum of £9,475 only was paid by the company to the vendor, subject as therein mentioned.
3. By a legal charge made on February 23, 1966, by the company, James Peter Grosscurth and John Sinclair Copeland, and the vendor, the company, inter alia, charged the property by way of legal mortgage with the payment to the vendor of the principal money, interest and other money thereby covenanted to be paid.
4. Particulars of the legal charge had never been delivered to the registrar of companies for registration in accordance with section 95 of the Companies Act, 1948.
5. By a debenture made on October 27, 1966, by Belmont Finance Corporation Ltd., the vendor and other companies and the plaintiff, Capital Finance Co. Ltd., of 28 Castle Street, Edinburgh 2, hereinafter called “the debenture holder,” inter alia, the company charged in favour of the debenture holder by way of collateral security its undertaking and goodwill and all its property, assets and rights whatsoever and wheresoever both present and future including uncalled capital and the property with the payment to the debenture holder of the sums therein mentioned.
6. On December 1, 1966, the debenture holder duly appointed Richard Alfred Coleman Mordant to be receiver and manager of the undertaking of the company and all its other property which was charged by the debenture to the debenture holder.
7. The receiver requested the vendor to hand over to him the documents of title to the property.
8. A petition was filed on February 14, 1967, compulsorily to wind up the company on the ground of insolvency.
9. At the date of the hearing the petition had been determined by a winding-up order dated October 3, 1967.
10. The vendor had at all material times retained possession of the property and of the title deeds of the property.
11. It was admitted that, if the vendor was entitled to an unpaid vendor’s lien on the property, such lien would have priority over any charge created by the debenture.

 

The material clause, clause 14 of the agreement dated July 27, 1965, was as follows:

“(i)     The deposit to be paid on exchange of contracts is the sum of £500 and the balance of deposit, amounting to the sum of £3,920, will be paid to the vendor as soon as the vendor hands over to the [company] outline planning permission for the premises; if the [company] shall fail to pay the balance of the deposit on the due date the vendor will on repayment of the sum of £500 to the [company] be entitled to rescind the contract.

“(ii)    The vendor will leave with the [company] 75 per cent. of the purchase-money to be secured on a first mortgage of the premises and to carry interest at the rate of 7½ per cent. per annum and to be repayable by instalments of £600 with interest on the sale of each plot by the [company], and it will be a term of the said mortgage that the whole of the moneys secured thereby will be paid to the vendor within two years of completion hereof and two of the directors of the [company] will join in as sureties.”

 

On February 2, 1967, the debenture holder issued a writ against the vendor and the company seeking a declaration that the charge created in favour of the debenture holder by the debenture made on October 27, 1966, had priority over (i) the legal charge made on February 23, 1966, between the company, James Peter Grosscurth, John Sinclair Copeland and the vendor to secure the payment of the sum of £28,425 and interest thereon or any equitable charge or (ii) any lien of the vendor in respect of the sum as an unpaid vendor or otherwise. The debenture holder also asked for an order that the vendor should hand over all the documents of title to the property in his possession or power to the debenture holder or as he should direct and an injunction to restrain the vendor from selling or attempting to sell or otherwise disposing of the property without the consent of the plaintiff. No relief was claimed against the company.

 

By his defence the vendor relied upon his vendor’s lien. The company did not deliver any defence. A petition for the winding up of the company was presented on February 14, 1967, and an order for compulsory winding up was made on October 3, 1967. By an order dated November 24, 1967, in the winding up, the debenture holder was given liberty to proceed with the action upon undertaking to argue against the claim of the vendor to have a right to the title deeds of the property.

 

The floating charge created by the debenture, having been created within 12 months of the winding up of the company, became void under section 322 of the Act of 1948. The debenture holder was accordingly reduced to the status of an unsecured creditor.

 

On the hearing of the action as a point of law on the agreed statement of facts Pennycuick J. held that the vendor had not obtained an implied vendors’ lien on the property because he had bargained for a legal charge which, being a higher interest than a lien, excluded the unpaid vendor’s lien; he also held that, since the charge fell within section 95 of the Act of 1948 and not section 97 of the Act of 1948, the vendor’s charge was void against the liquidator and any creditor (of whom the debenture holder was one), and that, accordingly, the vendor was no more than an unsecured creditor of the company who had to prove his debt in the winding up.

 

The vendor appealed on the grounds that he had either a valid legal or valid equitable charge on the property, alternatively a valid unpaid vendor’s lien on the property, and that accordingly he took priority over the unsecured creditors.

 

The property had in fact been sold and was represented by a sum of money which had been placed on the parties’ deposit and it was agreed that the priority of rights to those proceeds of sale should be determined as if they were the property.

 

The liquidator issued a summons in the winding up claiming delivery up of the title deeds from the vendor. Pennycuick J. made no order on that summons. The liquidator appealed. By consent both the vendor’s appeal and the liquidator’s appeal were called on together. It was agreed that, if the vendor succeeded in his appeal, he must also succeed against the liquidator, and that if he failed he must also fail against the liquidator. Accordingly, the vendor’s appeal was heard first. The liquidator’s appeal does not call for separate report.

 

1. I. Goulding Q.C. and Gavin Lightman for the vendor.

 

1. A. Settle Q.C. and George Hesketh for the debenture holder.

 

2. [1968] 1 W.L.R. 1158; [1968] 1 All E.R. 573.

 

The following cases, in addition to those referred to in the judgments, were cited in argument: Wilson v. Kelland3; In re Birmingham, decd.4; In re Albert Life Assurance Co.5; Thurston v. Nottingham Permanent Benefit Building Society6; Teed v. Curruthers7; In re Molton Finance Ltd.8; Wright v. Dean9; Hollington Brothers Ltd. v. Rhodes10; In re Cary-Elwes11; Bond v. Kent12; Chapman v. Tanner13; and In re Brentwood Coal & Brick Co.14

3 [1910] 2 Ch. 306.

4 [1959] Ch. 523; [1958] 3 W.L.R. 10; [1958] 2 All E.R. 397.

5 (1870) L.R. 11 Eq. 164.

6 [1902] 1 Ch. 1, C.A.; aff. [1903] A.C. 6, H.L.(E.).

7 (1842) 2 Y. & C.Ch.Cas. 31.

8 [1967] 3 W.L.R. 1561; [1967] 3 All E.R. 843, C.A.

9 [1948] Ch. 686; [1948] 2 All E.R. 415.

10 [1951] T.L.R. 2, 691; [1951] 2 All E.R. 578n.

11 [1906] 2 Ch. 143.

12 (1692) 2 Vernon 281.

13 (1684) 1 Vernon 267.

14 (1876) 4 Ch.D. 562, C.A.

 

Cur. adv. vult.

 

July 30. The following judgments were read.

 

 

HARMAN L.J.

These two appeals were called on together. We heard first the final appeal, which was an appeal by the first defendant, the vendor of the property in question, against an order of Pennycuick J.1 made on December 14, 1967, which declared that the vendor had neither a legal nor an equitable charge valid against the property nor an unpaid vendor’s lien upon it. The plaintiff was a debenture holder seeking to enforce a charge upon all the property of the second defendant, the company, the purchaser of this property from the vendor, but on October 3, 1967, an order was made by the court, for the winding up of the company with the result that the floating charge created by the debenture, having been made within a year of the beginning of the winding up, is altogether void. The debenture holder thus becomes an unsecured creditor in the winding up. The cudgels are, however, taken up by the liquidator of the company who also argues like the debenture holder that the vendor too has no security and must rank like the debenture holder as an unsecured creditor in the winding up. This arises out of an application by the liquidator by summons under the Companies Act, 1948, in the winding up. The two appeals really cover the same ground and it is agreed that the decision on the vendor’s appeal will govern the liquidator’s.

 

The first appeal was heard on an agreed statement of facts, so that the pleadings may be ignored. [His Lordship stated the agreed facts and continued:]

 

It was admitted below that, if the vendor was entitled to an unpaid vendor’s lien on the property, that would give him priority over the debenture and in this court it is conceded that, if he had at the relevant date, namely the commencement of the winding up (February 14, 1967), a valid unpaid vendor’s lien, that would entitle him to priority over the liquidator.

1 [1968] 1 W.L.R. 1158; [1968] 1 All E.R. 573.

The first question, therefore, is whether the legal charge of February 23, 1966, required registration under section 95 of the Act of 1948, and, not having been so registered, is void against the liquidator and the creditors in the winding up. Section 95, so far as relevant is in these terms:

“(1)   Subject to the provisions of this part of this Act, every charge created after the fixed date by a company registered in England and being a charge to which this section applies shall, so far as any security on the company’s property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge together with the instrument, if any, by which the charge is created …, are delivered to or received by the registrar of companies … in manner required by this Act within twenty-one days after the date of its creation …” (2) This section applies to the following charges: … (d) a charge on land, wherever situate, or any interest therein…”

 

It will be seen that this applies to a charge created by a company.

 

Section 97, on the other hand, is in different terms:

“(1)   Where a company registered in England acquires any property which is subject to a charge of any such kind as would, if it had been created by the company after the acquisition of the property, have been required to be registered under this part of this Act, the company shall cause the prescribed particulars of the charge … to be delivered to the registrar of companies for registration. …”

 

This refers to the converse proposition and means, I think, that the charge is already to be in existence when the property is acquired; but there is no such penalty as is attached to the failure to register under section 95.

 

In my judgment, this case comes within the former and not the latter section. The ordinary conveyancing practice was followed whereby the entirety of the property was conveyed to the company which then charged it by way of legal mortgage. The company had to have the legal estate in the property before it could create the legal charge, and it is not true to say that all that the vendor was selling was the equity of redemption. In re Connolly Brothers Ltd. (No. 2)2 was a case where the Court of Appeal was considering equitable priorities and not the legal estate, and thus is distinguishable. The subsequent case of Church of England Building Society v. Piskor3 contains a passage directly in point in the judgment of Romer L.J., where he said4:

“The theory that a purchase, which is completed by payment of money which has been provided in part by a third party, and a mortgage by the purchaser of the property sold to secure the repayment of that money to the lender, constitutes only one transaction, if the instruments are executed at more or less the same time, is a conception which has a prima facie appeal, but it does not, on analysis, in my opinion, truly reflect the legal effect of what takes place. The mortgage of the purchased property cannot have any operation in law (whatever rights it may give in equity or by estoppel) unless and until the purchaser is in a position to vest a legal term in the property, as security, in the mortgagee, and he is not and cannot be in a position to do this until he himself has acquired from the vendor the legal estate out of which the mortgage term is capable of being created. From this it follows that the execution and delivery of the conveyance (if the property is freehold) or of the assignment (in the case of a leasehold) by the vendor to the purchaser must of necessity constitute an essential preliminary to the vesting in the mortgagee of a subsidiary interest in the property.”

2 [1912] 2 Ch. 25, C.A.

3 [1954] Ch. 553; [1954] 2 W.L.R. 952; [1954] 2 All E.R. 85, C.A.

4 [1954] Ch. 553, 564.

 

I am, therefore, of opinion that on the winding up the charge, not having been registered, was avoided as against the liquidator and against the creditors, although it remains a good debt provable in the winding up. The question of registration under section 97 is here irrelevant, as the absence of it has no fatal consequences.

 

A further question was debated, namely whether since the contract contained an express covenant in favour of the vendor to create a legal mortgage in his favour that did not give him an immediate equitable charge. I think that it did, but that too, in my opinion, was avoided by the winding up, for it was no less registrable under section 95 than the legal charge. Any equitable charge must only be the reflection of the legal charge to which the vendor was entitled and must follow, I think, the same course. In any event, this equitable charge merged when the legal charge was given.

 

The remaining and most serious question is whether the vendor did not have an unpaid vendor’s lien. Such a lien arises in the ordinary course in favour of a vendor who has not received the purchase money, and it is the creature of the law and does not depend upon contract or possession. It depends on the fact that the vendor has a right to specific performance of his contract. The existence of the lien, however, depends upon the terms of the bargain between the parties and on the surrounding circumstances and may be excluded, as is pointed out in Snell’s Principles of Equity, 26th ed. (1966) page 490, para. 2:

“As soon as a binding contract of sale is made, the vendor has a lien on the property for the purchase money and a right to retain the property until the money is paid.”

 

On page 491 the following appears:

“Occasionally, however, the vendor will have no lien. If he receives all that he bargained for, for example, if he sells the property in consideration of the purchaser giving him a promissory note or a bond to pay him an annuity, and a promissory note or bond is duly given, there will be no lien on the property sold, even though the note is not met at maturity or the annuity is not paid. Moreover, the nature of the contract may exclude the vendor’s lien, as where the existence of a lien would prevent the purchaser from selling the property, or where the intention of the parties is that the purchaser shall resell or mortgage the property and pay off the vendor out of the proceeds …”

 

It was held by Pennycuick J.5 that the terms of the contract did exclude a lien in this case. The circumstances relied on were, first, that the vendor contracted for a legal charge for the balance of the purchase money and that he received; secondly, that the existence of the equitable charge arising as above described “left no room” (in the judge’s words) for a vendor’s lien; and, thirdly, that the terms of clause 146 of the contract showed that it was intended to pay off the vendor out of the proceeds of the sale of lots and that this process would be inconsistent with the existence of a vendor’s lien. The judge accepted the view that the existence of the equitable mortgage up to the date of completion “left no room” for a vendor’s lien. I do not feel able to accept this view. At the date of the contract only a part of the deposit was paid (see clause 14 (1)) and thereafter until completion the equitable mortgage only covered three-quarters of the purchase money and left room for a lien at least on the balance. It does seem to me, however, that this lien must be taken to have been abandoned when the contract was completed, for on the happening of that event the vendor obtained all that he bargained for, namely one-quarter of the purchase money in cash and the balance by way of the stipulated legal charge. It seems to me that the provision for paying off the legal charge by instalments on sale of plots within two years is irrelevant and has no bearing either way because the vendor as legal chargee must join in any conveyance and could refuse to concur unless paid his £600.

 

It was argued for the vendor that what he contracted to get was a valid legal charge, and that he has not received because the company in default of its obligation under section 95 did not register the charge with the result that it became ineffective on the winding up. I do not accept this argument. The charge was effective when made and, although it was the purchaser’s duty to register, it was open to the vendor himself to remedy the defect at the purchaser’s expense.

 

I am, therefore, of opinion that in the end the judge reached the right conclusion and that by the time the winding up of the company supervened the vendor had no valid legal charge for want of registration under section 95 and no valid equitable charge nor unpaid vendor’s lien because these both came to an end at the date of completion. In my opinion, therefore, the appeal must be dismissed.

5 [1968] 1 W.L.R. 1158, 1163.

6 Ante, p. 902E-G.

 

DANCKWERTS L.J. I agree with the judgment of Harman L.J. and I do not feel that I can usefully add anything.

 

 

SACHS L.J.: I agree that the legal charge of February 23, 1966, was one which required registration under section 95 of the Act of 1948; that the preceding equitable mortgage similarly required such registration; and that the position as regards those charges is as stated by Harman L.J.

 

That leaves for consideration the questions raised as to whether a vendor’s lien ever attached to the property; if so, whether it determined upon the execution of the legal mortgage; and if so, whether on account of the mortgage not having been registered and having thus become “void against the liquidator and any creditor of the company,” the vendor’s lien revived or, alternatively, the liquidator is precluded from alleging that it was determined.

 

As regards whether a vendor’s lien ever attached to the property, I do not wish to add to what has been said by Harman L.J. and am content to assume that it did. On that basis I agree that if it did come into being it was upon February 23, 1966, determined upon the execution of the conveyance and legal mortgage: to my mind the terms of the original agreement of July 27, 1965, are, when taken as a whole, inconsistent with the existence of any lien whatsoever after the execution of those documents.

 

I would, however, add something in relation to the two final points much canvassed by both parties in this court (but not discussed by the judge in the course of his judgment): whether any lien, despite having been determined, yet revived owing to the mortgage not having been registered, and, alternatively, whether the liquidator is precluded from alleging that it was ever determined.

 

As to the first point, I have great difficulty in understanding how, when once a lien has ended by virtue of agreement between the parties (for it is, as I understand it, only by agreement, express or implied, that liens are determined), it can in circumstances such as those under consideration revive – although I appreciate that, if the act upon which the purported determination took effect is found to be a complete nullity ab initio it may in appropriate cases be said that there was never a determination at all.

 

In re Emery, ex parte Harvey,7 where a legal mortgage given after notice of an act of bankruptcy was shown to be a nullity ab initio but the previously existing equitable mortgage was not affected by that act, does not assist the vendor in the present case.

7 (1839) 2 Mont. & Ch. 261.

 

Indeed, it illustrates the fallacy in his submissions – for here the instrument of February 23, 1966, remains effective between the parties to it, that is to say, as between the vendor, the purchaser, and the two sureties (against whom, incidentally, judgments have been obtained). The instrument presently under consideration is not a true nullity; and it is to be observed that the word “void” in section 95 for all practical purposes means no more than “unenforceable as against” the liquidator and creditors to the extent laid down in the section.

 

As regards these points, which were much pressed on behalf of the vendor, great reliance was placed upon Vibart v. Coles8; and this court was informed that that decision was apparently accepted by the judge as applicable to the present set of facts. That was, however, a very unusual case dealing with a highly technical point of law relating to facts which upon examination are very different from those presently in issue. It concerned a simple contract debt for money lent which as between lender and borrower had merged into one of higher degree – a specialty debt – by virtue of a consent judgment. That judgment not having been registered it did not, however (owing to the provisions of section 27 of the Debtors Act, 1869), have the status of a specialty debt as against third parties. In those circumstances there was every reason for that debt continuing to have the status of a simple contract debt as regards third parties and for it not simply vanishing altogether as an obligation.

 

The judgments delivered in Vibart’s case8 upon analysis give effect to that position – as is shown, for instance, where Lord Coleridge stated9: “The debt must remain if the higher security is void,” and where Fry L.J. said10: “If the judgment is void as between the administratrix and creditor, it follows that as between them it works no merger of the original debt.”

 

Those parts of the judgments which are concerned with the doctrine of “blowing hot and cold” do not in the circumstances really carry further the true point decided. Indeed, I confess, with all respect, to considerable doubts as to whether that doctrine could nowadays apply where, the position of the consent judgment having been fixed by statute, no question of election could or did arise, no one had changed their position because of any conduct of the party whose conduct was impugned, and that party had made no contradictory assertions as between himself and the person seeking to rely on the preclusion.

 

So far as Vibart’s case11 is concerned, it suffices to say that the present case does not relate to a merger, and, perhaps more importantly, that as at present advised I cannot see any grounds on which the vendor here can successfully assert that the liquidator is precluded from relying upon the position created by statute.

8 (1890) 24 Q.B.D. 364, C.A.

9 Ibid. 366.

10 Ibid. 367.

11 24 Q.B.D. 364.

Moreover, the vendor having been a part author of his present position through not having taken advantage of his entitlement to register the legal charge, he seems to me to be in great difficulty over seeking to assert in any form that the agreed determination of the lien is no longer effective on account of his own failure to take appropriate action at the right time.

 

It follows that I agree that the appeal should be dismissed.

 

Appeal dismissed with costs.

 

Order below discharged except as to costs.

 

Declaration substituted that legal charge void as against liquidator and creditors of the company for non-registration and that vendor was not entitled to unpaid vendor’s lien.

 

Leave to appeal refused.