The Gazette 1986

GAZETTE

sepTemBER

1986

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

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

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