England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
IN THE MATTER OF IGROUP LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 1985
Before:
THE HONOURABLE MR JUSTICE LIGHTMAN

		Royal Courts of Justice Strand, London, WC2A 2LL
		23rd October 2003

Mr Justice Lightman:

INTRODUCTION

1. This is the hearing of a Part 8 Claim by igroup Limited ("the Claimant"), as a person interested, seeking rectification or amendment of a number of forms 395 and 403b prescribed by the Companies (Forms) Regulations 1985 ("the Forms") that were delivered to the Registrar of Companies ("the Registrar") on behalf of the 1st–9th defendant companies. The defendant companies are its subsidiary and associated companies and support the application. The Claimant's case is that the schedules attached to the Forms contained some unnecessary (but entirely accurate) personal information relating to their customers ("the Customers") whose mortgages were the subject matter of the charges in question. The Claimant asks for an order that the schedules to the forms 395 simply be removed altogether and that the schedules to the forms 403b be replaced by new schedules. The 10th defendant, the Registrar, opposes the application. The issue before the court is whether the court has jurisdiction to make such an order either under section 404 of the Companies Act 1985 ("the Act") or its inherent jurisdiction. References in this judgment to sections are to sections in the Act.
2. The Claimant has been represented by Mr Matthew Shankland and the Registrar by Mr Richard Snowden QC. They have both afforded me invaluable assistance in deciding this case.

FACTS

3. The Claimant and the defendant companies carry on the business of mortgage lending to Customers who are members of the public. In the course of that business, the defendant companies borrowed monies from various banks and gave security to the banks by way of debentures. The debentures charged the defendant companies' rights and interests under the mortgages which they held over the Customers' properties. Prescribed particulars of the charges were duly delivered to the Registrar in accordance with section 395 of the Act. The forms were drafted in sufficiently general terms as to disclose no personal information about the Customers.
4. From June 1999 the defendant companies carried out a securitisation programme which involved the equitable assignment of their interest in the mortgage loans to a number of special purpose vehicles. As part of this process, the solicitors instructed on behalf of the defendant companies sent to the Registrar the Forms, being various forms 403b relating to deeds of release of certain properties from the charges that the defendant companies had previously given to their lenders and various forms 395 relating to new charges which they had granted to lending banks or security trustees. The Forms referred to and had attached to them a number of schedules ("the Schedules") that not merely accurately identified the properties released from the charges or which were the subject of the new charges, but also variously contained entirely accurate personal information relating to the Customers such as their names, their addresses, the prices paid for their properties, the original advances, the current balances of their mortgage loans, the payment dates, the monthly payment amounts and the interest rates charged ("the Information"). For whatever reason the solicitors who prepared the Forms plainly took a deliberate decision to use schedules supplied by the Claimant containing the Information (namely the Schedules) and to refer to those Schedules in the body of the Forms. They could have prepared forms acceptable to the Registrar using different schedules that did not contain the Information, as the defendant companies had done on their applications for registration made prior to June 1999. But they did not do so. On receipt of the Forms, the Registrar made appropriate entries on the Register of Charges of the particulars referred to in section 401(1) and the memoranda of satisfaction referred to in section 403(1). There is no suggestion that such entries were inaccurate or incomplete in any way.
5. On learning of the disclosure in the Forms of the Information the Claimant commenced these proceedings. The particular concern of the Claimant prompting the proceedings is not so much prejudice to the Claimant or the defendant companies, although the Claimant's evidence suggests that they might suffer prejudice if competitors or others seek to use the Information to market products to the Customers without their consent. No suggestion is made that this has actually happened. The Claimant's real concern is for the Customers, and in particular to mitigate the consequences of the disclosure already made. Such mitigation is considered to be called for because the disclosure may constitute a breach by the Claimant or the defendant companies of duties owed to the Customers of confidence and under the Data Protection Act 1998 or an interference with the Customers' human rights. The Claimant relies on the possible existence of these breaches of duty and the possible interference in support of the contention that the court has jurisdiction to order the deletion of the Information from the Forms and Schedules and should exercise that jurisdiction. The Registrar disputes that the court has the jurisdiction to make any such order.

THE STATUTORY PROVISIONS

6. Chapter 1 of Part XII of the Act contains the statutory provisions relating to registration of companies' charges with the Registrar and in the chargor companies' Register of Charges. Part XXIV sets out the functions of the Registrar in relation to the keeping of company records. Both Parts are relevant on this application.

(a) Registration with the Registrar

7. Section 395(1) provides that certain (in fact most) charges created by a company registered in England and Wales shall be void:

"… unless the prescribed 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] for registration in the manner required by this Chapter within 21 days after the date of the charge's creation."

8. The Companies (Forms) Regulations 1985 (SI 1985/854) ("the 1985 Regulations") provide in regulation 4(2) that the particulars prescribed for the purposes of section 395(1) are the particulars contained in Part I of Schedule 4 and in particular Form 395. Form 395, headed "Particulars of a mortgage or charge" pursuant to section 395, requires the form to be completed by inserting the company number, the name of the company, the date of creation of the mortgage or charge, the description of the instrument (if any) creating or evidencing the amount secured by it, the names and addresses of the mortgagees or persons entitled to it and short particulars of the property mortgaged or charged.
9. Section 401(1) provides for the Registrar to keep a register in prescribed form, of all charges requiring registration under Chapter 1 of Part XII of the Act. It provides as follows:

"401 Register of charges to be kept by registrar of companies

(1) The registrar of companies shall keep, with respect to each company, a register in the prescribed form of all the charges requiring registration under this Chapter; and he shall enter in the register with respect to such charges the following particulars–

(a) in the case of a charge to the benefit of which the holders of a series of debentures are entitled, the particulars specified in section 397(1) [including the total amount secured by the whole series, the date of the resolution authorising the issue of the series and the date of the covering deed (if any) by which the security is created or defined, a general description of the property charged, and the names of the trustees (if any) for the debenture holders],

(b) in the case of any other charge–

(i) if it is a charge created by the company, the date of its creation, and if it is a charge which was existing on property acquired by the company, the date of the acquisition of the property, and

(ii) the amount secured by the charge, and

(iii) short particulars of the property charged, and the persons entitled to the charge."

Section 40 1(2) provides that the Registrar shall give a certificate of any charge registered in pursuance of the Chapter and that such certificate shall be conclusive evidence that the requirements of the Chapter as to registration have been satisfied.

10. Section 403 provides that the Registrar, on receipt of a statutory declaration in the prescribed form verifying the satisfaction (in whole or in part) of the secured debt or the release of part of the charged property from the charge, may enter on the Register a "memorandum of satisfaction".
11. Section 404 contains the statutory provision for rectification of the Register. The provision is concerned with "rectification" of the Register (though, not exclusively rectification). This is clear not merely by reason of the terms of the sub-heading to section 404, but because of the concluding words of subsection (2). It is of course also concerned with extensions of time for registration. Section 404 provides as follows:

"Rectification of register of charges

(1) The following applies if the court is satisfied that the omission to register a charge within the time required by this Chapter or that the omission or mis-statement of any particular with respect to any such charge or in a memorandum of satisfaction was accidental, or due to inadvertence or to some other sufficient cause, or is not of a nature to prejudice the position of creditors or shareholders of the company, or that on other grounds it is just and equitable to grant relief.

(2) The court may, on the application of the company or a person interested, and on such terms and conditions as seem to the court just and expedient, order that the time for registration shall be extended or, as the case may be, that the omission or misstatement shall be rectified."

(b) Registration in the chargor company's register

12. Section 407 requires every limited company to keep at its registered office a Register of Charges and to enter on it all charges specifically affecting property of the company. The entry must in each case give a short description of the property charged, the amount of the charge and (except in case of securities to bearer) the names of the persons entitled to it. Failure to register does not invalidate a charge, but an officer of the company knowingly or wilfully authorising or permitting the omission of an entry required to be made in pursuance of the section is liable to a fine. Section 408 provides that creditors and members of the company have a right to inspect any instrument creating a charge requiring registration under the Chapter and the Register of Charges shall be open to inspection by any person.

(c) Registrar's records

13. Section 707A of the Act requires the Registrar to keep the originals of documents delivered to the Registrar for 10 years and section 709 entitles anyone to inspect the records kept by the Registrar for the purposes of the Act, and this includes the original of any document delivered to the Registrar where the record kept by the Registrar of the contents of the document is illegible or unavailable. These provisions apply to forms (and accordingly schedules to forms) submitted to the Registrar on an application for registration of a mortgage or charge. As a matter of practice and quite exceptionally the Registrar does not keep the original charge documents or copies of them and accordingly these are not available for inspection. A creditor or member may however, as I have already said, inspect copies of the charge documents at the company's registered office and in principle anyone should be entitled to inspect the charge documents if registered at the Land Registry (see the Land Registration Act 2002).

JURISDICTION UNDER SECTION 404

14. It is plain on a reading of section 404 that the jurisdiction to order rectification under section 404 only exists if (i) there has been an "omission or misstatement" and (ii) that omission or misstatement has been "of any particular with respect to any such charge or in a memorandum of satisfaction". I must consider whether these two conditions are satisfied in this case beginning with the second of the conditions.
15. There is no complaint of any omission, but of misstatement. The "misstatement" of which complaint is made by the Claimant is not in respect of any entry on the face of the Register of Charges, but in the Forms and the Schedules. The issue accordingly arises whether the jurisdiction of the court under section 404 is restricted to entries on the face of the Register of Charges or extends to the Forms and the Schedules thereto.
16. Notwithstanding Mr Shankland's submissions to the contrary I am satisfied that the references in section 404 to "any particular with respect to any charge" and to "a memorandum of satisfaction" are references to the particulars that the Registrar is required to enter on the Register of Charges under section 40 1(1), and to the memorandum of satisfaction that the Registrar may enter on the Register of Charges under section 403. The wording of section 404 "any particular with respect to any charge" mirrors the wording in section 401(1) "he shall enter in the register with respect to such charges the following particulars". And a "memorandum of satisfaction" can only be a reference to an entry made on the Register of Charges by the Registrar under section 403, because the concept of a memorandum of satisfaction does not appear anywhere else. Accordingly, the power of rectification granted to the court by section 404 is limited to correcting mistakes of omission or commission in the entry of any particular with respect to a mortgage or charge or in a memorandum of satisfaction made by the Registrar on the Register of Charges maintained by the Registrar under section 401. It does not extend to mistakes otherwise than in a particular entered on the Register and accordingly does not extend to the information particulars entered on a Form 395 or a Form 403b by or on behalf of an applicant for registration under section 395(1).
17. Mr Shankland sought to overcome this hurdle by arguing that forms 395 and 403b are necessarily part of the Register of Charges or can be made part of the Register of Charges by the Registrar choosing to enter certain of the particulars by reference to the Forms. In support of this contention the Claimant prayed in aid the fact that the contents of the Forms may be necessary information to spell out and understand the full (or any) meaning from the particulars registered. In this context he referred to the note at the top of the pages of the Register: "Searchers may find it desirable to refer to the mortgage documents microfiche for more detailed particulars"; and the note on the Registry's website under the heading "Company Charges and Mortgages" in relation to the process for registering charges: "If you omit or misstate any detail in the documents registered then you should apply to the Court to correct under Section 404 of the Act: Rectification of the Register of Charges".
18. There is no basis in law for that submission. The mere fact that a (necessarily short) entry on the Register of Charges indicates that further details can be found in another document does not make that other document part of the Register of Charges. As Mr Snowden pointed out, it cannot, for example, sensibly be suggested that a reference on the Register to a debenture makes that document part of the Register and so empowers the court to rectify the debenture under section 404. Nor can the notes written by the Registrar in an effort to provide helpful guidance operate to convert the material referred to into (in effect) a continuation sheet or addendum to the Register.
19. In a word, the Forms are not part of the Register of Charges and section 404 of the Act has no application to the Forms or the Schedules thereto, and the court has no jurisdiction under section 404 to rectify them. The Forms once received by the Registrar under sections 707A and 709 have to be retained by the Registrar as part of the records kept by the Registrar and made available in copy or original form for inspection by any person. There is not merely absent any provision for "rectification" of such documents: the provision for their preservation as part of the Registrar's record and for their availability to public inspection is inconsistent with any amendment being made to them.
20. I now turn to the question whether the first condition has been satisfied and accordingly whether there has been an omission or misstatement within the meaning of section 404. As I have already said, the Claimant does not contend that there has been any "omission" from the Forms. Its case is that the inclusion of unnecessary information on the Forms is a "mis-statement" within the meaning of section 404 because the inclusion (which rendered the Information available to the public) potentially was or potentially would occasion a breach of duty owed to the Customers. The proposition regarding a breach of duty was advanced in tentative form for reasons of self-preservation because the Claimant does not wish to admit breach and. expose itself and its associated companies to any liability to the Customers.
21. I do not think that I really need be concerned with propositions advanced in such a tentative form. Since no case is made by the Claimant that a breach of duty or interference has actually occurred, it cannot be part of my duty on this application to resolve whether it has or has not. Indeed it is scarcely practicable for me to do so without a positive case to this effect being advanced. In a word the Claimant's case in this regard is embarrassing. The most I can do in respect of them is to say that, whilst the Claimant may have reason to feel concern, on the evidence before me the existence of any breach of duty or infringement is far from obvious.
22. The first suggested possible breach of a duty is of confidence owed by the Claimant and defendant companies to the Customers in respect of the Information. The inclusion of the Information in the Forms or Schedules makes the Information publicly available, for the public have a right to inspect the Forms under sections 707A and 709. The evidence before me is insufficient to establish the existence of any duty of confidence owed by the Claimant or the defendant companies to the Customers in respect of the Information. All I am told is the fact that the Claimant included in the Forms or the Schedules and accordingly made publicly available if they had realised what was being done and that an alternative was available. I am far from satisfied that the Claimant or the defendant companies assumed any duty of confidence in relation to the Information or that (if any duty was assumed) it precluded disclosure of the Information to the Registrar in the way it was disclosed on registration of a sub-mortgage. In any event the Registrar cannot have owed any duty of confidence to the Customers or have been concerned with the existence of any such confidence in performing faithfully her duties under the Act or have been concerned to filter out on registration information on the Forms or in the Schedules which may be confidential to third parties.
23. The second suggested possible breach is of the Data Protection Act 1998. It is unnecessary to examine that complicated legislation in any detail. It is sufficient to say that it appears highly dubious whether the disclosure of the Information in the Forms by the defendant companies constituted any breach of its provisions. But in any event it is clear that there was no breach by the Registrar in effecting the registration and retaining for inspection by the public the Forms and Schedules, for section 34 of the 1998 Act provides an exemption from the non-disclosure provisions if the data consists of information which the data controller is obliged (as the Registrar is obliged) by or under any enactment to make available to the public for inspection.
24. The third suggested possible breach is by the Registrar of section 6 of the Human Rights Act 1998 which provides that it is unlawful for a public authority to act in a way which is incompatible with a Convention Right. The relevant Convention Right is article 8(1) which provides that everyone has the right to respect for his private and family life, his home and his correspondence. Article 8(2) provides an exception where the interference is necessary in the interests of the economic well-being of the country The only authority cited in this context was the judgment of Maurice Kay J in Regina (Robertson) v. Wakefield Metropolitan District Council [2002] QB 1052 ("Robertson"). In Robertson it was held that for a public body to require electors to include their names and addresses on the electoral register and to adopt the practice of selling the register to commercial concerns without affording the individual elector a right of objection breached the electors' right to respect for his private life. The facts of the present case are far removed from those under consideration in that case. The Information has not been (as the information was in Robertson) exacted by a public authority for one purpose and then used or exploited for another. The Information is a form of a statement of the accounts between the defendant companies and their customers. I cannot think that disclosure of the Information for proper business purposes and in particular in pursuit of an obligation to register a charge can engage Article 8(1). But in any event any interference with that right is surely justified as in accordance with law, necessary in the interests of the economic well-being of the country (the maintenance of an accurate and complete record of filings at Companies House) and proportionate. In particular it is necessary that the public have the means of access to information as to the subject matter of the charges granted by the defendant companies so that they can deal with those companies on a properly informed basis. That is the rationale for the registration provisions of the Act to which I have referred. I have considered whether it is significant for present purposes they might have been. I have reached the conclusion that it is not significant. It cannot be a matter for the Registrar to undertake the quite impossible task of deciding in the case of each application for registration whether or not apparently relevant information disclosed needs to be dispensed with. But in any event the rationale of the statutory provisions is that registration shall be informative. The fact that the Registrar for good and practical reasons may perforce accept applications and forms which are less informative cannot mean that objection can be taken to acceptance of more informative forms and applications which more fully achieve the statutory objective.
25. Accordingly there appears to me to be no substance in the suggestion that the disclosure or consequent public availability of the Information constitutes any form of wrongdoing by the defendant companies, still less the Registrar. But in any event even if there were any such wrongdoing as is suggested, I cannot see how such wrongdoing could render the disclosure of the Information a "mis-statement" entitling the court to exercise its jurisdiction to rectify the Register under section 404. There is nothing stated which is erroneous or wrong and there is no allegation that there is. The complaint is about the telling of the truth.
26. Accordingly for the reasons which I have given the court has no jurisdiction to grant relief claimed under section 404.

INHERENT JURISDICTION

27. In the alternative the Claimant contends that, if section 404 does not give the court jurisdiction to order rectification of the Forms and their Schedules, the court has an inherent jurisdiction to order such rectification. This submission is unmaintainable, for in the case of Exeter Trust v. Screeenways [1991] BCLC 888 ("Exeter Trust"). The Court of Appeal expressly held that the existence of the limited statutory jurisdiction to order rectification under section 404 was wholly inconsistent with any suggestion that the Court has any inherent power of rectification.
28. The Claimant seeks to escape from the decision in Exeter Trust by submitting that Re Calmex Ltd [1989] 1 All ER 485 ("Calmex") is authority for the proposition that the Court has an inherent jurisdiction to order the Registrar to rectify documents held by the Registrar; that Exeter Trust only decided that section 404 was a statutory fetter upon the exercise of that inherent jurisdiction in relation to the Register of Charges; and that the Court of Appeal in Exeter Trust referred to Calmex with approval. Neither of the first two propositions are correct. Calmex merely established (if ever authority were required for the proposition) that the court has a supervisory jurisdiction over the Registrar and can in judicial review proceedings make orders enforcing the performance by the Registrar of the Registrar's public duties.
29. Calmex was a case in which the company in question had been the subject of a winding up order that had been forwarded to the Registrar and entered on the Registrar's records relating to the company in accordance with section 130(1) of the Insolvency Act 1986. It turned out that the winding up order had been made entirely by mistake as a result of a confusion between similarly named companies, and that the company that had ostensibly been wound up had not even been served with the petition. Hoffmann J. held that the proceedings and winding-up order were a complete nullity.
30. Hoffmann J. then went on to deal with the question whether an order could be made for the removal of the winding up order from the Registrar's records ([1989] 1 All ER 485 at 488 g-j):

"Finally, counsel for the registrar submitted that the court had no jurisdiction to tell the registrar to remove documents from the register. I would be surprised if a company had no remedy against the registrar if he chose to include in the file a document which was prejudicial to the company and which he had no statutory duty to keep. And I have held that, on the true construction of s. 130(1) of the 1986 Act, the registrar has no duty to retain entered in his records a winding-up order which the court has declared to be a nullity. I suspect that the remedy would be by way of judicial review, but counsel for the registrar said that the registrar did not wish to take any point on the procedure by which the matter has been brought before the court, but contended that even by way of judicial review there was no jurisdiction. In my judgment the court does in principle have jurisdiction according to ordinary public law principles to control the way in which the registrar carries out his statutory duties, subject to any specific exclusions of that jurisdiction or the evidence on which it could be founded as in R v. Registrar of Companies ex parte Central Bank of India [1986] QB 1114."

31. Calmex was a case dealing with the question of whether the Registrar should retain in the Registrar's records a particular document (namely the winding-up order) which was a nullity. It was not a case like the present dealing with whether it might be permissible to order the Registrar to rectify or alter a document held by the Registrar. Hoffmann J held that the Registrar had no statutory duty to keep such a nullity and therefore should not do so. It was not a case like the present which is concerned with the question of how the Registrar should deal with valid documents, namely the Forms and Schedules that had been duly delivered in accordance with the relevant legislation and properly relied upon by the Registrar in the discharge of the Registrar's statutory functions and which the Registrar is under a statutory duty to retain as part of the Registrar's records available for public inspection.
32. In a word, Hoffmann J held in Calmex that the Registrar had a statutory duty to remove from the Registrar's records the nullity and the court in exercise of its supervisory jurisdiction would enforce that duty. In the present case, far from there being any public duty to rectify, the Registrar is under a public duty to retain the Forms and Schedules in their present form. There are no grounds alleged or shown for invoking the court's jurisdiction by way of judicial review. Calmex accordingly affords no support for the proposition that the court has inherent jurisdiction to make the order sought.

CONCLUSION

33. For the above reasons this application must be dismissed.