England and Wales High Court (Chancery Division) Decisions

You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Nugent v Nugent [2013] EWHC 4095 (Ch) (20 December 2013)
URL: http://www.bailii.org/ew/cases/EWHC/Ch/2013/4095.html
Cite as: [2015] 1 CH 121, [2014] 2 All ER 313, [2013] EWHC 4095 (Ch), [2014] 3 WLR 59, [2015] 1 Ch 121, [2014] 1 P &CR 19, [2013] WLR(D) 516

[New search] [Printable RTF version] [View ICLR summary: [2013] WLR(D) 516] [Buy ICLR report: [2014] 3 WLR 59] [Buy ICLR report: [2015] 1 Ch 121] [Help]

		Neutral Citation Number: [2013] EWHC 4095 (Ch)
		Case No: 2BS30659

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR

20/12/2013

B e f o r e :

MR JUSTICE MORGAN
____________________

Between:

	DAVID NUGENT	Claimant
	- and -
	SARAH JANE (known as SADIE) NUGENT	Defendant

____________________

Mr Michael Jefferis (instructed by Stephen Gisby & Co) for the Claimant
Mr Christopher McNall (instructed by Kirwans) for the Defendant
Hearing dates: 9 December 2013
____________________

HTML VERSION OF JUDGMENT
____________________

Mr Justice Morgan:

Introduction

The issue considered in this judgment is whether the court has, following the Land Registration Act 2002 ("the 2002 Act"), an inherent power to order the cancellation of a unilateral notice registered against a title registered under the 2002 Act and, if so, in what circumstances, and how, such a power should be exercised.

The application which raised the above issue was an application by the Defendant, the registered proprietor of land at Court Farm, Llantilio Crossenny, Monmouthshire, under title number CYM533447, for an order of the court cancelling a unilateral notice which had been registered against that title by the Claimant, to protect the interest which he claims in these proceedings. The application was made so as to enable the Defendant to raise funds, whether by selling or charging the land or some part of it, in order to pay for her defence of these proceedings. The application was opposed by the Claimant on a number of grounds. One important matter that was argued related to the jurisdiction of the court to make such an order. There was also argument as to when it was appropriate to allow a defendant to have access to an asset for the purpose of raising funds to defend the claim against him or her, when ownership of that asset was claimed by the Claimant.

At the hearing, I gave permission for the Defendant to rely on further evidence on one particular matter and for the Claimant to answer that evidence. I then indicated that I would give my decision in writing following that exchange of evidence. I duly received the further evidence but, in addition, I was shown an exchange of correspondence following the hearing and in that correspondence the parties appeared to be moving towards agreement in principle as to how matters should be addressed, although there are still important matters of detail to be worked out. The parties have not asked me to refrain from, or defer, giving a judgment in this case. As the application raised an important issue as to the court's jurisdiction and as the parties have not yet agreed the necessary details as to the disposal of the application, I consider that I ought to give judgment on the questions of principle which have been raised. In view of the degree of consensus which is now emerging between the parties, I consider that it is not necessary, and it may not be helpful, to go into matters as to the detailed background to this application. I will explain matters to the extent necessary to show how the present issues arise. Further, it seems better to leave the parties to work out on a co-operative basis the detail of how the matter is to be taken forward.

Mr Mc Nall appeared on behalf of the Defendant/Applicant and Mr Jefferis appeared on behalf of the Claimant/Respondent.

The proceedings

Mrs Nugent was born on 5 May 1914 and is now 99 years old. She was married to George Nugent, who died in 1984 (the papers also refer to his death as being in 1986). Before that date, Mrs Nugent and her husband jointly owned Court Farm, the land to which I have referred. Since 1986, the farm has been owned by Mrs Nugent alone. The farm comprises a farmhouse, some outbuildings and about 74 acres of land.

Mrs Nugent has two children, Richard and Stephen. Richard has two children, one of whom is the Claimant, David Nugent. Stephen also has two children. In these proceedings, David Nugent claims against Mrs Nugent that, in equity, he is entitled to the farm or would be entitled to the farm on Mrs Nugent's death. His case is that he was promised the farm by Mrs Nugent and her late husband and that he acted to his detriment in reliance on those promises. Mrs Nugent has now made it clear that she does not intend to leave the farm to David on her death. David says that Mrs Nugent is acting unconscionably and that the court has power to intervene on his behalf, even in Mrs Nugent's lifetime. He seeks various heads of relief against Mrs Nugent. In particular, he claims a declaration that Mrs Nugent is not free to sell more of the farm than is reasonably needed to meet her needs and debts and that the balance of the farm and its proceeds held on her death should be left by will to David Nugent and if it is not so left, then it is to be considered as being held in equity for his benefit. He also seeks an appropriate order during Mrs Nugent's lifetime to satisfy the equity which he says has now arisen. David Nugent will no doubt seek to rely on the principles as to proprietary estoppel explained in Gillett v Holt [2001] Ch 210 and Thorner v Major [2009] 1 WLR 776.

The claim to an equity based on a proprietary estoppel is resisted by Mrs Nugent. In her Defence, she pleads that there were no promises of the kind alleged made by her late husband or by herself and that David is not entitled to any relief in relation to the farm.

The unilateral notice

On 18 June 2012, David Nugent's solicitors registered a unilateral notice against Mrs Nugent's registered title to the farm in order to protect the interest which he claims. The notice, as registered, states that it is in respect of "an order" of the court in these proceedings but that it is not accurate. The notice is registered to protect David Nugent's claim but the court has not made a relevant order in his favour. However, it was not suggested that anything turned on the way in which the unilateral notice has been expressed.

The application

In her Defence, Mrs Nugent drew attention to a statement in the Particulars of Claim that David Nugent accepted that Mrs Nugent was free to sell some part of the farm as was reasonably needed in order to meet her needs and debts. Mrs Nugent then pleaded that David Nugent should accordingly release the unilateral notice which prevented her dealing with the farm. David Nugent contends that the costs to be incurred by Mrs Nugent in defending his claim by denying the promises which were made do not come within her "needs and debts", as that phrase is used in his pleading. Accordingly, David Nugent was not prepared to release the notice and on 4 October 2013, Mrs Nugent made the application which is now before me.

By her application, Mrs Nugent sought an order that the Chief Registrar to the Land Registry be directed forthwith to cancel the unilateral notice. The order was sought under the inherent jurisdiction of the court. Shortly before the hearing of this application, Mrs Nugent's solicitors put forward a different formulation of the order which was to be sought. As reformulated, Mrs Nugent sought an order providing for the notice to remain on the register but in circumstances where David Nugent must give his consent to all endeavours by Mrs Nugent to raise monies against the title (whether by sale, charge, or otherwise) for the sole purpose of funding Mrs Nugent's defence to this claim but subject to a cap by reference to Mrs Nugent's solicitors' present estimate of the costs involved. As explained earlier, following the hearing of the application, the parties appear to be moving towards agreement on the way forward.

Litigation friend

At the hearing, it emerged that Mrs Nugent does not currently have capacity to conduct her defence of these proceedings. I indicated that I would be prepared to appoint her son, Stephen Nugent, as a litigation friend to enable the hearing of the application before me to be effective. I was invited to appoint Stephen Nugent for a period longer than the period needed to deal with the present application. I have concluded that I should only appoint him for the purposes of dealing with the present application. That appointment will continue for that purpose until all of the consequential matters in relation to this application are dealt with. The appointment is made under CPR rule 21.6. It will remain open to Stephen Nugent to seek to be Mrs Nugent's litigation friend on a different basis. He may seek to rely upon CPR rules 21.4 and 21.5 if he wishes. It will be open to David Nugent to make submissions against Stephen Nugent being appointed on that basis. My order, which is limited to the present application, does not carry with it any implications one way or the other as regards the appropriate response to any future application or the opposition to it.

Jurisdiction

Counsel for Mrs Nugent submitted that the High Court has jurisdiction to make an order cancelling the unilateral notice and that in all the circumstances that the court ought to make such an order, at least to the extent needed to allow Mrs Nugent to raise funds to defend this claim, whether that is to be by selling or charging the land, or some appropriate part of it. He submitted that before the coming into force of the 2002 Act, the court had repeatedly held that it had an inherent jurisdiction to vacate cautions registered under the Land Registration Act 1925 and that that jurisdiction was regularly exercised. He submitted that there was nothing in the 2002 Act which took away or curtailed that jurisdiction so that the court was now able to order the cancellation of a unilateral notice. He then submitted, on the facts, that the present case was an appropriate one for the jurisdiction to be exercised.

Counsel for David Nugent submitted that the High Court has no such inherent jurisdiction. He submitted that a unilateral notice is a creature of the 2002 Act which identifies the circumstances in which such a notice may be removed. Those circumstances do not include the possibility of an order of the court that the notice should be removed in circumstances such as those relied upon by Mrs Nugent. Instead, the 2002 Act has created the position of the Adjudicator to the Land Registry and that his functions have recently been transferred to the First-tier Tribunal. A registered proprietor can apply to the First-tier Tribunal for the cancellation of a unilateral notice. On such an application the Tribunal will decide who is right and who is wrong in relation to the substantive merits of the underlying claim which is said to be protected by the unilateral notice. In the course of oral argument, counsel accepted that there were some circumstances pursuant to the express terms of the 2002 Act, where the court had power to alter the register. Further, the court could prevent a party relying upon a breach of the statutory tort in section 77 of the 2002 Act. He submitted that none of those provisions was engaged in the present case. Apart from those provisions, which did not apply, there was no other power in the court to accede to the present application.

These submissions gave rise to an important point as to the court's jurisdiction. As will be seen, the point is not a new one but it might be said that the point has not been decided in a case where the matter has been fully investigated and the court has had the benefit of full argument on both sides. In addressing this issue, the course I will take is to consider the provisions of the 2002 Act and the Land Registration Rules 2003; I will then consider the cases on the Land Registration Act 1925 and on the Land Charges Acts of 1925 and 1972; I will then refer to the discussion in the cases since the 2002 Act and then reach my conclusion.

The Land Registration Act 2002

Sections 32 to 39 of the 2002 Act deal with the registration of notices against a registered title. A notice is an entry in the register in respect of the burden of an interest affecting a registered estate or charge: section 32(1). The entry of a notice does not mean that it has been accepted that the claimed interest is valid but it does mean that the priority of such an interest, if valid, is protected for the purposes of sections 29 and 30: section 32(3). In particular, section 29(2)(a)(i) provides for a disposition of a registered estate to be subject to an interest which is protected by a notice.

Section 33 excludes certain interests from those which may be protected by a notice. A claim to an equity, pursuant to a proprietary estoppel, is not in the list of exclusions and, further, section 116(b) recognises an equity by estoppel as an interest capable of binding successors in title from the time that the equity arises.

By section 34, an application may be made for the entry in the register of an agreed notice or a unilateral notice. Section 35 requires the registrar to notify the registered proprietor of such an entry. By section 35(3), the beneficiary of the notice (amongst other persons) may apply to remove the notice from the register. Under section 36, the registered proprietor may apply to the registrar for the cancellation of a unilateral notice. The beneficiary of the notice may object to such an application. The above statutory provisions are supported by rules in the Land Registration Rules 2003: see rules 83 to 86.

Section 73 deals with what is to happen in the case of an objection. If the objection is not otherwise disposed of, then the registrar must refer it to the First-tier Tribunal (formerly the Adjudicator): section 73(7). Sections 108 to 112 deal with adjudication or determination by the Tribunal. The Tribunal's jurisdiction includes disputes referred to it under section 73(7): section 108(1)(a). The possible involvement of the High Court in connection with the determination of such a dispute is dealt with in section 110. There is provision for an appeal from the First-tier Tribunal to the Upper Tribunal: section 111.

Section 77(1) provides that a person must not exercise the right to apply for the entry of a notice "without reasonable cause" and section 77(2) provides that the duty under section 77(1) is owed to any person who suffers damage in consequence of its breach.

Schedule 4 to the 2002 Act deals with alteration of the register. The schedule distinguishes between alteration and rectification. Rectification involves an alteration which prejudicially affects the title of a registered proprietor: see schedule 4, para. 1. The cancellation of a unilateral notice would appear to be a benefit to the registered proprietor and so would not adversely affect his title. So the cancellation of a unilateral notice would involve an alteration of the register, but not its rectification. By schedule 4, para. 2, the court may make an order for alteration of the register for the purpose of correcting a mistake or bringing the register up to date. By schedule 4, para. 5, the registrar can alter the register for the same purposes. These powers are the subject of rules 126 to 130.

The operation of the statutory provisions

The practical effect of the unilateral notice in this case is to prevent Mrs Nugent selling the land or borrowing money on the security of a charge over the land. A purchaser or a chargee could become registered in relation to the interest they acquired but they would be subject to David Nugent's rights in equity, if he were in due course to establish them. It is plain that a purchaser would not pay the unincumbered value of the land in those circumstances. Further, a lender would not proceed on the basis that its charge over the land provided security equal to the unincumbered value of the land.

The meaning of "without reasonable cause" in section 77 was considered in Fitzroy Development Ltd v Fitzrovia Properties Ltd [2011] EWHC 1849 (Ch), a decision of my own. I held that a person with a reasonably arguable case in support of the existence of the interest claimed had "reasonable cause" to enter a unilateral notice to protect such an interest, even where a court later ruled against the existence of the interest claimed. Counsel for Mrs Nugent submitted to me that I should not follow that decision but he did not put forward any argument in support of that submission. Accordingly, I will proceed on the basis that that decision was correct.

Section 77 can be relevant where a person applies to enter a unilateral notice in the register and such a notice is registered. If the beneficiary of the notice did not have reasonable cause (in the sense described above), then he has committed a statutory tort pursuant to section 77. I can see no difficulty in principle which would prevent a court from making an order, before a person applies to register a unilateral notice without reasonable cause, to restrain such a person from committing such a tort. I can also see no difficulty in principle which would prevent a court, in a case where a person has registered a unilateral notice without reasonable cause, from making an order against that person requiring him to apply for the removal of the notice under section 35(3). If an application were made for such orders on an interim basis, the usual approach in American Cyanamid Co v Ethicon Ltd [1975] AC 396 and/or Nottingham Building Society v Eurodynamics Systems [1993] FSR 468 (on appeal, at [1995] FSR 605) would be applied. However, there is a limitation on the court's power, in reliance on section 77, to order the removal of a unilateral notice. The applicant for such relief would have to show that his case is that the beneficiary of the unilateral notice is acting without reasonable cause (in the sense described above). In the present case, when the scope of section 77 was being discussed, counsel for Mrs Nugent did suggest that an order should be made against David Nugent on the ground that he had applied to register the unilateral notice without reasonable cause. Counsel had not suggested that in his skeleton argument. I doubt if it is open to me in this case to make such an order on the basis of section 77. So far as I am able to judge, David Nugent has, in good faith, made a claim which is reasonably arguable. Accordingly, on the material before me, I would not be able to say that Mrs Nugent has raised a serious issue to be tried as to whether David Nugent has committed a statutory tort under section 77 by registering the unilateral notice.

Schedule 4 to the 2002 Act deals with alteration of the register. By schedule 4 para. 2, the court may make an order for alteration of the register for the purpose of correcting a mistake or bringing the register up to date. The court's power could be relied upon in some cases to order the removal of a unilateral notice. If the registered proprietor sought a declaration, whether by way of an application for summary judgment under CPR Part 24, or otherwise, that the beneficiary of the notice did not have the interest which he sought to protect by the unilateral notice, and the court made such a declaration, then the court could proceed to order under schedule 4 para. 2 that the register be altered by the removal of the unilateral notice in order to bring the register up to date. Of course, this power could not be exercised where the court considered that the issue as to whether the interest existed could only be finally determined at a trial.

In the present case, counsel for Mrs Nugent argued that I could determine that David Nugent had no real prospect of success in his claim to a proprietary estoppel. This submission was not in counsel's skeleton argument and David Nugent had not previously been required to respond to any such argument. The material before me principally consisted of the pleadings which have been exchanged. I could not possibly accept the submission that I should decide on the pleadings, and the other material before me, that David Nugent had no real prospect of success.

It follows from the above analysis of the 2002 Act, that I am not able in this case to accede to Mrs Nugent's application by relying on section 77 or schedule 4 para. 2. If Mrs Nugent is to succeed in her application, it must be on some other basis. This is why Mrs Nugent contended that the court has an inherent jurisdiction which is available and why David Nugent contended the opposite.

Before the 2002 Act

The Land Registration Act 1925 ("LRA 1925") was repealed and replaced by the 2002 Act. The Land Charges Act ("LCA 1925") was repealed and replaced by the Land Charges Act 1972 ("LCA 1972"). The LCA 1972 is still in force. These three Acts contained provisions which are relevant when considering the case law as to the court's inherent jurisdiction to order the vacation of a register entry made under one or other of those Acts.

Section 54 of LRA 1925 provided for the registration of a caution against dealings. A caution could be registered by a person claiming to be interested in the land, title to which was registered. Section 55 of LRA 1925 provided that the effect of such a caution was that the registrar should not, without the consent of the cautioner, register any dealing or make any entry on the register to protect the rights acquired under a dealing by the proprietor with such land until he had served notice on the cautioner, warning off the caution. It was open to the cautioner to object to the registration of the dealing or the making of some other entry on the register and for the registrar to rule on that matter. By section 56(1) of LRA 1925, any person aggrieved by any act done by the registrar in relation to a caution could appeal to the court. By section 56(3) of LRA 1925, if a person lodged a caution "without reasonable cause", then he was liable to made good damage suffered by another person by the lodging of the caution by paying such compensation as should be just. Section 59(1) of LRA 1925 provided that a pending land action could be protected by lodging a caution against dealings. Section 82 of LRA 1925 provided for rectification pursuant to an order of the court or by the registrar (subject to an appeal to the court) in certain cases. It is not necessary to set out the terms of section 82 but some of the cases, to which I refer below, considered section 82(1)(a) (where there was a decision of the court), section 82(1)(b) (order made where party aggrieved) and section 82(1)(h) (error or omission in the register and just to rectify). Section 127 of LRA 1925 provided for the conduct of business by the registrar and section 128 gave the registrar power to summon witnesses. Sections 138, 139 and 140 of LRA 1925 dealt with certain powers of the court in relation to land registration.

It is also relevant to refer briefly to some of the provisions of the Land Charges Act 1925 ("LCA 1925") and the Land Charges Act 1972 ("LCA 1972"). By section 1 of LCA 1925, registers were kept of pending actions and of land charges. Section 2 of LCA 1925 dealt with the register of pending actins and provided that in certain limited circumstances, the court could order the vacation of the registration of a pending action. Section 10 of LCA 1925 provided for a register of land charges and section 10(8) provided that the registration of a land charge could be vacated pursuant to an order of the court.

LCA 1925 was repealed and replaced by LCA 1972. Under LCA 1972 there continued to be a register of pending actions and a register of land charges. By section 1(6) of LCA 1972, registration might be vacated pursuant to an order of the court. Section 5 of LCA 1972 dealt with the register of pending actions. Section 5(10) of LCA 1972 provided that in certain limited circumstances, the court could order the vacation of a registration of a pending action.

The cases before the 2002 Act

There are many reported cases which concerned the registration of cautions under LRA 1925 and the registration of land charges and pending actions under LCA 1925 and LCA 1972. In order to understand the nature of the court's power to order the vacation of a register entry and, in particular, the inherent jurisdiction of the court and the circumstances in which that jurisdiction was available, I have considered the decisions in Heywood v BDC Properties Ltd [1963] 1 WLR 975, Heywood v BDC Properties Ltd (No. 2) [1964] 1 WLR 971, Taylor v Taylor [1968] 1 WLR 378, The Rawlplug Co Ltd v Kamvale Properties Ltd (1969) 20 P&CR 32, Calgary & Edmonton Land Co Ltd v Discount Bank (Overseas) Ltd [1971] 1 WLR 81, Lester v Burgess (1973) 26 P&CR 536, Clearbrook Property Holdings Ltd v Verrier [1974] 1 WLR 243, Norman v Hardy [1974] 1 WLR 1048, Calgary & Edmonton Land Co Ltd v Dobinson [1974] Ch 102, Northern Developments (Holdings) Ltd v UDT Securities Ltd [1976] 1 WLR 1230, Tiverton Estates Ltd v Wearwell Ltd [1975] Ch 146, Alpenstow Ltd v Regalian Properties plc [1985] 1 WLR 721, Tucker v Hutchinson (1987) 54 P&CR 106 and Clowes Developments (UK) Ltd v Mulchinock [1998] 1 WLR 42.

These cases considered a range of different questions as to the court's power, in the case of registered land, to vacate a caution registered to protect a pending claim or an alleged land charge and the court's power, in the case of unregistered land, to vacate an entry in the register of pending actions or of land charges. In some cases, the court held that the interest which was claimed did not come within the class of case where an entry could be placed on the register. In other cases, the claim to a land charge or the pending action were considered to be lacking in substance. If the court reached either of those conclusions, then the court generally considered that the right response was to vacate the registration of the caution or of the land charge or of the pending action. In some cases, such an order could be made under the relevant statutory provision, whether it was section 82 of LRA 1925 or section 10(8) of LCA 1925 or section 1(6) of LCA 1972. It was also held that such a power could be exercised on an interim application without a trial (Heywood v BDC Properties Ltd [1963] 1 WLR 975) and that a robust approach was appropriate (The Rawlplug Co Ltd v Kamvale Properties Ltd (1969) 20 P&CR 32).

In addition, the court was prepared to hold in a number of different contexts that, even if the power to vacate the registered entry was not expressly conferred by a statutory provision, the court had what it described as an inherent jurisdiction to vacate the entry. This was first said by the Court of Appeal in Heywood v BDC Properties Ltd (No. 2) [1964] 1 WLR 971 and this was soon repeated by the Court of Appeal in Taylor v Taylor [1968] 1 WLR 378. In the first of these cases, the inherent jurisdiction was asserted to prevent "an abuse" where the register entry related to a claim which was without substance. The abuse in question was not an abuse of the court process and the Court of Appeal did not rely on the inherent jurisdiction to strike out a court process; instead the court was willing to act to counter what it regarded as an abuse of the registration system. The court said that the registration in that case "ought never to have been made" (page 975). In the second of these cases, the Court of Appeal held that the interest which was registered did not come within the permitted class of entry and the register entry "ought not to be there at all" (see page 381E), and its vacation was ordered.

There is very little discussion in the cases as to the source of this inherent jurisdiction. The nearest one gets to a challenge to any inherent jurisdiction was in Lester v Burgess (1973) 26 P&CR 536 (see the argument at page 542) but that challenge was rejected in a case where (it was assumed for the sake of the argument) the registered proprietor could show that the beneficiary of the caution did not have any arguable claim. It was said that the court could exercise the jurisdiction of a court of equity to make an order in personam so as to give effect to the rights or obligations of the parties arising from any contract between them and the relevant events.

In this way, the court held that it could order the vacation of a register entry where the right claimed was not within the class of rights which could be registered or where the claim was without any real substance. But what was to be done where the right claimed did come with the class of rights which could be registered and where the claim was a good arguable one? Was the beneficiary of the register entry entitled to say that the statute permitted such an entry where the alleged facts supported it and whether the facts were as alleged could only be determined at a trial? Was the beneficiary therefore entitled to maintain the entry until trial irrespective of whether the entry would cause uncompensatable prejudice to the owner of the land?

An answer to these questions was first given by Templeman J in Clearbrook Property Holdings Ltd v Verrier [1974] 1 WLR 243. In that case, the Plaintiff had registered a caution to protect its rights as purchaser under an alleged contract. The judge rejected the vendor's argument that the purchaser's claim was without substance. He therefore could not vacate the caution on the basis of the earlier authorities. He then said this, at page 246 D - G:

"In these circumstances it appears to me that I have jurisdiction to do this: I can make an order vacating the register. As soon as that order is made the plaintiffs, having now before me an application in an action whereby they are asking for specific performance, can apply immediately for an interlocutory injunction pending trial, restraining the defendant from selling, letting or dealing with the property in any way inconsistent with the plaintiffs' claim for specific performance. The defendant is willing to submit to such an injunction as soon as it is asked. There will be no need for anybody to go away and draft a notice of motion. It is entirely a matter for the plaintiffs. If they ask for such an injunction the defendant will submit to it. The consequence will be that if the injunction is made there will be a cross-undertaking in damages by the plaintiffs. So if at the end of the day it appears that the plaintiffs are not entitled to specific performance then the defendant will be able to claim damages under the cross-undertaking. [Counsel] did submit that in all the circumstances damages might be difficult to assess because of the peculiar nature of the property, but that always arises whenever there is a cross-undertaking. It is a burden which the defendant is willing to accept.

It seems to me that course will both preserve the plaintiffs' right to specific performance and the defendant's right to damages, if in the event the plaintiffs fail in the action. I see no reason why I should not adopt that course, whether it be behaving robustly or not, and that is the course I propose to take. I propose to make an order vacating the entry on the register, and I pause to see whether the plaintiffs make any application for an interlocutory injunction."

Templeman J did not spell out where this jurisdiction came from. However, he plainly regarded it as just to treat the parties in the same way as if the purchaser had applied for an injunction to restrain a disposal of the land, pending the trial of the purchaser's application to enforce the alleged contract of sale. When the court is persuaded to grant an interim injunction, it routinely requires the applicant for the injunction to give an undertaking in damages. The judge plainly thought it would be unjust to allow the purchaser, by maintaining the caution, to produce the result that the vendor could not dispose of its land, in circumstances where the vendor would not be compensated for any resulting loss, in a case where the purchaser's claim was later dismissed.

Shortly after this decision, the issue was considered by the Court of Appeal in Tiverton Estates Ltd v Wearwell Ltd [1975] Ch 146. In that case, Lord Denning MR said at pages 161G – 162A:

"In some circumstances it would not be right to vacate the caution. For instance, if the cautioner had a substantial point in his favour and it would be unfair to him to vacate it, the court might then try to protect both sides by telling the cautioner: "You may keep the caution on the register if you undertake to pay the owner any damages caused by its presence if it is afterwards held that it was wrongly entered. But, if you are not ready to give such an undertaking, then the caution must be vacated." An alternative would be to do what Templeman J. did in Clearbrook Property Holdings Ltd v Verrier [1974] 1 WLR 243. But in the present case I would not do any of those things because it is plain to my mind that there was no enforceable contract. The register should be rectified by cancelling the caution."

and Stamp LJ said at page 172 A - D:

"As would be the position if there was no registration and the defendants were applying for an interlocutory injunction to restrain the plaintiffs from dealing with the land until trial, the court must, I think, in determining whether to grant the relief sought, form a view, on the facts before it, whether the party seeking the interlocutory relief has made out a prima facie case, and, if he has, must consider whether in the circumstances to grant or withhold the relief sought. Where the court grants an interlocutory injunction it exacts, as of course, a cross-undertaking in damages. and if the defendants here had made out a prima facie case, I would have thought the convenient course to adopt would be either to order the entry on the register to be vacated unless the defendants gave an undertaking in damages or to adopt the course adopted by Templeman J. in Clearbrook Property Holdings Ltd v Verrier [1974] 1 WLR 243. There he gave the purchasers the opportunity of moving for an interlocutory injunction so that the vendor would have the advantage of the undertaking in respect of the damage he might suffer from being unable to deal with his land until the trial. Neither of these courses is acceptable to the defendants; nor do I think that the defendants are in the least likely to succeed in the action."

The Court of Appeal did not explain where the asserted jurisdiction came from. However, it was obviously considered desirable that the court should have such a jurisdiction. It meant that a party with a claim to an interest in land could be protected pending trial but so too could the other party. These cases prevented a party, with a claim to an interest in land, registering an entry which gave that party all of the benefits of an interim injunction restraining a disposal of the land but which did not do anything to protect the other party.

Although I consider that Clearbrook and Tiverton Estates went well beyond the earlier cases where the court had held that the right to maintain the register entry could not be established, there does not appear to have been any subsequent challenge to the existence of the court's jurisdiction to act in the ways described in these two cases. Indeed, Clearbrook and Tiverton Estates were regularly followed. They were considered by the Court of Appeal in Tucker v Hutchinson (1987) 54 P&CR 106, where the court regarded the jurisdiction of the court in this respect and the relevant practice to be settled.

Accordingly, if the present case had arisen under LRA 1925 or LCA 1925 (both now repealed), or were to arise under LCA 1972 (which continues in operation), a judge at first instance would be bound to hold that the court had jurisdiction to make an order of the kind envisaged in the above cases.

Was the jurisdiction taken away by the 2002 Act?

In view of my conclusion as to the jurisdiction of the court in a case under the LRA 1925, the question arises whether that jurisdiction has been abrogated or otherwise affected by the 2002 Act. The first thing to notice is that there is no provision in the 2002 Act which expressly so provides. Accordingly, one could only hold that the earlier jurisdiction has been abrogated or otherwise affected by the 2002 Act if its continued existence in its original form were incompatible with the scheme of the 2002 Act. In order to consider such a possibility it was necessary to consider, as I have done, the provisions of LRA 1925 and of LCA 1925 and of LCA 1972 to see why it was the case that those statutory provisions were not considered to be incompatible with the inherent jurisdiction. In my judgment, there is no sufficient change of substance between the earlier provisions and the provisions now in the 2002 Act which would justiy the conclusion that the existence of the inherent jurisdiction is incompatible with the 2002 Act, whereas it was compatible with the earlier legislation.

The 2002 Act was enacted following considerable work by the Law Commission which published a Consultative Report ((1998) Law Com. No. 254) and a Final Report ((2001) Law Com. 271. Para. 6.22 of the Consultative Report briefly referred to the inherent jurisdiction of the court, without any adverse comment. Paras. 6.27 to 6.31 of the Final Report discussed various forms of protection against the improper entry of a unilateral notice but made no mention of any continuing inherent jurisdiction. That might suggest that the Law Commission thought that there would be no need for, and possibly no room for, an inherent jurisdiction under the 2002 Act. However, in the 8^th ed. of Megarry & Wade on the Law of Real Property (the leading editor being Mr Charles Harpum, formerly a law commissioner who had been closely involved in the preparation of the above reports) at para. 7-076, the following is stated:

"In practice, if, as often happens, a registered proprietor seeks the removal of a unilateral notice as a matter of urgency (usually because a sale is pending), he may apply to the High Court, acting in its inherent jurisdiction, to seek the vacation of that notice. The court has a wide inherent jurisdiction to order the vacation of any entry in the register, and it was often used in the past in relation to cautions against dealings. Although the point has been left open, there is nothing in the Land Registration Act 2002 that takes away this useful jurisdiction. It is commonly exercised speedily on an interim application, without awaiting the trial of any action, thereby preventing the entry from improperly inhibiting dealings with the land. Where the registration is only arguably correct, an interim application to vacate the entry will usually be dismissed only on terms. The party who opposes vacation will normally be required to give an undertaking to pay the landowner damages if at trial it is held that the entry was wrongly made."

The cases after the 2002 Act

I was referred to a number of cases since the coming into force of the 2002 Act which were said to be relevant. These were UCB Group Ltd v Hedworth [2004] EWHC 1138 (Ch), Stein v Stein [2004] EWHC 3212 (Ch), Loubatieres v Mornington Estates (UK) Ltd [2004] EWHC 825 (Ch), Donnelly v Weybridge Construction Ltd [2006] EWHC 348 (TCC), Red River UK Ltd v Sheikh [2007] EWHC 1038 (Ch) and Waghorn v Waghorn Chancery Division 14 June 2013. All these decisions were by judges at first instance.

In some of these cases, the question of the court's jurisdiction to vacate a unilateral notice was not raised or was expressly agreed or was left open. I have also considered the case of Godfrey v Torpey, Chancery Division, 5 May 2006, unreported, which was not cited, where, again, there does not appear to have been any argument about jurisdiction. Those decisions do not provide any real help in resolving the present dispute as to jurisdiction.

The other cases, however, are relevant. In Stein, the Claimant applied for relief in relation to a restriction registered under the 2002 Act by the Defendant. The Defendant was not represented at the hearing of that application. The judge held that there was no justification for maintaining the restriction. He plainly thought that that meant that the registrar could remove the restriction under schedule 4 to the 2002 Act. It is less clear why the judge did not himself make such an order under schedule 4 para. 2. In the course of his judgment, at [26], the judge said that under the 2002 Act, the court did not have the power which used to exist in relation to cautions to order the vacation of the caution when the court was satisfied that it was inappropriate for the caution to remain registered. He did not cite any authority and I think it unlikely that the matter was fully argued before him.

In Loubatieres, the judge held that the Defendant who had registered a unilateral notice in relation to an alleged contract had no sustainable basis for that registration and that the court had power to "entertain a claim for breach of section 77 and to make appropriate orders".

In Waghorn, the judge held that the claim which was sought to be protected by a unilateral notice was hopeless. He also held that the jurisdiction which existed before the 2002 Act to vacate cautions had survived the 2002 Act and he ordered the removal of the unilateral notice.

Conclusion as to jurisdiction

I conclude that the jurisdiction, recognised and developed by the courts, in relation to the vacation of cautions registered under the LRA 1925, applies also in relation to unilateral notices registered under the 2002 Act. That jurisdiction applied in different ways in relation to cautions to protect claims which were unsustainable and in relation to cautions to protect claims which were well arguable. In the present case, on the material before me, David Nugent's claim is well arguable. Accordingly, I cannot order the cancellation of the unilateral notice on the ground that his claim is without substance. The earlier cases where the underlying claim was well arguable only went so far as to require an undertaking in damages from the beneficiary of the caution, as a condition of keeping the caution in place. However, the clear philosophy of those cases was that the court should not allow the beneficiary of the notice to have the protection of the notice pending trial without the court considering the position of the registered proprietor and whether, and if so how, the proprietor should be protected pending trial. The court proceeded on the basis of an analogy with the position it would adopt if the beneficiary of the notice had, instead of registering a notice, applied for an interim injunction. I will therefore consider, in accordance with the philosophy in the earlier cases what the court would do, as between these parties, if David Nugent applied for an interim injunction pending trial and, in that context, I will take into account any adverse effect on Mrs Nugent of the court granting such an injunction.

In accordance with that approach, I consider that, in general terms, the court would have regarded the present case as an appropriate one in which to restrain Mrs Nugent from disposing of or charging the property. The court would be prepared to approach this case as it would a case where a claimant claims an injunction to prevent a defendant interfering with the claimant's property rights. The real question would then be whether the court would allow Mrs Nugent to sell any part of the property to raise funds to pay legal fees for her defence of the claim or to grant a charge over any part of the property to secure repayment of monies borrowed for that purpose.

The analogy of proprietary freezing orders

Counsel for Mrs Nugent submitted that, as regards the application for an order permitting Mrs Nugent to sell or charge the land, or a part of it, to fund her defence, the principles to be applied were those established in relation to permitting a defendant the subject of a proprietary freezing order to have access to the frozen property for the purpose of raising funds to conduct the defence of the underlying claim. Counsel for David Nugent did not substantially quarrel with this approach. In any event, it seems to me to be the right approach. In particular, it does not seem to me to matter whether David Nugent can say that he has a present proprietary interest in the farm or whether he can only say that he seeks an order which, when he obtains it, will then confer on him a proprietary interest in the farm.

The principles which apply in this respect in relation to proprietary freezing orders can be taken from three cases, in particular: Sundt Wrigley & Co Ltd v Wrigley, unreported, 23 June 1993, Court of Appeal (Civil Division) Transcript no. 685 of 1993, Fitzgerald v Williams [1996] QB 657 at 669-670 and Ostrich Farming Corporation Ltd v Ketchell, unreported, 10 December 1997, Court of Appeal (Civil Division), transcript no. 2259 of 1997. Further, the relevant principles are discussed in the recent case of Serious Organised Crime Agency v Azam [2013] 1 WLR 3800, in particular at [37] and [63], although that decision involved the application of section 245C of the Proceeds of Crime Act 2002, where different principles apply. So far as material in the present case, the application of the relevant principles requires the following approach:

(1) the court should recognise that the result of the claim may be that it is determined that David Nugent has a present proprietary right to the land or that the court will confer upon him a proprietary right to the land;

(2) although David Nugent recognised in his pleadings that it would not be unconscionable for Mrs Nugent to use the land to meet her own needs and pay her debts, he is entitled to argue that because it is unconscionable for her to refuse to perform the promises allegedly made by her and her late husband, it is similarly unconscionable for her to use the land to raise funds to be spent defending his claim; spending money in that way is not meeting a relevant need or paying a relevant debt;

(3) conversely, the court should recognise that the result of the claim may be that David Nugent has no present proprietary right, and is not given any proprietary right, to the land, which at all times has belonged to Mrs Nugent, who is entitled to use the land to raise funds to defend the claim;

(4) the decision whether to allow the land to be used to raise funds to pay the defendant's legal expenses requires a careful and anxious judgment which will involve an assessment of the injustice to David Nugent of allowing Mrs Nugent to do so (if David Nugent in due course establishes his claim) and of the injustice to Mrs Nugent of preventing her from doing so (if David Nugent in due course fails to establish his claim);

(5) the burden is on Mrs Nugent to show that she does not have access to any other available assets on which she could draw to pay her legal expenses;

(6) in considering whether Mrs Nugent has other available assets on which to draw, it is relevant to consider whether Mrs Nugent could effectively call on family or friends with the means to support her in paying her legal expenses.

In applying this approach, I will first consider whether Mrs Nugent has alternative sources of funding or can effectively call on family or friends with sources of funding sufficient to pay her legal expenses.

No one suggests that Mrs Nugent personally has access to any funds of any substantial amount. In addition, her counsel explained why I should not take the view that she must find (if she could) solicitors and counsel who would act for her on a CFA with ATE insurance and, as I understand it, counsel for David Nugent did not really press the suggestion that I should require Mrs Nugent to take this course.

I have also considered the position in relation to Mrs Nugent's son, Stephen Nugent. He could be said to be relevant in that he has a very obvious interest in the outcome of this litigation and it seems likely that he has taken the lead in instructing solicitors to act on behalf of Mrs Nugent. Although the burden was on Mrs Nugent to show that she does not have access to funding either from her own resources or from friends and family who could and should help her, she did not (at the hearing of the application) adduce any evidence as to Stephen Nugent's financial position. Instead of dismissing her application on this ground, I directed that she serve such evidence, giving David Nugent a right to respond to the evidence served. Mrs Nugent did serve such evidence and it became common ground that Stephen Nugent did not have resources which he could make available to fund Mrs Nugent's defence of the claim.

Accordingly, the matter comes down to the balance of injustice of deciding this application against David Nugent were he later to establish his claim and deciding this application against Mrs Nugent if David Nugent were later to fail to establish his claim.

Mrs Nugent is 99 years of age. She has no alternative source of funds to pay the legal expenses of defending this claim. It would be unjust to her, and to those who hope to inherit her estate, if she did not have the advantage of legal advice and representation in relation to this claim. The claim is a substantial and significant claim in terms of the amount involved and the importance to those directly and indirectly affected. It is accepted that I should cap the amount of legal expenses which can be raised by a sale or a charge of the frozen asset. Although I do not have a precise figure for the value of the farm, I am able to conclude that, even if Mrs Nugent did spend the full amount that she seeks to be allowed to spend, and sold a part of the farm for that purpose, the greater part of the farm would remain available to David Nugent, should he succeed in his claim. If Mrs Nugent raised the required sum by charging the land, David Nugent would still have available the greater part of the value of the land, should he succeed.

Conclusion

My conclusion is that I have jurisdiction to make an order of the kind which is needed. I further conclude that justice requires me to exercise that jurisdiction to permit Mrs Nugent to raise funds to defend this claim by way of an appropriate sale or an appropriate charge of the land, or a part of it.

In addition, Mrs Nugent has an overdraft of £51,000 which is unconnected with this claim. The bank to which the money is owed has a charge over the land to secure repayment. David Nugent contends that his rights are an overriding interest (by reason of his occupation) which have priority to this charge. Whether that it be so or not, this debt to the bank falls within the concession made by David Nugent in his pleading that Mrs Nugent should be able to use the farm to raise funds to meet her needs and her debts.

Having decided the questions of principle raised by this application, there are important matters of detail which need to be agreed to give effect to my decision. The parties have begun to address those matters of detail. It is preferable that I leave the parties to make progress in that respect although I will, of course, resolve any difference between them which they are unable themselves to resolve.

To save costs, I can indicate that it will not be necessary for the parties to attend the hand-down of this judgment, when I will adjourn all consequential matters to a further hearing, if necessary, on a day to be fixed.