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England and Wales Land Registry Adjudicator

You are here: BAILII >> Databases >> England and Wales Land Registry Adjudicator >> U K Housing Alliance (North West) Limited (in administration) v (1) Colin Bowyer (2) Sandra Bowyer (3) Kenneth Watson (4) Winifred Valerie Watson (5) David Harold Hames (6) Catherine Margaret Hames (7) Maurice John Crocker (8) Sandra Crocker (Contracts and options) [2013] EWLandRA 2011_0604 (18 March 2013)
URL: http://www.bailii.org/ew/cases/EWLandRA/2013/2011_0604.html
Cite as: [2013] EWLandRA 2011_604, [2013] EWLandRA 2011_0604
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REF/2011/604

REF/2011/617

REF/2011/623

REF/2011/625

 

ADJUDICATOR TO HER MAJESTY’S LAND REGISTRY

LAND REGISTRATION ACT 2002

 

IN THE MATTER OF A REFERENCE FROM HM LAND REGISTRY

 

BETWEEN

UK HOUSING ALLIANCE (NORTH WEST) LIMITED

(IN ADMINISTRATION)

 

APPLICANT

 

and

 

1.       COLIN BOWYER

2.       SANDRA BOWYER

3.       KENNETH WATSON

4.       WINIFRED VALERIE WATSON

5.       DAVID HAROLD HAMES

6.       CATHERINE MARGARET HAMES

7.       MAURICE JOHN CROCKER

8.       SANDRA CROCKER

 

RESPONDENTS

 

Property Addresses:

  1. 51 Wright Avenue, Rudheath, Northwich, Cheshire CW9 7LB
  2. 20 Derwent Road, Middleton, Manchester, M24 5LP
  3. 10 Cherington Close, Handforth, Wilmslow, SK9 3AS
  4. 28 Marple Road, Northwich, CW9 7AU

Title Numbers: 1. CH128122

2. MAN162

3. CH222964

4. CH339523

Before: Mr. Michael Mark sitting as Deputy Adjudicator to HM Land Registry

Sitting at: Manchester Tribunal Service

On: 7, 8 and 9 January 2013

 

Applicant Representation: Stephen Robins, counsel

Respondent Representation: Caroline Stanier for the First and Second Respondents

The Third and Fourth Respondents in person

Robin Horner, counsel for the 7 th and 8 th Respondents

___________________________________________________________________________­

 

DECISION

 

The Applicant, now in administration, was in business in 2007 to 2008 buying residential properties from owners in occupation for full market value, payable as to 70 per cent on completion and as to the 30 per cent balance, subject to conditions, at the expiry of ten years. At the same time it entered into assured shorthold tenancies of 10 years with the vendors at a rack rent with the vendors having the right to a further tenancy at the end of the 10 years. The vendors sought to protect their rights in respect of the 30 per cent balance by registering a notice against the freehold title at the Land Registry. The Administrators of the Applicant sought to have the notices cancelled.

 

Held:

  1. Where a vendor is to be paid part of the purchase price on completion and the balance at a later date no unpaid vendor’s lien arises in the absence of specific provision for one: Winter v Lord Anson , (1823) 1 Sim & St. 434; Clarke v Royle, (1830) 3 Sim.499; Buckland v Pocknell, (1843) 13 Sim.406; Earl of Jersey v Briton Floating Dock Co., (1869) LR 7 Eq 409; Re Albert Life Insurance Co., (1870) LR Eq 164; Re Brentwood Brick & Coal Co., (1876) LR 4 Ch D 562; Capital Finance v Stokes, [1969] 1 Ch 262.
  2. Even where an unpaid vendor’s lien would otherwise arise by implication, it can be excluded by express provision in the sale contract: Qayoumi v Oakhouse Property Holdings plc , [2003] 1 BCLC 352.
  3. The provisions in the contracts in the present test cases which provide that there is to be no unpaid vendor’s liens do not fall foul of the Unfair Terms in Consumer Contract Regulations 199: UK Housing Alliance v Francis , [2010] EWCA Civ 117; Director General of Fair Trading v First National Bank plc, [2001] 1 AC 481; Office of Fair Trading v Abbey National plc, [2010] 1 AC 696.
  4. No facts have been established in any of the three test cases dealt with in this decision which could give rise to any constructive trust or estoppel which could have arisen either prior to or at the time that the Applicant went into administration or as a result of the administration.
  5. In any event, it is not possible to have a remedial constructive trust or equity by way of estoppel which arises in the course of the administration of a company: Re Polly Peck Internations plc (in administration) (No.2) , [1998] 3 All ER 812.
  6. There is no right of set off of rent or other payments due to the Applicant under tenancy agreements granted to the vendors at the time of the sales against the outstanding balance of the purchase price except insofar as such right may arise in the course of the administration or liquidation of the Applicant. In particular there is no right of set off against a third party to whom the property has been sold on by the Applicant: Edlington Properties Limited v Fenner & Co. Limited, [2006] 3 All ER 1200.
  7. The contingent right to receive the balance of the purchase price at the end of 10 years does not affect a registered estate or charge within the meaning of section 32 of the Land Registration Act 2002.
  8. Accordingly no notice in respect of that right can be registered at the Land Registry to protect the right and the notices so registered must be vacated.

 

  1. For the reasons given below, I shall direct the Chief Land Registrar to give effect to the applications of the Applicant (“UKHA”) in respect of the above properties other than 10 Cherington Close, Handforth, Wilmslow, title number CH222964, the property which is the subject of the reference in REF/2011/623. The hearing in REF/2011/623 was due to take place together with the other three references above, but was adjourned at the hearing as the Fifth and Sixth Respondents were unable to attend due to the illness of the Fifth Respondent. There will be no order as to costs in respect of the three references disposed of by this decision.

 

  1. The four cases which came on for hearing on 7, 8 and 9 January were test cases affecting about 40 other applications which have been referred to the Adjudicator. All the cases arise out of purchases of residential properties by the Applicant before it went into administration on 3 June 2010. UKHA was incorporated on 29 June 2006. It appears from the background set out in the Administrators’ report dated 21 July 2010 that UK Housing Alliance plc was the sole shareholder until it transferred its shares to others on 25 March 2010. When it went into administration on 3 June 2010, its authorised share capital was £55,550 shares of 1p each, or £555.50.

 

  1. UKHA traded as a property holding company involved in the purchase and subsequent letting of residential properties principally in the north of England. In each case with which I am concerned, and in most other cases, the purchase was for what was stated to be the full market price, but only 70 per cent of that price was paid. The remaining 30 per cent of the price was only to be paid after 10 years, or sometimes later, and then only if certain conditions were satisfied. Meanwhile, the vendors were granted assured shorthold tenancies to enable them to continue to live at the property they had sold. In essence the scheme enabled house owners to realize equity in their homes which going on living there. The initial payment would enable them to pay off their mortgages or to have funds for other purposes.

 

  1. From the evidence of the Respondents in these cases, I am satisfied that the scheme was widely advertised by UKHA in the press and on TV. It is clear that several of the Respondents only entered into the sale and leaseback arrangements because the scale of this advertising convinced them that UKHA was a substantial concern which would be good for the money 10 years later.

 

  1. UKHA was financed at least in part (the details were not before me) by Kaupthing Singer Friedlander (“KSF”), and the properties or some of them were used as security for loans from that bank, the debenture being dated 17 May 2007. It would appear that due to reducing tenant numbers and the fall in property prices caused by the recession and credit crunch UKHA was heavily loss making, and after falling into arrears with interest payments, KSF, which is also in administration, appointed administrators over UKHA.

 

  1. There would seem to be little prospect of any of the vendors recovering any of the remaining 30 per cent of the purchase price as unsecured creditors, but many of them sought to register unilateral notices in the charges registers of the properties in an attempt to obtain some form of security for the payment of the outstanding amount due to them. The notices were registered on their behalf by Megsons, a firm of solicitors who appear to have taken over their files from the firm of solicitors they had instructed to act for them on the recommendation of UKHA in the sale and leaseback transaction. The notices were only registered in the spring and summer of 2009, long after the transactions in question.

 

  1. In order to enable vendors to sell without delay but with solicitors acting and advising them, UKHA, when it was starting to carry on its business, or soon afterwards, entered into an arrangement with a firm of solicitors in Oldham, Chartbridge, for that firm to act for vendors with UKHA paying their costs. Standard Heads of Terms, signed subject to contract when a deal was agreed with a vendor, provided at paragraph 7 that UKHA would on completion contribute £350 towards the vendor’s legal costs but if the vendor instructed one of the firms recommended by UKHA who were acquainted with the standard documentation required for the transaction UKHA would pay all that firm’s costs on completion (an example is at trial bundle p.171-2).

 

  1. Although the Heads of Terms refer to one of the firms recommended by UKHA, all the cases that have been referred to the Adjudicator involve Chartbridge or their successor firms. It appears from the evidence of Robert Schofield, a partner in that firm, that Chartbridge was a limited liability partnership that ceased to trade on 28 July 2008. A limited company, Chartbridge Limited, then took over the practice but ceased to trade on 3 September 2008. Mr. Schofield had then become a consultant at another firm of solicitors, Megsons. Megsons appear to have acquired the files relating to the UKHA sales and to have employed a former paralegal in Chartbridge, Kerry Sharples, to deal with them.

 

  1. Mr. Schofield, another partner in Chartbridge, Debra Cooke, and Kerry Sharples, attended the hearing under requirement notices requiring their attendance to give evidence. The original reason for that was because all the unilateral notices had been registered by Ms Sharples at around the same time, and there was an issue whether, and if so on what basis, UKHA had authorised the unilateral notices early in 2009.

 

  1. Mr. Schofield’s evidence was that he had only been involved in setting up the arrangements. Initially, a partner, Helen Murgatroyd, had been the person who theoretically dealt with the individual purchasers, with the assistance of Kerry Sharples. Ms Sharples also referred another member of the firm, Ann Murton, being involved until she was made redundant early in 2007. In practice, however, it would appear from the evidence of both Mr. Schofield and Ms Sharples that Ms Murgatroyd played no part in any transaction and everything appears to have been left to Ms Sharples who had no legal qualifications. She had a tick list of matters to deal with, and once she had dealt with all of them, she would take the list to Ms Murgatroyd or Ms Cooke to be signed off. Normally everything was dealt with in writing, but occasionally clients would phone in. She would only see them face to face if there was a special reason such as urgency because creditors were pressing.

 

  1. Ms Murgatroyd had left the firm in about December 2007 and Debra Cooke, another conveyancing partner, had taken over the UKHA cases. Ms Sharples appears to have continued to work largely unsupervised, but around June 2008 Ms Cooke states that she considered and revised certain of the standard documents. She left soon afterwards, and the sale by Mr. and Mrs. Bowyer in June 2008 appears to have been one of the last with which Chartbridge was involved.

  1. Standard documentation was used for all the sales with which this decision is concerned and the same or similar documentation appears to have been used in all or most of the other cases that have been referred to the Adjudicator. Although there have been some amendments, it would appear from the evidence of Mr. Schofield that he had negotiated the arrangements with UKHA and their solicitors, Brecher Abram, by which Chartbridge would act for vendors and be paid by UKHA, and had discussed with them the draft documentation that was required. Ms Murgatroyd also appears to have played some part in the drafting of the standard documentation.

 

  1. Most transactions went through within 14 days. I note that Mr. Hill, the UKHA representative who procured the subject to contract heads of terms to be signed in each of the three cases before me, told Mr. and Mrs. Crocker that they could instruct their own solicitors but that it would be quicker and easier if they instructed Chartbridge.

 

  1. It is plain that it would be quicker and easier, although not necessarily safer, to instruct Chartbridge. Whether it was wiser may have depended on the urgency with which a vendor needed quick money. There seems to me to be a difficulty in this sort of arrangement. There is no evidence as to whether Chartbridge was on a fixed fee for each transaction, but if it was, then there would be a disincentive for it to do more than the minimum required, which in this case involved sending out standard form letters of advice and other documentation and receiving signed documentation back. There would also be an incentive to delegate such work to a lower grade of fee earner. There is also an obvious tension between giving independent advice, not influenced by the position of the buyer, and the fact that it was not only being paid by the buyer but was plainly dependent on the buyer for a potentially significant amount of future work which might not materialise if it was seen to be putting off potential sellers.

 

  1. As will appear, the standard form letters of advice did contain what would be largely good and accurate advice to an educated person who took the trouble to read them thoroughly, but there are many people who either are not capable of reading or understanding written advice of minimal complexity, and who need the most important points at least to be driven home orally. It is clear, however, from the evidence of Ms Cooke and more particularly of Ms Sharples, that beyond formal invitations in correspondence to get in touch if the seller wished, little if anything was done to meet sellers or give any oral advice.

 

  1. What also became clear from the evidence of Ms Cooke and Ms Sharples was that Chartbridge did not include on the standard checklist a requirement that the 10 years assured shorthold tenancy should be registered, presumably with the cost being charged to UKHA as agreed between UKHA and each vendor. Nor was there any provision at that time for a unilateral notice to be registered. Again, if that had been agreed with UKHA, provision should have been included for it in the checklist, although there was no evidence before me that that had happened. Ms Sharples explained that she was made redundant by Chartbridge when it stopped getting work from UKHA, but was taken back a week later to deal with retentions and post completion money. She was then taken on by Megsons, after Mr. Schofield had become a consultant with that firm. At some point, it then came to the attention of Mr. Alan Cockburn, under whose supervision she was working, that none of the leases had been registered, as required by section 4 of the Land Registration Act 2002. This appears to have occurred at around the time in late 2008 when KSF went into administration.

 

  1. By this time, the leases were all out of time for registration, but it was decided to run a trial application at the expense of Megsons to get one lease registered. When that was successful, Ms Sharples was instructed to write to the vendors/leaseholders for money to enable their leases to be registered. At the same time, she was instructed to obtain funds to enable unilateral notices to be registered against the properties in respect of the vendors’ outstanding 30 per cent of each purchase price. She stated that there had previously been discussions as to the possible registration of a UN1 but she did not know the outcome. She had therefore written to each vendor asking for £80 to enable the leases to be registered and the unilateral notices to be entered. I note that by that time, in early to mid-2009, UKHA appeared to have stopped buying properties and what they did own had long since been charged to KSF. Each of the Respondents had sent her the £80, as had the other vendors in the cases referred to the Adjudicator. The money had been paid, the leases had been registered and the unilateral notices entered. The terms of the unilateral notices were not identical in each case. I shall deal with the entries in the three remaining test cases when setting out the facts of those cases in more detail. There is no suggestion that KSF was aware of what was happening, still less that it consented to any dealings by UKHA with the land.

 

  1. Mr. Schofield gave evidence that it was agreed at an early stage that unilateral notices would be registered, and Ms Cooke also gave evidence that it was agreed with Chartbridge that they would put a notice on the register to protect the vendors in respect of the additional money due. However, there was no supporting documentary evidence as to this, and nothing to suggest that this had ever been communicated to anybody at Chartbridge dealing with these sales. Moreover, insofar as the notices are said, as many are, to protect an unpaid vendor’s lien, they are wholly inconsistent with the express provisions of all the agreements for sale that no lien should arise. In this respect I have no hesitation in preferring the evidence of Ms Sharples that she did not know the outcome of any discussions about a lien. It appears to me to be highly unlikely that the well known London solicitors who were acting for UKHA would have agreed to the unilateral notices being entered to protect liens that were precluded by the express terms of the agreements they had drafted and that would, at least from May 2007, be inconsistent with the terms of the debenture with KSF. All three test cases involve sales after that time. Unfortunately, when they were selected, and indeed until a copy of the debenture was produced at the hearing, neither the relevance nor the date of the debenture was appreciated or taken into consideration.

 

  1. By contrast, I note that when the question of registration of the leases came up, the consent of KSF does appear to have been sought and given (see for example the letter dated 11 February 2009 from Megsons to Mr. and Mrs. Crocker), and KSF does not challenge the registration of the leases.

 

Mr. and Mrs. Crocker – 28 Marple Road

  1. I turn to the three individual test cases. I start with the earliest, involving Mr. and Mrs. Crocker. They owned and lived at 28, Marple Road, Northwich. Their joint witness statement explains that they heard a radio advertisement for UKHA in April 2007, which was how they became aware of sale and lease back schemes. They explored other companies doing the same and decided that UKHA seemed the best for them. They were interested because Mrs. Crocker was registered disabled and was likely to need to enter a nursing home or care home later in life. If that happened the property would have to be sold to pay for the care leaving nothing for their children or grandchildren. Also they had one debt that had to be settled. I am unsure that their understanding as to the need to sell the house was correct, at least so long as Mr. Crocker was living there.

 

  1. The Crockers then sought an information pack. They were impressed by the professional pack which was then sent to them. They thought that it meant that they could continue to live in the property and would have a nest egg for their family at the end of it. They were also attracted by the fact that the process was said to be quick and easy.

 

  1. The contract of sale from Mr. and Mrs. Crocker to UKHA is dated 11 July 2007, the same date as is given in the Charges Register for a charge over the property in favour of KSF, which was also the completion date under the sale contract. The unilateral notice was registered on 7 April 2009 and is expressed to be “in respect of an unpaid vendor’s lien arising from a Sale Contract dated 11 July 2007. The assured shorthold tenancy was for 10 years from 11 July 2007 and notice of it was also entered against the freehold title on 7 April 2009.

 

  1. The sale contract gives the price as £120,000, of which £84,000 was to be paid on the Completion Date (defined as 11 July 2007) and the balance of £36,000 “will be payable in accordance with the Schedule hereto”. Clause 6.2 provides that “You hereby agree that You shall not have any lien in respect of any money payable to You under this contract.” “You” is defined as Mr. and Mrs. Crocker. The Schedule contains provisions as to when and if the £36,000 would become payable. The primary provision in paragraph 1 is that the money would be paid by UKHA “on the day on which You give Us vacant possession of the Property provided that you have occupied the Property under the terms of the Assured Shorthold Tenancy Agreement (“AST”) for an unbroken period of at least 10 years from today’s date.” The Schedule goes on to include provision for early payment if both the tenants were to die before the 10 years were up and for the loss of any right to all or part of that sum in the event that the AST was terminated before the end of the 10 years.

 

  1. The sale agreement was entered into two months after Heads of Terms had been signed, on 10 May 2007. This had been done at the Crockers’ home with UKHA’s “Valuation Consultant”, Andy Hill, in attendance and completing the form for them. Before agreeing the deal the Crockers had questioned Mr. Hill about it. Their witness statement, which they drafted themselves, described him as a professional looking gentleman who seemed trustworthy and who described the scheme in great detail, stressing that it was quick and easy and that there were no risks involved as long as they made their rental payments each month for the next 10 years at the end of which they would receive the £36,000. When they asked for background on the company, Mr. Hill told them that UKHA had a large clientele of very rich men who had invested into the company to buy these properties, thus establishing a large portfolio, as they had seen a gap in the market for rental properties. Not only did these investors have part ownership of the properties until the 30 per cent was paid back, when they would own the whole of the properties but they also had the rental income from all the tenants.

 

  1. I note that there is no mention in the witness statement of any charge to secure payment of the £36,000. Nor is there anything to suggest that the Crockers were concerned with security in that sense. They, like the Bowyers and the Watsons, were concerned to deal with a substantial concern in which they had confidence. However, when Mrs. Crocker gave evidence, she stated for the first time that Mr. Hill had assured them that they would have a charge to secure payment of the £36,000. There is no suggestion of that in the evidence of Mr. Crocker at the hearing, and neither the Bowyers nor the Watsons suggested that any mention was made of a charge. Rather Mr. Hill was said to have indicated that all the legalities would be dealt with by the lawyers and his concern was to stress the financial strength of UKHA. Indeed in oral evidence Mr. Crocker said that Mr. Hill had said that to ensure payment “it” would be registered at the Land Registry but never said what “it” was. I have come to the conclusion that Mr. Crocker’s recollections are more accurate and that, although Mrs. Crocker has now convinced herself that the word “charge” was used, that is a false memory which has arisen since her witness statement was written. Although Mr. Hill went out of his way to stress, falsely whether he knew it or not, the strength of UKHA and that the £36,000 would be safe, he gave no assurances as to how that was to be achieved. That was to be left to the lawyers.

 

  1. In the Heads of Terms, the Crockers’ solicitors were identified as Chartbridge, and UKHA’s solicitors were identified as Brecher Abram. The initial £84,000 was to be used in part (about half) to pay off a debt secured on the property, and the remainder was to be paid to the Crockers. Conditions were attached which included provision for completion within 3 days of UKHA’s solicitors being in possession of all necessary completed documentation in an agreed form from the Crockers’ solicitors. Some but not all of the provisions subsequently in the contract as to payment of the balance of £36,000 were included, as was provision for the AST, which was to be for 10 years at a yearly rent of £6360 per annum with annual RPI related increases and a right for the Crockers to renew the AST for a further 8 years with payment of the £36,000 being postponed.

 

  1. Clause 6 of the conditions provided “The Vendor will instruct solicitors and advise the Buyer of their details…”. Clause 7 provided that UKHA would on completion contribute £350 towards the Crockers’ legal costs but if the Crockers instruct one of the firms recommended by UKHA who are acquainted with the standard documentation required for this transaction then UKHA would on completion pay all that firm’s costs.

 

  1. The instructions to Chartbridge were communicated to them. This would appear to have been done by UKHA’s parent company writing to Ms Murgatroyd by letter dated 14 May 2007, enclosing the signed heads of terms and other documents. By letter dated 14 May 2007 Chartbridge then wrote to the Crockers that they understood the Crockers wished Chartbridge to act for them in the sale of 28 Marple Road. The letter identified Helen Murgatroyd as the person primarily responsible for the conduct of the transaction and gave a direct dial telephone number and a fax number and email address. Unlike in the evidence of the solicitors at the hearing, the letter identified Ms Murgatroyd as the Conveyancing Manager and invited the Crockers to speak directly to her if they had any problem. Mr. Schofield was identified as the partner responsible for dealing with complaints. The letter also contained provision for the payment of fees and disbursements by the Crockers. As requested, the Crockers signed and returned a copy of that letter, the signatures being dated 20 May 2007.

 

  1. By letter dated 5 June 2007, UKHA’s parent company again wrote to the Crockers apologising for the delay and enclosing copies of various reports that had been obtained, and revising the basis on which UKHA was prepared to proceed in that £2900 was to be withheld to cover essential repairs.

 

  1. Chartbridge then took steps two weeks later to obtain a redemption statement from the Crockers mortgagee and a creditor with a charging order against the property. At the same time they wrote to the Crockers explaining the retention and enclosing the contract and tenancy documentation together with reports on the contract and the deferred payment as well as the tenancy agreement and other documentation. The letter asked the Crockers to read through all the reports carefully and if satisfied with each report to sign and return the duplicate letter. The duplicate letter reference was to duplicates of the reports which were to be signed. The contract report and the report on the final payment agreement explained when the final payment was to be made, and subject to what conditions.

 

  1. The transaction proceeded to completion and there is a general file note dated 20 July 2007 which deals with the tenancy agreement being sent to the Crockers once it and other documentation was received from Brechers and for the archiving of the file for 10 years. It makes no mention of the registration of the tenancy at the Land Registry. The Crockers were also sent a financial statement detailing how the net proceeds of sale were dealt with. The letters to the Crockers were signed by or on behalf of Ms Murgatroyd, with her direct dial number and email address included. The tenancy agreement was in due course sent to the Crockers by Chartbridge under cover of a letter dated 16 October 2007, still without any step having been taken to register it. The balance of the retention money also appears to have been duly accounted for.

 

  1. I note from the financial statements in the trial bundle that Chartbridge’s charges for the sale were $411.25 (equivalent to £350 + VAT) and that there was also a charge of £6 for office copy entries and a bank transfer fee of £105.75. Against this there was a receipt of £523 from UKHA. I am unclear exactly what this related to as it does not precisely correspond to any solicitors’ charges although it may also include some element in respect of charges for the tenancy agreement.

 

  1. There matters rested until March 2009, when it would appear that Ms Sharples telephoned the Crockers to ask for money to register the lease. By letter dated 12 March 2009, Mrs. Crocker sent a cheque for £80, and by letter dated 24 March 2009, Ms Sharples, this time acting for Megsons, acknowledged receipt of £80 “in order to register your Lease.” The application in fact appears to have been to register both the lease and the unilateral notice as the application was rejected by the Land Registry initially by letter dated 27 March 2009, issues being taken as to defects in the lease that required correction. A new application had therefore to be submitted and it would appear that one was submitted on 7 April 2009 (presumably after the lease had been altered with or without the approval of any of the parties to it), and a letter from the Land Registry dated the same date, 7 April 2009, confirmed that the application had been completed. The unilateral notice appears to have been registered at the same time and by letter dated 14 April 2009, Ms Sharples confirmed to the Crockers that this had been done.

 

Mr. and Mrs. Watson – 20 Derwent Road

  1. The second sale was that by Mr. and Mrs. Watson of 20 Derwent Road, Langley. The sale in this case was on 7 November 2007 for a price of £100,000 of which £30,000 was to be left outstanding. The charges register shows that also on 7 November 2007 a charge was granted by UKHA over the property in favour of KSF to protect existing and future advances. Apart from the contract documentation which Mr. and Mrs. Watson signed, almost nothing has survived in respect of the other documentation which was produced from Chartbridge’s files for the Crockers. The lease and a unilateral notice “in respect of an unpaid vendor’s lien detailed in the Schedule attached to” the contract of sale dated 7 November 2007 were registered by Megsons, through Ms Sharples, on 24 March 2009.

 

  1. Once again clause 6.2 of the sale contract provides that the Watsons “shall not have any lien in respect of any money payable to [them] under this contract.” The provisions for payment of the balance were similar to those described above in respect of the Crockers. Although Chartbridge acted for the Watsons, nothing seems to have survived in their files relating to this transaction despite the fact that all these files were supposed to be archived for 12 years. If any advice was given to the Watsons by Chartbridge, there was no evidence before me of what it was.

 

  1. Mr. Watson, with whose evidence Mrs. Watson agreed, explained that in 2007 they had large bills that needed paying and they were getting desperate. They saw an advert by UKHA and got in touch. A gentleman came to see them. He could not remember his name. Mr. Watson asked what would happen if they went to the wall later, and the gentleman said this was impossible because there was too much money involved. They agreed what the house was worth and it seemed a good deal. The gentleman said that they should use Chartbridge – it would not cost them money and would be quicker than using their own solicitor. He explained the basis on which they would get the £30,000 and that they would be secure for 10 years. At the end of the line, there would be a document that would provide that they would not be thrown out of their house and at the end of the day they would get their £30,000. Their money would be secure and they were guaranteed to get the final payment because of the strength of the company. He said a notice would be put on the property but not what kind of notice. Mr. Watson also said however, that he could not remember if anything was said about putting a notice on the register.

 

  1. They had the £70,000 within a fortnight. Subsequently, in 2009, Ms Sharples had rung them up and stated that she had spoken to UKHA to put a unilateral notice on the property to protect the £30,000 just in case the company went to the wall. She asked for £80 and Mr. Watson sent a cheque for that amount. According to Mrs. Watson, Ms Sharples said that the £80 was to guarantee that UKHA could not sell the house beneath them.

 

Mr. and Mrs. Bowyer – 51 Wright Avenue

  1. Mr. and Mrs. Bowyer only sold their property some time after the Crockers and the Watsons had sold theirs. They had contacted UKHA in March 2008 after seeing their adverts on TV and in national newspapers. They wanted to be in a position to help their three children, pay off some existing debts and enjoy a holiday while they were both fit and well enough to do so. They received what they described as a very professional information pack on 2 April 2008 and noted that they would have a nest egg at the end of 10 years. They contacted UKHA and Mr. Hill came to meet them at their home on 15 April 2008, the first of three visits. He described the process as quick and simple and said that UKHA had a dedicated team of solicitors that they could use at no cost to them. If they used their own solicitors, he stated, that would be at their own expense and may delay the process. When asked if there were any risks, he stated there were none at all as long as they made the rent payments each month over the next ten years.

 

  1. Mr. Hill also told them that UKHA had a large clientele, and that monies had been invested into the company to buy these properties by some very rich men who had seen a gap in the market. He was also stated to have said that not only did these investors have part ownership of the properties until the 30 per cent was paidback, when they would own the properties outright and they also had the ongoing rental income from the properties. In cross-examination, Mrs. Bowyer stated, and I accept, that they asked what would happen if UKHA became bankrupt. Mr. Hill’s reply was that that would not happen as they were on too big a scale. He did not answer the question of what would happen if UKHA did become insolvent. Legal provisions, he said, would be put in place to ensure that they got their money at the end of the 10 years. Mr. Bowyer said that there was no discussion as to what would happen if the company became insolvent. “Going bust” did not cross their minds. They thought any problems would be taken care of through their solicitors. He described their security as the financial strength of the company.

 

  1. I note that the Bowyers’ written evidence is very similar to that of the Crockers. I also note that it appears that the Bowyers’ daughter helped both them and the Crockers to prepare their witness statements and I am unclear to what extent the words used were those of the parties rather than the recollection of the daughter who had attended the meeting on 15 April. Mr. Bowyer himself, however, confirmed in evidence that Mr. Hill had said that they would still have ownership of 30 per cent until they were paid for it and also confirmed what had been said about the big portfolio and the gap in the market. Everything would be registered at the Land Registry. I am satisfied that Mr. Hill, who did not give evidence, had a pre-prepared patter which included these statements, but that he was also very careful to say that the details would be worked out in the legal documents.

 

  1. The Heads of Terms were completed by Mr. Hill and were signed by the Bowyers on 29 April 2008. They record secured debts owed by the Bowyers of £53,000. The initial payment was to be £94,500, of which £53,000 was to pay off existing secured debts and the balance of £41,500 was to be paid to the Bowyers. The Heads of Terms again contained a provision that UKHA would pay £350 towards the Bowyers’ solicitors’ costs or the whole of those costs if the Bowyers used one of UKHA’s recommended solicitors.

 

  1. The contract of sale and tenancy agreements are dated 12 June 2008, and the sale completed the same day. The sale price was £135,000 and £40,500 was left outstanding to be paid after ten years on terms similar to those upon which the Crockers and the Watsons sold their properties. Somewhat curiously, as the property appears to have been in joint names, the only vendor named in the contract was Mr. Bowyer. Before entering into the contract, the Bowyers had received a three page report from Chartbridge, whom they had instructed to act for them. They had returned a copy of this to Chartbridge signed by them and dated 8 June 2008, confirming that they had read and understood it. The report goes in some detail into the legal position, as had similar reports sent to other purchasers. Unlike other reports, this report contained, towards the end of the second page, the statement in relation to the final payment of 30 per cent “You should bear in mind that the final payment is not secured and if UKHA were to go out of business you might not receive the final payment.” It may be that this statement was an amendment introduced by Ms Cooke shortly before she left. Mr. and Mrs. Bowyer gave evidence, which I accept, that they did not remember seeing this until it had been drawn to their attention in the course of negligence proceedings against Chartbridge. Mr. Bowyer also stated, and I accept, that if he had seen it and had been told that he was still part owner of the property it would have set alarm bells ringing. They had not looked for it because Mr. Hill had not mentioned it as an option. They had checked Mr. Hill’s valuation of the property and found it was right. Mrs. Bowyer said that she had read most but must have skipped this part of the report.

 

  1. They had understood part ownership to mean the tenancy agreement with the security of the house. If they had not been satisfied with what Mr. Hill had told them, they would not have gone ahead with the deal.

 

  1. Once again, it was only in 2009 that Ms Sharples contacted the Bowyers about registration of their lease and a unilateral notice. The application to register the lease was made on 25 February 2009 and was completed on 27 February 2009. At the same time the unilateral notice was applied for, being described on this occasion as in respect of a contract for sale dated 12 June 2008 between UKHA and Mr. Bowyer, the beneficiaries being Mr. and Mrs. Bowyer. Meanwhile, a charge over the property had been granted by UKHA to KSF and this had been registered on 23 July 2008 at the same time as the transfer of the property to UKHA.

 

The law

  1. It is clear that the contractual documents relating to the payment of the final 30 per cent of each purchase price do not confer on any of the vendors an unpaid vendor’s lien. It is clear law that where a property is sold and the contract provides that completion should take place before all or part of the purchase price is to be paid, the vendor has no lien over the property as security for a payment which is only due on a future date (see Winter v Lord Anson, (1823) 1 Sim & St. 434; Clarke v Royle, (1830) 3 Sim.499; Buckland v Pocknell, (1843) 13 Sim.406; Earl of Jersey v Briton Floating Dock Co., (1869) LR 7 Eq 409; Re Albert Life Insurance Co., (1870) LR Eq 164; Re Brentwood Brick & Coal Co., (1876) LR 4 Ch D 562; Capital Finance v Stokes, [1969] 1 Ch 262). The transfer in each case was for the immediate payment of 70 per cent of the price and a promise to pay the rest of the purchase price 10 years later. On the basis of the law as laid down in the above cases, in the absence of an express agreement for a lien, there can be no lien for the 30 per cent balance.

 

  1. It is also clear that each of the contracts of sale specifically provides that the vendor shall not have any lien in respect of any money payable under the contract. Accordingly, even if any lien would otherwise have arisen, it is excluded by the terms of the contracts. There is no legal principle which prevents such a lien from being excluded (see for example Qayoumi v Oakhouse Property Holdings plc, [2003] 1 BCLC 352 at para.20).

 

  1. Further, although Mr. Hill gave assurances that the vendors would get their money, these were based on the strength and solvency of UKHA. Beyond that, I am satisfied that Mr. Hill gave no assurances beyond saying that all the legal details would be dealt with by the lawyers. Mr. Hill may well have misrepresented the strength and solvency of UKHA, especially in the case of the Bowyers, but that cannot give any of the vendors any rights in respect of the property. Even if any of them may have been entitled to rescind their contract had they discovered the truth in time, there has rightly been no contention before me that anybody had rescinded any contract or could now do so. There is nothing which could give rise to an estoppel which might prevent UKHA from denying any of these vendors’ right to a lien.

 

  1. At one point I questioned whether the exclusion clause preventing a lien from being created might itself be challenged as an unfair contract term, but in view of the fact that the lien would not have arisen even without that clause, the question does not arise. I had in mind the Unfair Terms in Consumer Contract Regulations 1999. UKHA has contended that it is neither a seller nor a supplier within the meaning of regulation 4(1) of the 1999 Regulations, with the result that those Regulations do not affect it. It was clearly not a seller, but in some sense it was a supplier of financial services by buying properties, and as the landlord it was also supplying properties to let. In UK Housing Alliance v Francis, [2010] EWCA Civ 117, leading counsel for UKHA accepted that the 1999 Regulations applied to the sale and leaseback arrangement in that case. It is unnecessary for me to decide the point here, and I do not do so.

 

  1. More significantly, Regulation 6(2) of the 1999 Regulations provides that “Insofar as it is in plain intelligible language, the assessment of fairness of a term shall not relate (a) to the definition of the main subject matter of the contract, or (b) to the adequacy of the price or remuneration, as against the goods or services supplied in exchange. It appears to me that, even if UKHA was a seller or supplier, the main subject matter of the contract of sale was for the sale of the property for an agreed price payable in a particular manner. Put in terms of services supplied by UKHA one is looking at the adequacy of the financial provision it made in return for the property. The price or financial provision was stated in plain intelligible language, even if the sellers did not understand or read the terms in question, and it is not open to me to assess the fairness of those provisions. Consideration of whether it ought to be secured, and consideration of the provisions as to when and by whom it should be paid, relate to its adequacy, at least on the facts of these cases, and that adequacy cannot be considered by a court ( Director General of Fair Trading v First National Bank plc, [2001] 1 AC 481; Office of Fair Trading v Abbey National plc, [2010] 1 AC 696. In those circumstances, it is clear that no lien can exist in any of these contracts.

 

  1. My only concern in this respect arises because of the strong encouragement from UKHA for the vendors to use the services of one of their approved firms of solicitors. It is clear that this can result in greater speed, and there may be circumstances where speed is needed. But it does not appear to me that solicitors who are on UKHA’s panel and are paid by them are fully independent. Chartbridge were plainly getting a great deal of work from UKHA. When the work ceased, redundancies followed. Those at Chartbridge who were acting for vendors would know that if they were too demanding or if their advice resulted in too many vendors withdrawing there would be a strong possibility that they would lose a steady source of income. Also, there is no evidence whether their fees were fixed by agreement with UKHA, but if they were, that would also limit the advice they would willingly provide and the steps they would take.

 

  1. Again, I questioned at one point whether there might be a right on the part of the vendor to set off any outstanding debt against rent or other liabilities under the tenancy agreements that should be noted on the register in respect of the tenancy agreements. However, until the ten years of the tenancy are up, there could be no right of set off in equity as the right to the 30 per cent is a contingent right – the money may or may not be payable at the end of the 10 years. Accordingly, as the final 30 per cent of the purchase price is only payable after the expiry of the tenancy agreement, no set off is possible between the two debts. If a vendor exercised the right at that time to a new tenancy agreement, that right would be to a new tenancy with the then freehold owner. If that new freehold owner is not UKHA, then there would be no set off ( Edlington Properties Limited v Fenner & Co. Limited, [2006] 3 All ER 1200).

 

  1. Unilateral notices can only be registered in respect of the burden of an interest affecting a registered estate or charge (Land Registration Act 2002, s.32). It is clear that the contractual obligation of UKHA to pay the final 30 per cent of the price cannot affect the freehold or leasehold registered estates. In the absence of any right of set off, there is no way in which the right to the final payment can affect the property or any charge over it. It is a personal right against UKHA only. Even if UKHA sold the property, the vendors’ right to the 30 per cent balance is only against UKHA and they have no rights against the purchasers. A unilateral notice cannot therefore be registered in respect of the right to be paid the 30 per cent.

 

  1. I accept that, as pointed out by Mr. Horner for Mr. and Mrs. Crocker, there is here a clear repudiatory breach of the contract of sale by UKHA in that it is plain that it will not make the payments at the end of the tenancy even if they are then due. If the repudiation is accepted by the vendors that would relieve them of performing any further obligations under that contract if they had any and would entitle them to claim as unsecured creditors for damages for breach of contract in respect of the loss of a chance to get the extra 30 per cent. It would not, however, give them any security in the land for that sum. Any rights in the administration or any subsequent liquidation of UKHA by way of statutory set off would not give them any right to register the notices at the Land Registry whether by way of lien or otherwise as any right of set off would not affect the freehold or leasehold interests in their respective homes since any purchaser of the freehold estate would take free from any such right.

 

  1. All these notices appear to have been registered at around the same time in 2009 and appear to have been registered after discussions between Megsons and UKHA. Although it appears to me that the notices were registered with the knowledge and consent of UKHA, it does not appear to me that as a result of this they can in any way affect the properties or the registered titles, or that they can affect the position of KSF which is not shown to have consented. Even if KSF had consented I am unable to see how this can give the various vendor/tenants any more rights than their respective agreements confer on them.

 

  1. Further, on the basis of my findings of fact, I can see nothing that would have made it inequitable for UKHA to deny any of the vendor/tenants any rights over the freehold or leasehold titles in respect of the outstanding 30 per cent purchase price. Nothing was said to them to suggest that they were to have any such right and the terms of the agreement made it clear that they would not have such a right. They were left under the impression that their position was secure not because of any assurance that they would have any rights in the property but because they were satisfied by the representations of Mr. Hill and the various advertisements they had seen that UKHA was a substantial company that would be able to pay when called on to do so.

 

  1. Finally, neither the court nor the administrators nor any liquidators that may be appointed have any general power to amend or modify the statutory schemes set up under the Insolvency Act 1986. The result of that is that a court has no power after the administration has commenced to find that properties are held by UKHA on a remedial constructive trust or subject to some equity resulting from a proprietary estoppel ( Re Polly Peck International plc (in administration) (No.2), [1998] 3 All ER 812). Even therefore, had I found that there would otherwise be facts giving rise to a remedial constructive trust or proprietary estoppel in respect of any property, it is too late for a court to give effect to it now that UKHA is in administration. For the avoidance of doubt, this is limited to trusts or rights by estoppel which can only come into existence by act of the court. It would not affect a constructive trust arising before the administration begins. This would not preclude a court giving such a remedy if by some miracle UKHA were to come out of administration without immediately going into liquidation, but there is no realistic prospect of that happening, and on the facts of these cases even if it were to happen there is no basis for such a trust or proprietary estoppel applying.

 

  1. Unfortunately, the Respondents in these cases and many others have parted with the title to their homes in return for promises of money which have not been fulfilled. They have no prospect of seeing any part of the remaining 30 per cent of the prices of their homes paid by UKHA and have no rights in respect of the properties or their tenancies to recover what ought in due course to be due to them if they fulfil their contractual requirements under their tenancies. Whether they have any remedies against their solicitors (beyond what appears to be a clear claim against Chartbridge for £40 each in respect of the amounts they had to pay to have their leases registered after Chartbridge failed to do so) is something on which I express no opinion. They may perhaps, at least in some cases, derive some comfort from the fall in the property market soon after the transactions with UKHA, which may mean that the 70 per cent which they received is rather more than 70 per cent of the value of their properties a year or two later. What is clear is that they have no right to maintain the notices which were registered on their behalf by Megsons. I have some sympathy with the question raised by Ms Caroline Stanier, representing Mr. and Mrs. Bowyer, who asked why an irresponsible bank should get its money back while the victims get nothing. The answer, which is not wholly satisfactory but is the law, is that the irresponsible bank had a charge, while the victims did not.

 

Costs

  1. All parties are agreed that there should be no order as to costs.

 

 

By Order of The Adjudicator to HM Land Registry

 

dated the 18 th day of March 2013

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