PROPERTY CHAMBER

FIRST -TIER TRIBUNAL

LAND REGISTRATION DIVISION

 

IN THE MATTER OF A REFERENCE FROM HM LAND REGISTRY

 

LAND REGISTRATION ACT 2002

 

REF/2014/0938

 

BETWEEN

 

(1) Sharron Parkes

(2) Gavin Parkes

Applicants

and

 

Martyn Frederick Peter Smith

(As Trustee in Bankruptcy of Gavin Parkes)

Respondent

 

Property Address: 12 Manor Drive, Barton, Northwich CW8 4ET

Title Number: CH308144

 

 

Judge Colin Green

 

At: Liverpool Civil Justice Centre

On: 24 November 2015

 

First Applicant's Representation: Richard Devereux-Cooke of counsel, instructed by Bermans LLP

 

Second Applicant: in person

 

Respondent Representation: Hugh Derbyshire of counsel, instructed by Ashton Bond Gigg

 

 

 

DECISION

 

It is ordered that the orders dated 20 February and 17 March 2015 be set aside.

 

Reasons for Decision

 

Background

1.                         The Respondent is the trustee in bankruptcy of the Second Applicant, who was made bankrupt by an order dated 12 July 2013. The First Applicant is his wife and together they are the joint registered proprietors of 12 Manor Drive, Barton, Northwich ("the Property") under the above title number.

2.                         By an application dated 22 October 2013, the Respondent applied for entry of a restriction in Form J against the title, on the footing that the Second Applicant had a beneficial interest in the Property which formed part of his bankruptcy estate. Objection was made separately by each Applicant, both relying on an assignment dated 25 September 2003 ("the Assignment") made between the Official Receiver, the trustee in bankruptcy of the Second Applicant in respect of a previous bankruptcy, and the First Applicant, which purported to assign "all the interest and rights in or to the Property now vested in the Official Receiver as trustee in bankruptcy to hold to the Purchaser absolutely." It was contended therefore, that although the Property was in joint names, the First Applicant was the sole beneficial owner and the Second Respondent had no beneficial interest in the Property when he was made bankrupt a second time. On 15 December 2014 the Chief Land Registrar referred the matter in dispute to the Land Registration Division of the Property Chamber, pursuant to s. 73(7) of the Land Registration Act 2002.

3.                         By a letter dated 17 December 2014, the Tribunal wrote to the Applicants directing that they serve a Statement of Case by 5 p.m. on 16 January 2014 and by a letter of the same date wrote to the Respondent's firm in Shrewsbury (incorrectly described as solicitors) directing that the Respondent serve his Statement of Case within 28 days after receipt of the Applicants' Statement of Case.

4.                         A Statement of Case was served on behalf of the First Applicant, contending that by virtue of the Assignment the whole beneficial interest in the Property was held on trust for her. On 23 January 2015 the Tribunal wrote to the Respondent at the Shrewsbury address, stating that a copy of the Applicants' Statement of Case had been received and reminding him that his Statement of Case was due by 5 p.m. on 13 February. By letters dated 2 February, the Tribunal wrote to both parties, expressing the view that it had jurisdiction to deal with the issues expected to arise in the case and they were not the exclusive preserve of the insolvency jurisdiction - which had been contended by the First Applicant's solicitors - and reminding the Respondent of when his Statement of Case was due.

5.                         No Statement of Case was served by the Respondent and by an order dated 20 February 2015 it was ordered as follows:

"Unless the Respondent serves his Statement of Case on the Tribunal and on the Applicants on or before 5 p.m. on 6 March 2015, the Tribunal may:-

(a)    debar the Respondent from taking any further part in these proceedings; and

(b)    direct the Chief land Registrar to cancel the Respondent's original application dated 22 October 2013 to enter a restriction.

This order is made under rules 8(3)(a), 9(3)(a) and 9(7) of the Tribunal Procedure (First-tier Tribunal)(Property Chamber) Rules 2013."

The order was sent under a covering letter of 20 February 2014 to the Shrewsbury address.

6.                         There was no response, and therefore on 17 March 2015 the Tribunal made the following order:

"1. The Respondent is debarred from taking any further steps in these proceedings.

2. The Chief Land Registrar is directed to cancel the Respondent's original application dated 22 October 2013 to enter a restriction."

7.                         A letter in identical terms was sent to the First Applicant's solicitor and the Respondent at the Shrewsbury address on 17 March, enclosing a copy of the order and providing that if either party wished to apply for an order for costs, they should submit a schedule of costs incurred since the date of the reference (15 December 2014) by 16 April. The First Applicant's solicitors submitted a schedule to the Tribunal under cover of a letter of 15 April, and at the same time sent a copy of the Respondent's solicitors.

8.                         This prompted a telephone call by the Respondent's solicitors to a member of the Tribunal staff, and a letter to the Tribunal of 23 April, which included the following:

"For the avoidance of doubt Mr Smith has not received any directions from the Tribunal and has not been given any opportunity to make written submissions. He has not received notice of any hearings or any decisions of the Tribunal. He has received no correspondence from the Tribunal at all. He is therefore alarmed to learn that the proceedings have concluded."

9.                         After receiving observations from the First Applicant's solicitors, the matter was put before a Tribunal Judge who caused a letter to be sent to the Respondent's solicitors on 12 June 2015, which concluded as follows:

"In this case the debarring order and order directing the Chief Land Registrar to cancel your client's application was sent to your client at the address provided [to the Land Registry] on 17 March 2015. He had 28 days after that date to apply for the proceedings to be reinstated under rule 9(5)-(7) of the Tribunal Procedure (First-Tier Tribunal) (Property Chamber) Rules 2013. There is a similar provision, with a similar time limit under rule 51 in respect of a decision which disposes of proceedings where there has been a procedural irregularity and it is in the interest of justice to set aside the decision. The Tribunal is prepared to consider an application from you to set aside the debarring order but you will need to support it with a witness statement from your client dealing with the points raised above.

The Tribunal has power to extend or shorten time limits for complying with rules, and for the avoidance of doubt the time limit for making any application, with evidence in support, is to be by 3 July 2015. Consideration of the application for costs made by the Applicant will be deferred until after that date."

10.                         The suggested application was made by way of a witness statement from the Respondent on 29 June. Two matters dealt with in that statement should be mentioned. First, the explanation provided as to why none of the above communications had been seen was that the Respondent's accountancy firm had closed its office at the Shrewsbury address on 30 September 2014 and arrangements were made for the landlord to forward correspondence to the Respondent's Birmingham office, but no formal postal redirection was put in place. The relevant correspondence was not forwarded by the landlord, however and the Tribunal was never given notice of any change of address, to either the Birmingham office of the Respondent's solicitors. Apparently, the fee earner at the Respondent's solicitors had received the First Applicant's Statement of Case from her solicitors, but was unfamiliar with the Tribunal's procedure and was unaware that the Respondent would usually be expected to also serve a Statement of Case. It was only when he received the schedule of costs from the First Applicant's solicitors that he realised that matters were amiss. This account was not seriously challenged by the First Applicant.

11.                         Second, paragraph 28 of the statement referred to draft court proceedings which had been prepared and provided to the First Applicant's solicitors, which the Respondent would have to issue before the expiry of the three year time limit provided for by s. 283A of the Insolvency Act 1986, on 12 July 2016, in order to prevent any interest of the Second Respondent in the Property revesting in him.

12.                         After receipt of the statement, by an order dated 9 September 2015, the Tribunal directed that the Respondent should inform the Tribunal and the Applicants whether such proceedings had been issued, and if not do so immediately that it occurred. Directions were also given for service of a witness statements by the Applicants and a statement in reply if required, and for the Respondent's application to be listed for hearing.

13.                         The draft proceedings have not been issued (no notice has been received that they have been) but they were exhibited to the First Applicant's statement of 25 September 2015. They consist of a draft application notice in the Chester County Court, the relevant insolvency court, and a statement in support. In summary, the Respondent claims that the Second Applicant had an interest in the Property prior to the bankruptcy order as a result of payments made since February 2009 and/or because the Assignment was ineffective to transfer his interest to the First Applicant and seeks an order for the sale of the Property with vacant possession.

The Hearing

14.                         At the hearing the First Applicant and Respondent were represented by counsel. The Second Applicant was also in attendance acting in person. Although he has almost certainly been discharged from his bankruptcy, the matters in issue concern his bankruptcy estate which is under the control of the Respondent and therefore he can only have limited involvement in such matters. In any event, he wholly supported his wife's case.

15.                         There relevant provisions of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 ("the 2013 Rules") are as follows, First, in respect of the debarring order in paragraph 1 of the order of 17 March, rules 9(5) to (7) provide:

"(5) If the proceedings or case, or part of them, have been struck out under paragraph (1) or (3)(a), the applicant may apply for the proceedings or case, or part of it, to be reinstated.

(6) An application under paragraph (5) must be made in writing and received by the Tribunal within 28 days after the date on which the Tribunal sent notification of the striking out to that party.

(7) This rule applies to a respondent as it applies to an applicant except that—

(a) a reference to the striking out of the proceedings or case or part of them is to be read as a reference to the barring of the respondent from taking further part in the proceedings or part of them; and

(b) a reference to an application for the reinstatement of proceedings or case or part of them which have been struck out is to be read as a reference to an application for the lifting of the bar on the respondent from taking further part in the proceedings, or part of them."

16.                         So far as paragraph 2 of the order of 17 March is concerned, or even the whole order, rule 51 provides

"(1) The Tribunal may set aside a decision which disposes of proceedings, or part of such a decision, and re-make the decision or the relevant part of it, if—

(a)    the Tribunal considers that it is in the interests of justice to do so; and

(b) one or more of the conditions in paragraph (2) are satisfied.

(2) The conditions are—

(a) a document relating to the proceedings was not sent to, or was not received at an appropriate time by, a party or a party's representative;

...

(d) there has been some other procedural irregularity in the proceedings."

Either the relevant correspondence was not received at an appropriate time, or there was a procedural irregularity, albeit one caused by the Respondent's failure to make proper arrangements for redirection of his firm's post or consisting of the Respondent's failure to notify the Tribunal that he had appointed a solicitor pursuant to rule 14(2) of the 2013 Rules.

17.                         During the course of the hearing I raised the issue of whether the original application had by that stage actually been cancelled by the Land Registry, which seemed virtually certain (in fact, it was cancelled on 24 March 2015) and if so, whether I had power to restore the application. If I did not, this was a material consideration in how I was to exercise my discretion under the above provisions. The issue had not been considered by counsel, who were of the view that if the order was set aside the proceedings would continue as if it had not been made. So that they could have a proper opportunity to consider the matter, at the conclusion of the hearing I made an order in the following terms:

"(1) By 4.00 p.m. on 15 December 2015 the First Applicant and the Respondent shall serve on each other and the Tribunal written submissions concerning the issue of the consequences of the order dated 17 March 2015 and whether the Respondent's application to the Land Registry has been cancelled and if so, whether it can be reinstated.

(2) The First Applicant and the Respondent have permission to respond to such submissions by 4.00 p.m. on 5 January 2016"

18.                         Written submissions have been received, together with submissions in reply from the First Applicant. I am grateful for the helpful way both counsel have presented matters.

Determination

19.                         Section 110(3) of the Land Registration Act 2002 provides:

"Tribunal Procedure Rules may make provision about the functions of the First-tier Tribunal in consequence of a decision on a reference under section 73(7) and may, in particular, make provision enabling the First-tier Tribunal to determine, or give directions about the determination of—

(a) the application to which the reference relates, or

(b) such other present or future application to the registrar as Tribunal Procedure Rules may provide."

20.                         The relevant provisions concerning directions to the registrar are contained in rule 40 of the 2013 rules:

"(1) The Tribunal must send written notice to the registrar of any direction which requires the registrar to take action.

(2) Where the Tribunal has made a decision, that decision may include a direction to the registrar to—

(a) give effect to the original application in whole or in part as if the objection to that original application had not been made; or

(b) cancel the original application in whole or in part.

(3) A direction to the registrar under paragraph (2) must be in writing, must be sent or delivered to the registrar and may include—

(a) a condition that a specified entry be made on the register of any title affected; or

(b) a direction to reject any future application of a specified kind by a named party to the proceedings—

(i)                  unconditionally; or

(ii)                unless that party satisfies specified conditions."

21.                         Mr. Derbyshire on behalf of the Respondent argues that lifting the bar and setting aside the direction to cancel the original application would be a decision allowing me to direct restoration of the original application, which must still be in existence. He refers to Chief Land Registrar v. Franks [1], paragraph 42 in which Lord Justice Rimmer, considered the Adjudicator to Her Majesty's Land Registry (Practice and Procedure) Rules 2003 ("AR") the previous rules which governed practice and procedure in this Tribunal (formerly, the Adjudicator), rule 41 of which was in substantially identical terms to rule 40 of the 2013 Rules. In considering whether the Tribunal had power to order the registrar to restore an application, Lord Justice Rimmer made the following observations:

"During his submissions, Mr Morshead devoted some attention to the question of whether there is anywhere to be found in the AR a provision that would enable the adjudicator to make a restoration order such as the judge made. The argument was, as I understood it, that if no such power could be found in the AR, the judge could have no such power either. In my judgment, that argument does not assist the registrar's position. I am disposed to accept that there is nothing in the AR indicating that an adjudicator could make a 'restoration order' of the type Briggs J made. Equally, I cannot imagine circumstances in which the making by an adjudicator of such an order could or would ordinarily arise. In my view, however, the inability to find any jurisdiction to make such an order in the AR is beside the point. As Mr Gatty pointed out, the jurisdiction that Briggs J was exercising was the jurisdiction of an appeal court; and that court's jurisdiction is to be found in the Civil Procedure Rules 1998, in the appeal court's powers in CPR Part 52. Part 52.10(2)(a) provides that the appeal court has power to 'affirm, set aside or vary any order or judgment made or given by the lower court'."

22.                         Likewise, there is nothing in rule 40 or elsewhere in the 2013 rules or in the Practice Direction which applies to this Tribunal which empowers the Tribunal to make a restoration order. Nor does it have the powers of the High Court, to whom appeals were previously made (they are now made to the Upper Tribunal) and in any event, the present application is not an appeal. If the Tribunal is not able to direct that the original application be restored, no further direction can be given to the registrar under rule 40 to either give effect to the application or cancel it, in either case in whole or in part.

23.                         Although the original application cannot be restored, I do not consider this means that the Tribunal proceedings are unable to continue. This is clearly contemplated by the rules and the proceedings have a life independent of the existence of the underlying application. In this case however, it would be most unsatisfactory to continue proceedings and determine the issue of beneficial ownership at a future date - as Mr. Derbyshire invites me to consider doing - for the following reasons.

        23.1.                         As mentioned above, no direction could be made to the registrar. Although the Tribunal could find whether or not there was a beneficial interest, this could be at odds with the direction already given to cancel the application and no new direction could be made.

        23.2.                         Mr. Derbyshire makes clear in his written submissions that if the application is not restored the Respondent will make a further application for a restriction to protect his priority. Assuming the parties are unable to compromise the issues between them, another application would lead to a further reference to this Tribunal in which a direction could be made to the registrar at the conclusion of the proceedings, a far more appropriate way of dealing with matters. As seen from the above, the current proceedings have not proceeded beyond service of the First Applicant's Statement of Case, which could easily be used again in any future reference.

        23.3.                         In the absence of compromise, it seems inevitable that the Respondent will commence the draft proceedings mentioned above before 12 July 2016, in which relief would be sought which falls outside the scope of what can be ordered by this Tribunal. In the light of that, the insolvency jurisdiction would be a more appropriate forum in which to litigate matters and there seems little point in proceeding with the issue of beneficial ownership in this Tribunal, duplicating issues better resolved elsewhere where there are full powers to make declarations and an order for sale, should it be thought necessary. If those proceedings have not been issued by the time consideration is given by the Tribunal to any future reference from the Land Registry, it is likely that an order will be made that the Respondent commence those proceedings. Alternatively, if the proceedings have been issued, the Tribunal proceedings would probably be stayed pending the outcome of the insolvency proceedings.

24.                         Notwithstanding the above, there is one reason why I consider I should set aside the order of 17 March, and for the avoidance of doubt, that of 20 February, but it is not in order that these Tribunal proceedings can continue, save in respect of costs. There has been no substantive determination of the underlying issue of beneficial ownership, but there has been a direction that the original restriction be cancelled. Lest the Land Registry consider in respect of a further application by the Respondent for a restriction that he is prevented from being registered by reason of the earlier direction, I will set aside that direction. I should make it clear however, that I have no power to bind the Land Registry in such matters.

Costs

25.                         There are two costs issues: the costs of the proceedings up to the order of 17 March and the costs of the Respondent's application. As regards the former, the First Applicant has already served a costs schedule. The Respondent's solicitors should by 29 February send to both the Tribunal office and the First Applicant's solicitors a response dealing with both the Respondent's liability for costs (should this be contested) and the amount of costs. The First Applicant may, before 14 March, send to the Tribunal office and the Respondent's solicitors a short reply to such response

26.                         In respect of the costs of the Respondent's application, if either the First Applicant or Respondent wishes to claim costs, the following directions will apply.

        26.1.                         The application for costs must be made in writing by 29 February and copied to the Tribunal office and the other party's solicitors. Copies of all supporting invoices, and counsel's fee notes should accompany the application. In so far as the application includes legal costs, it must be accompanied by a schedule of those costs suitable for summary assessment, and must certify the dates on which the relevant work was undertaken.

        26.2.                         Each party should by 14 March send to both the Tribunal office and the other party's solicitors a response to any costs application, dealing with both the liability for costs (should this be contested) and the amount of costs.

        26.3.                         Either party may, before 21 March, send to the Tribunal office and the other party's solicitors a short reply to such response.

27.                         I will consider both sets of issues in respect of costs further after 21 March.

 

 

 

 

 

 

Dated this Tuesday 23 February 2016

 

 

 

 

By Order of The Tribunal