REF/2015/0049

 

 

PROPERTY CHAMBER, LAND REGISTRATION DIVISION

FIRST-TIER TRIBUNAL

IN THE MATTER OF A REFERENCE FROM HM LAND REGISTRY

 

BETWEEN

THE LORD CHANCELLOR

(AS SUCCESSOR TO THE LEGAL SERVICES COMMISSION)

APPLICANT

and

(1) ALAN TAYLOR

and

(2) JANICE ELAINE TAYLOR

RESPONDENTS

Property Address: 7 Ty Wern Avenue, Rhiwbina, Cardiff CF4 4 AW

Title Number: SLN229943

 

Before: Judge Michell

Sitting at: Caradog House, Cardiff

On: 4^th February 2016

 

Applicant Representation: Mr Barry Havenhand, counsel, instructed by Michelmores LLP

Respondent Representation: Mr Richard Taylor

 

 

___________________________________________________________________________­

 

DECISION

___________________________________________________________________________

 

LEGAL AID CHARGE- CHARGE ARISING IN JANUARY 1998 - LEGAL AID CERTIFICATES DISCHARGED IN SEPTEMBER 1998-COSTS ASSESSED IN 2011 -APPLICATION TO ENTER RESTRICTION TO PROTECT LEGAL AID CHARGE MADE IN 2014 - WHETHER REGISTRATION OR ENFORCEMENT OF THE CHARGE BARRED BY LIMITATION

 

Cases referred to

Re J (A Person of Unsound Mind) [1909] 1 Ch 574, CA

Gotham v Doodes CA [2006] EWCA Civ 1080

Legal Services Commission v. Rasool [2008] EWCA Civ 154

Yorkshire Bank Finance Ltd  v. Mulhall [2008] ECA Civ 1156 

McPherson v Legal Services Commission  [2008] EWHC 2865 (Ch)

Legal Services Commission v. Henthorn [2011] EWCA Civ 1415

 

 

Introduction

1.         On 2 July 2014 the Lord Chancellor, as statutory successor to the Legal Services Commission, applied for the entry of restrictions in form JJ in Schedule 4 to the Land Registration Rules 2003 on the title to 7 Ty Wern Avenue, Rhiwbina, Cardiff (‘the Property’). The Lord Chancellor claims to hold a statutory charge over the beneficial interest of each of the Respondents, Mr and Mrs Taylor in the Property pursuant to section 16(6) of the Legal Aid Act 1988 and therefore to be entitled to the entry of form JJ restrictions.  No point is taken as to the form JJ restrictions being the correct form of restriction if the Lord Chancellor has enforceable statutory charges over the interests of the Respondents in the Property.  The Respondents object to the registration on two grounds.  Firstly, they deny that the Lord Chancellor has a statutory charge over the Property.  Secondly, they say that if a statutory charge did arise, it is now statute barred under the Limitation Act 1980

 

2.         For the reasons set out below  I will order the Chief Land Registrar to enter the restrictions in Form JJ against the above title, to protect the Lord Chancellor’s charge secured on the property preserved by Mr and Mrs Taylor.

 

Background and evidence

 3.        The facts of this case are not in dispute. Mr and Mrs Taylor are the joint beneficial owners of the Property.  On 4^th February 1993 they executed a Legal Charge of the Property to Midland Bank to secure the liabilities of a building company, Homecraft Builders (South Wales) Ltd. of which Mr Taylor was a shareholder and director.  There was one other shareholder and director, Mr Robert Gronow.  Mr Gronow was the majority shareholder.  The Legal Charge was limited to the sum of £27,000 plus interest and charges.  In December 1994, the Bank issued a demand for repayment of the indebtedness of the company being approximately £70,000.  The company then went into liquidation and the Bank issued proceedings against Mr and Mrs Taylor for possession under the Legal Charge.  Mr and Mrs Taylor defended the proceedings and issued third party proceedings.  Mr Taylor’s defence was that he had executed the Legal Charge under a mistake induced by the negligence of both the Bank and the solicitor who acted for the Bank in taking the Legal Charge.  Mrs Taylor claimed that she had been induced to sign the Legal Charge by misrepresentation, having been led to believe that Mr Taylor Gronow had provided security for the company’s liabilities in the form of charges over three properties, all of which would rank before the Legal Charge of the Property.  The third party proceedings were against Mr Miles Richards, the solicitor who acted for the Bank in obtaining the Legal Charge and against Mr Gronow.  Morgan Cole Solicitors acted for Mr Miles Richards.

 4.        By application forms signed on 7^th February 1995, Mr and Mrs Taylor both applied for legal aid funding to defend the possession proceedings.  Mr Taylor was represented by Charles Crooks & Jones Solicitors and Mrs Taylor was represented by Phoenix Walters Solicitors.  Legal Aid Certificates were issued for Mr Taylor on 9^th March 1995 and for Mrs Taylor on 5^th May 1995.            

5.         On 28^th January 1998 a consent order was made determining the proceedings between the Bank and Mr and Mrs Taylor.  Mr and Mrs Taylor agreed to pay £24,000 to the Bank by 23rd February 1998 and the Bank agreed to discharge and release the Legal Charge and to accept the £24,000 in full and final settlement of its claims in the proceedings, including any claim to costs.  The third party proceedings continued.  On 15^th April 1998, Mr Taylor’s Legal Aid Certificate was transferred to Phoenix Walters.  On 28^th September 1998 Mrs Taylor’s Legal Aid Certificate was discharged on the grounds that she did not qualify for Legal Aid on financial grounds.  On 22nd October 1998 Mr Taylor’s Legal Aid Certificate was discharged on the same grounds.  The third party proceedings continued and were finally determined in October 1998, when Mr and Mrs Taylor’s third party claims failed.  Various payments on account were made to Phoenix Walters under the Certificates prior to their discharge     

6.         What then happened was that Phoenix Walters prepared a Bill of Costs detailing the work done under both Legal Aid certificates.  However, the Bill was never presented to the court for assessment.  In or around September 2001 Phoenix Walters was effectively wound up and the senior partner moved to work with Robertsons Solicitors.   

7.         Nothing then appears to have happened in respect of the Legal Aid costs until about early 2011 when the Legal Services Commission sought to recover monies from Phoenix Walters in respect of payments on account.  This prompted Messrs Robertsons to make investigations and to discover that the Bill of Costs prepared after discharge of the Certificates had not been sent to the court for assessment.  Robertsons have said that they found the original Bill and supporting documents on a closed file and submitted them to the Court.  However, subsequently they could not find either the original Bill nor the covering letter.  Robertsons then prepared a new Bill of Costs detailing the work carried out by Phoenix Walters on behalf of Mrs Taylor between 5^th May 1995 and 28^th September 1998 and for Mr Taylor between 15^th April 1995 and 22^nd October 1998.  The Bill of Costs was signed by Mr Peter Weber, who signed above the words “Phoenix Walters (now practising at Robertsons Solicitors)”.  Mr Weber signed the certificate on the Bill certifying that “the assisted persons/LSC funded Clients have no financial interest in the Detailed Assessment”.  On 15^th June 2011 District Judge Dawson sitting in the Cardiff County Court gave leave for the Bill of Costs to be filed out of time and assessed and allowed the Bill of Costs as drawn.  Robertsons signed a Legal Aid Assessment Certificate dated 1 July 2011 claiming costs assessed in the sum of £23,742.45 from the Community Legal Services Fund.      

 8.        Robertsons wrote to Mr and Mrs Taylor on 14^th December 2011 stating that the Bill of Costs had been assessed, enclosing an (incomplete) copy of the Bill, stating that the Legal Services Commission might place a charge over the Property for the sum of £3,000, being the difference between the original debt owed to the Bank of £27,000 and the amount agreed to be paid, being £24,000, enclosing a form CLS Admin 1 and stating that the form needed to be signed by Mr and Mrs Taylor within 7 days and stating that the writer would be sending the form to the LSC in 7 days in any event. The form contains a form of declaration to be signed by the legally aided person agreeing that the Legal Services Commission has a charge over specified property and agreeing that the Legal Services Commission will charge simple interest on the amount owed at the rate set out in regulations.  It also contains an application for enforcement of the statutory charge to be postponed. There then followed correspondence between Robertsons and Mr and Mrs Taylor’s son, Mr Richard Taylor, who represented them.  Mr Richard Taylor is a law costs draftsman.  In that correspondence, Robertsons said that the statutory charge would “stand at £3,000” and that Phoenix Walters offered to pay £3,000 to the Legal Services Commission to cover the statutory charge so that Mr and Mrs Taylor would not be liable for any monies on the Bill of Costs.  Subsequently, on 26^th January 2012 Robertsons wrote to Mr Richard Taylor to say that the statutory charge was not for £3,000 but for the whole amount of the assessed Bill.        

 9.        After some correspondence, the Lord Chancellor made an application to HM Land Registry for the entry of the restrictions on the title to the Property.  Mr and Mrs Taylor objected and the matter was referred to the Tribunal for determination.       

 

 Applicable law

 10.       s. 16 of the Legal Aid Act 1988 included the following

             “(6) Except so far as regulations otherwise provide—

            (a) any sums remaining unpaid on account of a person's

            contribution in respect of the sums payable by the Board in

            respect of any proceedings, and

            (b) a sum equal to any deficiency by reason of his total contribution

            being less than the net liability of the Board on his account,

            shall be a first charge for the benefit of the Board on any property which

      is recovered or preserved for him in the proceedings.”

(7) For the purposes of subsection (6) above it is immaterial what the

nature of the property is and where it is situated and the property within

the charge includes the rights of a person under any compromise or

settlement arrived at to avoid the proceedings or bring them to an end and

any sums recovered by virtue of an order for costs made in his favour in

the proceedings (not being sums payable to the Board under subsection

(5) above).

(8) The charge created by subsection (6) above on any damages or

costs shall not prevent a court allowing them to be set off against other

damages or costs in any case where a solicitor's lien for costs would not

prevent it.

(9) In this section references to the net liability of the Board on a legally

assisted person's account in relation to any proceedings are references to

the aggregate amount of—

(a) the sums paid or payable by the Board on his account in respect

of those proceedings to any solicitor or counsel, and

(b) any sums so paid or payable for any advice or assistance under

Part III in connection with those proceedings or any matter to

which those proceedings relate,

being sums not recouped by the Board by sums which are recoverable by

virtue of an order or agreement for costs made in his favour with respect

to those proceedings or by virtue of any right of his to be indemnified

against expenses incurred by him in connection with those proceedings”.

This section was repealed on 1^st April 2000 but it was not suggested in these proceedings that it does not remain the section under which the Lord Chancellor is entitled to a charge.  The facts giving rise to the charge occurred prior to the date of the repeal of the section. 

11.       The issue of what property is preserved where proceedings for possession by a mortgagee are compromised by an agreement for the mortgagor to pay an agreed amount to the mortgagee and for the mortgage to be discharged was considered in McPherson v Legal Services Commission [2008] EWHC 2865 (Ch) by Morgan J, on appeal from a decision of Deputy Adjudicator Rhys (as he then was).

 12.      Mrs McPherson was a defendant in possession proceedings brought against her and her husband in relation to mortgage arrears. The proceedings were compromised on terms that the McPhersons were to pay £265,000 to the mortgagee in relation to all outstanding claims. The Legal Services Commission (LSC) applied to register a charge against the property. The entire legal and beneficial interest was transferred to Mrs McPherson. The matter was referred to the Adjudicator. Deputy Adjudicator Rhys found that the property was preserved by virtue of the proceedings. The relevant regulations in force at the time were the Civil Legal Aid (General) Regulations 1989. The relevant act was the Legal Aid Act 1988 (see section 16).Mrs McPherson appealed against Mr Rhys’ decision. Morgan J dismissed the appeal. He found that the McPhersons preserved possession of the property and that the charge attached to the property because it was preserved by the compromise of the proceedings. This finding disposed of the matter.

13.       It follows from the decision in McPherson v Legal Services Commission, that Mr and Mrs Taylor preserved their respective beneficial interests in the Property by the settlement of the proceedings for which they had the benefit of Legal Aid and it is to the Property that the charge attached under Section 16(6).   

 

Regulations

14.       Regulation 95 of the 1989 Regulations dealt with the vesting and enforcement of the legal aid charge.  It provided as follows (so far as is relevant)

“(1) Any charge on property recovered or preserved for an assisted person arising under section 16(6) of the Act or created by virtue of regulation 96, 97 or 98 shall vest in the Board.

(2) The Board may enforce any such charge in any manner which would be available to a chargee in respect of a charge given inter partes, but the Board shall not agree to the release or postponement of the enforcement of any such charge except where regulation 96, 97 or 98 applies and then only in accordance with the provisions of those regulations.

3) Any such charge shall according to its nature–

(a) …;

(b) in the case of registered land, be a registrable substantive charge; or

(c) in a case in which the conditions specified in section 54(1) of the Land Registration Act 1925(2) are met, be protected by lodging a caution in accordance with the provisions of that section,

and references to registration in regulations 96 to 98 shall be construed as references to registration or protection in accordance with paragraph (a), (b) or (c) of this regulation”.

15.       Mr Richard Taylor referred to Regulation 119 of the Civil Legal Aid (General) Regulations 1989 (“the 1989 Regulations”).  By that regulation Mr and Mrs Taylor should have been supplied   by the solicitor with a copy of the bill and informed of the extent of their “financial   interest” and the steps which could be taken to safeguard that interest prior to the assessment.  Mr Taylor also referred me to regulation 105A but this is not relevant in this case. Regulation 105A applies in the case of an assessment of costs under regulation 105.  Regulation 105 refers to an assessment of costs by a Legal Aid Area   Director and not to an assessment (formerly and in the regulations referred to as “taxation”) by the court.  The regulation providing for taxation of the costs of an assisted person was regulation 107.  That regulation provided as follows

“(1) The costs of proceedings to which an assisted person is a party shall be taxed in accordance with any direction or order given or made in the proceedings irrespective of the interest (if any) of the assisted person in the taxation”. 

 

 

Limitation Act 1980

 16.         The Limitation Act 1980 contains a number of limitation provisions which were said on behalf of Mr and Mrs Taylor to be relevant, namely

(i) s.5, which provides that an action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued;

(ii) s.9, which provides that an action to recover any sum recoverable by virtue of any enactment shall not be brought after the expiration of six years from the date on which the cause of action accrued;

(iii) s. 15, which provides that no action to recover any land shall be brought after the expiration of twelve years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person; and

(iv) s.20, which provides  as follows

“(1)No action shall be brought to recover—

(a) any principal sum of money secured by a mortgage or other charge on property (whether real or personal); or

(b) proceeds of the sale of land;

after the expiration of twelve years from the date on which the right to receive the money accrued”.

and

(v) s. 24, which provides that an action shall not be brought upon any judgment after the expiration of six years from the date on which the judgment became enforceable.

I should also mention section 17 of the Limitation Act 1980, which provides (so far as is relevant)

“Subject to—

(a)section 18 of this Act;

at the expiration of the period prescribed by this Act for any person to bring an action to recover land (including a redemption action) the title of that person to the land shall be extinguished”

The provisions of the Limitation Act 1980 apply in general to proceedings by the Crown in like manner as they apply to proceedings between subjects – Limitation Act 1980 s.37(1).  In any case not covered by the statute, time will not run against the Crown – Re J (A Person of Unsound Mind) [1909] 1 Ch 574, CA.  Proceedings by the Crown include proceedings by any government department – s.37(3).

 

Authorities as to limitation 

17.       I was referred to three authorities, namely Gotham v Doodes [2006] EWCA Civ 1080, Legal Services Commission v. Rasool [2008] EWCA Civ 154, and Legal Services Commission v. Henthorn [2011] EWCA Civ 1415.  None of these are directly concerned with the issues before me. 

18.       In Gotham v Doodes  the issue on the appeal was whether the application of the trustee in bankruptcy to enforce by orders for possession and sale a charge on land imposed by an order made under s. 313 of the Insolvency Act 1986 on 29^th May 1992 was barred by s. 20(1) Limitation Act 1980.  Section 313 provides

(1)   Where any property consisting of an interest in a dwelling house which is occupied by the bankrupt or by his spouse or former spouse … is comprised in the bankrupt’s estate and the trustee is, for any reason, unable for the time being to realise that property, the trustee may apply to the court for an order imposing a charge on the property for the benefit of the bankrupt’s estate.

(2)   If on an application under this section the court imposes a charge on any property, the benefit of that charge shall be comprised in the bankrupt’s estate and is enforceable  … for the payment of any amount which is payable otherwise than to the bankrupt out of the estate and of interest on that amount at the prescribed rate”.

19.       The Court of Appeal found as follows

(1) The section created a “charge” to which s. 20 Limitation Act 1980 could apply. A “charge” was described by Buckley LJ in Swiss Bank v. Lloyds Bank [1982] AC 584, 594, as including an equitable charge, which

“is said to be created when property is expressly or constructively made liable, or specially appropriated, to the discharge of a debt or some other obligation, and confers on the chargee a right of realisation by judicial process …”. 

By an order made under s. 313 property was appropriated to the discharge of the amounts referred to in s. 313(2) and was realisable by judicial process, namely an application for orders for possession and sale.

(2)   The charge secured a “principal sum” even though its amount might fluctuate.  The word “principal” was used in s. 20 to differentiate the original sum or “tree” from the interest or “fruit” which it might yield.

(3)  If s.20 is to apply, the “right to receive” must be a present, not a deferred right.

(4) There was no right to receive money under s. 313 at the time when the order for the s. 313 charge was made.   

(5) S.313 imposed a charge to secure a future obligation and no right to receive the principal sum accrues until an order for sale of the property is made, an order for sale not being as of right but in the discretion of the court.

(6) Accordingly, s.20 did not apply.

20.       On the definition of “charge” within section 20 of the Limitation Act 1980 applied in this case, the charge imposed by section 16(6) of the Legal Aid Act 1988 is a “charge” within that section.  The charge makes property specifically liable for the discharge of a particular sum of money, being the amounts referred to in section 16(6).  By regulation 95(2) the charge is realisable by judicial process in the same way as a charge given inter partes.                        

21.       In LSC v. Rasool [2008] EWCA Civ 154 the issue was whether the LSC’s claim for “monies owed in respect of a legal aid certificate” was statute-barred under section 9 of the Limitation Act 1980 where the certificate had been revoked on 12^th May 1999, the costs were taxed on 19^th December 2001 and the claim was issued on 14^th March 2006.  It was common ground that the LSC’s claim was an action to recover a sum recoverable by virtue of an enactment within section 9 of the Limitation Act 1980.  The issue was when the cause of action accrued; whether on the date of revocation of the certificate or on the date of assessment of the costs.  The Court of Appeal held that the cause of action accrued on the date of revocation. Regulation 86 gave the LSC a right to recover from the formerly assisted person “the costs paid or payable under regulation 84(b)”.    Where costs had been “paid”, the cause of action was complete.  The rule should not be any different where the costs are “payable”.  The process of ascertainment of the amount of costs was a mere procedural requirement and not an inherent element of the cause of action itself.  Construing the Limitation Act in this way enabled the period of limitation to be ascertained with certainty and would prevent taxation being delayed indefinitely.

 22.      LSC v Rasool is concerned with the recission of a legal aid certificate and not the discharge of a certificate.  In the case of the rescission of a certificate regulation 86(a) provided that the Legal Aid Board (or the LSC) should

“have the right to recover from the person to whom the certificate was issued the costs paid or payable under regulation 84(b) less any amount received from him by way of contribution”.

Regulation 84 provided

           “Upon the determination of a retainer under regulation 83–

(a) the costs of the proceedings to which the certificate related, incurred by or on behalf of the person to whom it was issued, shall, as soon as is practicable after the determination of the retainer, be submitted for taxation or assessment; and

(b) the fund shall remain liable for the payment of any costs so taxed or assessed.”

Thus under regulation 86(1)(a), on rescission of a certificate, there is a right to recover from the person to whom the certificate was issued the costs of the proceedings. The LSC could bring an action against the formerly assisted person for the amount of the costs. By way of contrast, in the case of a discharge of a certificate, there is a right to recover from the assisted person only the amount of any unpaid contributions.  Regulation 86(2) provides

“(2) Where a certificate has been discharged, the person to whom the certificate was issued shall remain liable for the payment of his contribution (if any) as determined or redetermined, up to the amount paid or payable by the Board under regulation 84(b) and, where he continues to take, defend or be a party to the proceedings to which the certificate related, section 17(1) of the Act shall apply in so far as the costs were incurred while he was an assisted person”.

The costs, after deduction of the amount of any contribution paid, is a charge on property recovered or preserved but if no property is recovered or preserved, the LSC cannot recover these costs against the assisted person whose certificate has been discharged.

23.       In LSC v. Henthorn [2011] EWCA Civ 1415 the issue was when time starts running under the Limitation Act 1980 in relation to a claim by the LSC for the recovery of an alleged overpayment of money paid to counsel on account of fees, in respect of work done under the Legal Aid Certificate.  It was common ground that section 9 of the Limitation Act 1980 applied.  Regulation 100(8) provides

“Where, after taxation or assessment, payments made under this regulation are found to exceed the final costs of the case, the solicitor or counsel (if any) shall, on demand, repay the balance due to the fund and, where the total costs exceed any payments made under this regulation, the balance shall be paid from the fund”.      

The plain and natural reading of the regulation was that time does not start running until the assessment has occurred.   Time did not begin to run against the LSC in respect of claims falling within regulation 100(8) until the assessment there referred to had taken place.   

24.       I was not referred to Yorkshire Bank Finance Ltd.  v. Mulhall [2008] ECA Civ 1156. I consider that that case provides some assistance.  The issue in that case was whether a judgment debtor was entitled to have a charging order set aside where the creditor had taken no steps to enforce it for more than 12 years from the date when the order was made.  The Court of Appeal held that he was not so entitled.  A charging order is by statute enforceable as an equitable charge.  The Court of Appeal considered both sections 20 and 24 of the Limitation Act 1980.   The Court of Appeal noted that an equitable chargee has no right to possession and therefore section 15 of the Limitation Act 1980 does not apply – see para 14.  As section 15 does not apply, section 17 of the Limitation Act 1980 does not apply to extinguish the interest of the chargee – see per Lloyd LJ at para 35 and per Etherton LJ at para 39.  Lloyd LJ said that even if section 20(1) of the Limitation Act 1980 could apply in the case of a charging order, it did not apply to any of the normal steps taken to enforce a charging order, namely an application for an order for sale and for possession for the purposes of sale – see para 33.  If the owner of land subject to a charging order wanted to clear the charging order from his title, even where it had been made more than 12 years earlier, he could only do so on terms that he paid all principal and interest.

25.       This case is of assistance because it is authority for the following propositions of law

(1) that section 15 of the Limitation Act 1980 does not apply to a charge (other than a charge by way of legal mortgage) because a chargee has no right to possession;

(2) that section 17 does not apply to extinguish the charge after the expiry of 12 years from the date on which it was granted; and

(3) that the owner of the land charged can redeem only on payment of the principal and interest, even where more than 12 years has expired from the charge coming into existence.

 

The parties’ submissions

26.       On behalf of Mr and Mrs Taylor, Mr Richard Taylor advanced two arguments. First, he submitted that the failure to comply with regulation 119 meant that the statutory charge did not arise. Although the solicitor had certified on the bill that Mr and Mrs Taylor had no financial interest in the detailed assessment, this was incorrect.  Mr Taylor did not refer me to any authority as to the consequences of a failure by the solicitor to comply with regulation 119.

27.       Second, Mr Taylor submitted that the statutory charge was barred by limitation or that the right of the Lord Chancellor to recover any sum under the statutory charge was barred by limitation.  He said firstly, that there was a contract in place between the LSC and Mr and Mrs Taylor and that the 6 years limitation period under s. 5 applied; secondly, that the time limit in section 9 applied as the amount recoverable under a statutory charge was a sum recoverable by statute; thirdly, that section 15 applied; and fourthly, that section 20 applied as the sum was a sum secured by a statutory charge and that a statutory charge was within the phrase “a mortgage or other charge” in that section. 

 28.      Counsel for the Lord Chancellor, Mr Havenhead submitted in answer firstly, that the failure by the solicitor to carry out his obligations to Mr and Mrs Taylor under regulation 119 did not mean that the statutory charges had not arisen and could not be protected by entry of restrictions and secondly, that there was no limitation period preventing the entry of restrictions to protect the legal aid charge. 

29.       As for the first argument, section 16(6) provided that “ a sum equal to any deficiency by reason of the [assisted person’s] contributions being less than the net liability of the Board on his account shall be a first charge for the benefit of the Board on any property which is recovered or preserved for him in the proceedings”. The charge arises when the property is recovered or preserved.  The existence of the charge does not depend on the assessment by the court of the assisted person’s costs.  If it did so, the assisted person would be able to defeat the charge by disposing of any property recovered or preserved in the period between recover and completion of the assessment of his costs.  The charge was therefore in existence prior to the date when Mr and Mrs Taylor’s solicitors failed to comply with their obligations under regulation 119.  That failure did not therefore stop the charge from arising.  Furthermore, there is nothing in regulation 119 to provide that the consequence of a failure by the solicitor to comply with regulation 119 is that any property recovered or preserved by the assisted person is freed from the statutory charge. 

30.       As for the second argument, I do not accept that the statutory charge should not be protected by the entry of the restriction.  If the Lord Chancellor takes steps to enforce the legal aid charge, he will not bring an action against Mr and Mrs Taylor on simple contract within section 5 of the 1980 Act, or bring an action for sums recoverable from them by statute under section 9 of the 1980 Act.  The Lord Chancellor cannot bring an action to recover the land the subject of the statutory charge; he never had possession and although section 38(7) of the Limitation Act 1980 extends section 15 to include a right to enter into possession of land, a chargee (as opposed to a mortgagee) has no right to enter into possession of land. Though the Lord Chancellor may be barred from “bringing an action to recover a principal sum” under section 20 of the Limitation Act 1980, this section does not apply to prevent the Lord Chancellor from bringing proceedings for an order for sale and for possession for the purposes of sale.  The expiry of the period in section 20 of the Limitation Act 1980 will not extinguish the charge – see Yorkshire Bank Finance Ltd. v. Mulhall [2008] EWCA Civ 1156 per Etherton LJ at para 39. The statutory charge will remain in existence until redeemed.  The Lord Chancellor is therefore entitled to have the statutory charges protected by registration of the restrictions.

 

Conclusions

31.         I shall direct the Chief Land Registrar to give effect to the application of the Lord Chancellor.  The statutory charges exist over the respective beneficial interests of both Mr and Mrs Taylor.  The Lord Chancellor is entitled to protect the charges by the entry of the appropriate form of restrictions, being a restrictions in form JJ.

 

Costs

32.       My preliminary view is that Mr and Mrs Taylor must pay the Lord Chancellor’s costs of the proceedings.  The usual rule is that the losing party pays the costs of the winning party.  I know of no reason why it would not be just to so order is this case.  Any party who wishes to submit that some different order ought to be made as to costs, must serve written submissions on the Tribunal and on the other party by 5pm on 5^th May 2016.

 

 

BY ORDER OF THE TRIBUNAL

 

 

DATED THIS 21^st APRIL 2016