REF/2005/0256

ADJUDICATOR TO HER MAJESTY’S LAND REGISTRY
LAND REGISTRATION ACT 2002

IN THE MATTER OF A REFERENCE FROM HM LAND REGISTRY

BETWEEN
YORKSHIRE BANK PLC

APPLICANT

and

(1)	PHILIP ALFRED ELLIOTT
(2)	CAROLE ELLIOTT

RESPONDENTS

Property Address: 34 Labray Road, Calverton, Nottingham, NG14 6LB

Title Number:  NT108754

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

Sitting at: Mansfield County Court
On: 23 February 2007

Applicant Representation: Solicitor
First Respondent Representation: In person
Second Respondent Representation: None

___________________________________________________________________________

DECISION
___________________________________________________________________________

1.	For the reasons given below, I shall direct the Chief Land Registrar to reject the application made on 11 November 2004 to enter a restriction to protect an interim charging order.

2.	 By an interim charging order dated 25 October 2004 and made in the Nottingham County Court, the interest of the Second Respondent in the above property was charged with payment of £19163.15 plus interest and costs.  The charging order was made final by order dated 25 November 2004.  The original judgment had been given against her in March 2004.

3.	The property is registered at HM Land Registry in the name of both Respondents, who were once husband and wife.  Their divorce decree was made absolute, also in the Nottingham County Court, on 14 November 2003.

4.	Before the interim charging order was made final, notice of it had been served on the First Respondent, who had had written to the court to say that he would be unable to attend the hearing on 25 November 2004, as he would be abroad, but that he was divorced from the Second Respondent, and that she was in the process of taking her name off the deeds to the property in respect of which she had no rights.

5.	The Second Respondent was adjudged bankrupt by order of the Nottingham County Court on 24 February 2005.  I am unclear why the Second Respondent was added as a party to this reference in those circumstances, rather than her trustee in bankruptcy, but I understand that the trustee is not pursuing any claim to an interest in the property.

6.	The primary contention of the Applicant appears to be that the making of the final charging order finally determined the question whether the Second Respondent had any interest in the property when the interim and final charging orders were made.  I reject that contention.  The First Respondent was not a party to the proceedings in which the final charging order was made.  Had the District Judge who made the order wished to determine the question whether there was anything in the contention of the First Respondent that his ex-wife no longer had a beneficial interest in the property, the District Judge would have had to adjourn the proceedings and add the First Respondent as a party, giving him an opportunity to appear to give evidence and argue his case.

7.	There is no evidence before me of what took place before the District Judge or of how the District Judge dealt with the First Respondent’s letter, but a common course in these circumstances is to make the charging order absolute, leaving the question whether there was any beneficial interest for it to bite on to be dealt with later, for example on an application for an order for sale, if necessary.  Whether that was so or not, however, nothing the District Judge did could involve any determination binding on the First Respondent as to whether the Second Defendant had any beneficial interest in the property upon which the charging order could bite.

8.	The real issue on this reference is conveniently summarised by the Assistant Land Registrar in a letter to the Applicant’s solicitors, Jeremy Sutcliffe & Co. dated 22 December 2004.  The First Respondent had contended that after an oral agreement had been made in or before July 2004, in effect for the Second Respondent to come off the Register and transfer to him her beneficial interest in the property, he had paid her the agreed sum of £5000 which she was to receive as consideration for that promise.  The Assistant Land Registrar noted that there was nothing in writing to satisfy section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 but pointed out that section 2(5) of that Act stated that nothing in the section affected the creation or operation of resulting, implied or resulting trusts.  He believed that following the payment of the money by the First Respondent to the Second Respondent there was a constructive trust created, so that the Second Respondent would be a bare trustee for the First Respondent.  On that basis, he pointed out, the charging order would have no effect, as there would be no beneficial interest to charge.

9.	This point was ignored throughout by Jeremy Sutcliffe & Co., and it appeared to take by surprise the trainee solicitor who was instructed to attend the hearing.

10.	The First Respondent’s case was clearly set out.  The Second Respondent had signed a statement dated 1 July 2004 accepting the sum of £5000 in full and final settlement and agreeing to be taken off the deeds of the property.  He had paid her £5000 on this basis following her oral agreement to that effect and she no longer had any beneficial interest.  There was also a written statement from the Second Respondent dated 30 November 2004 that the only reason she had not taken her name off the deeds was that she could not afford to pay anything to do so, a statement which has the ring of truth when one remembers that she owed the Applicant alone around £20000 and was made bankrupt about 3 months later.

11.	The First Respondent gave evidence at the hearing, which I accept, confirming the agreement and that he had paid the Second Respondent £5000 in return for the promise to take her name of the title deeds, which I have no hesitation in construing as an agreement that on payment of the agree amount, the First Respondent was to become sole beneficial owner of the property.  The trainee solicitor appearing for the Applicant did not seek to question what the First Respondent said.  

12.	Further, he conceded, rightly, that once the First Respondent had acted in accordance with the agreement and to his detriment by paying the £5000 to the Second Respondent, the Second Respondent held her beneficial interest on a constructive trust for the First Respondent.  

13.	He sought, however, faintly to contend that as there was no decision in the divorce proceedings with regard to the assets of the marriage, it remained possible for the Second Respondent to apply for a share of the property.

14.	Even if this is theoretically correct, ignoring the effect of the subsequent agreement, and the fact that both parties appear to accept that the property currently has negative equity because of its defective construction, a theoretical right to apply for financial provision that might include an interest in the property does not mean that in October and November 2004 she had any beneficial interest in the property.  At best she had some future right, which she plainly did not want to exercise, to apply to have such an interest transferred to her.

15.	In the circumstances, at the dates of the interim and final charging orders, the Second Respondent had no beneficial interest in the property, and therefore no interest which could be the subject of the charging order.  The First Respondent is entitled to raise this issue in objecting to the application to register the restriction in respect of the charging order and his objection succeeds.

16.	The First Respondent indicated that he had not incurred any costs in the course of this reference, and on that account only there will be no order as to costs.

Dated this 27th day of February 2007

By Order of The Adjudicator to HM Land Registry