[2023] UKUT 284 (LC)

Thereafter the precise course of events is less clear. A letter before action settled on behalf of the respondents later asserted that NVC had repeatedly and falsely represented that it had made applications to the Land Registry to register charges. On 18 December 2014 the respondents demanded repayment of the money advanced. I do not know whether they had yet become aware that NVC was taking steps to sell the houses which had by now been built on the various plots.

Three of the proposed sales were to the appellants, who entered into contracts with NVC towards the end of 2014 or early in 2015. Each contract was between NVC and one of the couples and was for the grant of a lease of one of the plots for a term of 999 years. Pursuant to their contract Mr Yarnold and Mr Broadbent purchased a lease of plot 1 dated 17 December 2014 which their solicitors attempted to register using a form AP1 which was received by the Land Registry on 27 January 2015. Mr and Mrs Lyon new lease of plot 3 was granted on 30 January 2015 and an application to register it was made on 3 February 2015. Mr and Mrs Owen were granted a lease of plot 5, also on 30 January 2015, and an application to register it was made on 17 February. The same firm of solicitors, Nyland and Beattie, acted for each of the appellants in these transactions.

When they were made aware of the applications to register leases Ms Ziga and Dr Razoq objected to them.

Each of these applications was received by the Land Registry after 23 December 2014, the date on which the Registry received an application by Ms Ziga dated 18 December for a restriction to be entered against titles GM 514222 and GM 554260 in respect of plots 1-5, 7 and 8. The application was made using a single Form RX1 naming Ms Ziga and Dr Razoq as the applicants, and the restriction requested was in the following terms:

The application explained that the respondents had advanced money to the registered proprietor under a joint venture to develop the land, that representations had been made to them by the registered proprietor that their beneficial interest would be protected by a first legal charge on the estate, which has not yet been registered, and that they were concerned that they would lose their security if this restriction was not entered. In the course of exchanges with the Land Registry the basis of the application was refined and came to focus on section 42(1)(a) and the prevention of unlawfulness. The unlawfulness in question was identified as the disposition of the registered estates in breach of contract.

The Land Registry considered the application for entry of a restriction at some length before initially concluding that it was inadmissible and should be cancelled. Its reasons were explained at length in a decision letter dated 8 July 2016, the substance of which was follows:

The respondents challenged the Land Registry’s July 2016 decision to cancel their application in judicial review proceedings which culminated on 12 March 2018 in a decision of His Honour Judge Barker QC (sitting as a judge of the High Court) (R (Sensar Ltd and Azdar Ltd) v The Chief Land Registrar [2018] EWHC 888 (Admin)). The Judgequashed the decision and remitted the application to the Chief Land Registrar for reconsideration. The foundation of the Judge’s decision was his apparent acceptance (contrary to the view of the Land Registry) that the JV Agreement did include a requirement that the consent of the respondents was to be obtained before any disposition. At paragraph [50] he paraphrased the agreement as:‘a form requiring consent in the following terms, "The property is not to be sold without the consent of either Senada Ziga (Sensar Limited) or Adil Razoq (Azdar Limited)"’. He went on at paragraph [57] to dismiss the Registrar’s argument that a simple breach of contract could not amount to “unlawfulness” for the purpose of section 42(1)(a) of the 2002 Act, for these reasons:

In his submissions in this appeal, Dr Razok relied heavily on Judge Barker QC’s observations about the effect of the JV Agreement, but he recognised that they were not determinative of any issue before this Tribunal. As the Judge himself had explained at paragraph [29], his decision was a review of a decision of a public authority by a judge who was not in a position to substitute his own view of the correct decision for that of the Land Registry. He was persuaded that “the decision taken was not based on a sufficiently careful review of the documents lodged, supplemented by the raising of appropriate requisitions” and (whatever view he took of the meaning of the agreement) it was for that reason that the challenge to the decision to cancel the applications succeeded.

When the application was remitted to the Land Registry it invited representations from the appellants, whose solicitors asserted that the JV Agreement contained nothing which restricted the disposition of the property by NVC. Such a disposition would therefore not be a breach of contract on the part of NVC and would not amount to unlawfulnesswithin the ambit of section 42(1)(a). After further consideration, and after initially indicating that the objections would be rejected and that entry of the restriction would proceed, the Land Registry eventually concluded (without giving reasons) that the appellants’ objections to the restriction were not groundless. On 21 December 2018, it referred the applications for restrictions and the appellants’ objections to the FTT.

Dr Razoq and Ms Ziga were dissatisfied with the Land Registry’s decision and again sought and obtained permission to apply for judicial review. The FTT stayed its proceedings pending the judicial review which concluded on 5 January 2021 with a determination by Morris J (R (Sensar Ltd and Azdar Ltd) v The Chief Land Registrar [2021] EWHC 13 (Admin)). His conclusion was that, notwithstanding the failure to give reasons and other procedural unfairness, the Land Registry had been entitled to conclude that the appellants’ objections were not groundless and that the statutory scheme required that those objections be considered by the FTT before the entry of a restriction could proceed.

Once again, it is not suggested that Morris J’s decision is determinative of any issue in this appeal, but it was the respondents’ case on the second judicial review that the JV Agreements were only capable of one interpretation, so it was necessary for the judge to consider their effect. He did so at [120]-[123], including the following:

“120.

[…] It is arguable, that, as a matter of construction of the JVA, the contract itself does not impose a consent requirement; rather it imposes a requirement to register a CH1 which in turn, if and when registered, will impose a requirement of consent. […]

122.

The Claimants' strongest argument that a disposition would amount to a relevant breach of contract is the contention that, because of the prior breach of contract in failing to register a CH1 charge, (and thereby failing to create a requirement of consent), a subsequent disposition by NVC without the Claimants' consent is itself a breach of contract.

123.

That the failure to register the CH1 charge is a breach of contract seems to me to be very arguable indeed. But the question is whether disposition without the Claimants' consent, in circumstances where there has been a prior breach by failure to register the CH1 (and where, but for that breach, disposition without consent would have been impossible or a breach of the CH1 or otherwise unlawful) is itself a breach of contract. That is a contention which is not bound to succeed and certainly not one which no reasonable decision maker could find was bound to succeed.A contention that the breach of contract there relied upon has already occurred prior to the disposition (and was not constituted by the disposition itself) could not be regarded as hopeless.”

The outcome of the second judicial review application was therefore that the appellants’ objections to the entry of the respondents’ restriction, and the appellants’ own applications for registration of their leasehold titles, to which the respondents’ objected, were all allowed to proceed to the FTT for determination.

I can briefly complete the account of the respondents’ dealings with NVC. As well as applying to register the restriction the two respondent companies commenced a separate action in the High Court in January 2015, eventually obtaining summary judgment against NVC for more than £580,000 plus interest. On 14 August 2015 final charging orders were registered against NVC’s interest in the two Springbank Gardens titles. Many others had been induced to lend money to NVC on the promise of similar gains, and eventually, on 11 February 2016, NVC was wound up by order of the High Court under the Insolvency Act 1986 on grounds of lack of transparency and lack of commercial probity.