Blemain Finance Ltd v Goulding

The Court of Appeal refused permission to appeal a recorder's order dismissing the applicant's attempt to challenge a possession claim by Blemain Finance. The key legal principle was the protection given by section 86(5) of the Land Registration Act 2002 to a person taking a registrable disposition for valuable consideration who acts in good faith and without notice or restriction; that provision meant Blemain acquired a title good against the trustee in bankruptcy. The court accepted the recorder's factual findings that the applicant was not occupying the property as his sole or principal residence at the date of his bankruptcy and that there was no basis to overturn findings about the applicant's asserted signature; accordingly the applicant had no realistic prospect of establishing that the trustee's title could defeat Blemain's registered charge. The renewed application for permission to appeal was therefore refused.

This is a renewed application for permission to appeal to the Court of Appeal against a recorder's decision dismissing an application by the occupier, Mr Goulding, to be added as a defendant and to resist an order for possession obtained by Blemain Finance Limited. The underlying facts were that Mr Cugley became registered proprietor in February 2003 after Mr Goulding transferred the property shortly before his bankruptcy; a second legal charge was granted to Blemain in July 2007 and registered.

(i) Nature of the application: permission to appeal a recorder's order dismissing Mr Goulding's application to set aside the possession order and to challenge Blemain's title.

(ii) Issues framed by the court:

• whether the transfer to Mr Cugley was voidable under section 284 of the Insolvency Act 1986 so that title vested in the trustee under sections 283 and 306;
• whether, by reason of occupation, the property reverted to Mr Goulding under section 283A of the Insolvency Act 1986;
• whether the trustee's title (if existing) could defeat Blemain's registered charge in light of the Land Registration Act 2002, in particular section 86(5); and
• factual issues as to occupation and the validity of a letter of consent signed by Mr Goulding.

(iii) Court's reasoning: the recorder's factual findings that Mr Goulding did not occupy the property as his sole or principal residence in February 2003 but only from 2005 meant that the section 283A argument failed. The recorder also required the applicant to prove any alleged forgery; there was no realistic prospect of overturning those findings on appeal. More fundamentally, the court concluded it was not seriously arguable that the effect of sections 283 and 306 of the Insolvency Act 1986 could nullify the effect of the Land Registration Act 2002. Section 86(5) protects a person taking a registrable disposition where the disposition is for valuable consideration, the taker acts in good faith, and there is no notice or restriction; the recorder found those conditions satisfied in favour of Blemain. The trustee had the procedural route under the Land Registration Rules 2003 (rule 168) to apply for registration, and the trustee's omission to register did not deprive Blemain of a protected title. On that basis the renewed application for permission to appeal was refused.

Permission to appeal refused. The court agreed with previous refusals and the recorder's findings of fact and held that, on the law, section 86(5) of the Land Registration Act 2002 protected Blemain's registered charge because it was a registrable disposition for valuable consideration taken in good faith and without notice or restriction; therefore the applicant had no real prospect of success.

Renewed application for permission to appeal to the Court of Appeal after Sir Stanley Burnton refused permission on the papers on 25 July 2013. The possession order was originally made in Bristol County Court by Deputy District Judge Cronin on 20 January 2009. Recorder Stead dismissed the applicant's application by order dated 3 June 2013. The renewed application was heard in the Court of Appeal and refused on 17 December 2013 ([2013] EWCA Civ 1630).