Skelwith (Leisure) Ltd & Anor v Armstrong & Ors

A registered charge may be transferred beneficially before registration of the transferee. A person entitled to be registered as charge proprietor may exercise “owner’s powers” under the Land Registration Act 2002, but equitable ownership alone does not automatically confer every power of a registered proprietor.

An equitable assignee of the mortgage debt may nevertheless exercise the statutory power of sale if entitled to receive and give a discharge for the mortgage money under the Law of Property Act 1925. Lack of possession is not an independent bar to sale. A power of attorney will not validate a disposition where the purported attorney does not execute the instrument in the donor’s name or otherwise comply with the statutory requirements.

The claimants challenged contracts by which Polar Holdings Limited agreed to sell the Flaxby Golf Club to Flaxby Park Limited. The registered proprietor of the land was Skelwith (Leisure) Limited, while the registered proprietor of the legal charge was Alan Armstrong, who had assigned the charge and related debt to Polar.

Polar had not been registered as proprietor of the charge when it entered into the sale contracts. The claimants alleged that the contracts were invalid because Polar had not served a valid notice of assignment, was not registered as charge proprietor, and was not in possession as mortgagee. The parties sought opposing strike-out and summary judgment orders.

1. Summary disposal. The court could determine the legal issues summarily because the applications raised points of law requiring no further evidence and the parties had had an adequate opportunity to address them.
2. Possession. Possession was not a prerequisite to exercising a mortgagee’s statutory power of sale. The absence of possession therefore did not independently invalidate the contracts.
3. Registration and owner’s powers. Under sections 23 and 24 of the Land Registration Act 2002, a person entitled to be registered as proprietor of a charge may exercise owner’s powers. Those powers may extend to dealings with the charged land, including a power of sale. However, Mortgage Business plc v O’Shaughnessy showed that equitable ownership does not necessarily confer all powers of legal ownership. An equitable charge owner must establish that the particular power is exercisable by an equitable owner under the general law.
4. Power of sale. Polar’s equitable assignment of the mortgage debt made it entitled to receive and give a discharge for the mortgage money within section 106(1) of the Law of Property Act 1925. It could therefore exercise the power of sale under section 101(1)(i), whether or not notice satisfying section 136 had been served before the contracts were made.
5. Power of attorney. The contractual powers of attorney did not validate the sale contracts. Polar had not executed them in Skelwith’s name, and the statutory provisions concerning execution by or for corporations did not apply on the facts. The contracts were nevertheless valid on the section 106(1) basis.
6. The paragraph of the particulars of claim attacking the transactions on the pleaded grounds was struck out. The claimants’ application for judgment in their favour was dismissed. Unless the claimants successfully amended their pleadings, the proceedings against Flaxby Park were to be dismissed.