In the matter of Rodus Developments Limited (in administration)

The court granted the Joint Administrators' Paragraph 63 and Paragraph 71 applications to the extent necessary to determine issues arising from a unilateral notice lodged at HM Land Registry by Actua Investment LLC. The judge concluded that any equitable charge said to have been created by the April 2018 facility agreement was void for non-registration under Part 25 of the Companies Act 2006 (in particular sections 859A, 859E and 859H). Permission was given to serve the applications out of the jurisdiction and retrospective alternative service was ordered by post and email on Actua's UK solicitors, Brandsmiths. The court ordered cancellation/vacation of Actua's pending unilateral notice at HM Land Registry and stayed the Paragraph 71 application; costs were awarded to the Joint Administrators.

Background and parties:

• The company, Rodus Developments Limited, a special purpose vehicle, owned freehold properties in England developed into residential units. The applicants were the joint administrators (Bushby and Edwards). The respondent was Actua Investment LLC, a Dubai company which had applied for a unilateral notice at HM Land Registry asserting an equitable charge said to arise under a facility agreement dated 3 April 2018.

Procedural posture and relief sought:

• The Joint Administrators applied under paragraph 63 and paragraph 71 of Schedule B1 to the Insolvency Act 1986 for declarations and consequential orders to remove or defeat the unilateral notice and to obtain permission to serve the applications out of the jurisdiction where necessary. The respondent did not attend or file substantive evidence.

Key facts:

• Actua claimed a loan of about 2.1 million and an equitable (and purported legal) charge over the properties; no charge had been registered at Companies House. The administrators discovered the unilateral notice and sought to challenge it. Multiple attempts to serve Actua in Dubai failed; documents were delivered to Actua's UK solicitors, Brandsmiths, who declined to accept service but had previously acted for Actua in this matter.

Issues framed:

• Whether the court should permit service out of the jurisdiction or otherwise order alternative service; whether the equitable charge (if any) was void for non-registration under the Companies Act 2006; whether the unilateral notice should be cancelled or vacated; and whether substantive relief could properly be granted in Actua's absence.

Court's reasoning:

• The judge ruled that the claims fell within the relevant gateways for service out and that the administrators had reasonable prospects of success. On the substantive point the court accepted for present purposes that an equitable charge could have arisen as security over future property when the company acquired the land, but that any such equitable charge was required to be registered under Part 25 CA 2006 and was not registered within the statutory period. Consequently the charge was void as against the administrators and creditors by section 859H. The court found Actua had not engaged to answer the points and had made service impracticable; alternative retrospective service on Brandsmiths by post and email was appropriate. Final relief was granted on the Paragraph 63 application: declaration that the charge is void, order that Actua's HMLR application/unilateral notice be cancelled/vacated and treated as withdrawn, and costs awarded to the administrators. The Paragraph 71 application was stayed pending further order.

Wider context: the judgment notes the court's power to order alternative service notwithstanding international judicial assistance treaties and relies on established authority on service and on the court's powers to cancel or vacate entries at the Land Registry.

The court granted the Joint Administrators' applications. Permission was given for service out or, in any event, the judge found the statutory thresholds for service out satisfied. Alternative retrospective service by post and email on the solicitors who had acted for Actua was ordered. The court declared the equitable charge void for non-registration under Part 25 of the Companies Act 2006 (sections 859A, 859E and 859H), ordered Actua's pending unilateral notice at HM Land Registry to be cancelled and vacated forthwith and stayed the Paragraph 71 application. Costs were awarded to the Joint Administrators. The rationale was that the charge was unregistered and therefore void as against administrators and creditors, and Actua had failed to engage and made direct service impracticable.