Prescott Place Freeholder Limited v Constantin Batin & Anor

A court order requiring compulsory transfer of a registered freehold can constitute an equitable interest in land from the moment it is made. The order’s proprietary effect is not defeated because statutory remedies remain available, terms remain to be fixed, or the purchaser may later withdraw. Where competing equitable interests are protected, Land Registration Act 2002 section 28 preserves priority according to the order of creation; section 29 does not displace that rule. A court may restrain conduct deliberately intended to frustrate the practical effect of its order where the claimant has a right to the ordered conveyance and there is a real risk of interference.

The judgment concerned consequential orders following an earlier trial judgment in proceedings arising from collective enfranchisement under the Landlord and Tenant Act 1987. The first defendant had been ordered to convey the freehold to the first claimant for £125,000. After that order, the defendants executed backdated equitable leases intended to reduce the value of the freehold and sought to preserve those interests by registration or actual occupation.

The court also considered an application by Together First Commercial Finance Ltd to be joined because its registered charge over the property was affected by the statutory conveyance. The central issues were whether the section 19 order was an interest in land, how priority would operate if the equitable leases were protected, whether the claimants had standing to seek injunctions, and whether injunctions should be continued and extended.

1. Joinder. Together was properly joined under CPR 19.2. The three conditions identified in Molavi v Hibbert [2020] EWHC 121 (Ch) were satisfied: an issue existed between Together and an existing party, it was connected with the matters already in dispute, and joinder was desirable for its resolution. The application was not defeated merely because it followed the trial judgment; Hotel Portfolio II UK Ltd v Ruhan [2022] EWHC 1695 (Comm) supported that conclusion.
2. Interest in land. The section 19 order was made against the registered proprietor and required conveyance of the freehold. Applying the general principles stated in North East Property Buyers [2014] UKSC 52 and National Provincial Bank Ltd v Ainsworth [1965] AC 1175, the order created an equitable proprietary interest from 25 October 2019. The analogy with a purchaser’s equitable interest under an uncompleted land contract was supported by Re Cary-Elwes Contract [1906] 2 Ch 143 and Jerome v Kelly [2004] UKHL 25. Jones v Mahmut [2018] 1 WLR 6051 did not conclusively determine the issue.
3. Priority. If the equitable leases were protected by notice or actual occupation, section 29 of the Land Registration Act 2002 did not displace section 28 because the interests were protected. Following Halifax v Curry Popeck [2008] EWHC 1992, the earlier equitable interest under the section 19 order had priority over the later equitable leases.
4. Injunctions. The claimants had standing because the defendants’ conduct threatened to invade the right to the ordered conveyance. The deliberate delay, failure to provide a truthful account of the original acquisition, and creation of backdated leases to reduce the freehold’s value justified injunctive relief. The existing injunctions were continued until conveyance, and the second defendant was restrained from entering actual occupation of Flats 36C and 36E. The alternative section 12B(5) application and the argument based on Welwyn Hatfield Borough Council v Secretary of State for Communities and Local Government [2011] 2 AC 304 were left undecided.

The parties were directed to agree the detailed order. The transfer was to be by Form TR1 on materially the same terms as the original transfer, for £125,000, with the payment mechanism respecting Together’s statutory rights.

The judgment was a first-instance consequential judgment following the Trial Judgment handed down on 3 March 2023. No citation for that earlier decision is stated.