Mortgage Five Zero Limited v The Secretary of State for Business and Trade

Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 governs contracts for the future creation or transfer of interests in land. It does not govern a deed which itself creates or transfers an interest. A properly executed mortgage deed can therefore create a legal charge without execution by the mortgagee.

A High Court judge must accept a relevant Court of Appeal decision unless and until it is reconsidered by that court. A company director’s limited authority after winding-up does not extend to issuing a new claim based on the same hopeless argument. For an extended civil restraint order, the court may treat the person controlling litigation as the real applicant, even where another party is named.

The Company operated a business advising mortgagors that mortgage deeds were ineffective because they had not been signed by the mortgagee, relying on section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. Deputy ICCJ Agnello KC wound up the Company in the public interest.

The Company appealed and made applications for a stay, permission to appeal, leapfrog referral, extensions of time and related relief. It also issued a Part 8 claim seeking declarations about the section 2 argument. The Secretary of State and Official Receiver sought resolution of the outstanding applications and an extended civil restraint order against Mr Jason Campbell.

The central issues were whether the section 2 argument had any merit, whether the applications should proceed or be stayed, whether permission to appeal should be granted, and whether Mr Campbell was responsible for persistent totally without merit applications.

1. The applications for leapfrog referral and adjournment were dismissed and certified as totally without merit. There was no basis for doubting Helden v Strathmore Limited, which authoritatively established that section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 applies to contracts for the future creation or transfer of interests in land, not to deeds which themselves create or transfer those interests.

2. The court explained that a mortgage deed signed by the mortgagor and properly witnessed is effective as a deed under section 1(3) of the 1989 Act and creates a legal charge under section 53 of the Law of Property Act 1925. Mortgagee execution is not additionally required. Bank of Scotland Plc v Waugh concerned a defectively executed legal mortgage which could operate as a contract giving rise to an equitable mortgage; it did not establish a general requirement that both parties execute a legal mortgage deed.

3. The renewed stay application was dismissed. In a public-interest winding-up, the court had to weigh the harm of allowing the company to continue against the difficulty of unwinding the consequences of winding-up if an appeal succeeded. No reason had been shown for disturbing the earlier refusal of a stay.

4. Permission to appeal was refused. The proposed appeal had no real prospect of success and raised no other compelling reason. The High Court was required to accept the Court of Appeal’s decision in Helden as the law governing the issue. The application was certified as totally without merit.

5. The application to set aside Master Clark’s dismissal of the Part 8 claim was refused. A director’s limited continuing authority after winding-up did not extend to instituting a new claim, particularly one advancing the same misconceived argument. The claim and the set-aside application were properly treated as totally without merit and as issued personally by Mr Campbell.

6. An extended civil restraint order was made against Mr Campbell for three years. “Persistently” required at least three totally without merit applications together with an evaluation of the party’s overall conduct. The concept of a party included the real applicant behind the named litigant. The court considered who was actually responsible for the applications and who was intended to benefit from them. Mr Campbell was the real party behind the relevant groups of applications.

7. The Secretary of State and Official Receiver were awarded summary costs of £3,011.50 each for the extended civil restraint order application.

• High Court (Business and Property Courts): Deputy ICCJ Agnello KC made a winding-up order against the Company on public-interest grounds. The High Court dismissed the Company’s appeal-related applications, refused permission to appeal, and made an extended civil restraint order against Mr Campbell.