Dean McGuinness & Anor v Edward Avery Gee & Ors
[2023] EWHC 3283 (Ch)
Darren Stuart Yarnold & Ors v Senada Ziga & Ors
1 December 2023
[2023] UKUT 284 (LC)
Upper Tribunal
Investors' money wasn't secured properly on a property before it was sold to someone else. The court decided that the agreement to secure the money *implicitly* meant the property couldn't be sold before that happened. Therefore, the investors were allowed to stop the sale to protect their investment.
Key Facts
- •Respondents invested in a property development scheme, expecting their investment to be secured by a legal charge.
- •Before the charge was registered, the property owner sold parts of the property to the appellants.
- •Respondents sought a restriction on the property title to prevent further dispositions.
- •The issue is whether the respondents are entitled to a restriction under section 42(1)(a) of the Land Registration Act 2002 to prevent unlawfulness.
- •The joint venture agreements contained an implied term that the land would not be sold before the charge was registered.
- •Appellants argued that the agreements did not contain such a term and that respondents had alternative remedies.
Legal Principles
Implication of contractual terms: A term will be implied if necessary to give business efficacy to the contract or if it is so obvious it goes without saying.
Marks & Spencer plc v BNP Paribas Securities Trust Co (Jersey) Ltd [2015] UKSC 72; Ali v Petroleum Company of Trinidad and Tobago [2017] UKPC 2; Yoo Design Services Ltd. v Iliv Realty Pte Ltd [2021] EWCA Civ 560; Hallman Holding Ltd v Webster [2016] UKPC 3
Section 42(1)(a), Land Registration Act 2002: The registrar may enter a restriction if it appears necessary or desirable to prevent invalidity or unlawfulness in relation to dispositions of a registered estate.
Land Registration Act 2002
Unlawfulness in the context of s.42(1)(a) can encompass breaches of contract that risk the loss of a contractual interest.
R (Sensar Ltd and Azdar Ltd) v The Chief Land Registrar [2018] EWHC 888 (Admin)
Outcomes
Appeal dismissed.
The Upper Tribunal found an implied term in the joint venture agreements preventing the sale of the property before registration of the legal charge. The sale to the appellants breached this implied term, constituting 'unlawfulness' under s.42(1)(a) of the Land Registration Act 2002. The restriction was therefore justified.
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