Loan Sales: Important Judgment In Relation To Registered Land

Author:Mr Kenneth Egan, Simon Hannigan, William Day, John Donald, Orla O'Connor and Cormac Kissane
Profession:Arthur Cox

A judgment of Ms Justice Baker delivered on 29 July 2016 will be of interest to purchasers of loan portfolios, insolvency practitioners and conveyancers alike.

In Harrington v Gulland Property Finance Limited, the High Court granted an interlocutory injunction restraining a receiver from taking possession of certain registered properties owned by the Harringtons. The Court held that the Harringtons had made out an arguable case that the receiver was not validly appointed because Gulland - the party purporting to make the appointment having acquired the loans and related charge from IBRC - was not yet registered as owner of that charge in the Land Registry.


Gulland acquired the interest of IBRC in the Harringtons' loans and security in February 2015. In February 2016 Gulland sought to appoint a receiver over the Harringtons' properties. Following an ex parte (emergency) application by the Harringtons, the High Court granted an injunction restraining the receiver from acting. A further hearing was then held on whether the injunction should remain in place until a full trial of the case. Ms Justice Baker's judgment was given after that hearing.


Although Gulland had acquired the relevant loans secured on the units from IBRC (and this fact was not in dispute), Gulland had not yet registered the transfer of the charge over the units at the Land Registry. This registration is achieved by filing a "Form 56", which is typically executed by a seller at completion of a loan purchase, along with a "global" deed of transfer of all the seller's rights in respect of the relevant loans and security. Gulland had not yet filed its Form 56 at the time that it purported to appoint the receiver, and therefore was not registered as the owner of the relevant charge at that time.

The plaintiffs argued that until such time as Gulland was registered as owner, it had no interest in the charge over the property and that, accordingly, Gulland did not have the power, whether contractual or statutory, to appoint the receiver at the date of the deed of appointment.


The High Court held that where a charge over registered land has been transferred, Section 64(2) of the Registration of Title Act 1964 should be interpreted to mean that until a Form 56 is registered in the Land Registry, no interest in the charge, including contractual rights arising under that charge, is conferred on the transferee. On that basis, the High...

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