A High Court judgment allowing an appeal against an order of the Property Registration Authority (the PRA) has significant implications for the registration of charges over future acquired property.

The decision of Mr. Justice Henry Abbot, delivered on 11 March 2013, calls for an expansion of the sub-rules of the PRA and the creation of new forms to accompany applications in order to provide sufficient details allowing for the registration of mortgages executed over future acquired property. The written judgment has only recently been made available to the public.

Background to the case

Anglo Irish Bank Corporation Limited (Anglo) made an appeal under Section 19(1) of the Registration of Title Act, 1964, against an order of the deputy registrar refusing the registration of a charge, executed on 16 December 2004, over a folio purchased by a company (the Company) on 12 February 2005. The deputy registrar of the PRA refused the application for registration on the grounds that the Company was neither the registered owner nor entitled to be registered as owner of the folio at the date of execution of the charge. The Deed of Mortgage and Charge (the Mortgage) entered into by the Company included a provision at clause 4.2 for a first fixed charge over all land, hereditaments and premises of any nature or kind and of any tenure which the Company may at any time hereinafter acquire or become entitled to and the Company assented to the registration of such charge as a burden on the property.

Arguments against registration

The PRA argued that whilst the provisions of clause 4.2 did provide for a first fixed charge over future acquired property, in order to properly charge the Company’s property a further Deed of Fixed Charge relating specifically to that property was required. The basis for this argument was clause 5 of the Mortgage which called for the Company to execute and deliver such documents and do all such acts and deeds as shall be necessary to grant to Anglo a specific charge on such property. Due to a complex set of circumstances, the Company was unable to execute such further documents necessary to create a first fixed charge and therefore Anglo sought to rely on the Mortgage as security for registration.

The PRA also argued that the Mortgage was not in the form prescribed by the Land Registry Rules which requires the folio to be identified in order for it to be registered. As the Company did not own the property at the time the Mortgage was executed, there was no reference to the folio.

Decision of the Court

Justice Abbot rejected the PRA’s submissions and found that the appropriate time for considering whether the Company was the registered owner of a property is when the documentation is presented for registration and not before. Justice Abbot further found that the short form of charge used in practice and recommended by the PRA as complying with the Land Registry Rules contains only basic details and does not reflect the complex contract that is entered into between the parties.

Justice Abbot allowed Anglo’s appeal and suggested that the PRA consider an expansion of the sub-rules relating to the types of instruments of charge which may be submitted for registration and perhaps provide for a form to accompany the application setting out sufficient information for the registrar to properly ascertain the circumstances and allow for registration. Such a form would assist in ensuring genuine registrations and prevent fraudulent or questionable applications.

Future of security for future acquired property

Companies, in entering into Mortgages and Charges which provide for security over future acquired property should be cautious in ensuring that they understand the implications in circumstances where it appears no further steps are required by Mortgagees to obtain fixed security in the future over any land acquired.