The High Court ruled that changing shares in a registered charge could be registered if the co-owners’ shares were capable of being ascertained and provided at first registration. It answered three of the Registrar of Titles’ four questions “Yes”, but answered the fourth “No”.
Mr Justice Henry Abbott delivered the judgment on 20 October 2006 in a reference under section 19(2) of the Registration of Title Act 1964. The Registrar had asked whether fluctuating shares in a charge could be registered, and whether the proposed description of those shares met the statutory and rules-based requirements.
The reference concerned an application by Allied Irish Banks plc and AIB Mortgage Bank to register a charge dated 12 April 2006, and to register the banks as owners of the charge as tenants in common. The banks’ submissions said their respective shares could change with future advances and differing amounts owed. They argued that a formula supplied to the Land Registry would allow the shares to be calculated.
The Registrar’s submissions opposed the application. They argued that the register had to show legal interests with sufficient precision, and that a formula relying on account information held by the banks would leave purchasers unable to establish the shares from the register. The Registrar also argued that changes in shares could amount to transfers of equitable interests, which could not be registered.
The judge distinguished co-ownership of a charge from co-ownership of land. He said a charge’s shares could vary as repayments were made or debts changed, and that the resulting shares could be established through ordinary conveyancing enquiries. In his view, differences caused by future advances or differential interest rates were not different in principle from differences arising from a borrower’s payment history.
He concluded that the Registrar’s rules still required each co-owner’s share to be ascertainable and provided at first registration, together with any formula used to calculate it. The judgment states that fluctuating shares could be registered “only in the case of a charge”. It distinguishes those interests from shares in land, which the judge described as static on the register.
The final answers were: (a) Yes; (b) Yes; (c) No. The source text then gives “Yes but only in the case of a charge” before those answers, apparently addressing the first question. The judgment does not include a separate operative order directing registration of the banks’ particular application, so the reference’s answers should not be read as confirmation that the application was registered.