LRA The Applicant, now in administration, was in business in 2007 to 2008 buying residential properties from owners in occupation for full market value, payable as to 70 per cent on completion and as to the 30 per cent balance, subject to conditions, at the expiry of ten years. At the same time it entered into assured shorthold tenancies of 10 years with the vendors at a rack rent with the vendors having the right to a further tenancy at the end of the 10 years. The vendors sought to protect their rights in respect of the 30 per cent balance by registering a notice against the freehold title at the Land Registry. The Administrators of the Applicant sought to have the notices cancelled.
Held: 1 Where a vendor is to be paid part of the purchase price on completion and the balance at a later date no unpaid vendor’s lien arises in the absence of specific provision for one: Winter v Lord Anson, (1823) 1 Sim and St. 434; Clarke v Royle, (1830) 3 Sim.499; Buckland v Pocknell, (1843) 13 Sim.406; Earl of Jersey v Briton Floating Dock Co., (1869) LR 7 Eq 409; Re Albert Life Insurance Co., (1870) LR Eq 164; Re Brentwood Brick and Coal Co., (1876) LR 4 Ch D 562; Capital Finance v Stokes,  1 Ch 262.
2 Even where an unpaid vendor’s lien would otherwise arise by implication, it can be excluded by express provision in the sale contract: Qayoumi v Oakhouse Property Holdings plc,  1 BCLC 352.
3 The provisions in the contracts in the present test cases which provide that there is to be no unpaid vendor’s liens do not fall foul of the Unfair Terms in Consumer Contract Regulations 199: UK Housing Alliance v Francis,  EWCA Civ 117; Director General of Fair Trading v First National Bank plc,  1 AC 481; Office of Fair Trading v Abbey National plc,  1 AC 696.
4 No facts have been established in any of the three test cases dealt with in this decision which could give rise to any constructive trust or estoppel which could have arisen either prior to or at the time that the Applicant went into administration or as a result of the administration.
5 In any event, it is not possible to have a remedial constructive trust or equity by way of estoppel which arises in the course of the administration of a company: Re Polly Peck Internations plc (in administration) (No.2),  3 All ER 812.
6 There is no right of set off of rent or other payments due to the Applicant under tenancy agreements granted to the vendors at the time of the sales against the outstanding balance of the purchase price except insofar as such right may arise in the course of the administration or liquidation of the Applicant. In particular there is no right of set off against a third party to whom the property has been sold on by the Applicant: Edlington Properties Limited v Fenner and Co. Limited,  3 All ER 1200.
7 The contingent right to receive the balance of the purchase price at the end of 10 years does not affect a registered estate or charge within the meaning of section 32 of the Land Registration Act 2002.
8 Accordingly no notice in respect of that right can be registered at the Land Registry to protect the right and the notices so registered must be vacated.
 EWLandRA 2011 – 0604
England and Wales
Updated: 22 November 2021; Ref: scu.516922