Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 applies only to contracts for the future sale or disposition of interests in land and not to documents which actually create or transfer such interests.
An “unmeritorious argument” has been considered in Mortgage Five Zero Ltd v Secretary of State for Business and Trade [2023] EWHC 2654 (Ch) an appeal by MFZL against a winding up order made on a petition by the Secretary of State.
MFZL operated a business providing non-regulated legal services to members of the public with mortgage problems. These services offered the prospect that mortgagors could escape their repayment obligations and might themselves have claims against mortgagee banks and building societies because they did not comply with section 2 of the 1989 Act which required a mortgage deed to be executed both by the mortgagor and the mortgagee and not merely by the mortgagor customer alone.
It was authoritatively established in Helden v Strathmore [2011] EWCA Civ 542 that such an argument was hopeless and based on a fundamental misunderstanding of the reach and purpose of section 2, which is concerned with contracts for the future creation or sale of legal estates or interests in land, not with documents that actually create or transfer such estates or interests. So, a contract to transfer a freehold or leasehold interest or a contract to grant a mortgage in the future are covered by section 2 but an actual transfer, conveyance, assignment or mortgage are not.
Claims for rectification and indemnity by parties associated with MFZL, based on the proposition that registered charges on the claimants’ properties were void because the mortgage deeds failed to comply with section 2, were summarily dismissed as “simply a nonsense” in Shaun Campbell & ors v Chief Land Registrar [2022] EWHC 200 (Ch). Shaun Campbell, against whom an extended civil restraint order was made, was the brother of Jason Campbell, the sole director and 50% shareholder in MFZL.
The Secretary of State took the view that it was contrary to the public interest for MFZL to be offering services to the public based on the misconceived argument that had been so emphatically rejected in Helden. The court agreed and a winding up order was made in April 2023.
MFZL appealed and made a raft of applications seeking to vindicate its interpretation of section 2. The court dismissed the appeal and granted the Secretary of State’s application dismissing all extant applications by MFZL in the winding up or any other proceedings and for an extended civil restraint order against Jason Campbell.
Louise Clark is a property law consultant and mediator
