Trustee In Bankruptcy of Louise St John Poulton v Ministry of Justice

This appeal is brought against a decision on a preliminary issue in proceedings in which the claimant sues the Ministry of Justice, as being vicariously responsible for Her Majesty’s Courts Service (HMCS), for damages either for breach of an alleged statutory duty or for breach of a common law duty of care. Judge Marshall Q.C. held that the action lay for breach of statutory duty but not at common law. The Ministry appeals, with permission granted by the judge, against the first of those conclusions. The claimant appeals, with permission granted by myself, against the second.

The facts from which the claim arises can be stated quite shortly. Louise St John Poulton, whom I will call the Debtor, was the subject of a bankruptcy petition issued in the Guildford County Court, presented on 21 January 2004 by Brighton and Hove District Council. Under rule 6.13 of the Insolvency Rules 1986, the court should have sent to the Chief Land Registrar forthwith notice of the petition and a request that it be registered in the register of pending actions. It did not do so. If it had, the Land Charges Registry staff should have made such an entry in the register of pending actions against the name of the Debtor. The Land Registry staff should have entered a notice in respect of the petition in relation to any registered estate which appeared to be affected, that is to say any in respect of which the Debtor appeared to be the registered proprietor. Neither of these things happened, because of the lack of notice to the Chief Land Registrar.

The Debtor was the registered proprietor of land at 35 Woking Road, Guildford. In March 2004 she sold this land, for net proceeds of some £45,000. It is accepted for the purposes of this appeal that, if the bankruptcy petition had been the subject of an entry in the register of pending actions and in the registered title of the particular estate, this transaction would not have taken place.

Later, a bankruptcy order was made in respect of the Debtor and, in due course, a trustee in bankruptcy (“the Trustee”) was appointed. The Trustee was unable to recover for the benefit of creditors the proceeds of the sale of the land at 35 Woking Road Guildford. That is the loss for which the Trustee seeks to recover compensation, for the benefit of the estate, by these proceedings. The claim is novel, but Mr Ullstein Q.C. for the Trustee told us that his instructing solicitors have other such claims pending, and know of yet others which await the outcome of this appeal.

It is, and has at all material times been, a feature of English bankruptcy law that the assets of the bankrupt vest in the trustee in bankruptcy, whose task it is to realise them for the collective benefit of the creditors. It has also been a feature of that law that the assets which so vest should include those which were the bankrupt’s property at a date earlier than the date of the order by which he or she becomes a bankrupt. By that means, the general body of creditors is to be protected against the risk that, during the process which leads to the bankruptcy, assets of the debtor will be disposed of in a way which does not enable to them to be made available for the benefit of creditors generally. At that time the debtor is bound to be under financial pressure, and may be tempted to deal with one asset or another in a way that would be inconsistent with the interests of the general body of creditors. Accordingly, dispositions of property by the bankrupt during a period before he or she became bankrupt are rendered void in certain circumstances, unless made with the consent of the court or later ratified by the court. By that means, in principle, the property of the bankrupt as at the start of the period should remain available for realisation by the trustee in bankruptcy for the benefit of the general body of creditors.

The principle that the trustee in bankruptcy’s title relates back in this way to an earlier date raises the possibility that there might be a transaction which is, in other respects, proper, being for full value and on normal and proper terms, the other party to the transaction having no idea that he is dealing with someone who is subject to a bankruptcy process, and where the relation back of the trustee in bankruptcy’s title would therefore put the purchaser at an unreasonable risk of having his title avoided by a subsequent event which he has no reason to foresee and over which he has no control.

The statutory provisions which lie at the heart of this case are those designed to resolve the dilemma presented by, on the one hand, the need to protect the general body of creditors by the principle as to relation back of the trustee in bankruptcy’s title and, on the other, the need to enable persons dealing with someone in relation to whom bankruptcy proceedings are under way to be aware of those proceedings and to protect such persons, in appropriate circumstances, if they enter into a transaction with the debtor unaware of the bankruptcy process.

The applicable statutory provisions are now to be found in the Insolvency Act 1986 and the Insolvency Rules 1986, the Land Charges Act 1972 and the Land Registration Act 2002. However, each of these re-enacts provisions which originated at the time of the 1925 property legislation, and those original provisions must be the starting point for a consideration of the question arising.

To put these provisions into context, it is necessary to record in outline the bankruptcy procedure as it stood under the Bankruptcy Act 1914, to consider how the balance was struck between the interests of the creditors and those of a purchaser, and to see how things changed, first in 1925 and then later.

In order that a debtor should be made bankrupt under the 1914 Act, it was necessary to identify an act of bankruptcy, of which there were several different kinds. Within 3 months after an act of bankruptcy, a creditor could present a bankruptcy petition. (The debtor could do so as well, but that case is less significant for present purposes.) After that there were two stages: first a receiving order, under which the official receiver was constituted receiver of the property of the debtor, and the creditors would consider whether a proposal for a composition or scheme of arrangement might be accepted, or whether the debtor should be adjudged bankrupt. Subject to the outcome of that process, the debtor might be adjudged bankrupt. Only at the last stage did the debtor become bankrupt, and a trustee in bankruptcy was then appointed.

Under the 1914 Act, section 37, when a person became bankrupt, the bankruptcy was deemed to have relation back to, and to commence at, the time of the act of bankruptcy being committed on which a receiving order was made against him, or, if there was more than one, at the time of the first relevant act of bankruptcy within 3 months before the date of presentation of the bankruptcy petition.

However, section 45 gave some degree of protection to those who dealt with a person who later became bankrupt. It applied to a number of transactions, including any contract, dealing or transaction by or with the bankrupt for valuable consideration, and any conveyance or assignment by the bankrupt for valuable consideration, so long as it took place before the date of the receiving order. Moreover the other party to the transaction must not, at the time of the conveyance, assignment, contract, dealing or transaction, have had notice of any available act of bankruptcy committed by the bankrupt before that time.

Bankruptcy petitions were not advertised then, nor are they now, but receiving orders were to be advertised under section 11. Thus, subject to any delay in placing the advertisement, persons dealing with a debtor could be expected to have notice of a receiving order. The need for protection applied primarily to the period before that order.

So far as the protection of persons dealing with the debtor is concerned, assuming that there was no actual notice of an act of bankruptcy, under the 1914 Act and before 1926 it depended on whether the person in question had asked all proper questions of the debtor and had not become aware, as a result of the answers to those questions, of any act of bankruptcy. If the questions were not in fact asked, it depended on whether he would have become aware of it if honest answers had been given to the proper questions, had they been asked. A person dealing with a debtor could not find out in any direct way whether a bankruptcy petition had been presented, and had to rely on the debtor’s answers to the proper questions. Of course, if these did reveal the existence of a petition, they would also disclose the act or acts of bankruptcy relied on in the petition.

In 1925 new rules were introduced into the Bankruptcy Rules 1915, with effect from 1 January 1926. That which is relevant to this case is rule 149A, as follows:

“149A. The Senior Registrar in the High Court and the Registrar of every County Court having jurisdiction in bankruptcy shall on the filing of a bankruptcy petition by or against a debtor forthwith send notice thereof to the Chief Land Registrar and a request that such petition may be registered in the register of pending actions.”

That has to be understood in the context of the new property legislation of 1925. The Land Charges Act 1925 provided for a register of pending actions. Like other registers under that Act, this was maintained by reference to the name of the person affected – relevantly the debtor against whom the petition was issued. It was therefore easy to search so as to see whether a bankruptcy petition had been presented and registered, so long as the name of the person in question was correctly recorded.

Entries could be made in that register as regards actions or proceedings pending in court relating to land, and also any petition in bankruptcy filed after the commencement of the Act: section 2(1). The registrar (i.e. the Chief Land Registrar) was forthwith to enter the particulars in the register in the name of the estate owner: section 2(3). No fee was to be charged for the registration of a petition in bankruptcy if the application for registration was made by the registrar of the court in which the petition was filed: section 2(5).

As for the protection of purchasers, section 3(1) gave protection in respect of a pending action to a purchaser without express notice of it, unless it was registered under the Act, so that the purchaser could be affected either by actual notice (if there was no registration) or by registration regardless of actual notice. In relation to bankruptcy petitions, however, this protection was limited so as to apply only in favour of a purchaser of a legal estate in good faith for money or money’s worth without notice of an available act of bankruptcy. Thus, registration of the bankruptcy petition was effective to override the interests of the purchaser, regardless of actual notice, but if it was not registered the purchaser’s protection still required there to be (a) no notice of the act of bankruptcy, (b) a purchase of a legal estate, (c) good faith and (d) money or money’s worth.

In relation to unregistered land, there was no other relevant provision, so that any other question regarding protection of the purchaser (absent registration) would have depended on the proper enquiries having been made, and on the outcome of those enquiries (or what the outcome would have been, if the enquiries were not in fact made).

As for the then relatively new arrangements for registered land, the position was governed by the Land Registration Act 1925 section 61. I will set out subsections (1), (2), (6) and (7).

“61(1) The registrar shall as soon as practicable after registration of a petition in bankruptcy as a pending action under the Land Charges Act 1925, register a notice (in this Act called a creditors’ notice) against the title of any proprietor of any registered land or charge which appears to be affected, and such notice shall protect the rights of all creditors, and unless cancelled by the registrar in the prescribed manner such notice shall remain in force until a bankruptcy inhibition is registered or the trustee in bankruptcy is registered as proprietor.

No fee shall be charged for the registration of the notice.

(2)

Until a creditors’ notice is registered, a petition in bankruptcy filed after the commencement of this Act shall not, as respects any registered disposition for money or money’s worth of any registered land or charge, be notice or evidence of any act of bankruptcy therein alleged.

…

(6)

Where under a disposition to a purchaser in good faith for money or money’s worth such purchaser is registered as proprietor of an estate or a charge, then, notwithstanding that an available act of bankruptcy has been committed by the person making the disposition, the title of his trustee in bankruptcy acquired after the commencement of this Act shall, as from the date of such disposition, be void as against such purchaser unless at the date of such disposition, either a creditors’ notice or a bankruptcy inhibition had been registered, but a purchaser who, at the date of the execution of the registered disposition, has notice of an available act of bankruptcy, or of the receiving order, or adjudication, shall not be deemed to take in good faith.

Nothing in this section shall impose on a purchaser a liability to make any search under the Land Charges Act, 1925.

(7)

Where the estate or assets of a bankrupt proprietor suffer loss by reason of the omission of the registrar to register a creditors’ notice or bankruptcy inhibition, as required by this section, or on account of the execution or registration of a disposition after a petition is registered as a pending action or after a receiving order is registered and before the registration of a creditors’ notice or bankruptcy inhibition, the trustee in bankruptcy shall be entitled to indemnity as a person suffering loss by reason of an error or omission in the register.”

Unlike registers under the Land Charges Act, the relevant entries under the Land Registration Act are made by reference to a particular registered estate. Therefore the efficacy of protection by this means depends on the Land Registry staff identifying correctly whatever registered land or charge was or might be affected, without any means of knowledge as to what relevant property interests the debtor might have. If any relevant registered land or charge had the same name in the proprietorship register as that given for the debtor in the petition, the system would or might be relatively reliable, but there might be plenty of scope for variations and therefore for a failure to register the required notice against a particular registered title, and in any event for a delay in doing so.

Section 61(6) protected a purchaser in good faith for money or money’s worth, once registered as proprietor, under a disposition of a registered estate or charge even if there had been an available act of bankruptcy, unless at the date of the disposition a creditors’ notice had been registered (or, after a receiving order, a bankruptcy inhibition). However, a purchaser with notice at the date of the disposition of an available act of bankruptcy was not deemed to take in good faith. The existence of a petition, in the absence of a creditors’ notice, was not notice or evidence of the act of bankruptcy alleged in the petition: section 61(2). Moreover, the last sentence of section 61(6) had the effect that a purchaser of registered land did not need to search under the Land Charges Act 1925 against the name of the counterparty, and could rely on the absence from the entries on the register in relation to the particular estate or charge of a creditors’ notice, even if the petition had been entered in the register of pending actions under the Land Charges Act.

I will discuss section 61(7) later.

The overall position as regards bankruptcy procedure remained the same until 1986. In 1952 the Bankruptcy Rules were revised. The provision which had been in rule 149A became rule 147 in the new rules, as follows:

“147.

On the filing of a petition the Registrar shall forthwith send to the Chief Land Registrar notice of the petition together with a request that it may be registered in the register of pending actions.”

The Registrar was defined by rule 4(1) in a way which fits closely with the terms of rule 149A as originally introduced:

““Registrar” means a registrar in bankruptcy of the High Court or the registrar or deputy registrar of a county court having jurisdiction in bankruptcy.”

The Land Charges Act 1925 was replaced, so far as relevant, by the Land Charges Act 1972, which is still in force. Registration in the register of pending actions is provided for by section 5. The relevant provisions, which do not effect any substantive change, are as follows (as originally enacted):

“(1)

There may be registered in the register of pending actions—

(a)

a pending land action;

(b)

a petition in bankruptcy filed on or after 1st January 1926.

(2)

Subject to general rules under section 16 of this Act, every application for registration under this section shall contain particulars of the title of the proceedings and the name, address and description of the estate owner or other person whose estate or interest is intended to be affected.

(3)

An application for registration shall also state—

(a)

…

(b)

if it relates to a petition in bankruptcy, the court in which and the day on which the petition was filed.

(4)

The registrar shall forthwith enter the particulars in the register, in the name of the estate owner or other person whose estate or interest is intended to be affected.

…

(6)

No fee shall be charged for the registration of a petition in bankruptcy if the application for registration is made by the registrar of the court in which the petition is filed.

…

(8)

A petition in bankruptcy shall not bind a purchaser of a legal estate in good faith, for money or money’s worth, without notice of an available act of bankruptcy, unless it is for the time being registered under this section.

(9)

As respects any transfer or creation of a legal estate, a petition in bankruptcy which is not for the time being registered under this section shall not be notice or evidence of any act of bankruptcy alleged in the petition.”

The only relevant amendments to this section since then have been the omission of the words shown as italicised in subsection (8) and the repeal of subsection (9). These were consequential on the 1986 reform of insolvency law, to which I now turn.

The process leading to a person becoming bankrupt was reformed and simplified in the Insolvency Act 1986. Now there must be a statutory demand, upon which, if it is not satisfied or set aside, a creditor’s bankruptcy petition may be presented, which may in turn lead to the making of a bankruptcy order. The previous regime and that now in force have in common the progress from a situation in which a creditor may present a petition, via the presentation of the petition, to bankruptcy, now under a bankruptcy order. Equally, although there is no longer a provision for the title of the trustee in bankruptcy to relate back as such, the same effect is achieved, in practice, by rendering void dispositions after the date of the petition, with limited exceptions.

It is not necessary to refer to the detail of the substantive provisions as regards the process towards a bankruptcy order. The equivalent to the previous rule 147 is Insolvency Rule 6.13, as follows:

“When the petition is filed the court shall forthwith send to the Chief Land Registrar notice of the petition together with a request that it may be registered in the register of pending actions.”

In 2009 this was amended so as to substitute “as soon as reasonably practicable” for “forthwith”. Nothing turns on that.

As for the definition of “the court”, rule 13.2 applies (except, and insofar as, the context otherwise requires) for the interpretation and application of the Rules (see rule 13.1), and it was as follows, so far as it applies to bankruptcy matters:

“(1)

Anything to be done under or by virtue of the Act or the Rules by, to or before the court may be done by, to or before a judge or the registrar.

(2)

The registrar may authorise any act of a formal or administrative character which is not by statute his responsibility to be carried out by the chief clerk or any other officer of the court acting on his behalf, in accordance with directions given by the Lord Chancellor.

(3)

In individual insolvency proceedings, “the registrar” means a Registrar in Bankruptcy of the High Court, or the registrar or deputy registrar of a county court.”

The only relevant change since then is that references to a district judge or deputy district judge were substituted in place of registrar or deputy registrar of the county court by the Courts and Legal Services Act 1990.

Thus the obligation of the court under rule 6.13, in the case of a petition presented in the county court, may be performed by a district judge of that county court, and may be authorised by the district judge to be carried out by the chief clerk or other officer of the court under rule 13.2(2).

The avoidance of dispositions between the date of the petition and that of the bankruptcy order is dealt with by section 284 of the Insolvency Act 1986, relevantly as follows:

“(1)

Where a person is adjudged bankrupt, any disposition of property made by that person in the period to which this section applies is void except to the extent that it is or was made with the consent of the court, or is or was subsequently ratified by the court.

(2)

Subsection (1) applies to a payment (whether in cash or otherwise) as it applies to a disposition of property and, accordingly, where any payment is void by virtue of that subsection, the person paid shall hold the sum paid for the bankrupt as part of his estate.

(3)

This section applies to the period beginning with the day of the presentation of the petition for the bankruptcy order and ending with the vesting, under Chapter IV of this Part, of the bankrupt’s estate in a trustee.

(4)

The preceding provisions of this section do not give a remedy against any person—

(a)

in respect of any property or payment which he received before the commencement of the bankruptcy in good faith, for value and without notice that the petition had been presented, or

(b)

in respect of any interest in property which derives from an interest in respect of which there is, by virtue of this subsection, no remedy.”

The last change to the relevant statutory provisions which I must note is the Land Registration Act 2002, by which the 1925 Act was repealed. The 2002 Act deals with bankruptcy in section 86, relevantly as follows:

“(1)

In this Act, references to an interest affecting an estate or charge do not include a petition in bankruptcy or bankruptcy order.

(2)

As soon as practicable after registration of a petition in bankruptcy as a pending action under the Land Charges Act 1972, the registrar must enter in the register in relation to any registered estate or charge which appears to him to be affected a notice in respect of the pending action.

(3)

Unless cancelled by the registrar in such manner as rules may provide, a notice entered under subsection (2) continues in force until—

(a)

a restriction is entered in the register under subsection (4), or

(b)

the trustee in bankruptcy is registered as proprietor.

(4)

As soon as practicable after registration of a bankruptcy order under the Land Charges Act 1972, the registrar must, in relation to any registered estate or charge which appears to him to be affected by the order, enter in the register a restriction reflecting the effect of the Insolvency Act 1986.

(5)

Where the proprietor of a registered estate or charge is adjudged bankrupt, the title of his trustee in bankruptcy is void as against a person to whom a registrable disposition of the estate or charge is made if—

(a)

the disposition is made for valuable consideration,

(b)

the person to whom the disposition is made acts in good faith, and

(c)

at the time of the disposition—

(i)

no notice or restriction is entered under this section in relation to the registered estate or charge, and

(ii)

the person to whom the disposition is made has no notice of the bankruptcy petition or the adjudication.

(6)

Subsection (5) only applies if the relevant registration requirements are met in relation to the disposition, but, when they are met, has effect as from the date of the disposition.

(7)

Nothing in this section requires a person to whom a registrable disposition is made to make any search under the Land Charges Act 1972.”

When the bankruptcy petition was presented against the Debtor on 21 January 2004, the relevant court staff should forthwith have sent to the Chief Land Registrar notice of the petition together with a request that it be entered in the register of pending actions under the Land Charges Act 1972: Insolvency Rule 6.13. This was not done. If it had been done, it would have been the duty of the Chief Land Registrar (in effect, the staff of the Land Charges Registry) to have made such an entry against the name of the Debtor: Land Charges Act 1972 section 5(4). The information should also have been passed to those responsible for the Land Registry itself so that an appropriate notice could be entered in relation to any registered estate or charge which appeared to be affected: Land Registration Act 2002 section 86(2). In the present case, the estate or estates comprising the land in Woking Road, Guildford would have been affected. Accordingly, as a result of that process, if it had happened properly, a potential purchaser of that land would have become aware before completion of the purchase that a bankruptcy petition was pending against the Debtor, and in practice the purchase would not have proceeded, because if it had gone through the purchaser’s title would not have been valid as against the trustee in bankruptcy, if and when one was eventually appointed.

On that basis the Trustee’s primary contention is that there was a breach of statutory duty on the part of staff of the Guildford County Court, that this breach of duty caused loss to the estate of the bankrupt as it vested in him, and that he has a cause of action for damages for breach of the duty. The Ministry is sued as being responsible for HMCS, itself vicariously liable for the default of its staff, in the offices of the Guildford County Court.

Several points are taken against this contention, but the main point is that the statutory duty under Insolvency Rule 6.13 does not give rise to a private cause of action. This requires attention to the general principles laid down for ascertaining whether, if a statutory provision creates a duty but does not make it clear whether or not it is to be actionable, it does create a private right of action for breach. Those principles require, in turn, attention to the particular legislation and its context. In the present case they also require consideration of the decision of the Court of Appeal in Ministry of Housing and Local Government v Sharp [1970] 2 QB 223 (which I will call Sharp), which was concerned with a private claim arising from a default as regards the issue of a certificate as to the contents of the local land charges register, under the Land Charges Act 1925.

The starting point for the general principle is Cutler v Wandsworth Stadium Ltd [1949] AC 399. The case arose from an alleged breach by the defendant of section 11(2)(b) of the Betting and Lotteries Act 1934, by which the occupier of a licensed racetrack was obliged to take such steps as were necessary to secure that, so long as a totalisator was being lawfully operated on the track, there was available for bookmakers space on the track where they could conveniently carry on bookmaking in connection with dog races run on the track on that day. Breach of this provision carried a criminal sanction. A bookmaker who contended that he had not been provided with suitable space brought a claim for an injunction and damages against the operator of the track. His claim succeeded in the High Court but not in the Court of Appeal or the House of Lords. Lord Simonds said at page 407:

“I do not propose to try to formulate any rules by reference to which such a question can infallibly be answered. The only rule which in all circumstances is valid is that the answer must depend on a consideration of the whole Act and the circumstances, including the pre-existing law, in which it was enacted. But that there are indications which point with more or less force to the one answer or the other is clear from authorities which, even if they do not bind, will have great weight with the House. For instance if a statutory duty is prescribed but no remedy by way of penalty or otherwise for its breach is imposed, it can be assumed that a right of civil action accrues to the person who is damnified by the breach. For if it were not so, the statute would be but a pious aspiration.”

In the same case Lord Normand referred to the width and uncertainty of the category of persons who might be said to be entitled to enforce the duty by way of a civil remedy, and the impossibility of discerning from the Act any more certain or specific class of beneficiaries of the statutory duty who might be entitled to enforce it. Like Lord Simonds, he thought relevant the provisions of the Act as regards enforcement or sanction. At page 413 he said this:

“If there is no penalty and no other special means of enforcement provided by the statute, it may be presumed that those who have an interest to enforce one of the statutory duties have an individual right of action. Otherwise the duty might never be performed.”

The subject has been much explored in more recent years, and there have been comments on, and additions to, the indicators mentioned in the speeches in that case. In X v Bedfordshire County Council [1995] 2 AC 633 the House of Lords had to consider whether private claims could be brought for failure by an authority charged with a statutory duty properly to perform that duty. Lord Browne-Wilkinson, giving the leading speech, classified private law claims for damages against public authorities into four groups: (A) actions for breach of statutory duty simpliciter (i.e. irrespective of carelessness); (B) actions based solely on the careless performance of a statutory duty in the absence of any other common law right of action; (C) actions based on a common law duty of care arising either from the imposition of the statutory duty or from the performance of it; (D) misfeasance in public office. The present case is within the first of those categories. About that, he said this (without attempting any general statement of the applicable law) at page 731-2:

“This category comprises those cases where the statement of claim alleges simply (a) the statutory duty, (b) a breach of that duty, causing (c) damage to the plaintiff. The cause of action depends neither on proof of any breach of the plaintiff’s common law rights nor on any allegation of carelessness by the defendant.

The principles applicable in determining whether such statutory cause of action exists are now well established, although the application of those principles in any particular case remains difficult. The basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action. However a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty. There is no general rule by reference to which it can be decided whether a statute does create such a right of action but there are a number of indicators. If the statute provides no other remedy for its breach and the Parliamentary intention to protect a limited class is shown, that indicates that there may be a private right of action since otherwise there is no method of securing the protection the statute was intended to confer. If the statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action: Cutler v. Wandsworth Stadium Ltd. [1949] A.C. 398; Lonrho Ltd. v. Shell Petroleum Co. Ltd. (No. 2) [1982] A.C. 173. However, the mere existence of some other statutory remedy is not necessarily decisive. It is still possible to show that on the true construction of the statute the protected class was intended by Parliament to have a private remedy. Thus the specific duties imposed on employers in relation to factory premises are enforceable by an action for damages, notwithstanding the imposition by the statutes of criminal penalties for any breach: see Groves v. Lord Wimborne [1898] 2 Q.B. 402.”

We were shown a variety of other recent cases in which the question has been raised and answered in different contexts. In some of them the decisive factor was the nature of the duty, in others it was the identification of the class for whose protection the duty exists, in yet others the most important factor was the relationship between the body which is subject to the duty on the one hand and the claimant on the other, and if there is an alternative remedy that is often a determinative factor.

Mr Ullstein relied on the observations in Cutler in support of a private right of action, on the basis that there is no sanction for failure to comply with the obligation in rule 6.13. That said, it might be regarded as less of a pious aspiration, absent a penalty or other sanction, that a court will comply with obligations imposed on it by Act or rule, than (for example) that a racecourse operator, which has a commercial interest in favouring its own totalisator operations, might fail to provide adequate space for on-course betting by bookmakers, in competition with the totalisator. Moreover it is less obvious that the obligation is imposed for the benefit of creditors than that, for example, a duty to fence dangerous machinery is imposed for the benefit of those who, whether using the machinery or being in its vicinity for some other reason, might be injured by it.

The argument for the Trustee gains some support from the absence of a statutory sanction for breach of the duty. As against that there are other considerations. One, relied on by Mr Moss Q.C. for the Ministry, is that the court is not the only person who can apply for the registration of a notice in respect of the petition. He pointed out, correctly, that it has always been the case since 1926 that the petitioning creditor could do so as well. Anyone other than the court would have to pay a modest fee, but the court did not have the exclusive right to give the notice. That said, it is a fair point on the part of Mr Ullstein that at any rate professionals experienced in dealing with insolvency matters would know that it was the court’s duty to give notice under rule 6.13 or its predecessors, and would therefore be likely to leave it to the court to do so, at least in the first instance. If it came to light later that the court had not done so the creditor might give its own notice, but I agree that creditors and their advisers might well not do so as a matter of course, because the court was under the duty to do so “forthwith”, and could be expected to have a system for doing so.

A more substantial point debated between Counsel arises from a comparison between the provisions of the rules and of the related Acts, as they stood in 1926. There was no sanction in the Bankruptcy Rules for failure to comply with rule 149A as it then stood, any more than there has been for the later versions of the same rule. There was no express sanction for failure to comply with the obligation in section 2(3) of the Land Charges Act 1925.

As regards section 61 of the Land Registration Act 1925, however, on the one hand the Chief Land Registrar was expressly immune from any civil action, under section 131, but on the other hand provision was made by the Act for an indemnity out of an insurance fund set up under the Act, not only for those who suffered loss as a result of rectification of the register generally (or of failure to rectify it), but also, under section 61(7), for loss suffered by a trustee in bankruptcy. This loss could arise in several different situations. One (that closest to the present case) was loss suffered through failure to enter a creditors’ notice. Equivalent to this was loss suffered by an omission to register a bankruptcy inhibition after the making of a receiving order. The subsection also extended to loss suffered on account of a disposition being executed or registered after a petition was registered as a pending action, or after a receiving order was registered, and before the registration of a creditors’ notice or a bankruptcy inhibition, as the case may be. There appears to be no equivalent to this provision in the 2002 Act, but that cannot affect the proper reading of the legislation as it stood in 1926 or in 1986.

Mr Ullstein submitted, on the basis of this contrast, that this showed that, in principle, those on whom the statutory duties relevant in this area were imposed were thought to be liable to a civil action for damages if the duty was not complied with, that in the case of the Land Registration Act 1925 it was thought right to exclude this possibility but to provide an alternative remedy by way of compensation, including for the consequences of failure to comply with section 61, but that in the case of the Land Charges Act 1925 and the Bankruptcy Rule no such alternative provision was made, so that there was nothing to displace the ordinary inference recognised in Cutler by Lord Simonds and Lord Normand that, if there is a duty, breach of which is likely to cause loss to specific or ascertainable persons, and no penalty, sanction or alternative remedy is provided, the likely inference is that it was intended that a private action could be brought for loss caused by a breach of the duty.

The insurance fund provided for by the Land Registration Act 1925 no longer exists, having been abolished by the Land Registration and Land Charges Act 1971. Now, instead, any indemnity payments under the land registration system are paid out of public funds generally. That makes no difference in principle. The Chief Land Registrar has always enjoyed immunity from a civil action for damages in respect of claims under the land registration legislation. The origin of this is in the Land Transfer Act 1875 section 86; the current provision is paragraph 4 of Schedule 7 to the 2002 Act. The insurance fund and indemnity provisions originated in sections 7 and 21 of the Land Transfer Act 1897.

It does seem somewhat odd, at first sight, that the Chief Land Registrar should have enjoyed immunity, backed up by a separate indemnity scheme, as regards his functions under the Land Registration Acts but not for those under the Land Charges Acts. One distinction is that matters dealt with under the Land Charges Acts tend to be more transient than those under the Land Registration Acts, where an error may affect whether someone has title to land at all that, under the unregistered system, he would have. However, the matters capable of registration under the Land Charges Act are not necessarily any more transient than those that arose under section 61 of the Land Registration Act 1925.

There is more scope for error under section 61 of the Land Registration Act 1925, and under the corresponding provision in the 2002 Act, since it may not be apparent, immediately or at all, what, if any, registered estates or charges are in the name of the person who is the subject of the bankruptcy petition; there is plenty of scope for innocent discrepancies of name. Thus there might have been a failure to enter a creditors’ notice under section 61 with no fault on the part of the Land Registry staff, because the names did not match closely enough. Alternatively, there might be a disposition of relevant registered land soon after the bankruptcy petition and before the Land Registry staff had been able to work out which registered estates were or might be affected; that possibility seems to be contemplated expressly by section 61(7).

In such circumstances loss might be suffered as a result of the failure to enter the notice at all or before the disposition, though without any clear or provable fault on the part of the Land Registry, particularly in the early years of land registration. That risk may have been substantial, and probably remained so for some decades until a rapid computerised search for relevant names in entries on the register became possible. For that reason it may have been thought more likely that the required creditors’ notice would not be entered at all, or in time to have the intended effect of putting a purchaser on notice, than that there would be a failure in respect of the simpler duties under the Bankruptcy Rule or the Land Charges Act 1925. It might also have been thought appropriate to provide the possibility of compensation out of the insurance fund (provided for out of fees payable under the land registration system) rather than out of public funds generally, for cases of loss arising under section 61.

In Curtis & Ruoff, Registered Land, 2nd edition (1965) the point is made at page 702 that a failure to enter a creditors’ notice may arise because the staff are not satisfied that the debtor has been identified as the registered proprietor, even though in fact they are one and the same person. At page 902 of that edition, in a passage describing payments made by way of indemnity since 1926, it is said that claims made include two for mistakes in regards to bankruptcy proceedings. No details are given of the nature of the mistakes, nor are more recent statistics available from later editions.

In relation to the position under these various inter-related statutory provisions it is also necessary to consider what was said, albeit directly about the local land charges system which is not administered by the Chief Land Registrar, in Sharp. (That system is now governed by the Local Land Charges Act 1975, which has its own distinct provision for the consequences of failure to register and for defective search certificates, with compensation to purchasers who suffer loss in such cases.) In that case the Ministry had paid compensation to a landowner upon the refusal of a particular planning permission, and it was entitled to recover that payment if planning permission were later granted, and then implemented, to similar effect to that which had been refused. That liability was to be protected against purchasers by registration in the register of local land charges, which was the responsibility of “the proper officer”, namely the clerk of the local council, acting as a public officer in his own right, not as a servant of the council. (I will refer to that person as the local registrar.) It was so registered, but, by mistake, a purchaser received a clear certificate as a result of which, as held by the Court of Appeal, the purchaser took the land free from the obligation to repay. The Ministry sued both Mr Sharp as local registrar, being responsible for the register, and also the local authority as vicariously responsible for the error of the person who had issued the clear certificate.

By a majority, the Court of Appeal held that the local registrar was not liable to the Ministry, not being under the statutory duty alleged against him nor a common law duty of care, but that the local authority whose employee had issued the inaccurate certificate was so liable at common law. For present purposes it is the discussion of the liability for breach of statutory duty that matters.

Lord Denning MR observed at page 265 that:

“The object of the register is to provide security for two classes of people, incumbrancers and purchasers.”

Lord Denning would have held the local registrar liable (as Fisher J would have done), on the basis that he was responsible for seeing that the duty was carried out, and absolutely liable if it was not, or at least for breach of a duty to use due diligence and to see that due diligence was used by “all his subordinates” in making searches in the register. He referred to the absence from the Land Charges Act 1925 of an immunity provision such as there was in the Land Registration Act 1925 section 131.

Salmon LJ held that the local registrar was not liable for breach of an absolute statutory duty, which was what had been alleged. He recorded that it had been accepted that the local registrar had not been negligent in any way and that he was not vicariously responsible for the negligence of the council’s servant who had carried out the search and issued the certificate (see page 270D). He referred to what Lord Simonds said in Cutler and noted indications in favour of civil liability, on the basis of an absolute obligation. He said at 274D:

“It is clear that section 17(1), (2) and (3) of the Land Charges Act 1925 were enacted particularly for the benefit of chargees, incumbrancers (of whom the Minister is one) and purchasers rather than for the benefit of the general public. Purchasers, chargees and incumbrancers may suffer the most grave financial loss if the search which section 17(2) requires is not properly carried out or the certificate which it requires is inaccurate.”

However, he held that the statutory duty was one of due diligence, not an absolute duty (for reasons which are not relevant to the present case), and because the claim had been put on the basis of an absolute duty, he held that it failed. He did also observe, though expressly without deciding the point for lack of argument, that a civil action would lie for breach of a statutory duty of care or diligence (page 275F). He noted an argument based on the immunity provisions in the Land Registration Act 1925, but rejected the submission that it was intended to remove an absolute liability which would otherwise have existed. He said of section 131:

“It was, in my view, designed to protect those working in the registry from being plagued by vexatious actions. It accordingly provided that any claim, save a claim in fraud, could be struck out in limine. The indemnity in section 85 was a beneficent provision, possibly in part to compensate for the loss of a cause of action in negligence, and which, in any event, justice demanded. It might well have been introduced into the Land Charges Act, 1925, but only in so far as concerned Her Majesty’s Land Registry, for in 1925 Parliament could hardly have been expected to set up a central fund in effect to indemnify local authorities against the mistakes of their own servants. Accordingly, the fact that no provisions corresponding to sections 83, 85 or 131 of the Land Registration Act appear in the Land Charges Act seems to me to be irrelevant to the question we have to decide.”

Cross LJ agreed with Salmon LJ that the local registrar was not under an absolute duty independent of negligence (page 290C). He accepted the possibility, without expressing a concluded view on the point, that if the claim against the local registrar had been framed in negligence, he could not have escaped liability by saying that the negligence was not his but that of his delegate (page 290D).

He did also comment on the possible liability of the Chief Land Registrar under the Land Charges Act 1925 in relation to an inaccurate certificate following a search of one of the land charges registers, as opposed to the local land charges register. At page 289E to 290C he said this:

“In 1888 the registrar [i.e. the Chief Land Registrar] was expressly exempted from liability to be sued for acts done in exercise of his powers under the Land Transfer Act, 1875; so Parliament at that date cannot have thought that there was anything inherently objectionable in the fact that members of the public who suffered through innocent mistakes in the registry should have no civil remedies. As he was exempt from liability under the Land Transfer Act, to subject him to liability under the Land Charges Act would, prima facie, be anomalous. The anomaly would, however, be explicable if and so far as the various officers of the Supreme Court who were directed to maintain registers by the Acts scheduled to the Conveyancing Act, 1881, and similar Acts, were themselves liable to be sued, for the provisions for official searches and certificates made applicable to the registrar in 1888 were taken from the provisions in section 2 of the Conveyancing Act, 1882. Further, in 1900, two registers formerly kept by the registrar of judgments were transferred to the land registrar. But if and so far as the court officials were not themselves liable to be sued I find it very difficult to suppose that Parliament intended to subject the land registrar to liability by the Act of 1888. The natural assumption would be that Parliament either considered that no express exemption corresponding to the Land Transfer Act provision was necessary or, more probably, simply forgot to put one in.

So the point which to my mind is crucial is to what extent, if at all, the various “proper officers” were liable to be sued. Douglass v. Yallop, (1759) 2 Burr. 722, to which the Master of the Rolls refers, shows that the senior master of the Court of Common Pleas, who received five shillings for each entry, would have been liable to be sued for any damages suffered by the plaintiff for his failure to register a judgment presented for registration under the Judgments Act, 1838. Of course, by 1888, the registrar of judgments (the senior master of the Queen’s Bench Division) received a fixed salary and it might perhaps be argued that his personal liability to be sued for the failure of one of his clerks to register a judgment did not survive the legislation which reorganised the courts. But even if that is not so, what we are concerned with is the obligation to issue certificates of search which was first created by the Conveyancing Act, 1882. That Act was a code applicable to all registers kept, or apparently to be kept, in the Central Office under the Acts scheduled to the Conveyancing Act, 1881, and any other Acts; so that it might apply to functionaries of varying status. I find it difficult to suppose that Parliament in the year 1882 intended by such an Act to make these unidentified officers of the court paid by salary personally liable to ensure the accuracy of the certificates of search issued in respect of registers under their charge.”

The relevance of the date 1888 was that it was in that year that land charges first appeared in the statutory scene, under the Land Charges Registration and Searches Act 1888.

Mr Ullstein submitted that it should be regarded as clear that, if the Ministry had alleged a statutory duty of diligence and breach of that duty, then, subject to proof of the lack of diligence, the claim in breach of statutory duty would have succeeded. That is possible, but the case is certainly not authority to that effect, and I do not accept that it is clear that it would be so. The content of the duty as regards issuing certificates after a search does not seem to me to assist in relation to the present case where the duty is to send the necessary notice forthwith to the Chief Land Registrar. Either it is sent or it is not; if it is not sent, the duty has not been complied with. Nor does it seem to me that the judgment of Cross LJ offers much comfort to the Trustee, given the scepticism demonstrated towards the idea that the Chief Land Registrar would be liable for the consequences of any default under the Land Charges Act 1925.

One of the oddities about the present claim is that, according to the rule, it ought strictly to be brought against a district judge of the Guildford County Court, whose duty it was, under the rule, to send the request to the Chief Land Registrar. Certainly, if such a claim had been made while Bankruptcy Rule 149A was in force it would have been brought against the Senior Registrar in the High Court or the Registrar in the county court. Part of what Cross LJ said in the passage quoted above bears on the point of liability of a court officer. Under Insolvency Rule 13.2(2) the task under rule 6.13 is one which the local district judge can delegate to the chief clerk or any other officer of the court acting on his behalf. In practice a task of this kind is delegated to administrative staff of the court. But that does not alter the fact that the statutory responsibility is that of a judicial officer. That is at first sight counter-intuitive, and evidently Cross LJ found it so.

The passage from the judgment of Cross LJ quoted above includes reference to a case of Lord Mansfield, Douglass v Yallop decided in 1759. The relevant passage is short:

“Lord Mansfield intimated that it very much concerned the chief clerk to take care that judgment be actually entered up upon the roll in due time, and docketed; for that after he has received his fees for making such an entry, he would be liable to an action upon the case, to be brought by a purchaser who should have become liable to it, and had searched the roll without finding it entered up.”

The case does not seem to be one in which the chief clerk was in fact held liable on such a claim, so Lord Mansfield’s observation is as a matter of principle, and seems to be obiter. The report concludes with a note to the effect that the chief clerk, perceiving the inconvenience to which the current practice rendered him liable, had determined “to put the matter on a safer foot for the future”. It does not seem to me that this offers the Trustee any substantial support for the idea that the obligation under rule 6.13 or its predecessors was intended to carry liability to be sued in a private action.

If the claim were brought against the district judge, rather than against the Ministry of Justice, it would not be subject to the defence of judicial immunity, since that only applies to acts done by a judge of a judicial nature, not to ministerial acts (or omissions) such as this would be: see Clerk & Lindsell on Torts, 19^th ed, paragraph 5-94.

Nevertheless, this is a factor to be considered as part of the relevant circumstances when deciding whether the rule was intended to give rise to civil liability. Mr Moss argued that the question should be addressed as at 1 January 1926, with the introduction of the new Bankruptcy Rule 149A and at the same time the new provisions of the Land Charges and Land Registration Acts. Mr Ullstein was prepared to engage with Mr Moss as at that date, but contended that the question arises in relation to rule 6.13 and the other relevant legislation as it stood when the Insolvency Act and Rules 1986 came into force, on 29 December 1986.

I consider that Mr Moss is correct on this point. The question of the continuity or otherwise of the 1986 legislation with the previous bankruptcy regime has had to be considered a number of times. Thus, in Re Smith, Ex parte Braintree District Council [1990] 2 AC 215 at 238 Lord Jauncey said that the 1986 Act was to be construed “as a piece of new legislation without regard to 19^th Century authorities or similar provisions of repealed Bankruptcy Acts.” However, it is not always right to ignore previous authorities, as Hoffmann J said in Re a Debtor (No 784 of 1991) [1992] Ch 554 at 558:

“That approach to construction was approved by the House of Lords in In re Smith (A Bankrupt), Ex parte Braintree District Council [1990] 2 A.C. 215, in which Lord Jauncey of Tullichettle said, at p. 238, that, in view of the changes in policy shown by the new Act, he felt justified in construing the provision of the Act of 1986 “as a piece of new legislation without regard to 19^th century authorities or similar provisions of repealed Bankruptcy Acts.”

Those authorities show that, in approaching the language of the Act of 1986, one must pay particular attention to the purposes and policies of its own provisions and be wary of simply carrying over uncritically meanings which had been given to similar words in the earlier Act. It does not, however, mean that the language of the new Act comes to one entirely free of any of the intellectual freight which was carried by words and phrases in earlier bankruptcy or other legislation.

Decisions of the court upon the meanings of phrases used in Acts of Parliament may come, in the course of time, to give them the quality of terms of art which Parliament may well be assumed to have intended them to bring with them when used in subsequent legislation. In section 265, for example, terms such as “domiciled,” “personally present,” “ordinarily resident,” have had attributed to them, both in the context of bankruptcy and in that of civil procedure generally, a wealth of refined construction which it is difficult to suppose Parliament did not intend equally to apply when those words were used in the Act of 1986. Is there any reason why that should not apply equally to the words “has carried on business?” There does not seem to me to be anything in the policy of the new Act which suggests that in this provision Parliament was intending to give those words a different meaning from those which they had been held to bear under the Act of 1914.”

It is therefore a question of considering both how similar the current text is to that of the previous legislation and whether there are policy reasons, having regard to the terms of the present legislation, which should lead to any earlier construction being ignored and to taking a fresh view of the content of the relevant provision. In the case of rule 6.13 and its predecessors there is no relevant previous authority, but the context of each successive rule, and the purpose of each, is identical, and the text is nearly identical. The changes in 1952 and in 1986 were merely of drafting style. In this respect, the continuity of the relevant provisions is plain. For that reason I could not accept that, if there is an actionable statutory duty, it was imposed for the first time in 1986. If it exists, it must be on the basis that it existed from 1926 onwards.

Before the judge, an argument was deployed which is not now pursued, namely that the rule-making powers under which, in turn, the Bankruptcy Rules and now the Insolvency Rules 1986 were made did not permit the creation of an obligation which gave rise to a private cause of action for its breach. Although Mr Moss did not pursue that point as such, he did rely on the fact that the duty is in a rule which is part of a set of rules dealing primarily with procedural matters as to which he argued that it is unlikely that a private cause of action was intended.

It is a fair comment that a set of rules made under Insolvency Act 1986 section 412 “for the purpose of giving effect to” the relevant substantive law as to personal insolvency (and its predecessors under the 1914 Act) is not the most promising source of a statutory duty for breach of which a private action may be brought. However, the Insolvency Rules do contain provisions which are more than just procedural, for example in relation to rights in a bankruptcy. Moreover the division of material between the Act and the Rules is not always consistent. Possibly for historical reasons there are points which, as regards corporate insolvency, are governed by the Act whereas, for bankruptcy, the equivalent is found in the rules.

Mr Moss relied on a number of particular points in support of his argument that the duty under rule 6.13 does not give rise to a private right of action. He said that the provision was not intended for the benefit of creditors but of potential purchasers from the debtor, that creditors should not be regarded as having been intended to be protected by the duty, and that therefore it would be wrong to treat them as having the benefit of it by way of a private action. As to that, I respectfully agree with Lord Denning’s observation in Sharp that the provision there relevant was intended for the benefit of both classes: creditors as well as purchasers or others wishing to deal with the relevant property: see paragraph [54] above. In my judgment the same applies in the present case.

Then Mr Moss contended that, if this was so, the potential liability would be to an indeterminate class, including some whose claims might not arise until after the time of the breach of duty, and that this was objectionable in principle. This ties in with another argument on his part, that if there were a cause of action, it would belong to each creditor and would not be a claim which would become vested in the trustee in bankruptcy, except by individual assignments.

The basis of the claim is that, because of the breach of duty, the debtor has been able to dispose of property in a way such that the trustee in bankruptcy cannot recover it from the purchaser (because the purchaser was not affected by notice as a result of the absence of any registration) but equally the trustee in bankruptcy is unable to recover the proceeds from the bankrupt, which will have been dissipated. The claim is therefore inchoate at the time of the breach. It only becomes effective if, after the filing of the petition, first the debtor disposes of an asset which he or she would not otherwise be able to do, secondly a bankruptcy order is made on the petition, and thirdly a trustee in bankruptcy is appointed (or the official receiver becomes the trustee). That does not happen until some time after the making of such an order. Until then the property of the bankrupt remains vested in him or her, though subject to duties of the bankrupt towards the official receiver under section 291 and to rights and duties of the official receiver as the receiver and manager of the bankrupt’s estate, under section 287.

The class of creditors for whose benefit the duty would apply is those with claims in the bankruptcy, namely (with a few special exceptions) those to whom the bankrupt owed debts at the time of the bankruptcy order. For that reason Mr Moss is correct to say that this class could include persons whose debts arose after the presentation of the petition, and in the case of some who were already creditors at that date, the amount of their debt might increase before the date of the order. I do not consider that this factor provides a good argument against the existence of the duty. However many creditors there may be, and however large their debts at the date of the bankruptcy, the potential liability for breach of duty would be limited by the value of any property which the debtor is able to dispose of because of the absence of the appropriate notice from the register. Mr Moss is entitled to say that the liability might be substantial if the value of the property is substantial, but the number of creditors, and the size of their debts, does not affect the quantum of the liability for breach of duty overall.

He also contended that if there were any claim, it would be on the part of individual creditors, not of the trustee, and that as such it would not become vested in the trustee. This was not a point taken below, and Mr Ullstein objected to its being taken here, but it is a point of principle, to which no additional evidence could have been relevant on the preliminary issue, and I propose to deal with it.

I do not accept this argument on the part of Mr Moss. As I have mentioned, the cause of action (if there is one) is not complete until a bankruptcy order has been made nor, in practice, until a trustee in bankruptcy has been appointed. The loss resulting would be measured by reference to the value of property disposed of by the debtor before the bankruptcy order but after the petition which, if the right notice had been on the register, could not have been disposed of safely as regards the purchaser. That is loss suffered by the trustee in bankruptcy, in that the relevant property, having been disposed of, does not form part of the estate of the bankrupt which vests in the trustee in bankruptcy, or, alternatively, it is an asset which the trustee in bankruptcy ought to be able to recover under section 284 but which he cannot recover because of the breach of duty. Whichever way you look at it, it is a loss to the trustee, and only indirectly to the creditors. For that reason I consider that, if there is a claim, it is one properly asserted by the trustee in bankruptcy.

I come back to the general question, whether the promulgation of Bankruptcy Rule 149A in 1925, and in turn its statutory successors, was intended to give the trustee in bankruptcy a cause of action if loss was caused by a failure to comply with the duty imposed by the rule. Of course, for this purpose, intention is not a subjective matter. It is not a question of speculating as to the subjective intention of the maker of the relevant rule: the Lord Chancellor with the concurrence of the President of the Board of Trade or now the relevant Secretary of State. It is to be ascertained objectively from the statutory text, in its proper context, by reference to the principles already discussed.

The absence of a sanction in the legislation for failure on the court’s part is at the forefront of Mr Ullstein’s submissions, understandably because of what was said in Cutler. For my part, in the present case I find that a less cogent point than it would have been in a different context. I do not consider that the obligation laid on the court by the rule can be considered no more than a “pious aspiration” in the absence of a sanction. I would find it surprising, in rules designed to implement the law as to bankruptcy laid down by the 1914 Act or the 1986 Act, if there were an explicit sanction for a failure on the court’s part to perform a duty such as that under rule 6.13. It is relevant that the petitioning creditor can itself make the necessary request to the Chief Land Registrar, so that the protection afforded by the system does not depend on action by the court under rule 6.13. However, I agree with Mr Ullstein that this does not take the matter much further, because anyone who knows about bankruptcy procedure would know about the obligation under rule 6.13 and the court’s practice of complying with it, and would not expect to have to serve the request itself.

In the end, I think the decisive point in the present case lies in the comparison with the Land Charges Act and the Land Registration Act, they being part of the statutory context in which the relevant duty was first imposed, by rule 149A. The judgments of the majority in Sharp do not afford much support to Mr Ullstein, but they are not binding on the point which we have to consider. Mr Ullstein’s best point is that, in one of the relevant Acts, Parliament gave the relevant person immunity from suit, but in return provided an indemnity out of (originally) an insurance fund paid for by users of the Land Registry, and specifically provided that the right to an indemnity should extend to the trustee in bankruptcy if he suffered loss due to a failure to enter a creditors’ notice on the title to relevant registered land. This shows that Parliament had in mind the possibility that creditors might suffer from a failure on the part of the Land Registry to comply with its duties under section 61, and considered that a private claim against the Registry should not be permitted but that compensation should be provided for out of the insurance fund. By contrast, no such provision was made in the Land Charges Act, so that the Chief Land Registrar might be taken to be open to suit for failure under that Act. Equally there was no immunity for the court under rule 149A, so, again, a breach of that duty might be taken to be actionable.

The argument by comparison with the other Acts can be put either way. I have set out Mr Ullstein’s version of the point. However, the majority of the Court of Appeal was not particularly taken with that argument, as applied to the Land Charges Act, in Sharp. The bankruptcy rule is at one further remove, requiring a claim not against the Chief Land Registrar but against the court. The need for immunity on the part of the Land Registry staff arose (in 1875) from the entirely new nature of the system of land registration, and from the fact that dealings by way of registration might lead to a party losing title to land which, under the unregistered system, he would not lose. It was clearly thought to be appropriate, in that legislative context, to exonerate the Land Registry staff from any personal liability but to set up a compensation system under the Act. The much more limited scope of the Land Charges Act did not call for that approach.

The point that is not altogether clear is why it was thought appropriate to provide for an indemnity under section 61(7) of the Land Registration Act for a trustee in bankruptcy in the case of loss caused by a failure to comply with the duty under section 61(1). For reasons given at paragraphs [45] to [50] above, this may have been because it was relatively likely that there would be failures to enter the appropriate notice on the title to the relevant registered land, or at least delay in doing so, and that this might be for reasons not involving fault on the part of the Land Registry staff. Since there was already immunity from suit on the part of the Chief Land Registrar under the 1875 Act, there would have been no question of creating a private right of action, but it may have been felt that the risk of a failure of the system was sufficiently substantial for an indemnity provision to be justified. (Although I am not aware of any public discussion of the point, it may be that this provision was omitted from the 2002 Act because such cases had proved to be very rare, or because they were likely to be very rare in modern circumstances.)

In my judgment this is the explanation for the right of indemnity in section 61(7). No other logical or reasoned basis for it has been suggested to us, nor has one occurred to me. It explains the distinction between the Land Registration Act and the other legislation concerned in 1925. Neither under the Bankruptcy Rule nor under the Land Charges Act would the same risk arise. The only risk in those cases would be of failure to perform a relatively simple duty, to give notice of the petition to the Chief Land Registrar, and to enter the petition against the name of the identified debtor in the pending action register.

I have not referred to the judge’s reasoning on this aspect of the case. On an important aspect of the case she was under a misapprehension, as were Counsel at the time, because the source of rule 6.13 had not been traced as far back as 1925. She was led to believe that it first came on the scene in the 1952 Bankruptcy Rules. In other respects as well the submissions made to her differed from those in this court. Nevertheless, on many points I agree with her.

However, on the central issue, whether in enacting rule 149A it was intended that failure to comply with the duty should give rise, if loss resulted, to a private claim for damages, I am unable to agree with her conclusion. In my judgment the rule, seen in its proper context of the other bankruptcy rules and the changes made at the same time by way of the Land Charges Act 1925 and the Land Registration Act 1925, does not disclose any such intention. No such sanction is necessary to make the rule more than a “pious aspiration”, because, on the part of relevant court officers and staff, the obligation would be performed as a matter of course. It is not a case in which, in Lord Normand’s words, “otherwise the duty might never be performed”. The fact that occasionally there may be a failure due to oversight does not seem to me to be a sufficient reason to find a private remedy for breach of the obligation created by this rule. That is supported by the fact that the petitioning creditor can, if he or it wishes, make the request to the Chief Land Registrar itself, albeit incurring a modest fee in so doing.

If, as Lord Browne-Wilkinson said in X v Bedfordshire County Council, cited above, the basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action, but a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty, then in my judgment in the present case the correct view is that the enactment of the new bankruptcy rule in 1925 was not intended to confer a private right of action for failure to comply with the obligation created by the rule. I therefore respectfully disagree with Judge Marshall, having had the benefit of different and probably fuller argument than she had on the points argued before us, and I would allow the appeal.

On the Respondent’s Notice, on the other hand, I entirely agree with her. If (as I think) there is no private claim for failure to comply with the obligation in the rule, I cannot see how a common law duty can be said to exist to do that which only arises as a result of the rule, such that a private claim could be made under common law, independently of the statute, by reason of the failure to do what the rule requires.

Judge Marshall referred on this point to two House of Lords decisions which had been cited to her, as they were to us. In Gorringe v Calderdale MBC [2004] UKHL 15, Lord Hoffmann said at paragraph 23, à propos of what he had said in Stovin v Wise [1996] AC 923:

“Since the existence of these statutory powers is the only basis upon which a common law duty was claimed to exist, it seemed to me relevant to ask whether, in conferring such powers, Parliament could be taken to have intended to create such a duty. If a statute actually imposes a duty, it is well settled that the question of whether it was intended to give rise to a private right of action depends upon the construction of the statute … . If the statute does not create a private right of action, it would be, to say the least, unusual if the mere existence of the statutory duty could generate a common law duty of care.”

Later, at paragraph 32, he said:

“Speaking for myself, I find it difficult to imagine a case in which a common law duty can be founded simply upon the failure (however irrational) to provide some benefit which a public authority has power (or a public law duty) to provide.”

He made it clear that he was dealing only with a case where the attempt was to impose a common law duty to act based solely on the existence of a public law duty, in that case a broad duty. He differentiated it from others where a public authority has done acts or entered into relationships or undertaken responsibilities which give rise to a common law duty of care. So here, although the duty is a narrow and specific one, it is not one in which the court has done any act or entered into a relationship or undertaken any responsibility towards the petitioning creditor, other than to issue and process the bankruptcy petition.

In the same case Lord Scott put it more firmly at paragraph 71:

“If a statutory duty does not give rise to a private right to sue for breach, the duty cannot create a duty of care that would not have been owed at common law if the statute were not there. If the policy of the statute is not consistent with the creation of a statutory liability to pay compensation for damage caused by the breach of the statutory duty, the same policy would, in my opinion, exclude the use of the statutory duty in order to create a common law duty of care that would be broken by a failure to perform the statutory duty.”

Reliance was also placed, on both sides, on the House of Lords decision in HM Customs & Excise v Barclays Bank [2006] UKHL 28. That case was not concerned with a statutory duty, but with a duty imposed on the bank by a court order, namely a freezing order. The claimants had obtained such an order and had given notice of it to the bank, but in breach of the order the bank failed to prevent funds being withdrawn from one of the relevant accounts. The claimants sued the bank for damages for negligence. The House of Lords held that the bank was not liable. Lord Hoffmann put the position in more definite terms than he had (though not more so than Lord Scott had) in Gorringe, at paragraph 39:

“39.

There is, in my opinion, a compelling analogy with the general principle that, for the reasons which I discussed in Stovin v Wise, the law of negligence does not impose liability for mere omissions. It is true that the complaint is that the bank did something: it paid away the money. But the payment is alleged to be the breach of the duty and not the conduct which generated the duty. The duty was generated ab extra, by service of the order. The question of whether the order can have generated a duty of care is comparable with the question of whether a statutory duty can generate a common law duty of care. The answer is that it cannot: see Gorringe v Calderdale Metropolitan Borough Council. The statute either creates a statutory duty or it does not. (That is not to say, as I have already mentioned, that conduct undertaken pursuant to a statutory duty cannot generate a duty of care in the same way as the same conduct undertaken voluntarily.) But you cannot derive a common law duty of care directly from a statutory duty. Likewise, as it seems to me, you cannot derive one from an order of court. The order carries its own remedies and its reach does not extend any further.”

Mr Ullstein relied on the speech of Lord Mance in this case because at paragraph 110 he provides one of the few judicial commentaries on Sharp, as follows:

“110.

The closest case to the present on which Mr Sales can rely is Ministry of Housing and Local Government v Sharp. But the statutory scheme there was aimed at protecting persons in respect of property purchases and, so far as necessary for that purpose, overriding other proprietary interests. Again, it would have been incongruous if a person relying on such a certificate to his detriment could have a claim because of the closeness of the situation to Hedley Byrne, but the minister whose cause of action for reimbursement was extinguished had none … I consider that Ministry of Housing and Local Government v Sharp was rightly decided. It was referred to without disapproval in the speeches of both Lord Templeman and Lord Griffiths in Smith v Eric S Bush [1990] 1 AC 831, 846d-g, 862f. The result reached was eminently fair, just and reasonable. The role of land registrar was established as a public service to keep accurate records and provide reliable information. The information was to enable buyers to be secure in the property rights they acquired but concomitantly to override other property interests in the public interest in order to achieve this, even though such security and overriding occurred through negligence of the registrar or a clerk fulfilling his function. It would be unjust if no compensation could be obtained for the adverse consequences on property rights of negligence of an official performing such a service in the public interest.”

Lord Mance endorsed Sharp in that passage for what it decided. As I have already said, it did not decide that the local registrar, who was subject to the statutory duty, was liable for loss caused by a careless failure to perform that duty, and the basis on which the council was held vicariously liable for the negligence of their employee who carried out the search and issued the inaccurate certificate was a common law duty derived from having undertaken those tasks, which was broken by not having performed those tasks with reasonable care. That is quite different from the present case.

The recent cases in the House of Lords show that, if the statutory obligation is one which does not carry with it a private remedy, it has to be ignored for this purpose. To derive a common law duty from the existence of the statutory duty in such a case would be to contradict what has been found to be the intention of the statute.

If the statutory obligation is left out of account for this reason, I cannot identify any possible basis for a common law claim for damages for failure to give notice of the bankruptcy petition to the Chief Land Registrar. There are several reasons for this. The most basic is that this is not a question of a duty of care; it would be a duty to do an act, which is either done or not done, and the complaint would be of failure to do it at all, not of doing it but without proper care and attention. Another is that, absent the obligation imposed by the rule, the petitioning creditor would have every reason to make the request itself, as it would be entitled to do. The only basis for saying that the creditor places reliance on the court is that the rule requires the court to give the notice. If it did not, it would be natural for the petitioning creditor to give notice.

Mr Ullstein relied on Sharp, by analogy, submitting that the employee of the council for whose fault the council was found to be vicariously liable was only doing that which was required by the Act. The difference is that the employee was carrying out a search of the register, and issuing a certificate as to the result of that search. Either in the search, or in recording its result, the employee was careless, by not noticing, or not recording, the relevant local land charge. That is quite different from the fault alleged in the present case, of not sending to the Chief Land Registrar a notice of the petition and a request to enter it in the register of pending actions. There might, I suppose, be a case where a fault could arise under the rule through careless performance of the statutory duty, for example if the notice gave the wrong name for the debtor. I do not need to consider what the position would be in that case. The present case is simply that of not giving the notice at all, not of trying to do so but failing to do so properly and effectively through lack of care or attention.

To align the present case with Sharp, and with other cases of voluntary assumption of responsibility, Mr Ullstein argued that there was an implicit statement on the part of the court staff, when accepting the petition for issue, that the duty under rule 6.13 would be performed. He could not allege that there was any express statement to that effect. The implicit statement could only arise from the existence of the rule. Responsibility was no more voluntarily assumed in the present case than it was by Barclays Bank on being served with the freezing order. The duty was imposed from outside, by the rule in one case and by the court order in the other. In the present neither on that basis nor on any other can a common law duty be found to do that which is the court’s obligation by virtue, and only by virtue, of the rule.

Judge Marshall summarised her conclusion on this point at paragraph 118 as follows:

“118.

The complaint here is simply that the Defendant did not do an act which was in fact what a statutory rule required. Without that provision, that omission would not give rise to a claim in negligence by the Claimant against the Defendant. Indeed, without that provision – or some other factual assumption of responsibility which is not this case – even if the Defendant had taken steps to send the relevant notice but had (say) carelessly misaddressed it so that it did not arrive, no cause of action would arise, because there would have been nothing giving rise to any duty to send the notice at all in the first place, and thus no damage caused by the particular carelessness. The defendant’s only obligation to do anything at all arose out of the statutory provision. There is therefore no basis for any cause of action apart from under that provision.”

I agree. In my judgment, the Respondent’s Notice fails.

I agree.

I agree with Lloyd LJ that the appeal should be allowed. I agree with his analysis of the difficult decision of Ministry of Housing and Local Government v Sharp [1970] 2 QB 223. For the reasons he gives, it throws little light on the question raised in this case, that is whether there is a private law right of action against a court for breach of the statutory duty in Insolvency Rule 6.13. Lord Mance’s approval, at paragraph 110 of HM Customs & Excise v Barclays Bank [2006] UKHL 28, of the result in Sharp was obiter and relates only to the facts and issues in Sharp which are different from those in the present case.

The test on the question raised is that stated in Cutler v Wandsworth Stadium Ltd [1949] AC 399, confirmed in X v Bedfordshire County Council [1995] 2 AC 633. The relevant passages are cited by Lloyd LJ. The absence of another sanction is an indication that there may be a private law right of action.

The general rule stated in the earlier cases (Doe v Bridges (1831) 1 B. & Ad. 847, and Pasmore v Oswaldtwistle UDC [1898] AC 387) was that “where an Act creates an obligation and enforces the performance in a specified manner, we take it to be a general rule that performance cannot be enforced in any other manner” (Lord Tenterden in Doe at page 857).

In Cutler, Lord du Parcq, at page 411, endorsed the principle stated by Lord Macnaghten at page 397 in Pasmore:

“Whether the general rule is to prevail, or an exception to the general rule is to be admitted, must depend on the scope and language of the Act which creates the obligation and on considerations of policy and convenience.”

There is no specified sanction in this case and the general rule as formulated does not apply. However, Lord Macnaghten’s broad approach to statutory construction is in my view appropriate to the issue whether a private law right of action exists in a particular statutory context. In Cutler, Lord Normand stated, at page 412:

“. . . the proper approach to the case is to consider whether on a true construction of the statute as a whole a right of action by an individual aggrieved by the breach of one of the statutory duties ought to be implied.”

In the absence of a specified sanction, Mr Ullstein QC, for the respondent, rightly refers to Lord Simonds’ fear, expressed at page 407 of Cutler (and by Lord Normand at page 413), that, in the absence either of something in the nature of a penalty or a right of civil action, a statute “would be but a pious aspiration” (cited by Lloyd LJ at paragraphs 38 and 39). I agree with Lloyd LJ that the fear has less relevance in the present context than in most other contexts. Court Officers and staff have, it may be assumed, every reason to carry out their duties efficiently, and no reason to fail to do so. In most statutory contexts, there will be a motive not to comply or at least an advantage in not doing so.

I agree with Lloyd LJ’s analysis of the difference between the regime for land registration and that for land charges and its consequences for present purposes. In the land charges context, I do not find it surprising that an explicit sanction for a court’s failure to perform a duty under rule 6.13 has not been included. It does not follow from the perceived need to provide a statutory remedy for failures in the land registration context that the absence of such a scheme for land charges requires the existence of a private law right of action.

The statutory duty in Rule 6.13 is upon “the court” (formerly under earlier rules “the Registrar”) and while, as an act of an administrative character, it may be delegated, it is relevant that the statutory responsibility was and is upon a judicial officer or institution. I agree with Lloyd LJ’s reasoning at paragraph 62. In considering the central issue, weight must in my view be given to the duty being on a judicial officer. The act (or omission) is administrative and not judicial, but Parliament cannot be expected lightly to create a private law right of action against a court in relation to its duties.

The respondent’s present difficulties could not have been overcome by bringing the claim by way of judicial review. That is a possible way of enforcing the duty though I express no decided view. It may, in any event, be insufficiently quick to prevent a sale. However, had a claim for damages been included in an attempt to review judicially the court’s default, it would have faced the same obstacles as are faced in the present private law action.

There are schemes for compensating those who have suffered from administrative failures by courts but to create a private law right of action for a breach of a statutory duty such as the present would be to take a further substantial step. It is not a step which, in my view, was intended either in the 1926 statutory scheme, which appears to me to be the relevant one, or in subsequent and amended schemes.

I agree with Lloyd LJ, and the respondent, that the case for a private law right of action is not defeated by arguments about categories of creditor or the extent of their claims. I also agree that the trustee in bankruptcy would be an appropriate claimant.

On the respondent’s notice, I agree with Lloyd LJ at paragraph 93. The statements of Lord Hoffmann and Lord Scott in Gorringe v Calderdale MBC [2004] UKHL 15, and Lord Hoffmann in Barclays Bank, cited by Lloyd LJ, are decisive of the issue. In the absence of a claim for breach of statutory duty, there is no basis in this case for a claim in negligence. The judge reached the same conclusion but on the premise that there was a private law right of action for breach of statutory duty. I do not propose to comment on the issue on a premise which in my respectful view is erroneous. Moreover, I do not consider it appropriate to speculate as to what other objections there may or may not be to a claim in negligence which for the reason given above cannot arise in this case.