137. Extension of time and rectification of register of charges Flashcards
- Extension of time and rectification of register of charges
General overview
[137.01] Section 137 empowers the court to extend the time for registration of the charge on grounds that the omission to register was accidental or due to inadvertence or some other sufficient cause or is not of a nature that is prejudicial to the creditors and shareholders, or that it is just and equitable to do so.
Extension of time
[137.02] The power to grant an extension of time for the registration of charges is a discretionary one. The court would take into account factors that it ought to take into account and by its order, strike a balance in protecting the interests of the chargee as well as the general body of creditors. The appellate court would interfere with the decision of the lower court only if it was shown that the exercise of discretion was based on a misunderstanding of the law or the evidence or based on a wrong principle: Media Development Authority of Singapore v Sculptor Finance (MD) Ireland Ltd [2014] 1 SLR 733; [2013] SGCA 58, CA. Prior to the onset of liquidation, a chargor could not object to the enforcement of an unregistered charge. Nor could the unsecured creditors complain because they had no proprietary interest in the company’s assets: Media Development Authority of Singapore v Sculptor Finance (MD) Ireland Ltd (above); applied Re Ashpurton Estates Ltd [1983] Ch 110 where it was held that “the established practice of the court, in the exercise of its discretion to grant an extension of time for registration of a charge under section 101 of the Companies Act 1948 (UK), was to make the order with a proviso that it was made without prejudice to the rights of parties acquired prior to the time when the charge became registered and it was also firmly established practice that the order would not be made once a company went into liquidation”. On the facts of the case, there were no exceptional circumstances that the court should not follow its normal practices and, since the registrar had properly considered the imminence of the company’s liquidation to be a relevant factor and the chargee had in its own interest deliberately deferred making the application, the registrar and the judge had properly exercised the discretion under the section by refusing to make the order; Re Ayala Holdings Ltd [1993] BCLC 256 ; Re City Securities Pte [1990] 1 SLR(R) 413 ; Re Ehrmann Bros Ltd [1906] 2 Ch 697, CA ; Power Knight Pte Ltd v Natural Fuel Pte Ltd [2010] 3 SLR 82 ; Re Telomatic Ltd [1994] 1 BCLC 90 . Application by the company for extension of time to register charge was disallowed because the liquidation of the company had commenced: Re Resinoid & Mica Products Ltd 1982] 3 WLR 979, CA ; cf Re Braemar Investments Ltd [1989] 1 Ch 54, Ch D ; considered in Re MIG Trust Ltd [1933] 1 Ch 542, CA where allegations of fraudulent preference were dismissed and extension of time granted to register the charge even when the company was wound up compulsorily; Re Barrow Borough Transport Ltd [1990] 1 Ch 227, Ch D ; PD Manufacturing International Pte Ltd v ING Bank NV [1999] SGHC 236, HC ; Re LH Charles & Co Ltd [1935] WN 15 . The order of court granting extension of time for registration often includes a proviso that “this order is without prejudice to the rights of any parties acquired prior to the time when the said debenture is to be registered”. Such a proviso will not improve the priority of a second floating charge that was created on the same day as the first floating charge that was not registered under s 95 of the Companies Act 1948 (UK) by mistake
Rectification of register
[137.03] See s 12B and the cases therein: Re CL Nye Ltd [1971] Ch 442 where the English Court of Appeal held that although under s 101 of the Companies Act 1948 (UK) the court could order the rectification of an omission or a misstatement in the register it had no power under that section to order the deletion of a whole registration; applied National Provincial and Union Bank of England v Charnley [1924] 1 KB 431 ; and Re Eric Holmes (Property) Ltd [1965] Ch 1052; [1965] 2 WLR 1260; [1965] 2 All ER 333 . A chargor could rectify a mistake made in the date of the resolution authorising the creation of the debenture that was registered with the registrar, and that the result of the correction would be to make the first registration valid under s 14(4) of the Companies Act 1900 (UK); that no further registration of debentures subsequently issued was necessary; and that no order for extension of time need be made: Re the Harrogate Estates Ltd [1903] 1 Ch 498, Ch D . An exceptional case would have to be made out to justify the court in making an order for rectification of the register of charges under s 101 of the Companies Act 1948 (UK), after a company had gone into liquidation and the rights of unsecured creditors in the liquidation had crystallised: Re Mechanisations (Eaglecliffe) Ltd [1966] Ch 20, HC . Refer to powers of the High Court and the registrar upon application by the company and on its own initiative: ss 12B, 12C and 12D of the Act.
