Off the Hook?
Not surprisingly, the Court of Appeal has recently held that a legal charge of land, which included angling lakes but did not expressly charge the fish in those lakes, created no security over the actual fish. The charge was in respect of the registered titles “which included the landowner’s rights ratione soli in respect of fishery within the land comprised in the titles, but cannot have included any specific rights in respect of all or any of the fish in the lakes.”
The land was sold by receivers appointed by the mortgagee. The receivers expressly gave no warranties as to the fish and had taken the view that the charge did not include the fish. Once the sale of the land completed, the mortgagor lost all rights to the fish.
The fish, like all fish, were considered to be wild animals, notwithstanding that they were enclosed in lakes from which they could not escape. As a result, the rights to them depended on control of the land. Once control of the land had passed by sale, so too did the rights to the fish. The judgment cost Borwick £1.1 million in prized fish stock and, arguably resulted in the purchaser receiving quite a gain. Whether it leads to a claim for a sale at an undervalue against the receivers is yet to be seen.
The case does, nevertheless, raise the question whether, if the legal charge had purported to expressly charge the live fish, would it have been an effective charge and if so, would it have been a floating or a fixed charge? In either case, several issues would have to be taken into account, such as:
- the fish’s ‘wild’ categorisation vs their being contained in enclosed lakes from which they could not escape;
- the effect of changes to the original fish stock, such as originally juvenile fish now being adults and/or the replacement of the original fish; and
- whether the charge extended to the progeny of the original fish!?
That said, the facts would lean towards it being a floating charge and mortgaging fish is not altogether an alien concept given that a tenant farmer may mortgage livestock under the Agricultural Credits Act 1928. However, that legislation does only apply to individuals, not corporates, and would likely only apply to farmed fish rather to fish such as those in the Borwick angling lakes.
(Borwick Development Solutions Ltd v Clear Water Fisheries Ltd [2020] EWCA Civ 578)
Simon Collins is a Partner in our Banking and Finance team.