Registration Flashcards

Question

Howell, “Notice: A broad view and a narrow view” [1996] Conv 34 at pp 40-43

Answer 1

There seem to be two “types” of notice applied in disputes relating to land. The paper differentiates between them and argues that the “narrow” doctrine should have a wider role than it has been given since 1925. 1) Narrow doctrine: a. priority of interests in land is, in general, decided on the “first in time principle” b. but where the conflict is between a prior equitable and later legal right, priority will be given to the purchaser of a legal estate who is bona fide without notice of the earlier equitable right. 2) Wide doctrine: a person is affected by prior “rights” of which he knows (has applications beyond land law: ex. in the tort of inducing breach of contract, the third party must know of the existence of the contract) A person whose interest is registrable but unregistered, unless protected by overreaching, will be void against the purchaser with notice. He may, however, not understand the differences or their justification between the narrow (where his interests are not saved) and broad (where they might be): indeed the most recent statement on the role of notice in land law (Barclays Bank v O’Brien) doesn’t differentiate between them. IAO the narrow doctrine of notice may have a place more generally in (registered) land law. Arguments in favour: 1) There has always been unease at the prospect of a purchaser of a legal estate defeating a prior equitable interest of which he is fully aware simply because the encumbrancer didn’t register (there’s nothing which makes a legal interest morally superior to an equitable one) 2) It’s difficult to exclude notice (foreseen by the Royal Commission on the Transfer of Land 1857: we are aware that it has been said that the judges would, notwithstanding any law to the contrary, in the course of time contrive some means of neutralising any enactment which went to exclude the doctrine of notice”, but then said “we cannot adopt these views”) 3) The retention of notice doesn’t pose insuperable problems for conveyancing (ex. in the US, registration of title was effectively abandoned notice is a vital part of the system of deeds registration) 4) Acceptance of actual notice would allow a more equitable allocation of priority by ensuring that the results of cases such as Midland Bank v Green accord with common sense. It might be argued that if actual notice were admitted, so must constructive notice. But IAO disagrees (ex. in the deed register, only actual notice displaces the priority given by the register). The admission of notice would present “far fewer problems than is feared”.

Answer 2

1. Held: Receipt based constructive trusts cannot be employed against purchasers who are not the primary wrongdoer because it would fly in the face of statutory protection for purchasers (if the purchaser is the primary wrongdoer then personal liability can be imposed) NOTE: 2. Australian analysis is coloured by: (i) Wider acceptance of receipt-based liability than English law (ii) Statutory provision where fraud defeats registered disponees: see Cooke and O’Connor, Purchaser Liability to Third Parties in the English Land Registration System: A Comparative Perspective (2004) 120 LQR 640 at 660-665: * “We have seen that under the New Zealand approach to Torrens fraud, a purchaser who has actual, or perhaps even constructive, knowledge that the transfer is in breach of trust is likely to be defeasible for Torrens fraud. In Australia, Mr Peffer would have to argue an in personam claim against Mrs Rigg. This might be formulated as a claim that she either knowingly assisted the trustee in a breach of trust, or was a knowing participant in a breach of trust, pursuant to both limbs of Barnes v Addy. On the present state of the authorities, it is difficult to say whether such a claim would succeed. The difficulty is that even if the elements of the claim are proved, the Australian courts will not allow an in personam claim to upset the registered proprietor's title if it would undermine the principle of indefeasibility. But this limitation is indeterminate, for it can be said that any in personam claim that upsets a registered title circumvents the principle of indefeasibility. The limitation, in effect, requires the court to balance the equitable or remedial considerations against the registrations system's object of security of transaction. Judges differ as to how they balance the competing policy interests.” 3. What lessons can be learnt by English law? Should English law also distinguish between obligations accepted by a purchaser and obligations imposed by law?

Answer 3

1. Issues considered by the court: (i) What guarantees are provided by registration (ii) Meaning of rectification (iii) Process of indemnity 2. Decision: whenever B derives title under a forged disposition, B will be entitled to an indemnity following rectification. Cheshire Homes was decided per incuriam. 3. Unanswered questions: (i) What is the position where there is no forgery (eg. mistaken registration like Knights Construction v Roberto Mac)? It appears that they wouldn’t be entitled to an indemnity because it would fall under the general rule as it is not covered by para 1(2)(b)). This highlights the problem with the court focusing on para 1(2)(b) rather than (say) s58 (conclusiveness); it doesn’t get to the heart of the issue raised by such cases: what does the fact of being registered mean that you are entitled to if that register is changed, and why? - Consequence: forgery cases are now treated differently from other cases. Whether that is justified is a different matter, but forgery is not unique – it is a void disposition just like a mistaken one, or one where the transferee did not have capacity to transfer; it is fraudulent, but not all fraudulent transfers involve forgery! (ii) How does it fit together with Gold Harp v McLeod (2015) (read the damn case), whose tenor is somewhat inconsistent with Swift, in that it appeared to hold that rectification was an entirely separate issue to overriding interests and loss, and doubted that the right to rectify could amount to an actual occupation overriding interest. 4. Thus we wait for a court to tell us a complete picture of what the “statutory magic” of guaranteed title achieves, but perhaps the provisions in LRA 2002 aren’t amenable to a single picture 5. The case: (i) First had to show a rectification and not alteration, which depends on establishing that Swift had more than a bare legal title (which was always subject to the owner’s right to rectify which overrode the charge because of actual occupation). Patten LJ reached this conclusion by deciding that Malory, while indistinguishable, was decided per incuriam. (ii) Then argued that para 1(2)(b) meant that Swift’s charge must be treated as if not a forgery for the purpose of calculating loss.

Answer 4

1. Malory v Cheshire Homes: (i) First Instance had effected a statutory work-around Malory but CoA’s “more satisfactory” conclusion was that the decision that transferee would hold on trust for transferor where the registered transfer was forged, was wrong. (ii) That conclusion in Malory has been subject to sustained criticism from two perspectives: (a) The case fatally undermines the point of registration (since it means that registration only confers legal title) because it robs the guarantee of title of any value (Cooke (2013)) and (b) is therefore inconsistent with the principles underpinning LRA 2002 (ii) There is nothing that can be said to trigger the imposition of a trust, so Malory is at odds with Westdeutsche 2. Was the charge (no longer bare) always flawed because of the owner’s overriding interest? (i) CoA held that though alteration to give effect to an overriding interest doesn’t constitute rectification (Re Chowood) in cases of forgery para 1(2)(b) deems that the alteration is prejudicial and therefore can constitute rectification 3. Was the right to rectify capable of existing as an overriding interest? (i) CoA said yes – but Gold Harp (2015) doubted the validity of the argument (at [34]). Lees thinks that the Swift decision is preferable because it strikes the right balance between protecting the careful purchaser and protecting those for whom the loss of the home would be particularly difficult – it allocates the land to those who desire it most. But it loses this balance if the purchaser doesn’t get an indemnity because of the existence of this overriding interest – which makes the CoA’s reliance on para 1(2)(b) somewhat unfortunate. Re Chowood (rectification made the applicants in no worse position than before no indemnity) would make sense if the overriding interest is a substantive right like a long equitable lease, but not the right to rectification because it is a discretionary right! 4. My reflections: 1) Sure it might be desirable that the CoA took a broader view and didn’t focus on forgeries, but if it did then would it not deprive para 1(2)(b) of any meaning? Why was the paragraph enacted anyway? Smith appears to suggest that its predecessor (a special provision inserted into the LRA 1925) was enacted in response to the A-G v Odell principle that a purchaser under a forged transfer obtained no good title and was not entitled to an indemnity. Therefore, if that provision, inserted to counter these specific facts, was hastily transferred into the 2002 Act, so as to create an exception to s58 conclusiveness (rectification to give effect to an overriding interest does not cause loss – Re Chowood) by appearing to remedy an exception that by virtue of s58 no longer exists, then Lees’ position might be more defensible.

Answer 5

1) Where a person is registered as the proprietor of an estate in registered land, HM Land Registry guarantees that title. This means that if it is necessary to rectify the register to correct some mistake that has occurred, any person suffering loss as a result is entitled to payment of an indemnity from the Registry.” 2) Indemnity is not always available where there is rectification – sch 8 para 5 says that where the loss is suffered wholly or partly as a result of C’s fraud or wholly as a result of their proper care, they are not entitled to indemnity (but the High Court had held that Swift did not lack proper care because it had done everything to the industrial standard at the time – though Milne thinks more would be expected of lenders today [this took place in 2006]) 3) Re Chowood a. Concerned a registration inconsistent with a squatter who had acquired rights to the land, where the registered proprietor had notice. It was not rectification in that case because (per Law Comm 271) rectification is when the correction prejudicially affects the title of the registered proprietor; in this case it doesn’t so prejudicially affect it. 4) Problems with the right to seek alteration operating as an overriding interest: a. For a right to override it must affect the estate immediately before the disposition (s29(1)). If the fraudster registers before the disposition to the purchaser, then it can override, but if the fraudster never registers, then it can’t possibly override because prior to the disposition to the purchaser, there is no right to apply for alteration! b. Secondly, the LRA treats a pending land action as a proprietary right for the purposes of the Act, but provides that it shall not be capable of being an overriding interest as a result of belonging to a person in actual occupation. So an application to the court for an order for alteration of the register to correct a mistake, which would give rise to a pending land action, cannot operate as an overriding interest. It would be odd then if the right to seek alteration when it was not being enforced by court proceedings could be an overriding interest. 5) Problems with para 1(2)(b) a. It’s unnecessary in light of s58, even for the avoidance of doubt. Law Comm 271: “Under the legislation then current [at the time of Odell], registration was merely a ministerial act by the registrar. It did not confer on the transferee any estate or right that he or she did not have before the registration. That principle was itself changed by the Land Registration Act 1925: see s 69(1). Its effect is replicated in Cl 58 [s58 LRA] of the Bill.” b. Drafting: the provision uses “rectified” and “rectification” rather than “altered” and “alteration” – had it meant what it says it meant, then a pre-condition for the operation of para 1(2)(b) would have been the very thing that the paragraph is there to establish – loss (mine but this can readily be explained because if it had used ‘alteration’, then the provision saying that there was loss means that it should have said rectification (while if it said rectification, then it was supposing the very thing it was set out to provide) – grandfather paradox?) c. Problematic when the registration is void for reasons other than forgery 6) Unfortunate that the CoA used para 1(2)(b) – it could have decided that Chowood didn’t apply where the right concerned was the right to apply for alteration of the register because: a. It wasn’t an interest in land b. It couldn’t be an overriding interest c. It couldn’t be intended that Chowood should extend to this right 7) It’s not at all clear that the para was intended to neutralize Chowood – it’s simply to counter the Odell argument that the dispone under a forged disposition doesn’t suffer any loss when the registration is removed.

Answer 6

1) A common problem is that an interest in land is claimed by two people as a result of a mistake or fraud of a third party who is not worth suing. Common Law usually takes an all-or-nothing approach, but Registration improves this situation with the possibility of indemnity when 1) a loss is caused by rectification or 2) a loss requires rectification to be remedied. So if the wrong person is registered, whoever loses the interest is indemnified. 2) Re Chowood: a purchaser bound by an overriding interest is not entitled to indemnity because rectification recognizes existing legal rights and doesn’t cause any loss to the purchaser. Three issues discussed in Swift 1) Effect of forgeries a. Cheshire Homes, followed by Fitzwilliam, held that a registered transfer vested legal title in the transferee but left the equitable title in the original proprietor whose signature had been forged. i. This was criticized because it diminished the effect of protection for purchasers but commentators couldn’t agree on whether the purchaser should be protected by s58 (conclusiveness) or s29 (defeating unprotected interests) b. Swift decided not to follow Cheshire Homes – the decision is widely welcomed because of the desire to make land transactions more secure by protecting the registered proprietor, but despite the language of some commentators, no one approach is better than the other. The purchaser wasn’t misled by the register, but by the identity of the vendor! But Swift is probably rightly welcomed because the registration can still be challenged on rectification, allowing the relative merits of the parties to be heard. i. However, the reasoning (that Malory was per incuriam s114) is curious, because s114 could have other meanings, and because it has been dropped from the Act ii. Whether it is s29 or s58 that confers equitable title can be important because s29 applies only to dispositions for value and subject to overriding interests, while s58 is unlimited. As Swift does assume that overriding interests bind the new proprietor, it’s probably s29 that is providing the protection (mine CF Lees who says the court should instead have relied on s58 – she appears not to have noticed the inconsistency. It highlights how easily you can manipulate something to fit one outcome, only to have it have a much bigger effect on other unrelated things. If the court had used s58 then it would imply that s58 is also subject to overriding interests (mine but surely this is the case?!?), or something else…) 2) Para 1(2)(b) itself a. Was enacted in response to Odell; its application to this case appears “entirely fortuitous”. But it is supported by the fact that in most cases, the actual occupation is by someone other than the vendor, so you should make inquiries. But it’s nonsense to make inquiries of the interest claimed by the vendor, who is himself in occupation. (mine perhaps this is one objection to only the occupation having to be reasonably discoverable, and an argument to say that their interest must also be discoverable? This would also allow the court in Hypo-Mortgage v Robinson to conclude that the child was in occupation but that his interest was not readily discoverable, as it would be nonsense to inquire whether an infant child consents to sale. But this would be indistinguishable from a doctrine of notice – is it proof for the contention that this actual occupation doctrine is actually no different from notice?) 3) Right to rectify as an overriding interest a. Maybe this is unlike other overriding interests in that indemnity should be payable without recourse to para 1(2)(b) in that the right to rectify is one where indemnity is usually available. The nature of the right is linked with indemnity entitlement; actual occupation might indicate fault on the purchaser’s part, but this can be reflected by refusing or reducing indemnity. (mine is this realistic? You’re at fault so you get compensated less? Like contributory negligence? So you’re getting a diminished share of a property right because you were negligent? Does it turn a property right into a personal right? I guess rectification is a personal right against the registry, but it’s supposed to be in lieu of a proprietary right?) b. Should it be an overriding interest in the first place? In Swift it was conceded, but in both Swift and Gold Harp there was no need for an overriding interest because rectification was available against the transferee anyway. The overriding interest analysis adds little to registration – should it be discarded?

Answer 7

Overriding interests will bind purchasers and/or lead to alteration of the register without compensation. Why do we have them? 1) Register replaces title deeds, so overriding interests should be whatever interests are not usually found on title deeds (historical explanation, rejected by Law Comm) 2) In the interest of simplicity and certainty overriding interests should be narrow, but they should include all interests that require protection against purchasers, but that are not reasonable to expect or sensible to require registration (Law Comm 158) 3) Ease of discovering the interest by purchaser (balancing unreasonableness of requiring registration and fairness of binding the purchaser) Sch 1 lists overriding interests for first registration; Sch 3 lists them for registered dispositions. The following discussion is on Sch 3:

Answer 8

Legal leases < 7 years are overriding interests, except those requiring registration under s4 (compulsory first registration) and s27 (registrable dispositions). They must be legal leases (City Permanent BS v Miller) because of the wording ‘grant’ implying deed, and because only legal leases bind purchasers automatically. Why are short leases overriding interests? 1) Often executed without legal advice; unreasonable to require registration 2) Usually full rent, so even if purchasers cannot get vacant possession there’s usually an income 3) Unlikely to be sold or mortgaged; registration would bring little benefit 2002 Act removes overriding status of future and discontinuous leases; these are undiscoverable risks for purchasers but para 1 lessees aren’t always in occupation because they might have sublet!

Answer 9

1. Most controversial, because it doesn’t identify a specific interest, opening the potential for a wide range of interests to bind purchasers by virtue of actual occupation. 2. It’s the right and not actual occupation that binds purchasers. 3. Therefore, C must prove two elements: 1) Actual occupation 2) Interest in land (legal or equitable – though legal interests bind automatically) – must be a proprietary and not personal right: National Provincial Bank v Ainsworth 4. Which rights are proprietary? 2002 Act identifies three categories: 1) Equities (claims to equitable remedies) – s116 2) Estoppel claims – s116 3) Rights of pre-emption – s115 5. Statutory right to alter the register is an overriding interest – Malory Enterprises v Cheshire Homes. The result in that case was expected because C already had a beneficial interest which could be an overriding interest, but it remains to be seen what would happen if C had no conventional proprietary interest. 6. Overriding status doesn't improve the right – it just removes the susceptibility to being defeated by failure to register. Therefore the overriding interest arising from the trust in Boland is still capable of being overridden if the mortgage money had been paid to two trustees, as in Flegg, where CoA held that the right was overriding no matter how many trustees, but HL reversed the finding. This is surely correct, as there is no reason why overriding interests should get extra protection in registered land. 7. What if the occupier approved of the registered transaction? (i) Bristol v Henning: two people bought a house together, both aware that a mortgage was required in order to fund the purchase. The conveyance and mortgage were taken in the name of one of them; CoA held that the other could not claim an interest binding the mortgagee because she authorized him to raise the money by mortgage (the intention being imputed from the fact that the house couldn’t have been bought without the mortgage) (ii) Paddington BS v Meldelsohn: Sch 3 doesn’t change the priority of rights; if nothing in the general law gives priority over registered rights, then Sch 3 won’t give them a bigger right (Lord Browne-Wilkinson) (iii) Abbey National v Cann: extended the principle – here C was aware that some money had to be raised on their joint purchase, but the sum that ended up being raised was far greater than necessary for the purchase. Mortgagee was nevertheless held to have priority for the entire sum raised. 8. Therefore a mortgage to fund a purchaser, or to enable something to be built, will likely be within Henning, but a later mortgage will usually be to the proprietor’s sole benefit, and would fall under Boland. If the occupier clearly approves a mortgage, it will fall under Henning, but more problematic will be situations where C is aware of the mortgage but approval is neither sought nor given. 9. From a policy viewpoint, perhaps more rights should be recognized as proprietary now that registration is the norm, because purchasers will only be bound when a right is registered, or C is in actual occupation. 10 .Actual occupation Meaning of actual occupation used to be debated between the dictionary meaning, and one embodying a doctrine of notice, but these debates are silenced by the 2002 Act. Law Comm stresses that notice is not being applied (271, 8.62), but then says at para 2(c) that a purchaser is not bound by an interest, absent actual knowledge, where the occupation wouldn’t have been obvious on a reasonably careful inspection of the land at time of disposition. This is well-justified because certainty (actual occupation being more certain than notice) cannot be used to defend purchasers being bound by difficult to discover interests. 11. The occupation must be obvious – not the fact that an occupier has a beneficial interest. 12. Before 2002, it was clear that if the person is living in the house (Boland) it counts as actual occupation (regardless of whether the owner is also living there). But problems arose when occupation was alleged before completion of purchaser (Rosset, Cann). Roger thinks that the result after the 2002 Act will probably be the same, though the analysis may shift to the statutory language, asking instead of whether they were in actual occupation, whether the occupation was discoverable on a reasonable inspection

Answer 10

1) The agency principle in Rosset can’t be taken too far. Strand Securities v Caswell held that the licensor allowing his stepdaughter to occupy the flat doesn’t mean that she was occupying on the licensor’s behalf, and the latter was therefore not in actual occupation. 2) Temporary absences: Chhokar v Cchokar held that someone who went to hospital for a few days to have a child retained occupation. Tizard held that a wife who went to the house everyday to visit the children also had actual occupation. Difficulty is drawing the line: what if I went on holiday for a year? 3) How far do we consider the specific circumstances of the purchaser? What if in Chhokar the husband removed all the wife’s belongings before selling, so that the purchaser couldn’t reasonably have discovered her presence? (shows the indefeasibilityis undesirable! In practice, she would have to move house with a new baby!) 4) When does occupation end? Thompson v Foy – occupier had removed her belongings but left her furniture. Nobody else had taken possession. Held that her intention to permanently leave the property was fatal to actual occupation. Approved in Link Lending v Bustard, which came to the opposite conclusion because C left for a care centre but intended to return to the home when her health improved. What is significant is how much the outcome in each case depends on the subjective intention of the claimant – something surely indiscoverable by the purchaser. But Roger thinks it can be defended because of para 2(c). 5) Can the exercise of an easement ever amount to actual occupation? Chaudhary v Yavuz said that the exercise of a right of access by a staircase didn’t suffice because it was an example of use rather than occupation, but the court left open the question for easements for storage or parking (closer resemble occupation). 6) Must C occupy the entire premises over which the interest is claimed? The wording of para 2 suggests yes (the overriding interest relates only to land over which there is actual occupation) and this is welcome because purchasers should be protected from seemingly innocuous interests turning out to be of a far greater extent, but actual occupation probably won’t require physical occupation of the entire plot (analogy with adverse possession: Higgs v Nassauvian Ltd).

Answer 11

1. Equitable easements and profits are no longer overriding interests. 2. Policy argument against this is that these easements are likely more beneficial to dominant land than harmful to servient land: Pritchard [1987] Conv 328. If this this true then it might be better to hold purchasers bound but compensate them, but this might reduce the incentive to register easements, and encourage purchasers to make expensive inquiries. 3. Para 3 includes implied and prescriptive easements, and those created prior to first registration of the fee simple (express easements are registrable dispositions and outside para 3). 4. these overriding interests will cease to bind the purchaser after 1 year of non-exercise unless there is actual knowledge or its existence is discoverable on a reasonable inspection. 5. Law Comm attached great significance to this change, arguing that it would allow purchasers to escape indiscoverable easements. But pre-2002 easements are an exception, and it is these easements that are most likely not to be exercised than modern easements.

Answer 12

Abolished categories: eg. adverse possession (though still protected by para 2 if possessor is in actual occupation) Reductions to individual categories: leases, actual occupation, easements/profits Encouraging registration of overriding interests: except leases < 3 years. Notice: once an interest has been protected by notice it can never again be overriding (s29(3)) – it appears therefore that unilateral notices that are objected to by the owner and then cancelled, cannot be overriding if later proved to exist. This might discourage applying for a notice if there is a risk that there will be difficulty proving the interest to exist.

Answer 13

Part IV 1) The danger of abolishing an overriding interest is that it might contravene ECHR provisions. Abolishing can only be justified where: a. The right is obsolete or b. The beneficiary of the right consents or c. There are significant policy grounds for doing so and appropriate transitional provisions are made Part V 1) The principal objectives in overriding interests reform are: a. High degree of security for registered titles b. Rights enjoy overriding status only where it is unreasonable or unrealistic to expect registration 2) Particularly rights expressly created shouldn’t normally be overriding unless there is good reason Notes Law Comm appears to take a unilateral approach to justifying protection of overriding interests, looking at it solely from the angle of the beneficiary of the interest rather than as a balancing exercise taking into account the need to protect purchasers. These justifications are essentially that registration is ‘unrealistic’ (para 4.5 – prescriptive or implied easements, adverse possession, estoppel or constructive trust), “inconvenient” or “pointless” (para 4.9 – short leases), or “otiose” because otherwise protected (para 4.10 – local land charges registered elsewhere, actual occupation). They do not consider the position of the purchaser at all, who will be bound without compensation. This can perhaps be justified because Law Comm at 4.4 says that “as to these, persons dealing with registered land must obtain information aliunde in the same manner and from the same sources as persons dealing with unregistered land obtain it”. Because the whole registration system is designed to protect buyers, it’s no objection that in respect of certain rights, the registration system makes no difference for buyers, as long as it doesn’t make the position worse.

Answer 14

Overriding interests are a major obstacle to the principle objective of the Bill: to create a faster and simpler conveyancing system under which it is possible to investigate title to the land almost entirely online with the bare minimum of additional enquiries. Unregistered interests which override first registration: 1) Short leases (not exceeding seven years) except future leases over three months in the future, or a lease granted out of an unregistered legal estate under the right to buy provisions of the Housing Act [or one more without interest] 2) Actual occupation overriding interests (Law Com recommends keeping the overriding status of occupiers’ rights because these people often don’t appreciate the need to enter a caution against first registration, especially in relation to informally created rights) 3) Legal easements and profits (Law Com recommends that equitable easements no longer take effect as overriding interests – they have to be registered as Class D(iii) land charges otherwise they won’t be binding on purchasers of the legal estate in the servient land for money or money’s worth

Answer 15

Equitable leases (i.e. mere agreement for a lease that does not create a term of years but only operating at best to give a right in a court of equity to specific performance of a contract to grant a lease) are not overriding interests, because of the wording “granted”, which implies that the agreement must be a lease or agreement effective to create a term if it is to be an overriding interest (Evershed MR).

Answer 16

The deserted wife’s equity (right to occupation) is a mere personal right against her husband and her occupation made no difference, and did not turn the right into one that could bind purchasers. Lord Hodson: Agrees with Russell LJ’s dissenting opinion in CoA that s70 (Sch 3 para 2) deals with rights that have the quality of enduring through different ownerships; it is the right and not the actual occupation that must be examined. Lord Wilberforce: 1) All that s70 does is to adapt the system of registration and the modified form of inquiry which is appropriate to that system to the same kind of right as under the general law would affect a purchaser finding a person in actual occupation of the land. It does not hold a purchaser bound to personal interests of the type enjoyed by the wife. 2) We can accept that there is a difference between unregistered land and registered land as to what kind of notice binds purchasers, or what kinds of inquiries the purchaser has to make, but nothing in the Act suggests that the nature of the rights which bind purchasers is to be different NOTE: 1) Should all types of rights fall within para 2? Otherwise, does para 2 risk influencing our thinking as to what rights should count as proprietary? (mine) Read: Tee [1998] CLJ 328

Answer 17

Facts: C owned two adjoining properties (a house and a garage) and let both to J. C died, and his personal representatives sold the house to J’s wife. C’s representatives then granted a new lease of the garage to J but mistakenly included a strip (the disputed strip) that had already been sold to J’s wife. C then sold the garage to B (purporting to include the strip), who registered his title. When both properties were subsequently sold (the garage to D and house to C(laimant)), the error was discovered and Claimant sought rectification. Held (Templeman J): Parking a car in the present case did not constitute actual occupation because: 1) Parking occupied only an insubstantial part of the large plot of land 2) Parking on an unidentified piece of land didn’t assert occupation over anything However, if there had been actual occupation, the judge appeared convinced that rectification could be given.

Answer 18

1) A heated debate: Does the registration system create new kind of “statutory” or “registered” estate or does it merely continue in existence the legal and equitable estates in general law? 2) Whatever the merits of both sides, it’s clear that the judiciary has shown little inclination to adopt the idea of a registered estate: City Permanent BS v Miller: main purpose of the 1925 (LR) Act is to simplify legal estates (Lord Evershed) 3) What, then, is the effect of first registration? It’s clear that it confers the legal fee simple, and irrespective of whether the registered proprietor is otherwise entitled to it. But does it also confer the equitable estate? 4) Normally the equitable estate will vest without recourse to LRA because registration will be preceded by an unregistered conveyance (which transfers both legal and equitable estates), but LRA will be relevant where the vendor doesn’t transfer the equitable estate before registration (eg. because the transferor doesn’t have the legal or equitable estate to transfer, or conveyance was void for forgery etc) 5) Clearly if transferee takes subject to a trust he will not get the equitable title, but otherwise, will s5 LRA confer it? 6) Epps v Esso Petroleum a. The judge appeared to suggest that if Mrs J had been in actual occupation then rectification would have been possible. b. Rectification is discretionary, so even if one of the grounds is established the judge still doesn’t need to grant it. Therefore, Epps shouldn’t have sought rectification at all; it’s a trap. If rectification is refused on discretionary grounds, then the registered owner will have the equitable interest (because the court held that the latter would continue as owner of the land), and Epps will have a claim for indemnity (s83(2)). So Epps seeks rectification and risks losing equitable estate to the judge’s discretion; seeking rectification may replace a valuable equitable estate with a claim to indemnity that may prove illusory (eg. because the claim is out of time (s83(1))). Therefore, instead of applying for rectification, Epps should have sought the remedy in the Saunders v Vautier rule [all the beneficiaries of a trust can demand the trustees to transfer the legal interest and terminate the trust] if he has the equitable interest and it can constitute an overriding interest.

Answer 19

1) If first registration confers only legal and not equitable title, then three consequences: a. Such cases as Epps would mean that the registered proprietor will hold the land on a bare trust for the original owner, who can invoke Saunders v Vaultier to get the land back. b. It can also be an actual occupation overriding interest (this applies if the land was subsequently sold, as a bare trust is not enforceable against subsequent purchasers (also subsequent purchasers get the equitable title)) i. But if the original owner wasn’t one but two, then it’s not a bare trust, but a trust for sale. Here it’s not at all clear that it can also constitute an overriding interest (the debate is that in trusts for sale Equity sees as done that which ought to be done, and so conclude that the interest is not in land but in personalty (Hayton), but on the other hand the court has also treated such a trust as an interest in land “if it suited their purpose” (Bull v Bull)). ii. It would be arbitrary if in one situation you can assert an overriding interest but not the other… c. If the original owner retained the equitable interest, and that gave rise to an overriding interest, then he can potentially use that as a ground for rectification against a registered proprietor in possession (as rectification against these is only given 1) to give effect to an overriding interest, 2) because the registered proprietor has contributed substantially to the mistake, 3) because the disposition was void and 4) because it would be unjust not to rectify

Answer 20

Facts: Lender made a loan on the security of a legal charge over a house, registering the charge. But when he tried to enforce the charge the owner of the house denied all knowledge of the transaction; it turned out that the landowner’s signature on the charge had been forged. The charge registration was cancelled; lender sought indemnity for loss. Issue: whether rectification of the register entitled the lender to an indemnity, or if registration had never been de facto enforceable but had always been subject to the owner’s right to have the forged disposition removed from the register (which took effect as an overriding interest). Held (CoA): The lender was entitled to indemnity even though there was an overriding interest (owner’s occupation), because the lender was claiming in good faith under a forged disposition. The lender was deemed to have suffered loss by reason of rectification as if the charge had not been forged. 1) Rectification must fulfill the test under Sch 4 para 1: 1) correction of a mistake and 2) prejudicially affects the title of the registered proprietor. If it doesn’t satisfy the test it’s an alteration. The distinction is important because indemnity is available for rectification only. 2) Court must consider whether the decision in Malory Enterprises v Cheshire Homes (that fraudulent registrations transfer only legal and not equitable title) is correct – if so, then the transferee never received anything more than the legal estate and so there would be no loss if the register was altered. Patten LJ: 1) Cheshire Homes on the beneficial ownership point is binding unless it was decided per incuriam. Two points lead to this conclusion: a. It ignores Argyle BS v Hammond b. It ignores s114 LRA 1925 Therefore satisfied that this point was decided per incuriam and is wrong. 2) The Law Comm should consider the issue of forgery coupled with an overriding interest. NOTE: This means that charge holders who are innocent victims of fraud may be able to seek indemnities for losses despite any overriding interests.

Answer 21

Facts: Boland held land on trust for himself and wife; mortgaged land to bank without wife’s knowledge. No overreaching because mortgage money was paid to one trustee only. Held (HL): wife’s beneficial interest could be an actual occupation overriding interest.

Answer 22

1) Debatable whether equitable interests can be actual occupation overriding interests, because they are minor interests and the two categories (minor interest and overriding interests) are mutually exclusive. 2) But the line between the two categories is not unbridgeable; there is no reason why, if there is actual occupation, a minor interest cannot acquire the status of overriding interests. NOTE: 1) The category of minor interests was abolished in the 2002 Act – this perhaps makes the discussion in Boland obsolete and removes the difficulty of recognizing equitable interests as actual occupation overriding interests (mine). 2) This is probably a positive development; keeping the two categories strictly separate would discourage the development of encouraging the registration by notice of overriding interests (because the distinction between minor interests and overriding interests was that the latter had to be entered by notice), which was one of the main improvements of the 2002 Act. (mine – not sure if correct)

Answer 23

1) Registration is supposed to simplify and cheapen conveyance, protecting the purchaser from the hazards of notice by allowing him to take free of any unregistered interests with one exception. Therefore, notice has no application to registered land; whether a particular right is an overriding interest depends solely on construction of s70. 2) With regard to actual occupation overriding interests, the purchaser’s position depends on what he has notice of, and whether the notice is constructive or actual. But to registered land, it is the occupation that matters, not the notice. 3) Actual occupation is to be interpreted as the dictionary meaning of the words. 4) Is the wife in actual occupation? a. The vendor is also in occupation, but this doesn’t exclude others from being in occupation as well. This includes the possibility of the wife being in occupation even if her husband is in occupation too. Everyone knows that wives have rights – they might even have a share in the matrimonial home. It would not be right to disregard her right just because her husband is also in occupation. 5) It is true that subjecting purchasers to enquiry into occupation may be contrary to the Law Comm’s purpose of simplifying conveyance, but insofar as the Act specifically recognizes occupation, this conclusion is justifiable especially seeing the increased prevalence of shared ownership.

Answer 24

1) Both judges delivering speeches stressed the role of current social considerations and social justice, but didn’t develop the concept, content to accept that a wife contributing to the purchase price deserves protection against later purchasers and mortgagees and that these considerations are important enough to outweigh inconvenience to the latter 2) Whether a beneficiary under a trust for sale can have an overriding interest: HL decided that a minor interest jointed with actual occupation can be an overriding interest: Roger identifies this as “registered land orthodoxy” 3) Peffer v Rigg is difficult to reconcile with Lord Wilberforce’s statement that “the [land registration] system is designed to free the purchaser from the hazards of notice – real or constructive”; “the only kind of notice recognized is by entry on the register” 4) Should the position be the same if the mortgage was granted at the time the property was purchased? Roger thinks no, because otherwise the wife would receive half the house largely at the mortgagee’s expense. Further, she would likely have acquiesced (through knowledge) to her husband getting the mortgage.

Answer 25

Others have confidently asserted that Boland would have been decided differently if there had been two trustees, because of overreaching. This article highlights an obstacle to this view. 1) There is no doubt that the ratio of CoA’s decision is limited to the case of the single trustee; it’s clear from Lord Denning’s speech at 330 and Omrod LJ’s speech at 337. But nothing in Lord Wilberforce’s speech in HL restricts it to the case of one trustee – and Lord Roskill specifically dissociates the House from the passage in Ormrod LJ’s speech at 418. 2) Therefore, a wider view than CoA’s is possible – Lord Wilberforce said that the wife’s interest as tenant in common was a minor interest which when combined with actual occupation became an overriding interest. This applies equally to the case of two trustees! Lord Roskill does even more – discrediting a key passage restricting CoA’s ratio. The implications of the narrow view 1) That conveyancers must make extended inquiries in registered houses with a single proprietor The implications of the wider view 1) The “total breakdown of the overreaching machinery” in its application to registered land on trust for sale Conclusion 1) Some inquiries cannot realistically be made (future occupants (because the date when the overriding interest bites is the date of registration and not the date of inquiry), occupants who cannot be identified, occupants not legally competent to give a binding answer etc.) – the solution may lie in insurance indemnity against undiscoverable rights (mine analyse how these different situations have been resolved – future occupants (?), those not legally competent (they aren’t in occupation). The idea of insurance is interesting – indemnity could operate as almost an insurance scheme, but it excludes claims by careless claimants (at least Roger says so, but don’t insurance schemes usually exclude carelessness?))

Answer 26

In reply to Sydenham, on why the narrow view must be the correct view. 1) The distinction between single and two trustees is clear in CoA both in argument and judgment 2) S70(1)(g) doesn’t define the rights capable of giving rise to actual occupation overriding interests. The authority is from National Provincial Bank v Hastings Car Mart (Russel LJ): it deals with rights in reference to land which have the quality of being capable of enduring through different ownership of the land according to normal conceptions of title to real property” a. The right of a beneficiary of a trust for sale in a case with two trustees does not fit into this definition; it is incapable of enduring through different ownership of land according to normal conceptions of title to real property because of overreaching 3) Nothing in HL’s judgment casts doubt to any of the above – HL was silent on the matter with two trustees save for Lord Roskill’s “mystifying” comment (accompanied neither by discussion nor explanation) – this cannot found the argument that Sydenham tries to make 4) Lord Roskill’s comment was probably not directed at the right passage, but even if it was, it’s probably not trying to say that the position should be identical in single and two trustee cases; otherwise, why did he single out Ormrod LJ and ignore Denning and Browne, who express similar views? 5) There might be cases where s70(1)(g) operates despite there being two trustees: eg. where the mortgage wasn’t one of the class which trustees for sale are empowered to enter into. But subject to this, the narrow view is the correct and only view.

Answer 27

Facts: A husband held on trust for himself and wife and beneficiaries. Work was done on the house before the pair moved in, the wife being in control of the builders as husband was frequently away. Issue was whether she counted as being in actual occupation during this time. Held (CoA): She was in actual occupation, because of her activities on the land and the actual occupation of the builders as agents for her. Therefore, occupation through an agent is sufficient (eg. caretaker). NOTE: The agency principle cannot be taken too far. The mere fact that C allows a licensee into occupation doesn’t mean the latter is occupying on C’s behalf.

Answer 28

1) There appears an obvious answer to C’s claim of actual occupation: where mortgage provides funds for initial purchaser, courts have been willing to imply the beneficiaries’ consent to the mortgage (alternatively, the mortgagee’s funds are required before land can be bought; therefore, the mortgagee has priority: Henning) 2) The latter analysis was recognized in Rosset but not applied because of the unusual facts (mortgage was for repair work not to enable land to be bought. C was also unaware of the bank loan and mortgage) 3) So C will win if she’s in actual occupation. But was she? 4) What date should be relevant for actual occupation – the date of the transfer, or the date of the registration? a. Convention view was registration date, but Mendelsohn purported to leave the issue open, and while Sparkes (1986) argued that the most commonly cited cases were weak support for the registration date approach and Law Comm proposed that date of transfer should be used for all overriding interests (Law Com 158) b. In Rosset CoA concluded that the date of transfer mattered by implying into s70(1)(g) the requirement that actual occupation should have existed at the time of transfer, convinced by the argument that on date of transfer purchaser did all he could to inquire and there was inevitably a gap. i. Reply: Problem will rarely arise in house purchasers because the chance of another person taking possession in the gap is small. Real problem is mortgagees, because mortgagors may allow others into occupation (eg. wife) 5) Problem with CoA’s interpretation: role of registration is downgraded without solving all the problems by choosing the date of transfer. 6) Other overriding interests arising after transfer will still bind purchasers. 7) Roger thinks that you should protect purchasers, but the best way is to require application for registration to be submitted within the priority window of official search and then backdate protection against intervening overriding interests to the date of the search.

Answer 29

1) How to interpret “actual occupation” a. “Absolutist” view – it must be interpreted in isolation (Lord Wilberforce, Boland: The words ‘actual occupation’ are ordinary words of plain English and should be interpreted as such) b. “Constitutionalist” view – it must be considered in context (a ‘notice-oriented’ test, like the one applied in CoA in Rosset – Purchase LJ: Two things must be established: 1) actual occupation and b) would appropriate inquiries have elicited the fact of her interest?) 2) Remains to be seen how the two tests reconcile, especially in cases of “marginal occupation” like “undiscoverable occupation” 3) The absolutist view risks purchasers losing out to undiscoverable interests; holders of these interests should not get an overriding interest. The old law of notice should be allowed to flavor the new. S70(1)(g) should be interpreted as reflecting the old doctrine of constructive notice.

Answer 30

Facts: C was mother of legal owner. Her furniture was moved into the house, but she went on holiday at the time of the move into the house. Held (HL): Acts preparatory to completion don’t count for actual occupation – there must be “some degree of permanence and continuity which would rule out mere fleeting presence” (Lord Oliver). Lord Oliver: 1) Thus, while an employee can occupy on behalf of the employer, a prospective tenant who has been allowed into the house prior to completion to plan decorations or measure fur furniture would not be in actual occupation even if they were there for hours at a time. NOTE: The mortgagee would have won even if there had been actual occupation.

Answer 31

1) Decision that the mother was bound to the much larger sum than the one she was aware of was troublesome because it’s not based on Henning and Mendelsohn (the (even imputed) consent didn’t extend to the larger sum) 2) If Cann is correct then it would effectively circumvent Boland, because in almost all cases an initial mortgage is authorized, and if Cann’s reasoning is applied, then this is enough to be bound to a subsequent unauthorized mortgage. 3) The actual occupation issue was problematic, because it was found that there was occupation 35 minutes daletion. Therefore, the use of the completion date is problematic because usually buyers inspect the property a few days before completion. Roger suggests setting the date at the date of the official search – it’s arbitrary, but at least the purchaser won’t have to worry about what happens minutes before completion.

Answer 32

Held (CoA): An infant child cannot claim to be in actual occupation. Nourse LJ: 1) Infant children are there because their parents are there; this is different from spouses who have an independent right to occupy. 2) Further, no inquiry can be made of minor children in a manner contemplated by s70 NOTE: Is actual occupation really different from notice, if what inquiry can realistically be made will determine whether someone is in actual occupation? (mine)

Answer 33

The case of psychiatric patient intending to return to her home afterwards) This was not a case of mere fleeting presence or acts preparatory to the assumption of actual occupation, “[i]n this case the new and special feature is in the psychiatric problems of the person claiming actual occupation. The evidence of Ms Bustard’s absence from the property did not mean that there was an absence of evidence of actual occupation of it by her”. (Mummery LJ)

Answer 34

1) the mere use by the claimant and his tenants of the metal staircase and landing for passing and repassing between the street and the flats did not amount to “actual occupation” of them within the meaning of Sch 3 para 2 so C’s right of way was not an interest falling within it and so its priority was not protected by virtue of section 29(2)(a)(ii) 2) purchasing the property subject to encumbrances discoverable by inspection doesn’t mean D undertook a new obligation, not otherwise existing, to give effect to such encumbrances; absent any express provision requiring D to take the property subject to the right to use the staircase, the fact that it was obvious on inspection didn’t render it unconscionable for D to obstruct it. Thus, there was no constructive trust

Answer 35

Actual occupation: the ladder was no more than an “access way”, no indication that it was used otherwise than for “passing and repassing between the street and the relevant flat”; this use does not amount to actual occupation. In easements like a right to park “where the dominant owner may place a large object on the relevant land and leave it there for what may be a substantial time”, “that issue does not arise on this appeal and I say nothing about it”. C’s arguments: 1) C, having put the ladder in place, was in occupation of the physical space taken up by the ladder by virtue of the presence of the ladder itself (i.e. analogously with a person present on land by chattels placed and left there, eg. Malory v Cheshire Homes where land used for storage was relevant). Fails because the ladder became part of the land, and thus becomes part of what could be used or occupied. Occupation “must be, or be referable to, personal physical activity by some one or more individuals”. [NB chattels are movables whereas ladders are immovable; C argued that if movables counted then so a fortiori should immovables] 2) C was in occupation by his contractors when the ladder was put up and had never given up that occupation. Fails because there’s no evidence that C was in occupation by his contractors; even if he was, that came to an end when the builders left; this argument stemmed from the mistaken view that actual occupation was a legal status, whereas it is instead a factual position that continues only until physical presence remains on the land. Constructive trust: in Lyus v Prowsa there was a constructive trust, but there are significant differences between the two cases – 1) In Lyus there was an express provision in the contract referring to C’s contract ; here, the reference to the asserted right was in general terms, within the category of encumbrances discoverable on inspection 2) In Lyus the contract was not binding on the bank, so that reference to it in the contract couldn’t be explained by a need to protect the bank; here, the reference was binding on the vendor so that if it had been effective against the purchaser, the vendor needed to ensure that the contract was subject to it 3) In Lyus C could not have done anything to protect their contract by way of registration; here, C could have entered a notice on the register. No constructive trust “would be justified in … any case where the third party right is only identified by way of general words in the contract…. In such a case the reference to the class of rights is accounted for by the vendor's obligation to disclose rights and by his interest in ensuring that, if there are rights not otherwise disclosed, subject to which the sale will take effect, it is not open to the purchaser to object to completion or to claim any form of compensation.”

Answer 36

1) the informal agreement with the previous owner had created an equitable easement + actual occupation at time of sale (though Judge Cowell said that this point was “very appealable”) = overriding interest 2) Because of the buyer’s promise in the contract of sale to take subject to any rights discoverable through inspection, his conscience was bound by a constructive trust

Answer 37

1. Likely ‘no’ because - a. contractors acting on B’s instructions can be seen to occupy on B’s behalf, but residential licensees or tenants occupy for their own purposes. b. Parliament removed the protection for parties in receipt of rent and profits, and this counts against allowing B to establish actual occupation through the presence of B’s tenants 2. One of the Law Com’s aims for the 2002 Act was to resolve this question of the enforceability of a right that extends beyond the part of the land actually occupied, but C’s argument which Lloyd LJ said had some force, that a right of access over both the staircase and balcony could be seen as “relating” to the balcony, points out the ambiguity in the para’s wording. - Lloyd LJ raised a more general question: is it possible for a holder of an easement to be in actual occupation of (any part of) the servient tenement? Lloyd LJ said that “at first sight it seems counter-intuitive”, and therefore IAO the (counsel’s) concession in Saeed v Plustrade that parking easements constituted actual occupation of the space “may have been misguided” [MI but notice Lloyd LJ’s express refusal to deal with parking easements].

Answer 38

General question: whether, and if so when, it should be possible for a constructive trust to arise in favour of a party, such as Chaudhary, who failed to have a pre-existing interest protected by an entry on the register? Lloyd LJ said that the 2002 Act doesn’t exclude the possibility, but such cases would be rare given the risk of undermining the registration system if a purchaser’s notice or lack of good faith suffices for an unregistered right to bind him. Thus, IAO even though the question of whether the purchaser’s conscience is affected is the central question, the fact that there was a failure to register a pre-existing right may be relevant: indeed Lloyd LJ said “I know of no English case in which the precedent of Lyus has been used successfully”.

Answer 39

1) C had ownership of the ladder as a separate chattel (ownership stemming from his manufacture and first possession). But counter argument is that it was annexed to D’s flat as its base was on it. 2) C had ownership of the ladder through annexation to his flat

Answer 40

1º Central question: should a party’s failure to protect a pre-existing equitable interest through the entry of a notice on the register prevent the assertion of that right against a purchaser for value who knows, or ought reasonably to know, of the existence of that right? We can argue yes because it’s easily discoverable and thus lack of registration is irrelevant. But… Law Com report makes clear that the 2002 Act doesn’t accept simple discoverability to be an alternative to registration. But then again, the Act does permit means by which an unregistered right may prevail The answer to this question will influence the judge’s approach to the meaning of actual occupation and to the tests applicable in deciding if a new direct right has arisen. But it would also influence the court’s interpretation of “mistake” in rectification; in Barclays Bank v Guy a narrow approach was taken (here also there was a failure to enter a notice), but subsequent development has cast doubts on this narrow approach. So too here, IAO there might be a widening of the approach to actual occupation and constructive trust; the rationale for protecting the rights of actual occupiers is to ensure that a purchaser is bound by easily discoverable rights (it can’t be said that it’s because of the importance of protecting rights to occupy because not all rights protected are rights to occupy, nor can it be said that the actual occupation in itself means it’s unreasonable to expect registration [MI perhaps it does! As long as I’m using something I don’t think about protecting it… eg. Jackson says that the purpose of protecting actual occupation overriding interests is both unreasonableness to expect registration and easily discoverable rights!), thus, it is understandable that the first instance judge wanted to stretch the meaning of “actual occupation”. 2º If there is a concern that an easement may confer exclusive possession of another’s land, then why are we saying here that it’s “counter-intuitive” that the dominant owner can ever be said to be in actual occupation of servient land? [MI but possession is a legal right whereas occupation is a question of fact: in storage and parking cases where we’re worried about exclusive possession, we’re not worried about the dominant owner being on the servient land all the time, but we’re worried about the servient owner not being able to use their own land!]

Answer 41

Chaudhary shows that the holder of an equitable interest may be in a much weaker position than the holder of its legal equivalent (ex. if the flats were in common ownership when the ladder was built, and then C’s flat was sold, there would be a Wheeldon v Burrows implied (legal) easement + obvious on a reasonably careful inspection of D’s flat = overriding interest (para 3). Here, C won’t be punished for failure to register.

Answer 42

A couple bought a house to accommodate themselves and the wife’s parents (who contributed to the purchaser price and the rest of the price was raised by executing a legal charge on the property in favour of a BS). The couple, registered legal owners, mortgaged the property, then took on a second and third charge without the parents’ knowledge. The parents remained in actual occupation for all material times. They then took another charge from C, who didn’t make inquiries of their parents about their occupation. The couple defaulted on the mortgage and C made an order for possession of the property. The parents argued that contribution to the purchase price = equitable interest in the property, and actual occupation = priority over C’s rights as mortgagees. Judge said they had an overriding interest, overreached by the execution of the legal charge in C’s favour by two trustees. CoA reversed the decision. HL allowed the appeal and said the interest was overreached.

Answer 43

The legislative compromise regarding the protection of beneficiaries under trusts vs. interest of the land being freely marketable = to protect beneficiaries by (and only by) the requirement of two trustees. Actual occupation overriding interests cannot be intended to frustrate this compromise and subject the purchaser to some beneficial interests but not others depending on the waywardness of actual occupation. Distinguished Boland because there the wife’s interest was not overreached; if it had been overreached, there would have been no interest to justify the wife remaining in occupation (actual occupation overriding interest requires actual occupation and an interest).

Answer 44

D sold her lease to two buyers who agreed that she would continue living in the property indefinitely for a rent. Her solicitors told her she was selling at a substantial undervalue, but she confirmed it, without ever disclosing her interest or agreement. D remained in actual occupation but buyers obtained a loan and then a mortgagee from C. Ownership of the lease and mortgage were registered. Buyers defaulted and a possession order was made. D argued that the unconscionable bargain with the buyers gave rise to an equity in her favour, which was an overriding interest (para 2) binding on the mortgagee. Trial judge said she had an entitlement to have the transaction set aside but it was not binding on the mortgagee bona fide purchaser for value without notice. Held: the right to set aside an unconscionable bargain was a mere equity by virtue of s116 LRA 2002 capable of being an overriding interest. But it was overreached, and further, s26 defeated D’s right since it impugned the title acquired by the mortgagee. Per curiam: The defendant's right to have the transaction set aside did not fall within paragraph 2 of Schedule 3 to the 2002 Act since it would have been reasonable for her to disclose both that she was not giving vacant possession and that the lease would be encumbered in the hands of the buyers by the tenancy she had agreed to take and where she did not reveal her rights she could not thereafter assert them. The fact that the mortgagee had notice of the undervalue is irrelevant

Answer 45

Lambert is different from both Scott and Cann: 1) D’s right arose from the earlier completion funded by the loan (unlike Scott) 2) The right couldn’t be said to arise simultaneously with the borrowers’ purchaser nor was it required for it (unlike Cann) Thus this is a classic priority contest between innocent purchaser and innocent interest holder, applying the priority provisions of LRA 2002 and overreaching provisions of LPA 1925. Issues: 1) Did D have a proprietary interest in the land capable of binding C? Originally D pleaded a lease but the trial judge found that the transaction could be set aside for unconscionability (and an agreement can’t be void and give rise to a lease at the same time), so argued that the right to set aside the transaction was an equity (proprietary because of s116 LRA). 2) Is it binding on C? a. If C’s mortgage had been originally used to finance the purchase directly, then C would have had priority as being first in time (Cann). b. Lewison LJ said that : i. C was protected by s26 LRA (“a person’s right to exercise owner’s powers in relation to a registered estate or charge is to be taken to be free from any limitation affecting the validity of a disposition"): the disposition the buyers made in favour of C was one they could make there being no limitation in the Register, and the title of C could not be question even if there was an overriding interest that would otherwise defeat their charge. 1. This would render overriding interests obsolete by giving primacy to s26 over s29, and would contradict a lot of caselaw. But this is misleading, because s26 confirms the status of the disponee’s title, not whether it has priority. It says that the disponee’s title is secure even if there was a limitation on his title, but nothing of the effect of overriding interests unrelated to the limitation. ii. Enquiry was made of the right holder who didn’t disclose when they reasonably should (D sold including a promise of vacant possession though this was untrue because she believed she had a lease; thus she failed to disclose her interest and thus would lose her priority). But… in this case the enquiry was not made by C; C were merely supplied with the sale documents, and the purpose of this exception is not to make right holders actively disclose their rights but to make then do so when reasonably questioned about their status. 1. IAO there could have been an estoppel argument but the enquiry exception didn’t apply iii. The mere equity was overreached by the charge with two trustees. This is significant because D’s interest wasn’t the equitable co-ownership interest under a trust of land ( the usual overreachable interest) but Lewison J said there was no reason why this and other types of equitable interest cannot be overreached except those specifically excluded by s2(3) LPA 1925. 1. This is remarkable: surely interests behind trusts can easily be quantified in money as they represent a share of the value of the land and therefore are overreachable, but as Lewison LJ points out, the statute imposes no such limitation and this assumption is wrong.

Answer 46

The 2002 Act represents a radical departure from previous law in terms of terminology and substantive law. Reliance on earlier authority requires care. 1) Distinction between rectification and other alterations: rectification (previously used for all alterations) applies only to alterations that correct a mistake, and that adversely affects the title of the registered proprietor. Rectification may radically reduce the reliability of the register, since it changes the legal position.

Answer 47

1) Mistake 2) Bringing the register up to date (eg. entering a prescriptive easement, deleting a lease terminated by forfeiture) 3) Giving effect to interests excepted from the effect of registration 4) Removal of superfluous entries Rectification requires correction of a mistake that must furthermore “prejudicially affect” the registered proprietor – this means that the proprietor is not affected by the interest prior to alteration. 1) Baxter v Mannion: if there is a statutory condition for registration (eg. adverse possession) then it is a mistake if that condition is not satisfied. Mistake doesn’t require a procedural error by the Registrar. Nevertheless mistake is supposed to be narrow; there is no general discretion to rectify.

Answer 48

The scope for rectification was wide before 2002; the main safeguard was the protection of proprietors in possession, a protection that remains today. One will normally be in possession unless dispossessed (Kingsalton v Thames Water Development), which means that if possession is disputed the proprietor will normally be in possession. Under the 2002 Act certain relationships mean that those not in physical possession (landlords, mortgagors, licensors and trustees) can possess if tenants, mortgagees, licensees and beneficiaries are possessing. This will limit the frequency of rectification and protect those physically possessing against the possibility of landlords’ titles being rectified. Unless the proprietor consents, rectification will only be available in two instances where there is occupation (para 3): 1) Proprietor has by fraud or lack of proper care caused or substantially contributed to the mistake (para 3(2)(a)) a. What does lack of proper care mean? At one extreme it might reintroduce the doctrine of constructive notice but courts seem not to have been so zealous. 2) It is for any other reason unjust for the alteration not to be made (para 3(2)(b)) a. Person seeking rectification must prove a strong case because rectification is discretionary, and a double negative is used Epps v Esso Petroleum = rare example of 1925 provision being applied judicially (C was largely to blame for the mistake because of his failure to build a new wall along the true boundary. The facts pointed to the conclusion that justice should refuse rectification, but C pointed out that if rectification was denied, C would not get compensation whereas if it was granted, the other party would get indemnified. Templeman J said that this argument wasn’t strong enough to counter the other arguments against rectification.

Answer 49

Administrative alterations are not problematic but rectification might undermine the protection accorded to registered proprietors. However, few rectification orders have been granted, so it’s less destructive than overriding interests (also because those who lose out are indemnified). Also, many would argue that if one of two innocent parties must lose a right and be compensated, then it’s better that this person is the one not in possession (disruption etc.).

Answer 50

It’s paradoxical that, though there are good policy reasons for limiting the meaning of mistake (protecting registered proprietor), it also means the scope of indemnity is limited.

Answer 51

Alteration to give effect to overriding interests (apart from para 1(2)(b)) does not result in indemnity because of the absence of loss. But Law Comm 158 suggested that compensation be payable anyway (this also strengthens the argument for retaining the actual occupation overriding interest). But this was opposed by the Land Registry and dropped. In Law Comm 254, at 4.19, it explains that this proposal is a good idea but open to a number of criticisms: 1) open-ended financial liability, 2) potential liability would never end (no final extinction of overriding interests and no prohibition on their creation), 3) significant change in concept of indemnity, as it would compensate where the register does not cause loss. (mine really?? Are there situations where indemnity is offered without the register per se causing loss?) Why controversial? 1) Extends indemnity to risks off the register (but indemnity has long protected against risks that are not the fault of the registry – eg. forgery) 2) Liability to pay indemnity would be open-ended and expensive (but in practice purchasers discover (or are reasonably expected to discover, which reduces or excludes indemnity) nearly all overriding interests, where indemnity cannot be claimed)

Answer 52

1) Fraud or lack of proper care (sch 8 para 5) 2) Time and quantum limits a. Time: claim must be brought within six years of knowledge of mistake, or the time there should have been knowledge (para 8) b. Quantum: i. Rectification – value of estate or interest at the time (para 6(a)) ii. Mistake not corrected by rectification – value of the interest at the time of the mistake (para 6(b)). More controversial because a mistake made years ago means that C will be indemnified for what the land was worth at the time, and the land value could have increased significantly since.

Answer 53

About £10 million are paid in indemnity annually, about £3 for every dealing, or 3% of the Land Registry’s income. This figure has been used to argue: 1) Rules are unduly strict in allowing indemnity 2) Land Registry has been great in there being few errors causing compensation (this argument is dangerous because it implies that indemnity is linked with failures in the Land Registry)

Answer 54

1) [8.38] The yardstick for determining whether there is an error or omission is sometimes the position in unregistered land. The objection is that: a. It might bring into play aspects of unregistered land that registration was meant to supersede (eg. notice). b. Now that most properties are registered, it’s inappropriate to use unregistered land principles which are increasingly unfamiliar to practitioners. 2) [8.40] Any rectification scheme must overcome the above deficiency. Therefore we recommend that it be made clear in legislation that: a. The only function of the power of rectification is to provide a discretionary mechanism that enables errors and omissions in the register to be remedied. It should remain that indemnity is available for loss caused by rectification or discretionary refusal of rectification. b. In the absence of mistake and where the court determines issues of substantive rights, it should only bring in principles for unregistered land when there are issues that arise from time prior to first registration. Such amendments should not be a matter of discretion/ c. Normally the register should be rectified to give effect to overriding interests, but it should still be a matter for discretion 3) [8.56] The present law for rectification is “for the most part sound” and doesn’t require “fundamental change” – any reform should be to clarify the law

Answer 55

1) [10.7] The difference between rectification and other alteration: a. Rectification is where a mistake is to be corrected – therefore it won’t cover alteration to give effect to rights acquired subsequent to registration or where the register was correct but subsequent events made it incorrect (here courts have no discretion on whether to alter) b. The correction of the mistake must be one that prejudicially affects the title of the registered proprietor – it doesn’t include alteration to give effect to overriding interests. Under previous law, the latter was included, though gave rise to no indemnity. Under the Bill, right to indemnity will coincide with rectification.

Answer 56

1) Problem in Gold Harp is whether Z takes subject to or free from X’s interest in this scenario: a. X holds a registered derivative interest (eg lease or easement) over Y’s registered freehold b. X’s interest is mistakenly deleted from the register c. Y creates a further registered derivative interest in favour of Z, who is innocent and pays valuable consideration 2) Underlying legal tensions: a. General property law: the law of unregistered conveyancing would favour X because priority is determined by the order in which competing interests were created b. Registered land law’s priority provisions: registered law prefers Z – s28-30 LRA 2002 provides that Z’s interest postpones (takes free from) X’s unregistered interest unless X’s interest is overriding c. Registered land law’s alteration provisions: Sch 4 may permit alteration of the register to correct the mistake – will it permit reinstating X’s interest? The answer depends on the underlying debates about the purpose of registration: should the position depend on what’s on the register, or general principles of land law? 3) Undercurrent running through Underhill LJ’s judgment: a. Like cases should be treated alike: X-Y-Z priority disputes should be treated like A-B-C title disputes (A is registered proprietor; B gets mistakenly registered as owner in A’s place pursuant to a void disposition from A; B conveys the registered interest to C; A seeks rectification) i. Underhill J: "In both cases the essential issue is the same, namely whether an interest created during the period of mistaken de-registration [i.e. C’s or Z’s later interests] may be prejudiced by the reinstatement of an interest [i.e. belonging to A or X] to which it would have been subject but for that mistake." ii. This assumption “seems sound” – what distinguishes the two types of disputes is the statutory source of C’s (s58 title) (Z’s – priority in s29) expectation. It could be argued that priority is less important than title, so C has more of a claim to alteration. But if the purchaser is to have confidence in what the register says, then both promises are equally important. So Underhill LJ was right to draw the analogy. (Can I rebut this??) 4) Three points in Gold Harp: a. The conceded finding that X had a prima facie ground for alteration of the register i. The mistake is X’s deregistration, not Z’s registration. Therefore what X was seeking is not to deregister Z’s lease, but to reinstate X’s with priority over Z’s. (Law allows two incompatible interests because there’s the possibility of the superior lease terminating prematurely) ii. In reaching this finding Underhill LJ implicitly found (obiter) that A would also have a ground – this purports to settle a lively debate. It confirms that outcomes would align with general property law, diluting the strength of LRA 2002’s title promise. b. The finding that there was no exceptional circumstance justifying denying X’s claim i. X tried to claim “exceptional circumstances” defence because 1) X’s alteration claim was unjustifiably delayed and 2) Z was better placed to develop the rooftop space and more likely to get planning permission. Underhill LJ rejected both. c. The effect of Sch 4 para 8 on the nature of the rectification remedy awarded i. Z argued that the effect of rectification was not to revert to the position had the mistake never occurred, but that X’s lease would be ranked lower than Z’s, because rectification powers change “for the future” the priority of interests, and therefore rectification affects only derivative interests that were granted after rectification ii. Underhill LJ rejected this and gave X priority, but only “for the future”. This is a compromise between general land law principles (giving X priority throughout) and the LRA’s priority rules (giving Z priority) iii. Underhill LJ was right to give X priority because it is supported by the language of the Act (Sch 4 para 8 is concerned with derivative interests that are already “affecting the registered estate” at time of rectification), the caselaw against it is inconclusive, and it is supported by principle (consistency between X-Y-Z disputes and A-B-C disputes) iv. But the purely prospective priority is undesirable because: 1. It might cause problems by treating A-B-C disputes differently – Sch 4 para 8 is an exception to ordinary retrospective rectification, and is inapplicable to A-B-C disputes. Therefore, C will be treated more harshly than Z (eg. he might become a retrospective trespasser) and this seems unjustifiable. 2. Protecting Z against tortious liability doesn’t require prospectiveness because Z gets indemnified anyway so won’t suffer any loss 3. Conceptual difficulties: if the rectification reinstates X’s lease to 2000 (predating Z’s) to explain why it has priority, but the practical priority isn’t enjoyed until 2014, then it’s very “odd” or even “conceptually schizophrenic” v. Therefore desirable for Law Comm to revisit Sch 4 para 8 5) The conclusion in Gold Harp might have been reached through an alternative and less tortuous route: when the second lease was granted, no money was paid, so the priority rules were governed by s28 and not s29. This means that disponees are bound by all prior proprietary interests (whether or not registered) – it’s likely that deregistration removed X’s legal but not equitable lease. 6) Conclusion: courts are diluting the title promise and priority promise in LRA 2002. We should be concerned because the promises are misleading and “hollow”; we should question whether the Act should make the promises at all.

Answer 57

Limits to the protection of purchasers of registered land 1) Forgery 2) Overriding interests (especially actual occupation) 3) Rectification Controversial situation: A claims an interest in B’s land, where B has been mistakenly registered (whether or not he is primarily responsible for the mistake) and has executed a registrable disposition in favour of C, who is registered. If C is bona fide then one can argue that he was misled by the register, except: 1) Protection of the proprietor in possession (C in possession succeeds unless he has been careless or it would be unjust not to rectify) (Sch 5 para 3, 6). As possession is given a wide meaning most (except chargees) will qualify. Both in actual occupation and possession, there’s a lot of emphasis on possession or occupation – meaning people are safe in their homes. 2) As indemnity is available, we can be more relaxed about rectification. Gold Harp v McLeod: mistake was the wrongful removal of a registered lease by proprietor of fee simple, who then leased the land, the lease registered. Rectification was allowed. Earlier cases show two ways how original lessees might succeed: 1) C’s registration might be a mistake to justify a separate rectification (rejected by CoA in Norwich v Steed – it can’t be a mistake to register following a disposition by a registered proprietor) 2) Rectification of the lease may follow from rectification of the fee simple The CoA’s conclusion “looks to be supportable”

Answer 58

Though the idea of a “title by registration” is attractive, it has proven unworkable in practice, is questionable in policy, and ought to be abandoned in favour of more subtle legislative scheme for resolving A-B-C disputes 1) The orthodox solution in English law concerning registered land is “formalist” – the solution is exclusively to be found in LRA 2002, the outcome favours C (contrasting with general land law principles favouring A). This vision was formed when LRA 2002 first came into force, but in light of subsequent caselaw, it didn’t really come out in practice and may never be anything more than a “mythical fantasy” 2) This orthodox view was realized by a narrow interpretation of Sch 4 (alteration) – interpreting grounds b, c and d as allowing mere administrative (and not substantive) changes. The only substantive ground (mistake) is also narrowly construed – it means that the Register is wrong. But wrong compared to what? Proponents of the orthodox view (like Roger Smith) argue that registration should be a self-contained area and we shouldn’t bring unregistered land principles. Thus ground A shouldn't be interpreted as an invitation to adopt unregistered land principles but mistake should be construed narrowly as when the Register fails to “reflect the true effect of the purported disposition”. 3) Formalism means 1) viewing the law as a closed system of logic and 2) requiring judges to follow these rules rigidly and mechanically, screening off other substantive factors that might otherwise be relevant to the outcome (political, moral, social considerations). It means outcomes are predictable and consistent, and efficient (judges don’t have to weigh competing policy arguments). The orthodox view is formalist because: a. Judges are supposed to interpret registration as a “sovereign and internally coherent system” and should minimize reliance on other factors. They must “take a leap of faith” and believe in the “statutory magic” that makes C owner even if their better “instinct” is to prefer A. b. The LRA refers to external principles which the orthodox view interprets as narrowly as possible (eg ‘bringing the register up to date’ means correcting administrative errors, and not syncrhonising the Register with rules of general property law) c. Thus LRA is supposed to embody (allegedly) Parliament’s policy choice that C should be favoured over A in all circumstances 4) But the judiciary has retreated from this orthodox view indirectly attacking C’s title acquired by registration: a. Gave “mistake” ground a much broader interpretation so as to deregister C in many more circumstances than the orthodox view would permit i. But does this make C worse off? This depends on whether s58’s statutory magic is real or illusory, and the courts have usually interpreted it as real – if C can’t keep the “mud”. They should at least get “money” b. Rendered illusory the “unjust not to alter the register” (what orthodox interpret to be “exceptional circumstances”) defence against alteration: Baxter v Mannion saying that it would be unjust not to alter because B was never entitled to be registered and simple justice required strong countervailing factors to prevent A from regaining title. This reasoning appears to favour alteration in almost every case, though the statute appears specifically to protect those mistakenly registered and in possession! c. Holding that A’s right to alter against B may bind C 5) But courts have also directly attacked the “title by registration” principle and diluted the power of the Register a. Recharacterizing cases as boundary disputes: s58 says there’s no promise of accuracy in respect of “general boundaries” (boundaries that have not been precisely determined by the Registry) and judges have “exploited” this exception by widening the definition of boundary b. Treating A as beneficial owner whose right may bind C: the orthodox view is that registration confers both legal and beneficial title, but Fitzwilliam and Malory have said it conferred legal title only and this threatens to destroy the orthodox view [BUT THEY HAVE BEEN OVERRULED] c. Treating A as legal and beneficial owner throughout 6) Conclusion: the judiciary is steadily “derailing” the orthodox view and leads to four conclusions – a. From A’s and C’s perspective the current state of the law is unpredictable b. The judicial rejection of the orthodox view changes the function and reliability of the Land Register c. Why are judges rejecting the orthodox view? i. Wide-scale benefits of the orthodox view might not be sufficiently manifest to judges hearing concrete A-C disputes ii. Judges’ “impulsive” preference for A suggests a commitment to the general property law rules that owners like A shouldn’t normally be deprived of their title without consent d. Judicial rejection of LRA 2002 as a self-contained formal code raises fundamental questions about the viability of formal codes generally especially then they seek to implement policies and achieve outcomes that run counter to deep-rooted legal principles and judicial instincts 7) Way forward: either retain and fortify the “title by registration” principle, or revert to general property law principles, or preferably a “middle way” integrating registration principles with general property law by: a. Abandoning the “artificial, formalist notion” that title stems from the register (root title openly in general property law) and recognizing that general property law rules might themselves be modified for registered land cases to respond to their unique policy concerns b. This would mean that A would prima facie be favoured, but C would be favoured in certain exceptional circumstances in registered land. c. Scotland has recently done this – it provides that C exceptionally gets the title after he and/or B has possessed the land for a combined period of one year (Scots Law Comm 222; Land Registration etc. (Scotland) Act 2012 s86). English law should do the same. And abandon “title by registration”

Answer 59

``` Defends the view that it should be possible to rectify the register to the prejudice of an innocent purchaser who has taken a disposition from a mistakenly-entered proprietor. Orthodox view (protecting purchasers against rectification) has recently been called into question by allowing alteration against third parties – the article argues this development is desirable. The case for and against purchaser protection is more complex than the standard account of land registration suggests – the more expansive account has been dismissed too readily. 1) LRA Sch 4 para 2(1)(a): courts may order alteration for the purpose of correcting a mistake. Prompted two interpretations for application to third parties: a. No rectification to the prejudice of innocent purchasers who take from mistakenly-entered proprietors – purchaser retains ownership and original owner claims indemnity (“truncated rectification model”) b. Rectification possible – original owner claims indemnity (author supports this view and calls it the “long-arm rectification model”) The truncated rectification model is not accepted because (even though there is indemnity) according to modern development in land law land cannot be equated to its market value or any level of monetary substitute. The long-arm model is preferred because it is not an automatic response in favour of one party, nor an entirely open-ended discretion, but introduces a “sophisticated set of structured provisions designed to examine the merits of both sides”. ```

Answer 60

1) Speed: eliminate the current three-stage process (execution, lodging with Registry, registration) and duplication of effort 2) Cost: removes the need for storage facilities, and the “registration gap” necessitating official searches 3) Clarity: priority of most minor interests will be apparent from the register 4) Accuracy: eliminate the risk of error

Answer 61

1) Security, accuracy and technology failures a. Not possible at this stage to say how these difficulties will be addressed 2) Attempts to create property rights without registration will necessarily be ineffective (no equity by estoppel etc.) a. Increase public awareness and introduce a transition period into 3) Must accommodate creation and transfer of property rights without compliance with existing formality requirements (deed) a. Recommends substitution of statutes requiring deeds with registration

Answer 62

“The most important single function of the Land Registration Bill is to create the necessary legal framework for the introduction of electronic conveyancing.”

Answer 63

1. Alleviate the dangerous effects of priority rules (s28 LRA 2002) 1. 1. S28 establishes that the priority of an interest is not affected by later (even registered) dispositions; therefore, an (unregistered) trust in favour of a third party will bind a purchaser who has, upon a search of the register, discovered an unencumbered title. The effect of this will diminish with compulsory electronic entry (Law Comm 271 para 5.3). 1. 1.1. However, some interests are not amenable to electronic entry (trusts, implied easements, etc.) 1. 2. Law Comm made it clear (though 2002 Act doesn’t directly address the issue) that bad faith and actual notice of purchasers have no impact on the priority of their registered disposition over unprotected interests; e-conveyancing will diminish this problem because no right can exist without registration 1. 2.1. However, again some interests are not amenable to electronic entry – eg. the trust in Peffer (though the estate contract in Midland will be caught)

Answer 64

1. Only legal (City Permanent BS v Miller) leases not exceeding 7 years, that don’t fall into the s4 and s27 exceptions, can be overriding interests. 1. 1. Effective: 1. 1.1. These leases are likely to be at full rent, so even if the purchaser can’t obtain vacant possession he can likely get an income. 1. 1.2. Future and discontinuous leases are excluded, removing undiscoverable risks for buyers 1. 2. Ineffective: 1. 2.1. Lessees that do fall into para 1 may not be in occupation either – they could have sublet etc. (or gone on holiday??), making their presence equally undiscoverable by purchasers 2. Overriding interest easements that have not been exercised for one year, and that are not easily discoverable and in the absence of actual knowledge, cease to bind purchasers. 2. 1. Effective: 2. 1.1. Allows purchasers to escape indiscoverable easements 2. 2. Ineffective: 2. 2.1. Pre-2002 easements are an exception to this rule: these easements are far more likely not to be exercised than modern easements.

Answer 65

1. Replaces uncertain doctrine of notice with a more certain doctrine of actual occupation 1. 1. But para 2(c) appears very similar to a notice doctrine 1. 2. Also Hypo-Mortgage v Robinson held that children couldn’t claim actual occupation partly because inquiry couldn’t be made of them – if this determines whether someone is in actual occupation, then is that not merely notice by another name?

Answer 66

1. Should all rights be capable of giving rise to actual occupation overriding interests? 2. Should this overriding interest influence the numerus clausus principle and the class of rights we call proprietary? 3. Does it matter which right is being asserted as giving rise to the interest; should it? 3. 1. The right to rectification should perhaps be different from substantive rights like a long equitable lease, because it is discretionary, and so only in hindsight could you be sure that rectification would indeed be granted. Should it, then, be deemed to have retroactive effect when rectification is granted, so as to hold that it had always been overriding in respect of the registered title? (building on Lees’ LQR article)

Answer 67

1) Opening the register a. For a long time the register was closed to the public, reflecting the inherent privacy of unregistered conveyancing. However, it was opened by the LRA 1988 (now s66 LRA 2002 provides access) b. Advantages of an open register: i. Owners of land are identified (who to make offers to, whom to sue for nuisance) ii. Discloses rights over one’s own land (eg. tenants will know whether their landlord is the freeholder or a head tenant) iii. E-conveyancing is only viable with an open register 2) Three principles underpin the registration system (Ruoff, An Englishman Looks at the Torrens System) a. Three principles i. Mirror principle: the register reflects all current facts material to title – i.e. a title is free from all adverse burdens, rights and qualifications not mentioned on the register. - In an imperfect world this principle isn’t always reliable: a. Fraud (rights gained by fraud must never be recognized) b. Well-recognized burdens easily discoverable outside the register though they cannot conveniently be registered ii. Curtain principle: purchasers need not look behind the register iii. Insurance principle: any flaw in the register leads to compensation for loss b. (Smith) The principles are ideals rather than reality (eg. overriding interests are an exception) i. NOTE: Is this always true? Is it really an ideal that we should strive for? Is the best registration system one where the three principles have fewest exceptions?

Answer 68

Registrable interests: interests that can have their own files (legal fees simple, leases) a. Fee simple i. Any fee simple owner can apply for registration; those worried that their interests will be prejudiced by subsequent registration can record protected interests under a land charge ii. Most registration results from compulsory registration 1. S4-8 LRA 2002 provides for compulsory registration of conveyance of fee simple (sale or gift) within two months 2. Justifications: a. Solicitors are involved so need for registration is unlikely to be overlooked b. Quicker approval by land registry, because the conveyance would likely have been approved on an unregistered land purchase iii. Three forms of registered title 1. Fee simple absolute (registration without flaws) 2. Qualified title (registration with a specific problem, meaning no guarantees about that particular respect) 3. Possessory title (no proof of documentary title; title depends on adverse possession) iv. Effect of first registration 1. Title vested in proprietor subject only to interests protected on the register and overriding interests (Sch 1) except: a. If proprietor is a trustee, the beneficiaries’ interests bind him if he has notice b. Adverse protection claims bind proprietor with notice 2. If registered proprietor didn’t own the land… a. Previous owner can assert ownership by overriding interest (Epps v Esso Petroleum) b. Claim for alteration of the register c. (Controversially) Palk argues that first registration might transfer only legal (and not equitable) title to the proprietor, so that the previous owner might be able to claim the equitable interest by overriding interest. But this is difficult to defend (Palk, Smith) and at any rate purchasers from registered proprietors definitely do get the equitable interest b. Leases i. Legal leases > 7 years can be registered like fee simple ii. Therefore there can be two (or more: subleases) titles to the same plot of land, but they must cross-refer to each other 1. Justifications for separate titles: a. Many long leases with unregistered freeholds b. Leases can be bought and sold, mortgaged, etc. iii. Same compulsory registration (two month deadline, loss of legal estate if failure to register) 1. Leases granted before 2002 are not compulsorily registered, but if they are assigned after 2002 with > 7 years left, then they must be registered iv. Future leases (irrespective of length) must be registered (s4(1)(d) LRA 2002) because they are undiscoverable by purchasers; thus they are no longer overriding interests v. If the fee simple isn’t registered, it’s common to use a good leasehold title to guarantee the lease, but not against defects in the landlord’s title. If the freehold is later registered then this defect is cleared away and the lease title becomes absolute.

Answer 69

a. Powers of registered proprietor are essentially the same as unregistered proprietors (s23), and these powers are free of limitations but proprietors remain liable for any breach of duty where limitations are disregarded (s26) – most important for trusts of land (eg. exclusion of trustees’ power to sell) i. Limitations protected by entry on the register are exempt from s26 ii. No exemption for overriding interests b. Registrable dispositions (s27): i. Transfers: legal title won’t pass until registration (s27(1)), but equitable interest passes on payment of consideration (provided formalities are satisfied) or if it’s a gift then the principle that donee has done everything in his power can be used (Mascall v Mascall) ii. Leases over 7 years: no two-month period (unlike for leases granted by unregistered landlord) 1. Pre-2002 used to be 21 years a. Decrease justified because of rising prevalence of shorter commercial leases and decrease in costs of registration 2. 7 years is to identify short leases relatively unlikely to be sold or mortgaged (registration of these is not beneficial and can be unrealistic/unnecessarily bureaucratic) 3. Anticipated reduction to 3 years when e-conveyancing is fully in force (Law Comm 271, para 3.17) 4. Further reduction unlikely (leases < 3 years can be created orally, meaning less likely to be legal advisors) 5. But future and discontinuous leases are always registrable dispositions 6. Because leases are new titles, a notice will be entered onto the grantor’s title iii. Registered charges (eg. mortgages): don’t have their own titles (entry onto existing title) mortgages of unregistered land cannot be registered iv. Easements and profits: (legal) easements and profits (by express grant) must be registered on the title of the benefited land and a notice on the burdened land; implied and prescriptive easements don’t need to be registered 1. Failure to register means easement can only be equitable so that registration is essential to bind purchasers (reverses previous law: Celsteel v Alton House Holdings) a. Therefore easements in short leases have to be registered, even if the lease itself is an overriding interest (justified because easements bind adjoining land whereas short leases only affect the landlord’s title to the land) 2. Profits in gross have their own titles (while profits appurtenant are registered in the same way as easements) c. Effect of registration i. S29 LRA 2002: Earlier unprotected (non-overriding) interests are defeated, as long as there is (valuable) consideration (Midland Bank v Green) ii. Contrasts with first registration: 1. Valuable consideration is needed 2. No special protection for trust interests or adverse possession iii. Problems: 1. Must the transferee be in good faith? 2. Can a purchaser be bound by a personal unprotected interest? 3. What is the effect of forged transfers? Three situations: a. A forges original owner’s signature in a transfer to himself, and then registers: A cannot be protected (though not clearly stated in legislation) b. A forges original owner’s signature in a transfer to himself, registers, and then sells the land to B (unaware of forgery). B obtains good title on registration because s29(1) provides that unprotected interests (original owner’s claim) are defeated by a registered transfer c. A forges original owner’s signature on a direct transfer to C, C registers, and believes in good faith that he is buying from the original owner. i. C wasn’t duped by the register, but by a supposed dealing with the original owner; protecting him would remove the incentive to ensure that documents are genuine ii. But C is also registered; it can be argued that having paid for registration, C should obtain the same guarantees as any other register (Torrens systems in Australia and New Zealand favour the purchaser: Frazer v Walker. This is IMMEDIATE INDEFEASIBILITY, contrasted with DEFERRED INDEFEASIBILITY which protects only subsequent purchasers, preferred in Scotland (LR (Scotland) A 2012, ss50, 86) iii. If C tries to rely on s29, there are two problems: 1. Malory Enterprises v Cheshire Homes: under pre-2002 law, there is no disposition where there is a forgery. Applied to the 2002 Act in Fitzwilliam v Richall Holding Services 2. S29 protects against unprotected interests “affecting the estate immediately before the disposition” – here, the original owner is registered prior to the transfer; there is no unprotected interest to defeat! iv. Therefore, C will NOT get a good title 4. But these problems will be diminished with e-conveyancing because: a. Entries on the register will bind proprietors regardless of whether they are authorized (LRA sch 5 para 8). b. Forged signatures won’t be a problem because there will be no formalities, but fraudulent use of lawyers’ signature keys may have same effect (Mason and Bohm). A might still impersonate the original owner and persuade a lawyer to deal with him in transferring to C, but then C will get good title. 5. Extra points: a. Even (unregistered) short leases enjoy the benefits of registration (LRA s29(4)) b. Easements over unregistered (benefited) land enjoy protections of registration, where the only entry is a notice on grantor’s title

Answer 70

a. Huge range of interests: restrictive covenants, fees simple that are not legal because lacking registration… b. Distinguishable from registrable dispositions because minor interests enjoy no priority over earlier unprotected interests (LRA s28) c. Methods of protection i. Two methods to cater for the wide range of minor interests ii. Notice: purchasers are bound, though the interest is not guaranteed (LRA s32) 1. All interests can be by notice except: a. Interests under a trust of land must be protected by restriction because restriction is more suitable b. Leases not exceeding three years, because they cannot be registered (but why is there only an option to protect leases between 3-7 years?) c. Restrictive covenants between landlord and tenant (binding on assignees anyway because assignees will read the lease and discover the covenants) i. BUT covenants that bind land over than the leased land must be registered by notice (changes the pre-2002 position: Oceanic Village v United Attractions) 2. Notices can be unilateral or agreed. a. Agreed: either the proprietor applied for it or consented to it, or if the registrar is satisfied as to its validity b. Unilateral: proprietor must be told about it, and may apply for it to be cancelled, whereupon the person who entered it must justify it. i. Compensation is payable if entered without reasonable cause and proprietor suffers loss (s77) iii. Restriction: prevents future entries on the register 1. Eg: restriction that transfers by fewer than two trustees cannot be registered 2. Beneficial for purchasers because they know what they need to do to take free of the beneficial interest, and for beneficiaries because they don’t have to argue their case because purchasers know that they can’t register (therefore suitable for trusts) 3. However, restriction doesn’t accord priority on the interest 4. Registrations can be entered whenever, even if the interest is not an interest in land (eg. positive covenants: restriction can say that any subsequent transfer will require the consent of the original seller, and that consent will be given if the transferee agrees with the original seller to comply with the covenant. 5. Can be entered by: a. Registrar (s42 – power; s44 – obligation where joint proprietors are registered) b. Application (s43 – obligatory where beneficial tenancy in common results) c. Court order (s46) 6. Can be “notifiable” (like unilateral notices) – useful where beneficiaries of constructive or resulting trust beneficiaries want to enter a restriction though the beneficial interest is denied by the proprietor a. Such a restriction isn’t entered until proprietor is given a chance to object d. Priorities i. Set out in s28, confirming Barclays Bank v Taylor and Mortgage Corporation v Nationwide Credit Corporation that priority is not affected by later dispositions (even if registered) subject to s29 priority enjoyed by registered dispositions ii. Doesn’t protect people taking interests that are not registrable dispositions, but Law Comm thinks that this risk will be minimized by compulsory electronic entries when introduced (Law Comm 271, para 5.3). However, several interests (eg. trusts) are likely to lie outside of these entries iii. [251, One additional general…]

Answer 71

affect purchasers without registration

Answer 72

1) Accommodate move towards electronic conveyancing a. Move towards electronic conveyancing would likely lead to a system where registration becomes essential for the creation and transfer of interests in land, replacing the formal requirements under the present law (s52 LPA 1925). The legislative structure must be receptive of this change, and take account of its likely implications. [1.2] b. Move towards e-conveyancing is desirable because [2.46]: i. Eliminates the period of time between transaction and entry on register ii. Eliminates the duplication of effort and risk of error 2) Deficiencies in the present legislation (LRA 1925) a. Present legislation is “badly drafted, … lacking in clarity [and] very complicated”. There is a clear need for modern legislation especially because most modern transactions deal with registered land. [1.3] i. The rules governing the protection of minor interests is unnecessarily complicated: there is no need to have four separate methods, and the protection given to cautions is inadequate [2.34] b. Present legislation reflects the erroneous perception that principles of registered land should so far as possible be the same as for unregistered land. It should be recognized that they are different: i. Differences in the protection of rights of occupiers, priority of equitable interests, rights of adverse possession etc. should be recognized [1.5] 1. Especially the rights of squatters constituting an overriding interest, a “sensitive issue” that should have a separate system for registered land [2.43] ii. This has been recognized in the Commonwealth: the basis of title to unregistered land is possession, while for registered title is the fact of registration. Many jurisdictions have different regimes for the two. [1.6]

Answer 73

Three “agreed objectives” guided the approach of the Joint Working Group [1.12]: 1) Simplify, clarify and make coherent the existing law 2) Flexibility (to accommodate e-conveyancing) and cohesion with existing system a. Create a “culture” of registration to facilitate e-conveyancing transition by [1.14]: i. Providing better protection for registered rights and interests 1. Registration should protect proprietor against squatters 2. Encumbrances over registered land should enjoy greater protection than at present ii. Simplifying the process of registration iii. Confine overriding interests (those that are protected outside of the register) 3) Take account of resource implications

Answer 74

Four major differences [2.5]: 1) Investigation of title is simpler for registered land 2) Doctrine of notice has no application to registered land 3) HM Land Registry guarantees a registered title (meaning that rectification gives rise to indemnity for loss) 4) Basis for title to registered land is not possession but the register: even entries obtained by fraud are effective. This principle has not yet been reflected in the rules governing adverse possession.

Answer 75

Transferees of registered dispositions take free of interests not protected on the register; therefore, those with the benefit of minor interest must ensure registration. However, the Registry does not guarantee the validity of (even registered) minor interests so other forms of protections exist [2.25]: 1) Protection by notice – a notice binds anyone who acquires the land; best form of protection 2) Protection by caution – entitles the person to be notified of (and to object to) any subsequent registered dealing with the land; does not affect priority in any way (Barclays Bank v Taylor, Russell LJ, holding that a registered minor interest didn’t gain priority over an earlier unregistered one). Can be entered unilaterally. 3) Protection by restriction – records limitations on powers of disposition, often used to protect interests under a trust 4) Protection by inhibition – “freezes” the register (inhibits registration of any further dealings), used as a last resort remedy in cases of fraud/bankruptcy These are in need of reform because 1) They are unnecessarily complex; there is no need for four separate methods that overlap with each other [6.44] 2) Cautions offer inadequate protection because they do not preserve the priority of the right, but might actually diminish it (eg. if an overriding interest is subsequently registered as a caution) [6.45]

Answer 76

1) Definition of “purchaser” a. Remove the “good faith” requirement [3.40] and define a purchaser as anyone taking an interest for valuable consideration [3.42] i. Experience from the Torrens system in Australia and New Zealand show that “fraud” is an uncertain exception that undermines the indefeasibility of title b. Cease to recognize “marriage consideration” as “valuable consideration” because it is anachronistic, and a transfer on marriage should instead be a wedding gift [3.43] c. Make clear that notice will not apply to dealings with registered land unless statute expressly so provides i. Law Comm was well-aware that this goes against strong academic opinion that purchasers of registered land should be bound by registrable but unregistered interests that they have actual knowledge of, to introduce an “ethical element” into registration (Battersby, 1995) and end the courts’ struggle to hold these purchasers bound (Smith, 1997). But reached this conclusion because [3.46]: 1. It was intended that LRA 1925 should displace doctrine of notice 2. Little evidence that absence of doctrine of notice has caused injustice 3. Ethical argument is weak compared to the principles that should guide registration: it should be considered an “integral part” of the process of transferring interests, akin to the formal requirement of a deed 4. Difficult to hold the line between actual knowledge and willful blindness/constructive notice ii. There does need a safety valve for parties who cannot reasonably be expected to register, but this is met by: 1. Overriding interests 2. Availability of personal remedies against the purchaser a. Trust property: constructive trustee for “knowing receipt” b. Transfer expressly subject to a right that doesn’t bind purchaser: constructive trust c. Tortious liability for conspiracy to defeat proprietary rights d. Misrepresentation/undue influence 2) Protection of minor interests [Part VI] a. Retain only two methods of protection: notice and restriction i. Notices can be either consensual (which cannot be warned off) or unilateral (which can be warned off in the same way as cautions could be ii. Restrictions will assume the function of inhibitions; they can be entered to restrict the powers of disposition in whole or in part, with or without consent b. More comprehensive scheme addressing making entries without reasonable cause involving: i. Sanctions for improper applications for registration ii. Power for registrar to remove or modify entries expeditiously

Answer 77

1) Breach of faith: registration has hitherto been taken in reliance on a principle of confidentiality 2) Information compulsorily obtained: where the state requires information by compulsion, it must not be displayed unless there is a need (absent here) 3) Invasion of privacy: a register tells you who owns the land, whether it’s mortgaged, rents payable on lease etc., which can be annoying for the landowner for outsiders to know (could attract unsolicited commercial mail, gossip columnists, terrorism (!?) etc.) 4) Mirroring position under unregistered land: titles for unregistered land is secret; it shouldn't’ be different because the title “happens to be registered” (MI: Appears to treat registration as an occurrence by chance) 5) Encouraging nominee registrations: and therefore concealing beneficial ownership, partially defeating the purpose of an open register 6) Partial opening sufficient: partial openness (disclosing name and address of proprietors only) would be enough

Answer 78

1) Breach of faith . No reliance; registration hasn’t been taken on reliance, but because it’s compulsory and to secure its advantages 2) Information compulsorily obtained no such principle, and there is a need; the need is for tenants to discover superior landlords, and to simplify house transfers 3) Invasion of privacy no general right to privacy: exploitation by advertisers is a “fact of modern life” and an open register is unlikely to encourage gossip columnists or terrorists 4) Mirroring unregistered titles unregistered titles need not be private 5) Nominee registration registration is not designed to reveal beneficial ownership 6) Partial opening is sufficient partial opening is unfeasible; requires too much resources and work

Answer 79

1) Conformity with other jurisdictions: most other countries with registers have open registers 2) Legitimate public interest: Ownership of land (as a finite resource) carries social responsibilities and open registers aids in historical research, study of planning/estate management etc. 3) Legitimate private interest: Landlords should be able to identify immediate and superior landlords 4) Simplifies house transfer: saves time in verifying title, discovering encumbrances, allow inspection of neighbouring properties etc. 5) Helpful to HM Land Registry Therefore, we recommend opening the register.

Answer 80

• Since LRA 1925 there haven’t been significant changes to registration, until LRA 2002, in which context we assess the significance of registration today • Today, registration is central to land law, no longer existing in a vacuum, and cannot be forced into old principles that linger in our legal analysis • The argument that differences between registered and unregistered land should be kept to a minimum was tenable when there were large amounts of both types of land, but untenable now because over 90% of land is registered. We should no longer hold back on developing registered land principles • Nevertheless, most of land law is unaffected by registration (eg. definition of a lease or easement), which must fit into familiar principles. But two areas should be reformed: o Structure of registration (registered/overriding/minor interests) demands alternation of priority rules (eg. guaranteeing proprietor’s title) o Land registration may facilitate change; rules that make sense in unregistered land may no longer make sense in registered land Against this background proposes three ways of looking at modern role of registration

Answer 81

• Most obvious role of registration: make conveyancing simpler, quicker and cheaper • Sub-issues: o Ease and cost of conveyancing registered land ♣ Not much difference between registered and unregistered conveyancing (difference was more the quality of title). o Potential for future improvements ♣ Computerization (reduce delay and costs) ♣ Replace conventional documentation with electronic communication (eg. electronic applications) ♣ Electronic conveyancing • Controversial because of security and practical operation (but these difficulties are shared with other areas of e-commerce) • But these difficulties aside, would it really make that much of a difference? Legal advisers will still need to check that they have authority to enter the electronic entry • Law Comm sees e-conveyancing as replacing regular conveyancing; if it becomes compulsory to use it, then: o Registration will become an integral part of creation of any property interest (“without registration, nothing will exist” ♣ This means that people won’t even be able to sue the other party in contract (though this might be cured later), and at any rate significantly more serious penalties for failing to register ♣ This means greater risk to people who don’t employ lawyers who might not know they need to register (Law Comm envisages a public awareness campaign but Smith doubts the effectiveness) o Role of formality requirements will be diminished; they will neither be sufficient nor necessary, but will still have a role: ♣ Litigation over MPA 1989 will decrease ♣ But there might still be problems when relevant terms are not electronic, or when contracts are entered into regularly and then electronically registered, omitting certain terms o E-signatures will mean that agents will sign on their clients’ behalf, raising the question of the effect of such signatures when the agent is not properly authorized o Potential to minimize current difficulties (registration gap, minor interests…) • Nevertheless, the reforms won’t be as comprehensive as this, because there will always be exceptions to the rule of compulsory e-conveyancing, and here the old problems will continue • Scope of these exceptions as defined by Law Comm in four categories, including: o Rights arising without express grant or reservation ♣ Inc. proprietary estoppel, adverse possession, implied/prescriptive easements, mere equities ♣ Issue 1: strict requirement to register will result in many rights being unenforceable and lead to increased use of proprietary estoppel o Interests under trust ♣ Issue 2: many actual occupation cases involve trusts, and while constructive/resulting trusts cannot be expected to be registered it is less clear that express trusts deserve such protection. • Conclusion: these exemptions significantly limit the benefits that appear to flow from requiring registration, but these exemptions are also necessary for justice. Therefore, while in individual cases buyers will be better protected, it does not mean that they will be able to safely make fewer inquiries

Answer 82

• Guaranteeing title is an essential aspect of title registration o NOTE: MI Challenge its truth? Can registration still be useful (enough to be desirable) even if it does not adequately guarantee the proprietor’s title? • Three component parts to guarantee title: (1) Freedom from adverse claims ♣ Overriding interests will continue to bind purchasers in registered land (implied/prescriptive easements, adverse possession (sometimes), leases not exceeding 21 years) so contrast with unregistered land is not as great as might be thought ♣ But to what extent do courts accept that there are differences? • Purchasers with actual notice of unprotected minor interests: the same considerations arise in unregistered and registered land (the debate is really between traditional concepts of when purchasers are bound, and the registration schemes in LCA 1972). But the Law Comm took the view that notice shall be irrelevant in registered land; the 2002 Act appears to have this effect. • Overriding interests: many legal interests are overriding, and though the 2002 Act seeks to diminish their scope, the most problematic overriding interest is Sch 3 para 2 LRA 2002 – the interest of “a person in actual occupation”. o Justification: preferable to require purchasers to make inquiries of occupiers than to defeat their interests (which frequently involves turning them out of their homes) o Question: how far does sch 3 para 2 merely reflect the rule that actual occupation constitutes constructive notice ♣ More recent (pre-2002) cases see attempts at introducing a doctrine of notice into registered land dealings: Lloyds Bank v Rosset, Abbey National v Cann. The conclusion is welcome (protecting purchasers who cannot discover the actual occupation) but the method is criticized because nothing in the statute justified introduction of notice. ♣ Danger = courts seeking old rules as “some form of ideal justice” to be invoked whenever possible • Personal liability based on knowing receipt: can circumvent the statutory protection for purchasers. Law Comm said there should be no concept of notice or knowledge in registered land, but welcomed personal liability. But personal liability that arises simply because one is a purchaser (and not because of his specific undertakings) is difficult to justify in circumstances where the law says that the property rights do not bind the purchaser… (2) Freedom from rectification of title ♣ How far are courts influenced by unregistered land outcomes in considering whether to rectify? • Danger: purchaser may find an unencumbered title destroyed by rectification; Jackson argues that importing unregistered land principles in this context frustrates the purpose of registration in failing to simplify the rules. • CoA said there was no general discretion to rectify (Norwich v Steed) • Law Comm would exclude unregistered land principles unless there is some issue that arises prior to first registration (para 8.40) • Rectification will normally only be awarded in case of fraud, lack of proper care, or “unjust for the alteration not to be made” • Even if rectification occurs, para 3 sch 4 gives protection to proprietors in possession (3) Right to financial indemnity if title is flawed

Answer 83

Considers developments that might be encouraged/facilitated by registration of title considering two Law Comm proposals: • To severely limit the scope and attraction of adverse possession rules (implemented by LRA 2002 – Sch 6) o Desirable for registered land because: ♣ Titles are guaranteed by the state, so adverse possession is insignificant in settling otherwise doubtful titles ♣ Registrar can serve notice and decide when adverse possession should be allowed • To not change the priority of interests (apart from the quality of the proprietor’s title) o Registration does provide an opportunity to change priorities, for example, according priority to the first registered equitable interest. This risks leaving interests unprotected, but adds certainty. Gaining equitable interests often involves significant spending, so certainty as to priority is important. Developments not considered by Law Comm: • Louise Tee: overriding interests should encompass all claims to land and not merely interests conventionally regarded as proprietary (propounded by Donovan LJ in Ainsworth but rejected by HL) o Argument: replacing the uncertain notice doctrine with registration and actual occupation means that some reasons for limiting proprietary interests are less forceful (eg. discoverability of interest is less problematic) so more proprietary interests can be added to the list ♣ Why numerus clausus? Though there are standard answers, there is a “lingering doubt” as to whether the justification is more one of “historical development” than modern utility. Tee’s argument forces us to consider this argument: though it might be good to allow registration of all interests, it would be radical (eg. allowing positive covenants to bind purchasers, ridding requirement of dominant tenement in easements…) and defy our preconceived notions o How far would this change simplify the law? ♣ Tee argues that present law is uncertain as to what binds purchasers so actually causes problems for purchasers ♣ But in practice, Smith argues that the majority of cases are clear as to whether the interest at hand binds purchasers o Lessons can be learnt from leasehold conveyancing, where covenants much more readily bind purchasers. Smith thinks that the lesson is that “the skies will not fall in if a wider range of obligations were to affect purchasers, but that some problems will arise: simplicity of structure would be bought at a cost.

Answer 84

1) The theoretical ideal of the mirror principle comes at the cost of restricting someone else’s rights. The benefit of registration to purchasers must be balanced against the interests of those whose rights might be prejudiced by a requirement of registration. Those who advocate drastically reducing the number of overriding interests sometimes look at the matter solely from the purchaser’s POV. a. Matters going against the imposition of a general registration system: i. Injustice of requiring particular interests to be registered on pain of deprivation ii. Registration of some interests would be “unnecessary, impracticable or undesirable” (eg. implied interests, or those acquired verbally, or transient rights, or those easily discoverable) iii. Some rights enjoyed in fact might, through the entry of a notice or restriction, provoke litigation through being seen as a hostile act iv. Any reduction in overriding interests means increase in indemnity claims b. Recommendation: i. (1) In the interest of certainty and of simplifying conveyancing, the class of overriding interests should be kept as narrow as possible ii. BUT (2) interests should be overriding where protection against purchasers is needed, yet it is either not reasonable to expect, or not be sensible to require, any entry on the register 2) Worries about Boland prompted proposals to abolish overriding interests (though retaining some as general burdens) and enlarge the potential for rectification and/or indemnity a. Reception ranged from welcoming (neither innocent party is left empty handed) to hostile (scheme is unworkable) b. Therefore, final recommendation is not to abolish overriding interests but limit them in accordance with the above principles 3) Retention of the paragraph protecting occupier’s rights can be justified because enquiries do have to be made of occupiers who may have rights – the equitable rights of spouses is now well-recognized and society must respect them; it is desirable that spouses should be consulted and involved in transactions involving their homes. a. But this is not a general justification for occupier’s rights because it’s not restricted to spouses in matrimonial homes, and it is not immediately obvious that other actual occupiers should be similarly consulted. b. Nevertheless, the rights of actual occupiers shouldn’t easily be discarded, because their rights often arise without express grant and the same reasons prompting us to retain easements, adverse possession and short leases as overriding interests, should apply a fortiori to actual occupiers.

Answer 85

(Per Lord Wilberforce) Interests of co-owners under a trust are minor interests, but if they are protected by actual occupation, they should acquire the status of overriding interests protected by [LRA 2002, Sch 3 para 2]. The gap between minor interest and overriding interests is not an “unbridgeable gulf”. NOTE: 1) Part of the problem in Boland was that the interest was held under a trust for sale (so it can be seen as in money rather than land); this problem is now largely obsolete following the abolition of trusts for sale 2) Minor interests are no longer a statutory category – what impact does this have on the issues in Boland? [We still use the language of minor interests (at least academically) – are the concepts discussed still relevant?]

Answer 86

1) Discontinuous leases (of whatever length) are registrable – this is a new provision. 2) Mortgage terms created by demise or subdemise are never registrable: it wouldn’t make sense to register them 3) Legal leases with over 7 years remaining at the time of application may be registered – this is a significant change (present law = 21 years) that goes against the consultation (which favoured a power to reduce the term if there were at a later date support for such a change) because: a. Absurd to continue to maintain two distinct systems of conveyancing between registered and unregistered – the two will continue to diverge with e-conveyancing and other reforms introduced in this Bill b. Business lease is commercially significant, and currently excluded from benefits of registration because they are usually less than 21 years. This is an “indefensible omission” because 1) it is a barrier to our goal of total registration and 2) it makes it impossible to grant such leases electronically, and 3) register is a public document with important information about land – there’s no justification for excluding a significant body of leasehold property from this source of information.

Answer 87

1) Leases under 21 years can never be registered, but take effect as overriding interests. Thus they can never be minor interests or entered by notice; dealings must be by the “technical” and “increasingly unfamiliar” rules of unregistered conveyancing. 2) Short leases have substantial commercial value, and commercial leases are increasingly shorter; therefore, it is appropriate to consider whether the range of registrable leases should be widened, especially in light of move towards e-conveyancing, which should offer considerable benefits to leases in reducing paper storage and access problems. 3) Extending registration to < 21 year leases will be desirable if likely to facilitate dealings with them: a. By making it easier to assign b. By making it easier to access the terms of the lease c. By increasing the security of title for derivative interests (subleases and charges) 4) Therefore, consultation is sought regarding the subject, with choices between: a. Status quo b. Leases of more than 14 years be required to be registered i. Note: original consultation was 14 years, which is significantly more than three years (or seven years) (also, the report says that commercial leases of 15 years are increasingly common, which appears to be the source of the 14 year number. So it isn’t making any provisions for the future at all? No thought at all that this number is likely to decrease even further????). c. Leases between 14 and 21 years can be registered if the tenant wished, or otherwise take effect as overriding interests d. Some other requirement

Answer 88

1) The principle that easements are overriding interests (LRA 1925, s70(1)(a)) and therefore express easements do not need the protection of registration when openly exercised and enjoyed with the appurtenant land, conflicts with the principle in this report that rights expressly created over registered land should be completed by registration. This will probably have to be when e-conveyancing is introduced. 2) Recommendations: a. Express easements should be completed by registration and should not be capable of existing as an overriding interest under s70(1)(a). When e-conveyancing is introduced, easements will only be able to be created by registration. (NOTE: Is this right? [5.14]) b. Five categories of easements should be overriding interests until they are registered, and legislation should make it explicit in each case that this is the case: i. Implied easements ii. Easements acquired by prescription iii. Easements in the course of acquisition by prescription (giving them overriding status confirms that change of ownership of burdened land doesn’t mean prescription has to start fresh) iv. Legal easements that existed at the time when the burdened property was first registered but the easement itself was not entered onto the register (such equitable easements should not be overriding interests because in unregistered land, they would not be effective against purchasers unless entered as a land charge (Class D(iii) LCA 1972), and they shouldn’t be elevated to an overriding interest simply because the land was registered) v. Easements appurtenant to an overriding interest (eg. rights appurtenant to a legal lease not exceeding 21 years, or equitable lease from an agreement for a lease) c. Those easements that exist as overriding interests under s70(1)(a) will continue to do so after such reforms, because removing the overriding status might contravene the ECHR unless compensation is offered d. However, those easements that took effect as overriding interests under the above provision will give rise to a rebuttable presumption that they have been abandoned after non-exercise for 20 years. This prevents purchasers from being trapped by undiscoverable easements. 3) These recommendations are consistent with the objective of securing the registration of overriding interests wherever possible.

Answer 89

1) Express easements and profits (in gross or appurtenant) are a registrable disposition except: a. Those registrable under the Commons Registration Act 1965 (because that Act prohibits registration under LRA 1925) b. S62 easements, though are treated in some respects as a form of express grant (Quicke v Chapman), are not treated as express easements in this context and do not require registration 2) Registration depends on the nature of the grant a. Legal profit in gross with its own title: notice; grantee registered as proprietor of interest created b. Other grant or reservation: notice; grantee entered as proprietor of the interest, in the benefited estate

Answer 90

1) Bill significantly changes scope of overriding interests in relation to easements and profits. Concerns remedied: a. Wrong in principle that easements expressly granted should take effect as overriding interests, because they constitute registrable dispositions and therefore should be registered i. Therefore recommends that only legal easements be overriding interests; since express easements don’t take effect in law unless registered, they cannot be overriding interests b. Almost impossible to prove abandonment of easements, and difficult to discover easements used only occasionally unless registered. Purchasers can be seriously disadvantaged. i. Therefore recommends that certain categories of legal easements not be overriding (unless registered under Common Registration Act or have been exercised in the one year prior to registered disposition in question): those not within actual knowledge of purchaser, and those that would not have been obvious on a reasonably careful inspection of the land over which the easement or profit is exercisable 2) Effect of the provisions is that people acquiring interests for valuable consideration under a registered disposition will only be bound by an easement as an overriding interest if: a. It is registered under the Common Registration Act b. Or he knows of it c. Or it is patent (obvious on a reasonably careful inspection of the servient land) d. Or it has been exercised within one year before disposition i. Designed to cover ‘invisible’ easements (drainage pipes, etc.) 3) Intention behind new provisions is to: a. Encourage creation of a system of standard inquiries as to easements and profits: sellers should disclose what they can reasonably be expected to know and then ensure that these rights are registered, so that purchasers know of these before completion of the transaction b. Onus should be on beneficiaries of easements that are overriding interests but are exercised intermittently to register them 4) Transitional arrangements: a. Easements that are overriding interests at time when Bill comes into force retain their overriding status (but it is hoped that owners will register them anyway) b. A three year ‘grace period’ where all legal easements not registered will be overriding interests (this only protects easements by prescription or implied grant/reservation, because express easements won’t

Answer 91

There are three issues facing Pandora for discussion: (1) Wilma will contend that pursuant to The Land Registration Act 2002 (LRA 2002) Schedule 3 section 2, her interest, in virtue of the trust she holds in the estate, will constitute an overriding interest. If proven, Pandora will hold the estate subject to this interest, and thus a possession order would be unsuccessful. (2) Susie will contend that pursuant to the LRA 2002 Schedule 3 para 3 (2) her easement across the driveway is protected. If proven Pandora will hold the estate subject to Susie’s right of way across the driveway. (3) The issue of Fred’s contract for a lease in the property

Answer 92

Wilma has an equitable interest in the estate and this interest will be the basis for her claim. Her daughter Daisy, although also holding an equitable interest, cannot contend she has an overriding interest as she cannot legally be in occupation (Hypo-Mortgage Services Ltd v Robinson). The issue therefore concerns Wilma alone. Section 29 of the LRA Act applies as the case concerns priorities in the case of the registrable disposition of an estate made for valuable consideration. S29 (2) (a) (i) does not apply, as under s33 (a) (i) a trust of land is excluded from notice on the register. Wilma will therefore argue under s29 (2) (ii), under paragraph 2 of Schedule 3: Interests of persons in actual occupation. To qualify under this paragraph (2) Wilma must prove that she had an interest ‘at the time of the disposition’, was a person in ‘actual occupation’ and does not qualify for any of the exceptions in 2 (a)-(d). Of these stages, it is clear that she had an interest under a trust at the time of the disposition, so that hurdle presents no difficulty. The question of whether Wilma was in ‘actual occupation’, and this occupation must be at the time of the disposition (Williams and Glyn’s Bank v Boland)2 , would be determined on a discussion of the case law. The facts of Wilma’s occupation are analogous to the case of Kingsnorth Finance v Tizard.3 However, as this case pertains to the doctrine of notice in reference to unregistered land, it is only of very limited use. This is supported by the Law Commission’s findings, and the provision of Sch 3 para 2 (c) (i) which suggest ‘actual occupation’ is separate from the principles applying to the doctrine of notice. It is clear that Harry’s occupation does not exclude Wilma’s (Williams and Glyn’s Bank v Boland)4 . In Link Lending Ltd v Bustard5 it was acknowledged that the courts are reluctant to suggest a single test for the determination of this question. The inquiry is therefore fluid and fact specific. In Abbey National v Cann6 it was suggested that ‘actual occupation’ for these purposes indicated ‘some degree of permanence and continuity which would rule out a mere fleeting presence’, though it did not necessarily involve the uninterrupted physical presence of the person claiming to occupy. Although Wilma lives somewhere else during the week, the regular weekend visits suggest continuity. This is substantiated by the fact that the separation is only ‘trial’. Indeed in Chhokar v Chhokar7 it was suggested that the need for permanence and continuity does not create difficulties where the occupier is temporarily absent. Although the case may be on the borderline, it seems likely that Wilma was in actual occupation. Schedule 3 para 2 (c) (i) may present some difficulty to Wilma, if Pandora were to contend that her occupation would not have been obvious on reasonably careful inspection of the land at the time of the disposition. This relates to the question of actual occupation, and it seems likely, on the lack of any discussion of this point in the case law, that if Wilma is found to be in actual occupation this section would not present a problem. To conclude, Wilma has an interest that overrides and therefore takes priority

Answer 93

Section 29 of the LRA applies as the case concerns priorities in the case of the registrable disposition of an estate: Harry sells the house to Pandora and she registers the estate. Susie has not registered the easement so s29 (2) (a) (i) does not apply. Instead she will seek to rely on s29 (2) (a) (ii) which directs the court to look at the interests which fall within any of the paragraphs of Schedule 3 of the LRA. Schedule 3 provides for the unregistered interests which override registered dispositions. Paragraph 3 (2) means that in order to protect her interest, Susie has to prove that ‘it has been exercised in the period of one year ending with the day of the disposition.’ As Susie uses the driveway most days, her easement falls within this category, and is therefore an overriding interest. As Pandora takes the estate subject to interests that override (City of London BS v Flegg)8 her estate will be encumbered by Susie’s right of way.

Answer 94

Section 29 of the LRA applies as the case concerns priorities in the case of the registrable disposition of an estate: Harry sells the house to Pandora and she registers the estate. Notice of Fred’s lease does not appear on the register by virtue of section 33 (b) (i)-(ii), as it is for fewer than three years, and consequently s29 (2) (a) (i) does not apply. Fred may seek to argue under s29 (2) (a) (ii) by turning to Schedule 3. Paragraph 3 of this Schedule cannot be used as Fred is not in actual occupation, though he contracts with Harry in July he does not plan to move into the property until August. Thus Fred must look at para 1, which provides for the leasehold estates in land which constitute overriding interests. By the use of the term ‘grant’ Fred’s interest is excluded as it was not made by deed. Thus he cannot rely on Schedule 3 and does not have an overriding interest. (NB need authority for this point) The status of interests in land ‘created by parol and not put in writing' is provided for by section 54 of the Law of Property Act 1925 (LPA 1925). These shall have ‘the force and effect of interests at will only’ unless they fall within the exception provided by s54 (2). To qualify for this exception, the lease must be less than three years, take effect in possession, be at the best rent reasonably obtained and without taking a fine. Fred’s contract falls short of two of these requirements. The lease does not take effect in immediate possession; Fred delays moving in by a month. Furthermore the lump sum of £60 000 would constitute a fine for these purposes. So where does this leave Fred? We can consider the case of City Permanent BS v Miller. In this case the first defendant (lessor) orally agreed (and then contracted) to let to the second defendant (the tenant) the first and second floor of a premises, on receiving from her three years rent upfront. The tenant did not take possession of the premises until registered proprietor had been assigned to the mortgagor and security exchanged. It was suggested that the interest of the tenant “was at the highest that of a person who had contract for the grant of a lease…neither a legal nor an equitable tenancy.” Thus, although Fred has no enforceable right against Pandora in land, Harry will be contractually liable to him. Fred’s interest does not qualify as an overriding interest, nor does it qualify for protection under s54 of the LPA 1925. Fred therefore has no enforceable right against Pandora but may bring a contractual action against Harry.

Answer 95

Main purposes of LRA 2002, as noted by Law Com 271, was to enable the register to become a complete and accurate reflection of the state of title at any given time, so it is possible to investigate the the land with the absolute minimum of additional enquiries and inspections ('the curtain principle'). But, there are 'cracks' in the mirror: 1. overriding interests (Schs. 1 and 3 paras 1-3); 2. alteration of the register (Sch. 4). 3. Some properties, i.e. in rural areas, are to this day unregistered. Why might we want a single conclusive register? 1. facilitate transactions by (i) simplifying the process such that fewer enquiries are required and (ii) there is less risk of being bound by unregistered encumbrances on your title, 2. thereby increasing the alienability of land On the other hand, the existence of certain unregistered interests is justified - provided the category is well-bounded, well-known and justified by reference to some stronger, legal or social need. The overriding interests + alteration are justified!

Answer 96

Under s.4 LRA 2002, first registration is required in the disposition of the major titles in land, including where there is a transfer of an unregistered legal estate which is a freehold estate or a leasehold estate which has more than seven years to run, when there is a grant of a lease or creation of a protected first legal mortgage. There is an inducement to register the land within two months from the date of the deed of registration, following s.6(4) LRA 2002, otherwise the title to the land will be void and the agreement will only be enforceable as a right in personam under contract. Thus, it seems from s.4 LRA 2002 that it is a clear principle of the LRA 2002 to increase the number of titles regulated by the register.

Answer 97

For every interest that is protected as an overriding interest/alteration, there is a corresponding interest which has been thwarted. This thwarted interest is problematic for deontological and consequentialist reasons. Deontological: As a matter of respect to the parties, even if they are not natural persons i.e. a building society, their expectations should be respected. By contrast, flippantly frustrating such expectations would deny the affected party a right to have their interests recognised. Thus, similar dignitarian arguments employed to defend the rule of law (give case + judge) can be imported to justify a conclusive register, especially from the perspective of the purchasers whose interest will be thwarted. Crucially, purchasers cannot plan their lives (or finances in the case of a building society and/or bank). A related but independent reason for a conclusive register is that it would enhance autonomy. Thus, a more conclusive register, such as that which might exist if e-conveyancing had successfully been implemented, would mean that parties were in greater control of matters of central concern in their lives, or what Dworkin might label 'critical interests'. Crucially, the decision to buy land is central to one's either financial or personal life, and is more deserving of protection than an 'experimental interest' i.e. what brand of cereal an individual habitually eats (the same argument can be employed with respect to protecting unregistered interests, discussed below). Finally, in a world with finite resources and limited time, a conclusive register provides a more efficient mechanism for carrying out the disposition. There are also instrumentalist arguments in favour of a conclusive register. - reducing the risk of fraud, making conveyancing easier and less expensive is also conducive to ensuring the alienability of land. Why is this a good thing? In one sense, it ensures that the party which can use the land most efficiently.

Answer 98

Sch. 1 and 3 paras 1-3. para 1 protects leasehold estates granted for a term not exceeding 7 years; those less than three years cannot be registered. Would we want to register all leases of this kind? In its current state, i.e. where we still do not have a digital system of conveyancing, it would clutter the Land Register and potentially render it less efficient. The same argument would not apply if convincing were to be introduced. Thus, although the overarching aim of the LRA 2002 was as the statement suggests, it was caveated by pragmatic considerations in light of the fact that it was as Gardner notes a means to and end (e-conveyancing which would have enacted the quotation) Para 2 captures a philosophical tension between title by registration and title by possession. The law rightly recognises that security of tenure is an important consideration. However, this consideration is heavily qualified by the subsections within Para 2, which note that the occupier must (a) have a right, thus a licensee cannot bind a purchaser, (b) but be in physical occupation of the land (though compare cases i.e. Chockar v Chockar + Bustard where woman was ill). Thus, it is not merely de facto possession which is being protected, as Dixon notes, overriding interests serve a higher social purpose of respecting the attachment which people have to their homes and occupancies. Hence, a 'fleeting presence' will not suffice. Such a concern is reflected in the case law concerning human rights. A1P1 and Art. 8 recognise the significance. Yet, even here the the scope to defeat a purchaser is narrow. Arguably, the law is not coherent in its approach and the SC should relax its approach in finding an A1P1 + Art. 8 case, in light of the statutory recognition that actual occupation can give rise to [... not sure]; similar argument can be made for proprietary estoppel, which shows that certainty, whilst ensuring justice in many cases, is not in and of itself sufficient to ensure justice [etc.] Finally, public rights are overriding as it may be essential for a public body to use the land and, following a utilitarian argument, the need of one person for that property should not be permitted to trump the need for the wider society for that land.

Answer 99

The Court or registrar may order the alteration of the register for various purposes, including correcting a ‘mistake’ or bringing the register up to date. In Re Chowood, a title by possession of a part of the claimant’s registered land had been granted before the claimant’s date of registration. Thus, rectification of the register was ordered to remove the claimant’s title to the strips. Also, in NRAM v Evans, the Court changed the register to bring it up to date, which completely changed the title to the land as noted on the register, creating a mortgage over the land. This shows how the register is not absolute, as it can be changed. Thus, it cannot be said that title to land is regulated and ascertainable from the register alone, because the register is subject to change by the Court or the registrar. As noted by Gardner, this means that the register cannot be regarded as conclusive. This should be the case, because effect should be given to those innocent parties who held the first title to the property and the innocent party whose right was a mistake should be compensated, preventing unconscionability. The further provisions in Sch. 4 and Sch.8 respectively that no order may be made if alteration affects the title of the proprietor in relation to land in his possession (unless he was fraudulent or negligent) and that a person is entitled to be indemnified if he suffers loss by reason of rectification of the register prevent the principle of alteration of the register from being too unfair. As seen in Swift 1st v Chief Land Registrar, this leads to a just result, because the person in actual occupation was permitted to retain his proprietary right to the property, and the innocent claimant who was the victim of fraud was entitled to compensation for the loss suffered as a result of the rectification.

Answer 100

To conclude, the governing principle of the Land Registration Act 2002 cannot be said to be that the title to land is to be regulated by and ascertainable from the register alone, because a considerable amount of land is still permitted under the Act not to be registered, unless it is subject to a qualifying disposition under s.4 LRA 2002. Furthermore, the existence and allowance of overriding rights under Sch. 3 clearly reveals that certain titles to land are subject to rights created outside of the register. The mechanism of alteration of the register and Sch. 4 is a further limitation on the quote, as it means that at the time a purchaser is considering purchasing land, the register is not a conclusive record of titles to land, because it could be rectified by the court or the registrar. The aim of the Law Commission to establish more titles under the Register should be regarded as a good one, because it greatly increases the efficiency of conveyancing and reduces the potential for fraud, however the Register should not be the absolute reflection of all interests in land, as this would lead to unconscionable results and prevent public bodies from performing essential public duties in some cases.

Registration Flashcards

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