Week 1- Formalities and registration?

Question 1

Facts and significance of Hunt v Luck 1902 regarding unregistered land and notice (actual or constructive- Note the days of actual and constructive notice are over following s32 of the 2002 act, which states that notice now merely refers to an entry on the register, and if not void, will be protected by s28)

Answer 1

Facts- Plaintiff believed her house had been fraudulently conveyed (as though by her now deceased husband) in favour of G, who subsequently conveyed it to the defendant mortgagors,
She wanted to assert her proprietary right over the property, because despite being unregistered, the deceased husband had remained true owner throughout.

Significance- Occupation of land provides constructive notice of all the tenants land, but not with notice of his lessor’s rights.
constructive notice will exist where rights reasonably discoverable by inspection of the property, and, in particular, from enquiry of any occupier as to his interests. This does not, however, extend to the rights of a landlord, there being no obligation to enquire as to the existence of interests beyond those of the tenant in occupation. If D had actual knowledge of C’s right to receive the rents, however, would have sufficed to fix D with notice of that right.

Question 2

What does s198 of the LOPA 1925 say about the relationship between registration and notice?

Answer 2

(1) The registration of any instrument or matter [F1in any register kept under the Land Charges Act 1972 or [F2the local land charges register]], shall be deemed to constitute actual notice of such instrument or matter, and of the fact of such registration, to all persons and for all purposes connected with the land affected, as from the date of registration or other prescribed date and so long as the registration continues in force.
(2) This section operates without prejudice to the provisions of this Act respecting the making of further advances by a mortgagee, and applies only to instruments and matters required or authorised to be registered [F1in any such register].

REGISTRATION CONSTITUTES ACTUAL NOTICE- BEGINNING OF THE DECLINE OF ACTUAL/ CONSTRUCTIVE NOTICE AND THE RELEVANT TESTS EXPOUNDED IN HUNT V LUCK

Question 3

How did s199 of the LOPA protect purchasers against void or incorrect interests in the form of constructive notice?

Answer 3

S199: Restrictions on constructive notice.

(1) A purchaser shall not be prejudicially affected by notice of—
(i) any instrument or matter capable of registration under the provisions of the Land Charges Act, 1925, or any enactment which it replaces, which is void or not enforceable as against him under that Act or enactment, by reason of the non-registration thereof;
(ii) any other instrument or matter or any fact or thing unless—
(a) it is within his own knowledge, or would have come to his knowledge if such inquiries and inspections had been made as ought reasonably to have been made by him; or
(b) in the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of his counsel, as such, or of his solicitor or other agent, as such, or would have come to the knowledge of his solicitor or other agent, as such, if such inquiries and inspections had been made as ought reasonably to have been made by the solicitor or other agent

Notice of void or unenforceable interests will not encumber a purchaser.

Question 4

How does Kingsnorth finance illustrate the effect of s199(1)(ii)(a) of the LOPA 1925 regarding notice of interests?

NOTE THAT THE CASE IS OUTDATED NOW AND THE PROTECTION OF BENEFICIAL INTERESTS HAS BEEN DIMINISHED BY 2002 ACT AS THEY CANNOT BE REGISTERED, NOR ARE MANY BENEFICIAL INTERESTS OVERRIDING INTERESTS BAR PHYSICAL POSSESSION

Answer 4

Facts- Plaintiffs appealed against a decision which said that the continued possession of a wife in the matrimonial home, despite the attempts by the husband to sell the house and conceal his wife’s (with whom he’d fallen out with) continued possession, should have been known to the plaintiffs if proper enquiries had been made- the surveyor had knowledge of the wife’s beneficial interest, and under s199(1)(ii)(a) of LOPA, this knowledge served constructive notice of her equitable interest, and as such, the mortgage took effect subject to the rights of the wife. This was so, even where the house was unregistered, and the wife’s rights were enforceable, notwithstanding the fact that the house was unregistered, so her equitable rights against the purchaser or mortgagee of the legal estate were enforceable.

Question 5

what do s2, 4, 10 and 17 of the land charges act dictate regarding registered interest

Answer 5

S2) https://www.legislation.gov.uk/ukpga/1972/61/section/2: dictates different types of land charges which exist in different classes. Land charges are restrictions/ prohibitions on a piece of land to secure payment or limit the use of land. These are binding on successive owners and occupiers.

S4(5)(6): https://www.legislation.gov.uk/ukpga/1972/61/section/4: s4)(5) dictates that land charges in class B and Class C (other than estate contracts) are void against a purchase of land, unless the land charge is registered in the appropriate register before purchase. 
S4(6) dictates an estate contract and class D charges are void against a purchaser, unless the land charge is registered in the appropriate register before the completion of purchase. 

S10(4): https://www.legislation.gov.uk/ukpga/1972/61/section/10: s10(4) dictates that a certificate shall be conclusive in favour of a purchaser, as against persons interested under or in respect of matter or document entries of which are required or allowed.

S17) https://www.legislation.gov.uk/ukpga/1972/61/section/17: sets out key definitions and interpretation.

Question 6

What do s3-11 of the Land registration act 2002 dictate with regards to voluntary and compulsory registrations of land/ interests?

Answer 6

• S3 concerns voluntary registration, s4 concerns when a title must be registered, and which events trigger compulsory registration eg transfer of a qualifying estate or grant out of a qualifying estate of land (a qualifying estate being an unregistered freehold estate or leasehold estate with a term at the time of transfer exceeding 7 years- promoting the importance of first registration)
• S5 gives the secretary of state a power to extend s4,
• s6 and s7 concern the duty to apply for registration, and says that if the registration requirement does apply, they must apply to the registrar to be registered as proprietor before the end of the period of registration, and the effect of non-compliance with this duty respectively. The transfer becomes void as per s7, and a constructive trust is set up.
• S8 concerns the apportionment of liability to make good otherwise void transfers of land,
• S9 and s10 sets out the classes of freehold titles and leasehold titles respectively, and s11 dictates the effect of first registration of freehold estates.

Question 7

What do s32-36 of LRA 2002 dictate for notices in the register?

Answer 7

S32- defines a notice as an entry into the registerof the burden of an interest affecting a registered estate or charge
S33- sets out excluded interests that cannot be the subject of notices, including a trust or settlement of land, or a leasehold estate that doesn’t require registration (curtain principle draws the curtains on interests under trusts)
S34- Allows an application by a proprietor to register his interest in the land, so long as it is not excluded under s33, and imposes obligations upon registrar to approve application subject to conditions eg certainty of the validity and title of the proprietor
S35- Regards unilateral notices in favour of a beneficiary of land, when someone on their behalf registers for their benefit
S36- Sets out criteria for cancelling unilateral notices.

Question 8

What does s72 dictate with regards to priority period protection?

What does s66 dictate with regards to the inspection of the register?

Answer 8

• https://www.legislation.gov.uk/ukpga/2002/9/part/6/crossheading/applications
  Priority protection when new interests seek registration. If it is a priority interest and made before the end of the priority period, it is protected from new applications- stops the general rule under s27-29 from allowing chronologically registered interests intervening in the mean time.

S66- Information- Inspection of registers, and what documents can be inspected, subject to restrictions.

Question 9

S115 and 116 of LRA 2002?

Answer 9

S115-116: Rights of pre-emption
(1) A right of pre-emption in relation to registered land has effect from the time of creation as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority).
(2) This section has effect in relation to rights of pre-emption created on or after the day on which this section comes into force.
116- Proprietary estoppel and mere equities
It is hereby declared for the avoidance of doubt that, in relation to registered land, each of the following—
(a) an equity by estoppel, and
(b) a mere equity,
has effect from the time the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority).

Question 10

What does law com 271 2002 suggests are the objectively of the LRA?

Answer 10

Movement from paper to electronic land registration and conveyance system.

1) Objectives of the bill
- Clear and demonstratable benefits- the land register should be “a complete and accurate reflection of the state of a title to the land at any given time…investigating title to land with the absolute minimum additional enquiries and inspection” EPITOMISES THE MIRROR PRINCIPLE
- Deals with registered and unregistered land, with a movement away from unregistered land to ensure that certainty is achieved- REQUIREMENTS OF FIRST REGISTRATION FOR UNREGISTERED ESTATES
- Prior to the act, no need to register a disposition of registered land in the register, and they are valid against almost all third parties who go on to gain interest in property without notice, even if they are unregistered. This is currently to overcome the registration gap- the time between making a disposition and registering it, so that it has effect in this interim period. Overriding interests are not protected in the register at all but bind any person who acquires interest in the land afterwards, whether they knew of it or not. The act wishes to significantly reduce the scope of overriding interests.
- Bill also wishes to change the perception that land should not have to be registered, and any argument that it is currently too onerous to do so should be mitigated by electronic registration.
- Fundamental principal that title to land is achieved through conclusive registration

Question 11

What are said to be the three basic principles of land registration?

Answer 11

1) “Mirror principle”- the idea that the register provides an accurate and complete reflection of property rights in relation to a piece of land. This is sometimes held to be competing with the countervailing policy reasons such as the need to protect some property rights as overriding interests
2) Curtain Principle- a curtain is drawn across the register against any trusts. This is so, because beneficial interests are not capable of registration and thus are comparatively less registration compared to other legal interests.
3) Insurance principle- if the register is incorrect, insurance will save those who incur loss as a result of this. It needs to be reliable as they are unable to look elsewhere (indemnity)

THE PURPOSE OF THE 2002 ACT AND MUCH OF THE UNDERLYING IMPLICIT POLICY REASONING BEHIND IT ALL DERIVES FROM MORAL AND PHILOSOPHICAL ARGUMENTS RELATING TO THE SENTIMENTAL VALUE OF OWNING PROPERTY AND PROMOTING CERTAINTY AS A RESULT.

Question 12

What interests can and can’t be registered?

Answer 12

Register of title is a collection of legal rights over land, and can include standalone registered interests, or interests attached to other interests eg a right of way over neighbouring property attached to a freehold of land.

• Other interests may be recorded rather than registered by way of a notice, appearing on the register and having protected priority.
• Beneficial interests cannot be registered and thus cannot be protected by the register. THIS IS THE CURTAIN PRINCIPLE WHICH REDUCES THE SCOPE OF UNREGISTERED EQUITABLE INTERESTS. Rather, they are protected to a lesser extent by the process of overreaching. Overreaching is the process by which a sale or disposition of land, such as the grant of a mortgage, beneficial interests in the land are removed from the land and attached to the proceeds of a sale or mortgage money instead. This requires that the sale or mortgage be paid to at least two trustees or a trust corporation.

Question 13

What does first registration involve and what are the new rules on it following LRA 2002?

Answer 13

First registration
-Involves registering previously unregistered property. Section 4 of the LRA 2002 sets out the circumstances in which land must be registered including leases for more than seven years, creation and, for those leases and also freehold estates, sale, gift, and the grant of a first legal mortgage. Exceptions eg university land and land owned by the crown are exceptions as their ownership is unlikely to change, although they often voluntarily register for the sake of clarity

• First registration can also occur as a result of adverse possession – colloquially known as squatting. The ancient rule at common law was that possession of land, as a trespasser, generates freehold ownership. In unregistered land, the Limitation Act 1980 provides that once someone has been in adverse possession of land for 12 years the “paper owner’s” title to the land is extinguished.48 At that point the squatter can register his or her own title.
  2. 45 A significant change made by the LRA 2002 was to protect registered title from adverse possession. Section 96 of the LRA 2002 provides that a registered proprietor’s title is not extinguished by the Limitation Act 1980; schedule 6 to the LRA 2002 provides for some limited circumstances in which, nevertheless, a squatter may succeed in an application to register his or her title.

Question 14

What powers are granted to estate owners under s23 and 24 of the LRA?

Answer 14

S23: Owner’s powers in relation to a registered estate consist of—

(a) power to make a disposition of any kind permitted by the general law in relation to an interest of that description, other than a mortgage by demise or sub-demise, and
(b) power to charge the estate at law with the payment of money.
(2) Owner’s powers in relation to a registered charge consist of—
(a) power to make a disposition of any kind permitted by the general law in relation to an interest of that description, other than a legal sub-mortgage, and
(b) power to charge at law with the payment of money indebtedness secured by the registered charge.
(3) In subsection (2)(a), “legal sub-mortgage” means—
(a) a transfer by way of mortgage,
(b) a sub-mortgage by sub-demise, and
(c) a charge by way of legal mortgage.

S24: Right to exercise owner’s powers
A person is entitled to exercise owner’s powers in relation to a registered estate or charge if he is—
(a)the registered proprietor, or
(b)entitled to be registered as the proprietor.

Question 15

What are the rules expounded in s26-30 of the LRA 2002?

Answer 15

S26: Protection of disponees (only registered limitations are binding upon disponees)

(1) Subject to subsection (2), 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.
(2) Subsection (1) does not apply to a limitation—
(a) reflected by an entry in the register, or
(b) imposed by, or under, this Act.
(3) This section has effect only for the purpose of preventing the title of a disponee being questioned (and so does not affect the lawfulness of a disposition).

S27: https://www.legislation.gov.uk/ukpga/2002/9/section/27
The requirement to register dispositions in the case of registered estates, including transfer of such estates, and the registration of charges, such as the grant of a legal charge

S28: Basic rule

(1) Except as provided by sections 29 and 30, the priority of an interest affecting a registered estate or charge is not affected by a disposition of the estate or charge.
(2) It makes no difference for the purposes of this section whether the interest or disposition is registered.

S29: Effect of registered dispositions on estates- Registered interests take priority over non-registered interests
Effect of registered dispositions: estates
(1)If a registrable disposition of a registered estate is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the estate immediately before the disposition whose priority is not protected at the time of registration…2)For the purposes of subsection (1), the priority of an interest is protected—
(a)in any case, if the interest—
(i)is a registered charge or the subject of a notice in the register,
(ii)falls within any of the paragraphs of Schedule 3, or
(iii)appears from the register to be excepted from the effect of registration, and
(b)in the case of a disposition of a leasehold estate, if the burden of the interest is incident to the estate.
(3)Subsection (2)(a)(ii) does not apply to an interest which has been the subject of a notice in the register at any time since the coming into force of this section.
(4) Where the grant of a leasehold estate in land out of a registered estate does not involve a registrable disposition, this section has effect as if—
(a)the grant involved such a disposition, and
(b)the disposition were registered at the time of the grant

S30: Effect of registered dispositions: charges

(1) If a registrable disposition of a registered charge is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the charge immediately before the disposition whose priority is not protected at the time of registration.
(2) For the purposes of subsection (1), the priority of an interest is protected—
(a) in any case, if the interest—
(i) is a registered charge or the subject of a notice in the register,
(ii) falls within any of the paragraphs of Schedule 3, or
(iii) appears from the register to be excepted from the effect of registration, and
(b) in the case of a disposition of a charge which relates to a leasehold estate, if the burden of the interest is incident to the estate.
(3) Subsection (2)(a)(ii) does not apply to an interest which has been the subject of a notice in the register at any time since the coming into force of this section.

Question 16

What was the old rule on priorities and how has the 2002 act changed it according to the 2001 law com report?

Answer 16

• The prior rule was that priority of interests in land was relative to their date of creation, whether protected on the register or not eg equitable not capable of protection by the register. However, following the old LRA act of 1925, registered dispositions were given special treatment, and when made for consideration, these dispositions take priority over non-protected interests, unless these interests are overriding interests.
• No radical reform to priority was necessary in the 2002 act for the following reason: the move towards electronic conveyance means that the creation and registration of any new interests will be simultaneous, and therefore the priority of these interests will be conclusive.

The general rule under the 2002 act is therefore that priority is determined by the date of creation, as per s28(1), and this is so whether or not the disposition is registered, and this extends the prior law from merely minor interests that would operate under this rule. This rule is however subject to exception.
The exception: if a registerable disposition of either a registered estate or charge is made for valuable consideration, completion of this disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the estate or charge immediately before the disposition who’s priority is not protected at the time of registration.
1) Only applies to registerable disposition or an estate or charge.
2) Made for valuable consideration, and this does not include marriage consideration or a nominal amount of money.
However, marriage consideration is considered a gift just like any other gift and this is now valid under the bill- where this valuable consideration is not in play, the general rule above applies.
3) Priority conferred: when the exception applies it gives the disposition priority over any interest a) that affects the estate or charge immediately prior to the disposition and b) whose priority is not protected at the time of registration. The effect of this is that if a third party was given rights to the land by the disponee in between disposition and registration, the disponee would not be able to claim priority over it. The disponee should not be able to create an interest for the third party and then claim to take free of it because it had not been registered before he or she registered proprietor.
4) This exceptional rule also incorporates leaseholds lasting less than 7 years which do not need to be registered- dispositions of such leaseholds for valuable considerations are to be treated as if that grant did involve the making of a registerable disposition that was registered at the time of the grant.

Question 17

What does the law com recommend with regard to nominal consideration being recognised as being sufficient for binding and postponing all prior non-registered interests?

Why is further reform sought following the 2002 act?

Answer 17

estate is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the estate immediately before the disposition whose priority is not protected at the time of registration.
The only definition of valuable consideration given is as follows in s132: valuable consideration does not include marriage consideration or a nominal consideration in money.

The law com recommends a reform of the law to include nominal consideration, which is binding in the law of contract, where consideration must be sufficient but need not be adequate. The meaning of nominal consideration is too ambiguous for the purpose of the current law. Some argue that nominal consideration is any value less than £5 which is considered consideration in name only; it signifies a binding contract even if it is not actually paid. Conversely, very substantial consideration may be cited but not paid in a contract, and very minimal consideration may nonetheless be paid despite being nominal in value.

7. 19 “As we explained above, the LRA 2002 does not itself provide a comprehensive definition of valuable consideration for the purposes of section 29. Nor has the court provided an authoritative interpretation of the phrase “valuable consideration” as used in section 29 of the LRA 2002. However, in Midland Bank, the House of Lords considered the meaning of “valuable consideration” in the Land Charges Act 1925. Lord Wilberforce said that “valuable consideration” is “a term of art which precludes any inquiry as to adequacy. … It is an expression denoting an advantage conferred or detriment suffered”.14 This interpretation appears to treat the concept of valuable consideration as broadly equivalent to consideration in contract.
8. 20 Midland Bank provides a powerful persuasive authority regarding the proper interpretation of “valuable consideration” in the LRA 2002: in the absence of provision to the contrary in the LRA 2002, there is no reason to suggest that the phrase should not be interpreted the same way in both pieces of legislation.”

The law com argues that the requirement of valuable consideration as a means of activating the priority exception should be retained, because, as is recognised by Nigel Madeley, the proprietary claims of someone who has received a gift are far less compelling than someone who has paid consideration for it. Therefore, those taking a gift ‘step into the shoes of the previous landowner’ whereas those engaging in a commercial transaction should benefit from priority protection.

Question 18

Facts and significance of Peffer v Rigg regarding the judicial treatment of sanctity of registration?

(note that it deals with the issue of nominal v valuable consideration before Midland Bank v Green)

Answer 18

Facts- The plaintiff, Peffer, and his brother, Rigg, purchased a property that was registered in Rigg’s sole name but was actually held on trust for them both. They both contributed to the purchase price in equal shares. No restriction was placed on the register regarding Peffer’s equitable interest. Later, Rigg transferred the entire legal estate to his wife, the defendant, for a nominal consideration of £1.

Issues: The defendants argued that they had not acted in breach of trust. They relied on s.20(1) Land Registration Act 1925 which says that a disposition of registered land for valuable consideration confers upon the transferee an estate subject to any incumbrances appearing on the register and any overriding interests affecting the estate which are not on the register. As Mrs Rigg had purchased the property for £1, this was valuable consideration and she should not be bound by Peffer’s unprotected minor interest.

Held: Mrs Rigg held the property on constructive trust for herself and Peffer. Graham J stated that while a purchaser for valuable consideration takes the land free of any incumbrances other than those registered or overriding interest, if the purchaser did not provide valuable consideration s.20(4) of the 1925 Act stated that any disposition would be subject to any minor interests, subject to which the transferor or grantor held the land even if not registered. In any case Mrs Rigg knew of the plaintiff’s equitable interest when she bought the property. According to equitable principles, this meant she was bound by that interest as a constructive trustee, even though it was not protected by an entry on the register.

Interest was in fact unregistered and not overriding, but equally could not be defeated without conveyance for valuable consideration.

Question 19

What does schedule 3 of the 2002 act say with regard to s117 and the existence of overriding interests?

Which are the most important/ prominent?

Answer 19

Schedule 3 sets out all of those overriding interests which, even if unregistered, take priority over any registered disposition, that is to say that the disponee receiving any registered disposition takes the land subject to these overriding interests.
The most important of these rights are 1) Leasehold estates in land granted for less than 7 years (except for a grant which constitutes a registrable disposition, or those which fall within s4(d,e,f), which include where a leasehold is to take effect 3 or more months after it’s creation, thereby precluding it from being overriding. 2) interests of people in actual occupation, subject to exceptions eg where those in actual occupation fail to disclose their occupation when reasonably called upon, or would not be obvious had reasonable inspection been made AND the disponee has no actual notice of. 3) A registered easement or profit a prendre which at the time of disposition is not within the actual knowledge of the disponee and would not have been obvious had reasonable inspection been made. Further overriding interests include customary rights, public rights, mines and minerals, local land charges, franchise, non-statutory rights in respect to sea wall/ embankment.

Question 20

What is the trade-off and criticisms relating to overriding interests?

Answer 20

• Trade-off between “achieving a fair result in individual cases (those with subsisting rights) and making conveyancing simpler, quicker and cheaper” which is the justification for registration (p4.1)
• Underlying principle of overriding interests is that “it is unreasonable to expect the person who has the benefit of the right to register them as a means of securing their protection”
• Whilst this links many overriding interests, it does not link them all, for example, some have obscure origins eg easements and are created informally between prior land-owners/ proprietors. Others have a historical justification eg chancel (church) repair liability mineral rights created prior to 1898, manorial rights. It would have been unreasonable to register such interests. Some rights eg leases not exceeding 21 years, or rights to coal, are just pointless to register.
• Criticisms of overriding interests: Undermines the mirror principle as the register is, by virtue of overriding interests, not a true reflection of absolute title, but equally to require complete registration of ALL RIGHTS may be inequitable to those who have held rights for many years and may never be registered.
• Undiscoverability- those rights which aren’t registered with the land register may nonetheless be contained in incomplete records or unorganised records, which are equally undiscoverable. THE REFORMED ACT SEEMS TO IMPOSE THE MOST IMPORTANT NEW OVERRIDING INTERESTS WITH A REQUIREMENT OF DISCOVERABILITY FROM REASONABLE INSPECTION OF THE LAND.

Question 21

How has the issue of overriding interests under previous legislation been dealt with under the 2002 act as per the law com?

Answer 21

INCENTIVISING REGISTRATION THROUGH ELECTRONIC CONVEYANCE,

• Reduce the number of circumstances in which overriding interests override dispositions for value whilst encouraging overriding interests to be registered. This coincides with the movement towards electronic conveyance, mirror principle easier to achieve with electronic conveyance as more up to date and instantaneous. Incentive to register in the form of a 10-year limitation period, after which unregistered interests are no longer protected. Dispositions AND registration can be undertaken simultaneously, so some otherwise unregistered rights will be registered by virtue of being the subject of a disposition.
• Conveyance of interests now coincides with registration, so previously unregistered interests will be subject to the requirements of first registration upon conveyance.

“The existence of such overriding rights means that inquiries as to title cannot be confined to a search of the register. We devoted a substantial part of the Consultative Document to a discussion of overriding interests and how their impact might be reduced without causing any disadvantage to those who have the benefit of them.22 Our conclusion was that interests should only have overriding status where protection against buyers was needed, but where it was neither reasonable to expect nor sensible to require any entry on the register.23 We suggested a number of strategies to ensure that the only overriding interests were those which met these criteria.24 As we have explained above,25 the introduction of electronic conveyancing will, of itself, substantially reduce the circumstances in which those criteria are met. As might be anticipated, our proposals attracted a good deal of interest and the responses were lively.”

Question 22

Facts and significance of City Permanent BS v Miller 1952 regarding the failure of overriding interests in the form of the agreed (as opposed to executed) lease of property?

How can the principle of this case be summarised in one sentence, with regards to the comments made by LJ Jenkins?

Answer 22

Facts- Under 70(1) of LRA 1925, leases for any term or interest not exceeding 21 years, granted at a rent without taking a fine was an overriding interest. The overriding interest that the second defendant believed he had acquired was not truly an overriding interest, because the wording of the quoted section requires that that the overriding interest be valid only if the tenant is in possession, or the lease of agreement must be effective to create a term. The second defendant did not take possession straight away. The plaintiffs first charge over the property, as a building society, was sought to be exercised when the first defendant defaulted on his payments. The second defendant sought to invoke their overriding interest in the property after their mortgagor defaulted on his rent repayments, whereas the plaintiff wanted to claim possession of the property.

Held-giving judgement for the plaintiff, no overriding interest had been acquired by the second defendant capable of defeating the first charge over the property held by the building society. The interest that the second defendant believed that they had when they first agreed the lease arrangements could only be created by deed. Accordingly, the interest of the tenant under the agreement was at highest that of a person who had a contract for the grant of a lease and a right to obtain specific performance of that contract. She had neither a legal nor an equitable tenancy.
Jenkins LJ: “But in my judgment the word “granted” necessarily imports the actual creation of a term, and that excludes, by force of the context, the case of a mere agreement for a lease, having no more than a contractual effect. To include such a case, in my judgment, section 70 (1) (k) should have read “granted or agreed to be granted.” Explaining why the agreement to agree a grant did not create an overriding interest.

A grant in principle does not qualify as an overriding interest.

Question 23

Facts and significance of National Provincial Bank v Ainsworth 1965 regarding personal v proprietary rights under the 1925 act and their potential to be overriding interests?

What was the actual right held by the wife and thus why did it not bind the bank?

Answer 23

Facts- H deserted his wife, W, who remained in the matrimonial home, which was registered land. Later H transferred the house to his company, which charged it to its bank. The bank applied by originating summons for possession of the house.

Held, that an order for possession should be made. Effectively, the wifes right to possession of the home depended upon her husbands’ possession, and therefore was not an overriding interest as it was not capable of enduring through different ownership of land.

Lord Wilberforce: “To suppose that the Sebastian makes any right, of howsoever a personal character, which a person in occupation may have, an overriding interest by which a purchaser is bound, would involve two consequences: first that this Act is, in this respect, bringing about a substantive change in real property law by making personal rights bind purchasers; second, that there is a difference as to the nature of the rights by which a purchaser may be bound between registered and unregistered land; for purely personal rights including the wife’s right to stay in the house (if my analysis of this is correct) cannot affect purchasers of unregistered land even with notice. So, if the right of a deserted wife is a purely personal claim against her husband, not specifically related to the house in question, but merely, at its highest, to be provided with a home, there is no difficulty in seeing that this type of right cannot, any more than any purely contractual right, be an overriding interest.”

The right was purely personal as against the husband and thus did not qualify as an overriding interest, a mere equity will not bind a purchaser for value, even with notice.

Question 24

Facts and significance of Willam v Boland. 1981 regarding equitable interests being overriding interests and physical presence as opposed to some entitlement in law being an overriding interest as actual occupation?

How can minor interests and overriding interests co-exist?

Answer 24

Only when one with a beneficial interest in land is in actual occupation will it suffice as an overriding interest capable of binding subsequent purchasers/ interest holders. The minor/ equitable interests of a beneficiary can be transformed into overriding interests, and the two categories are not mutually exclusive of each other.

Facts- Husband failed to repay the bank for his loan, as registered owner of the house. The bank sought to possess the house. Mrs Boland argued that she should be allowed to keep possession of the house because she made substantial financial contributions to the house, although was not registered owner. The bank argued that her rights were not a property right, and even if they were, they were not registered- such a claim against her unregistered interest fails if she is in actual occupation, as an overriding interest.

Significance- The House of Lords upheld the decision of the Court of Appeal and found in favour of the wife. Her rights counted as an overriding interest/ property right, which did not require registration under the 1925 act. Her interest was more than merely an equitable interest in the proceeds of sale, as was forwarded by the bank.
As Lord Denning M.R. points out, to describe the interests of spouses in a house jointly bought to be lived in as a matrimonial home as merely an interest in proceeds of sale, or rents and profits until sale, is just a little unreal”
-Such overriding interests could not be overreached ie the equitable interest which the wife was said to have could not be attached to the proceeds of the sale, rather her actual occupation overrode the interest of the bank, and she was entitled to retain possession- confirmed the general irrelevance of notice-based doctrines, although Boland had not decided whether occupation was required to be apparent.

-Lord Wilberforce further rejects that equitable rights are mutually exclusive of overriding interests, and of minor interests, which is why the wifes equitable interest in the house precluded the banks possession of the house: “In my opinion, the wives’ equitable interests, subsisting in reference to the land, were by the fact of occupation, made into overriding interests, and so protected by section 70(l)(g).”

Question 25

Facts and significance of City of London BS v Flegg 1988 regarding the operation of overreaching?

Answer 25

Facts- Mr and Mrs Flegg sold their home and used funds to put towards a new house, a house which their daughter and her husband had also chosen to put money towards. They were all to live in it, and they were all advised to register as owners, although only the daughter and husband did. They had money trouble and re-mortgaged the home without telling the Fleggs, and upon a further default of payment by the daughter to the building society, they sought repossession.

Significance- The court of appeal held that the Flegg’s interest in the home was not overreached through the BS’s contract with the children. Dillon LJ: “He submitted that, because the parents’ interest was overreached under the Law of Property Act 1925 on the creation of the plaintiffs’ mortgage, it was thereafter not an overriding interest “for the time being” subsisting in reference to the land. But, again, this argument is inconsistent with the scheme of the Land Registration Act 1925 as explained in the passages in Lord Wilberforce’s speech in Boland’s case which I have quoted above. The argument is unreal in that the parents continued in actual occupation of the land despite the execution by the registered proprietors of the plaintiffs’ mortgage of which the parents knew nothing.”

The House Of Lords held that the building societies charge took priority, and the pre-existing trust right of the fleggs was overreached. Although under the Land Registration Act 1925 section 70, people with actual occupation may have an overriding interest that would take priority over a third party, like the building society, this does not happen if the purchase money is paid to two or more trustees or a trust corporation. If that happens, under Law of Property Act 1925, section 2(1)(ii), the interests of the beneficiaries will be overreached and will attach to the purchase price, not the property.
Lord Templeman said the following.
One of the main objects of the legislation of 1925 was to effect a compromise between on the one hand the interests of the public in securing that land held in trust is freely marketable and, on the other hand, the interests of the beneficiaries in preserving their rights under the trusts.

Question 26

What 3 different approaches to occupation did the judges take in Lloyds Bank v Rosset?
(the importance of occupation being considered as actual occupation would be an overriding interest so long as it was reasonable obvious from an inspection.

Why is Nicholls LJ the best interpretation of occupation?

Answer 26

Mustill L.J. considered that:
“when Parliament decided in 1925 to add paragraph (g) to the list of overriding interests in registered land already created … it intended to produce a result which did reasonable justice to the bona fide purchaser … although the paragraph does not actually say that the acts constituting actual occupation must be such that a purchaser who went to the land and investigated would discover the fact of occupation and thereby be put on inquiry, the closing words of the paragraph are at least a hint that this is what Parliament principally had in mind.”

Purchas L.J. considered that the appropriate question was not physical residence of the wife but whether the acts alleged to constitute actual occupation, including the presence of builders, would have provided evidence to the purchaser of adverse encumbrances.
“It is a fine point of distinction when set against the concept of an inquiring and prudent purchaser seeing these activities going on and in particular noticing the presence of the wife to decide whether there was evidence of occupation both by the husband and the wife on the premises.”67
According to this construction, the rationale of s.70(1)(g) is that occupiers’ rights are prioritised by reference to the evidential properties of occupation.”

Nicholls L.J. considered that equating occupation with residence would “in some cases”, for example, cases of renovation, “defeat the purpose intended to be achieved by paragraph (g).” It would thus be too strict a test as physical occupation may not be possible at the time of inspection. Where the meaning of occupation no longer correlates quite so automatically with proof of title, many decisions are resolving questions of priority by either express or intuitive reference to first principle. According to Nicholls L.J., although the meaning of occupation depended on the nature of the property, the limitation on overriding protection should be the extent to which occupation is visible to a purchaser on an inspection of the site. He reconciles his construction with the context of s.70(1)(g): “Had a representative of the bank inspected the property before 17 December to check if anyone was in actual occupation, he would have seen that, indeed, someone was there.”75 However, it is respectfully suggested that it clouds the issue to suggest that s.70(1)(g) is influenced by the unregistered land rule in Hunt v Luck that.

Question 27

What were the problems in the two cases of Scott v Southern pacific mortgages 2014 and Mortgage express v Lambert 2017

Answer 27

Victims of a re-mortgaging fraud scheme sell their houses to fraudsters, who obtain charges over the house and then make off with the loan.

Banks were successful in defeating the interest of the victims and they had no overriding interest in the properties. The purchase and grant of a charge by the fraudulent company in between was one indivisible transaction, and so at no point where the fraudsters owned the property free from the mortgage, so could not grant proprietary interests to the victim, so they had no overriding interests in either case.

Question 28

What does Abbey National BS v Cann say about the receipt of a legal estate and the subsequent granting of a charge over it in favour of a bank or building society?

What effect does this have on the potential for an overriding interest arising to convert an equitable interest into an actual occupation overriding interest?

Answer 28

Significance- Affirmed the decision in Rosset that the defendant must be in actual occupation at the time of the estate being registered to suffice as an overriding interest, not the date when the estate was created or transferred. As such, the overriding interest did not take priority over the legal charge-(2) however, to substantiate a claim to an overriding interest against a transferee or chargee under s.70(1)(g) as a person in actual occupation of the land, the person claiming the overriding interest had to have been in actual occupation at the time of creation or transfer of the legal estate; (3) where a purchaser relied on a loan to complete his purchase, the transaction of acquiring the legal estate and granting the charge was one indivisible transaction, at least where there had been a prior agreement to grant the charge on the legal estate when acquired. The purchaser at no time acquired the estate free of charge, and so D2 had no overriding interest arising from actual occupation by moving in carpets for some 35 minutes before the time of completion.”

What this is saying is that between the securing of the loan and the charge over the home, no overriding interest in favour of the second and third defendants could have arisen prior to the charge over the home, therefore the charge took priority. This is the essence of the indivisible transaction.

“Lord Oliver found that, as a question of fact, Mrs Cann was not in actual occupation by virtue of activities prior to completion and that these activities were merely preparations for occupation.133 The reasoning that “some degree of permanence” is required beyond “mere fleeting presence”,134 arguably suggests that the mortgagee was protected because it had no subjective knowledge of the prior interest and no practical means of acquiring any.135 Reasoning on the basis of the first principle of registration is more clearly illustrated by the treatment of the “registration gap”, consequently restricting s.70(1)(g) to post-acquisition mortgages” (Jackson)

Question 29

What overriding interest does the case of Malory v Cheshire homes illustrate?

Answer 29

Malory v Chesire Homes 2002 Ch 216:
Facts- Where a land certificate had been obtained from the Land Registry by deception and the land sold to a third party, the actual occupier had an overriding interest under the Land Registration Act 1925 s.70(1)(g) by virtue of its right to seek rectification. C, the purchaser of certain development land from U, appealed against a ruling that the original owner of the land, E, was entitled to retrospective rectification of the Land Charges Register pursuant to the Land Registration Act 1925 s.82 . U had, by means of fraudulent conduct, secured the alteration of the register and then sold the land on to C, which had subsequently partly demolished the structure on the land.

Significance- Held, dismissing the appeal but varying the order to remove the retrospective effect of the rectification, that (1) if a claimant was in actual occupation of land then neither the discretionary nature of the right to seek rectification nor the concept that a claim to rectification was an overriding interest under s.82(3) precluded the existence of an overriding interest under s.70(1)(g). The fact that E had maintained fences, boarded up windows, and used the land for storage, amounted to actual occupation of the land for the purposes of s.70(1)(g)

Question 30

Facts and contention over the case and facts of Link lending v Bustard?

Answer 30

Facts- A party was found to be a person in actual occupation of a property for the purposes of the Land Registration Act 2002 Sch.3 para.2 where there was evidence of a sufficient degree of continuity and permanence of occupation, of involuntary residence elsewhere, which was satisfactorily explained by objective reasons, and of a persistent intention to return home when possible, as manifested by her regular visits to the property. Sectioned on an involuntary basis.

Appeal against first dismissal of claim for possession of property dismissed.
Held: In the instant case, there was a special feature in the psychiatric problems of the person claiming actual occupation.
-It was not necessary that the person claiming actual occupation was in physical occupation at the time which the mortgage was granted.
The judge’s conclusion that the respondent was in actual occupation was supported by evidence of a sufficient degree of continuity and permanence of occupation, of involuntary residence elsewhere, which was satisfactorily explained by objective reasons, and of a persistent intention to return home when possible, as manifested by her regular visits to the property
Defining involuntary and whether an intention will suffice for actual occupation.

Question 31

How does Chaudhary v Yavuz illustrate the difference between use and occupation for the purposes of actual occupation as an overriding interest?

Answer 31

Facts- whether or not an easement between shared property was an overriding interest despite not being registered in the relevant register, as the contract provided for the new purchaser to be subject to such encumbrances which existed in the relevant register

Significance- “In my judgment there was no actual occupation of any part of the metal structure by anyone which could give the claimant’s rights the status of an overriding interest. The judge did not record any findings of fact as to how the metal structure was used at any given time, other than that it was used by the claimant’s tenants to get to and from their flats on the upper floors of number 37 as well, of course, as by the defendant’s tenants to get to and from *259 theirs in number 35. Although referred to as a balcony, the part of the structure which ran along the side of number 37 at first floor level was no more than an access way to the front door of the flat at the rear of the property. There was no indication that it was used otherwise than for passing and repassing between the street and the relevant flat or flats. In my judgment such use does not amount to actual occupation. I dare say that no one else was in occupation of the metal structure either, but not every piece of land is occupied by someone, let alone in someone’s actual occupation (as distinct from possession)”
Distinction between use and occupation is the determining factor in this case.

Question 32

Facts and significance of Bristol and West BC v Henning regarding the imposition of a trust on a co-habitant and there whether an equitable interest could arise as an overriding interest?

Answer 32

Facts- H lived with his mistress as husband and wife. They had children. They lived in a property in his sole name, and in respect of which he was the mortgagor. He left the property, and was now unable to make the mortgage repayments, as was the mistress.
Held, that mortgagees were entitled to possession since she could show no beneficial interest under a constructive trust by proving relevant and necessary intention on the part of H that she should have such a beneficial interest

Significance- Lord Browne-Wilkinson “Once that is identified as the relevant question, in my judgment the answer becomes obvious. Mr. and Mrs. Henning did not contemporaneously express any intention as to the beneficial interests in the property. Therefore such intention if it exists has to be imputed to them from their actions. Mrs. Henning knew of and supported the proposal to raise the purchase price of the villa on mortgage. In those circumstances, it is in my judgment impossible to impute to them any common intention other than that she authorised Mr. Henning to raise the money by mortgage to the society. In more technical terms, it was the common intention that Mr. Henning as trustee should have power to grant the mortgage to the society. Such power to mortgage must have extended to granting to the society a mortgage having priority to any beneficial interests in the property… Since the nature of Mrs. Henning’s interest has to be found in the imputed intention of the parties and the imputed intention of the parties must have been that her interest was to be subject to that of the society, it is impossible for Mrs. Henning to establish that she is entitled to some form of equitable interest which gives her rights in priority to the rights of the society. I would therefore hold that, even on the assumption that Mrs. Henning has some equitable interest or right in the villa, such interest or right is subject to the society’s charge and provides no defence to the society’s claim for possession.”

Question 33

What do s65, 131,132, sch4 and sch8 say about indemnity and alteration of the register?

Answer 33

S65= gives effect to schedule 4 about altering the register.
S131-132: s131 defines a proprietor in possession
S132: General interpretation of terms

Schedule 4- situations where the register may be altered ie in pursuit of a court order.
Schedule 8- Sets out the situations in which a person is entitled to be indemnified for a loss eg costs or expenses incurred, entitlement for rectification of the register, mistakes in searches, copies etc.

Question 34

Facts and significance of Swift 1st v Chief land registrar 2015 regarding indemnifying innocent parties who make a mistake due to fraud?

Policy reasons for the potential problems created by the decision.

Answer 34

Facts- Fraudulent charge placed upon Mrs Rani’s house in favour of Swift. Swift sued the land registry for an indemnity due to the mistake made by them by cancelling the charge on the registration after allowing the fraudulent charge in the first place.

The land registry argued it was a simple case of rectification and that no loss had been suffered because either way, Mrs Rani had an overriding interest from reasonably obvious actual occupation which would defeat the claim by the mortgage company anyway.

2 issues- no loss, was a simple case of alteration of the register, the registered proprietor would only ever receive equitable title. Always subject to the encumbrance, its just a reflection of the overriding interest

Significance- The High Court and the Court of Appeal, concluded that under the law as it is stands Swift was entitled to claim an indemnity. Even though there was an overriding interest, in the form of the occupation of Mrs Rani, Swift was still entitled to be indemnified as they were claiming in good faith under a forged disposition. Swift was deemed to have suffered loss by reason of the rectification of the register, as if the charge had not been forged.
This decision means that charge holders who are the innocent victims of fraud may be able to seek an indemnity from the Land Registry for any losses, regardless of any overriding interests at the property in question. The decision itself can seem unfair on the Land Registry (and ultimately the taxpayer). It had not done anything wrong except, perhaps, fail to spot the fraud. But what evidence did it have?”

Question 35

What does Gold Harp v Macleod confirm about the interplay between alteration and changing priorities of interests?

Answer 35

The Court of Appeal dismissed G’s appeal. It confirmed that paragraph 8 did not limit the court or the registrar to restoring an interest only, but it extended to the court or registrar changing what would otherwise be the priority between the parties. In other words, paragraph 8 extends to the court the power to give the party the priority which it should have had but for the mistake. To restrict paragraph 8 to restoration powers only would defeat its purpose to correct mistakes and also the consequences of those mistakes, and would not address the very issues which paragraph 8 was intended to address.
Priority is accepted for the future, but the interim period where B was in possession, we can not make claims against those people.

Question 36

What does NRAM say about the difference between void and voidable interests and whether either of them constitute a mistake under schedule four of the LRA?

Answer 36

A charge taken off the register when it should not have been, the proprietor asked the charge to be removed incorrectly, and they wanted the charge to be reinstated.
The Court of Appeal held that the registration of a voidable disposition was not a mistake within the meaning of schedule 4 of the Land Registration Act 2002. There is a distinction between the consequences of the recording of void and merely voidable transactions in the register.
The Court concluded that the question of whether the entry was a mistake should be determined according to the position at the point in time where the entry or deletion was made. Where a disposition was not void, but merely voidable and until such a disposition was rescinded, the register would remain accurate. This was contrasted with a void disposition, where the registration would never have been made had the registrar been aware of the full facts.
The relevant point in time is when the registrar takes it’s action- the transaction is legally valid when it in registered and only voidable.
After a voidable disposition had been rescinded, the registrar could amend the register in order to bring it up to date. No compensation would be payable as ‘rectification’ was not necessary or applicable.

Question 37

What approach do the courts now take to mistake in the context of alteration of the register following Antoine v Barclays bank?

Answer 37

The bank had been granted a charge by someone who had used forged documents to procure an order from the Court for his registration as proprietor of the Appellant’s property. The Appellant sought rectification of the register, to remove the bank’s charge, on the grounds that the registration of its charge was either a mistake, or a consequences of one, for the purposes of schedule 4 to the Land Registration Act 2002. The bank successfully resisted the rectification of the register, despite the occurrence of the fraud, because the Court of Appeal held that the registration of its charge was not a mistake nor the consequence of one. Lady Justice Asplin (with whom Peter Jackson and Longmore LJJ agreed) held that registration on the basis of a valid court order was “akin” to the position in relation to a voidable transaction, rather than a void one. Now a very narrow approach to rectification and void versus voidable mistakes. More limited circumstances in which there is rectification.

Question 38

How does s2)a)ii) work with regard to overreaching, and, following BS v Flegg, how does this interact with a potential overriding interest of actual occupation?

Answer 38

So long as the purchase money, mortgage money etc is paid to two or more trustees, or a trustee company, the beneficial interest of beneficiaries in a property is overreached and attaches to this purchase Money as opposed to the property sold. This is so, following Flegg, even where actual occupation is evident to a building society who seeks to repossess a property, because otherwise the beneficiary would benefit not only from the overreached purchase money but also the continued rent-free possession of the property in question, which has otherwise been sold.

Question 39

Why was Cann not considered to have an overriding interest in her property when a charge was granted over it after the estate was transferred?

Answer 39

“Lord Oliver found that, as a question of fact, Mrs Cann was not in actual occupation by virtue of activities prior to completion and that these activities were merely preparations for occupation.133 The reasoning that “some degree of permanence” is required beyond “mere fleeting presence”,134 arguably suggests that the mortgagee was protected because it had no subjective knowledge of the prior interest and no practical means of acquiring any.135 Reasoning on the basis of the first principle of registration is more clearly illustrated by the treatment of the “registration gap”, consequently restricting s.70(1)(g) to post-acquisition mortgages” (Jackson)

It was an indivisible transaction whereby the conveyance of the estate and the granting of the charge could not be separated, and thus prior to the granting of the charge, Cann was never in actual occupation capable of sufficing as an overriding interest and thus taking priority over the banks charge.

Question 40

Following Antoine v Barclays Bank, at what point is the potential for a mistaken entry/ amendment to the register to be judged.

What must the mistake be in relation to regarding dispositions/ transactions/ registrations?

How does the case settle the law on void versus voidable dispositions?

Answer 40

J was the registered proprietor of a property. T obtained an order vesting the property in him and entitling him to be registered as proprietor. On the basis of that order, T was so registered. T then granted a legal charge over the property to the First Respondent (R1). The charge was also registered.

A (J’s executor) demonstrated that T had obtained the vesting order on the basis of forged documents and obtained an order setting aside the vesting order. A sought an order that the register be altered, on the basis that T’s registration as proprietor was a mistake, and an order to delete the registration of R1’s charge.

The Court of Appeal held that whether an entry in the register was a mistake had to be judged at the time that the entry was made. Furthermore, the mistake had to be as to the state of the register and not the underlying disposition. The factors affecting the underling disposition eg fraudulent documents etc do not render the subsequent entry a mistake, because the land registry were entitled to register the disposition because it actually happened, even if an order for it was obtained falsely A distinction could be drawn between void and voidable dispositions.

A void disposition is one which, in law, never took place and therefore should not be entered on the Register. Registration of a forged transfer would be a mistake at the time of registration, as there would be no disposition to register.

A voidable disposition, however, is valid until set aside. There is a disposition to register and no mistake is made when registering it. If the disposition is subsequently set aside, it does not render the entry a mistake retrospectively.

T’s registration as proprietor was based solely on the vesting order, which effected the disposition and conferred title on him independently of the underlying documents. Registration on the basis of a court order was akin to the position in relation to a voidable transaction. Even if A was entitled to have the order set aside as of right, the order remained valid until set aside. Accordingly, there was no mistake at the time of registration. As such, R1’s charge would remain.

Question 41

What were the facts of Mortgage express v Lambert and which overriding interest was overreached?

Answer 41

Lambert sold to two fraudsters who obtained a mortgage on the house and defaulted on payments. Bank sought proceedings for possession. The right of Lambert to rescind the contract for the original sale was overreached by the granting of the mortgage and possession proceedings were granted. there was no actual occupation as no notice of intention to continue to be in actual occupation after the sale, despite her liaising with the fraudsters.