REGISTERED

LAND:
FINISHING
REGISTRATION
PROF WARREN BARR

CREDIT DR JOHN PICTON

FOR SLIDE TEMPLATES
FOR PUBLIC DOMAIN PICTURES
 OVERREACHING OVERRIDING INTERESTS: NEWLY WEDS
EXAMPLE

 1. Newly weds pay a contribution to the purchase

price of a house, so likely have a beneficial
interest..They are in actual occupation. Their parents
have legal title.
 2. The newly weds cannot register their interest by
entry of a notice (LRA 2002, s 33(a)(i)), even if they
knew of it.
 3. They are unaware that they have an interest to
protect by restriction (and it has not been entered).
 Interest could be protected by priority. How does the
mortgage company avoid this? By ensuring
overreaching,
 DEALING WITH THE CRACK AND THE PROBLEMS

 Overriding interests normally bind purchasers (take priority)

 But overreaching (which only applies to beneficial interests behind a

trust) is the trump.

 People in actual occupation with a beneficial interest can be overreached

 Only useful if aware of existence of the interest before entering into a
registered disposition, as can ensure that the transaction will have
overreaching effect
 Otherwise, if transaction has happened, priority will be protected unless there
was an overreaching sale
ACTUAL OCCUPATION – OBVIOUS ON INSPECTION?

 Case by case approach

 Furniture
 Clothes
 KEY DEFINITION OF ACTUAL OCCUPATION

 Thomas v Clydesdale Bank Plc [2010] EWHC 2755 (QB)

 It is clear from what is said above that, in order to determine whether somebody is in actual occupation it is necessary to
determine not only matters which would be obvious on inspection but matters which would require enquiry to ascertain them.
That includes such things as the permanence and continuity of the presence of the person concerned, the intentions and wishes
of that person and the personal circumstances of the person concerned.
 ACTUAL OCCUPATION + INTEREST = OVERRIDING INTEREST

Freehold

 Ferrishurst v Wallcite [1999] Ch 355 (CA) ‘so far as

relating to the land of which he is in actual occupation’
Lease

Sub-lease of 50%
(Option to purchase Sub-lease of 50%
the superior lease)
 LESSONS FROM FERRISHURST

 Ferrishurst v Wallcite [1999] Ch 355 (CA)

 Actual occupation + interest = overriding interest

 Raises difficult conceptual question – ‘actual occupation of what?’

 This was a commercial case, but the general principle is most important to us in the context of beneficial interests behind a
trust
 OVERREACHING EQUITABLE INTERESTS

 Equitable interests (’family homes’ type interests) behind a

trust

 Payment to two trustees

 Law of Property Act 1925, s 2

 PAYMENT TO 2 TRUSTEES NECESSARY FOR OVERREACHING

 HSBC Bank Plc v Dyche [2009] EWHC 2954 (Ch)

Dyches
Collelldevalls
 LESSONS FROM DYCHE

 Inspection has not disappeared as a concept – mortgage lenders are still expected to inspect properties

 In order to overreach an interest it is necessary to pay 2 trustees

MORTGAGE LENDERS ATTEMPTING TO OVERREACH BENEFICIAL
INTEREST UNDER TRUST GIVING RIGHT TO OCCUPATION

 City of London Building Society v Flegg [1987] 3 All ER 435

 The most famous case

 A key reference point
 OVERRIDING INTEREST CAN BE DEFEATED BY THE KNOWING
INTENTION OF THE PERSON WITH THE INTEREST

 Paddington Building Society v Mendelsohn (1985) 50 P & CR 244 (CA)

 owner of erstwhile overriding interest can give up their priority if they intend to do so…
 REMINDER: NEED LAND RIGHTS

 Strand Securities v Caswell [1965] Ch 958 (CA)

 Personal rights such as a licence to occupy do not give overriding status
SUMMARY – ACTUAL OCCUPATION

 Actual occupation + interest = overriding interest

 However, at minimum, that actual occupation has to be ‘reasonably obvious on inspection’ to be an overriding
interest

 Equally, if someone with an interest intentionally sets up a situation in which a purchaser or mortgage lender
believes themselves to have priority, then their interest will not override.

 It is possible to overreach an overriding interest provided payment is made to 2 or more trustees

 APPROACHING A LAND QUESTION

Barry has recently purchased the fee simple of Mooney Manor, a large detached house, from Edna. Barry plans to
convert Mooney Manor into a hotel. Title to Mooney Manor is registered, and Barry has been registered with absolute
title.

Barry has moved in and discovered that Madge, a neighbour, claims that she has a right to use a visible pathway across
the rear garden of Mooney Manor. Valma, Edna’s 25 year old daughter, is still in occupation of Mooney Manor and is
refusing to leave. Les, another neighbour, claims that Mooney Manor is subject to a covenant restricting its use to
residential purposes. Kenny, a local developer, claims that Edna agreed to sell him a plot of land at the rear of Mooney
Manor and he claims that Barry was aware of this agreement
THE PROBLEM QUESTION SHOWS LAND ‘AS A SYSTEM’

 Interests + how they are protected

Easement (Madge)
Licence or more? (Valma)
Restrictive covenant (Les)
Option to purchase (Kenny)
THE PROBLEM QUESTION SHOWS LAND ‘AS A SYSTEM’

Easement (Madge)
Capable of being an easement and formalities?
Legal - when granted? If before Oct 2013, overriding interest in Schedule 3 if would have been
obvious on a reasonable inspection of land. If after that, will need to have been completed by
registration (s27) and will bind Barry (Madge can enforce it)
Licence or more? (Valma)
If licence, Barry will not be bound (personal interest)
Fact of actual occupation alone means nothing
Might need to explore whether it is a lease and corresponding rules or whether there is an implied
trust
If bf interest – same set of rules as per the worked example in the Week 9 drop-in session (see
worked example)
THE PROBLEM QUESTION SHOWS LAND ‘AS A SYSTEM’

Restrictive covenant (Les)

Proprietary and valid?
If so, needs to have been entered as a notice on the register for Les to be able to
exercise over Barry’s registered title when Barry had title completed
Option to purchase (Kenny)
Proprietary and valid?
Needs to be protected by notice to have bind Barry
Fact that Barry knew about it not enough (doctrine of notice does not apply to
registered land), unless there is proof of fraud
ALTERATION & INDEMNITY
 THE INSURANCE (OR INDEMNITY) PRINCIPLE

 The accuracy of the register is guaranteed by the state. In the

event of any inaccuracy, it will be rectified or altered.
 If the inaccuracy harms a proprietor, he or she will be compensated
by the state (s 3 LRA 2002)
 ALTERATION (SOMETIMES CALLED RECTIFICATION)

 Land Registration Act 2002, s.65 and sched.4

 S. 65 just tells us that the schedule ‘has effect’. Schedule 4 then provides:

 In this Schedule, references to rectification, in relation to alteration of the register, are to alteration which—

 (a) involves the correction of a mistake, and

 (b) prejudicially affects the title of a registered proprietor.

 LIST OF GROUNDS FOR ALTERATION (SOMETIMES CALLED
RECTIFICATION)

 Sched.4, paras 2 and 5

 (1)The court (PARA 2) or registrar (PARA 5) may make an order for alteration of the register for the purpose of—

 (a)correcting a mistake,

 (b)bringing the register up to date

 PROTECTING REGISTERED PROPRIETORS WHO SUFFER
MISTAKES

 So where register is corrected, how is the proprietor (who loses out) protected?

 Sched.4, paras 3 and 6 - protect the registered proprietor in possession against rectification (defined in para.1 as
‘correction of a mistake’)
 There will be no rectification of the register without the registered proprietor’s consent, unless
they he/she has contributed to the mistake through fraud or lack of proper care, or it would be
unjust not to make the alteration
 Part of state guarantee of title – should be difficult to correct and easier to instead compensate
(indemnify) a third party if they lost an interest
 FACTORS INFLUENCING ALTERATION (RECTIFICATION)

 Epps v Essso Petroleum [1973]

 Broad range of factors –position of all parties and acts of person who became registered proprietor in buying the property

 Sainsbury’s Supermarkets v Olympia Homes [2005] EWHC 1235

 Burden of proof is on the party seeking rectification

 Rees v Peters [2011] EWCA Civ 836

 Fact that interest (restrictive covenant) could not easily ne indemnified and registered proprietor knew about the interest (even
though it was not protected on the register) meant it would be unjust not to alter the register
 LIMITS ON ALTERATION (RECTIFICATION)

 Barclays Bank Plc v Guy [2008] EWCA 452

 Initial transfer of Guy’s land land (which became registered) was fraudulently procured
 Ten Acre Ltd, now the registered proprietor, charged the land by way of legal mortgage with Barclays Bank Plc
 Ten Acre Ltd defaulted and Barclays Bank Plc sought possession
 Guy argued for alteration of the register as the transfer was by fraud
 Court of Appeal did not permit alteration
 No doubt fraudulent transfer, but charge was not fraudulent
 Guy was aware that something had gone wrong and should have acted to enter a unilateral notice on the property, but had not acted quickly
enough
 No grounds for rectification, even though value of fraud was £15 million
 Guy left with claim in negligence against his solicitor
WHEN IS COMPENSATION POSSIBLE? (INDEMNITY)

Any person who suffers loss by reason of rectification or non-

 Land Registration rectification of an error or omission on the register is entitled to
Act 2002, s.103 be indemnified subject to certain limitations
(which points us to
a list in) sched.8
 RECTIFICATION AND THE SIZE OF THE PROPRIETOR’S CLAIM

 Sched.8, para.6 – the value to be claimed

 If non-rectification or rectification causes loss, claimant can claim value of the estate or interest at the time the mistake,
omission or error occurred, or rectification took place
 Hounslow LBC v Hare (1990) 24 HLR 9
 Pinto v Lim [2005] EWHC 60
 Increases in value of land are easier if rectification has been granted, as date of valuation is from the date of rectification, otherwise the date
of valuation is the date of the mistake itself (which is earlier and does not include changes in value)
 Cf Interest may be payable of the value has increased (para 9)
 LIMITS ON AN INDEMNITY CLAIM: SCH 8, LRA 2002

 - no compensation is payable if the claimant has caused or substantially contributed to the loss by fraud
or lack of proper care – (para.5).
 - contributory lack of care will reduce compensation (para.5).
 - claim must be made within the limitation period in the LA 1980 – 6 years (para 8).
PUBLIC DOMAIN IMAGES

Newly weds: http://maxpixel.freegreatpicture.com/Just-Married-Stroll-Bride-Wedding-Kiss-The-Groom-808956

Marquis of Salisbury: By Miyagawa (Own work) [CC BY-SA 3.0
(http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
By Keashif - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=45013941
Richard Croft [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
Tobin - https://www.flickr.com/photos/tobin/2662652741
By Paramount Pictures (ebay card) [Public domain], via Wikimedia Commons:
https://commons.wikimedia.org/wiki/File:Double_Indemnity_Lobby_Card.jpg