COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
(CHANCERY DIVISION) MANCHESTER DISTRICT
REGISTRY (HIS HONOUR JUDGE MADDOCKS)
London, WC2A 2LL
B e f o r e :
LORD JUSTICE CLARKE
LADY JUSTICE ARDEN
Malory Enterprises Ltd
|- and -|
|Cheshire Homes (UK) Ltd |
Chief Land Registrar
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr John Dagnall instructed by Pannone & Partners for the 1st Respondent
Mr N Caddick instructed by the Treasury Solicitor for the Chief Land Registrar
AS APPROVED BY THE COURT
Crown Copyright ©
Lady Justice Arden:
“1. It is declared that:-
(a) at all material times the beneficial interest in the Land presently registered at HM Land Registry under title number GM341218 (“the Land”) has been beneficially owned by and (until at least 17 July 1999) in the possession of the Claimant;
(b) following the rectification referred to in paragraph 2 below the Land shall also be in the legal ownership of the Claimant;
(c) at all material times the Claimant was and still is entitled to possession of the Land and on and after 17 July 1999 the First Defendant has trespassed on the Land by entering it and carrying out works upon it.
2. The register be rectified to show the Claimant as registered proprietor of the Land (with address 123 Deansgate, Manchester and showing the Claimant as being incorporated in the British Virgin Islands) with such rectification to be (insofar as necessary) retrospective to 12 January 1999.
3. The First Defendant be restrained whether by itself, its directors, officers, servants, agents or otherwise howsoever from entering on or carrying out works upon the Land.
4. There be an assessment of and enquiry into such damages (if any) as should be paid by the First Defendant to the Claimant by reason of matters on and following 17 July 1999 regarding or relating to the Land (being in particular its entries on to and carrying out of works on the Land) ….”
“82. (1) The register may be rectified pursuant to an order of the court or by the registrar, subject to an appeal to the court, in any of the following cases, but subject to the provisions of this section:-
(a) Subject to any express provisions of this Act to the contrary, where a court of competent jurisdiction has decided that any person is entitled to any estate right or interest in or to any registered land or charge, and as a consequence of such decision such court is of opinion that a rectification of the register is required, and makes an order to that effect;
(b) Subject to any express provision of this Act to the contrary, where the court on the application in the prescribed manner of any person who is aggrieved by any entry made in, or by the omission of any entry from, the register, or by any default being made, or unnecessary delay taking place, in the making of any entry in the register, makes an order for the rectification of the register;
(c) In any case and at any time with the consent of all persons interested;
(d) Where the court or the registrar is satisfied that any entry in the register has been obtained by fraud; ….
(e) Where a legal estate has been registered in the name of a person who if the land had not been registered would not have been the estate owner; and
(f) In any other case where, by reason of any error or omission in the register, or by reason of any entry made under a mistake, it may be deemed just to rectify the register.
(2) The register may be rectified under this section, notwithstanding that the rectification may affect any estates, rights, charges or interests acquired or protected by registration, or by any entry on the register, or otherwise.
(3) The register shall not be rectified, except for the purpose of giving effect to an overriding interest or an order of the court so as to affect the title of the proprietor who is in possession-
(a) unless the proprietor has caused or substantially contributed to the error or omission by fraud or lack of proper care; or .......
(b) unless for any other reason, in any particular case, it is considered that it would be unjust not to rectify the register against him.
(4) The registrar shall obey the order of any competent court in relation to any registered land on being served with the order or and official copy thereof.
83. (1) Where the register is rectified under this Act, then, subject to the provisions of this Act-
(a) any person suffering loss by reason of the rectification shall be entitled to be indemnified; and
(b) if, notwithstanding the rectification, the person in whose favour the register is rectified suffers loss by reason of an error or omission in the register in respect of which it is so rectified, he also shall be entitled to be indemnified.
(2) Where an error or omission has occurred in the register, but the register is not rectified, any person suffering loss by reason of the error or omission shall, subject to the provisions of this Act, be entitled to be indemnified.
(4) Subject to the following provisions of this section, a proprietor of any registered land or charge claiming in good faith under a forged disposition shall, where the register is rectified, be deemed to have suffered loss by reason of such rectification and shall be entitled to be indemnified under this Act.
(5) No indemnity shall be payable under this Act –
(a) on account of any loss suffered by a claimant wholly or partly as a result of his own fraud or wholly as a result of his own lack of proper care; .......
(6) Where any loss suffered by a claimant is suffered partly as a result of his own lack of proper care, any indemnity payable to him shall be reduced to such extent as is just and equitable having regard to his share in the responsibility for the loss.
(7) For the purposes of subsections (5)(a) and (6) above, any fraud or lack of proper care on the part of a person from whom the claimant derives title (otherwise than under a disposition for valuable consideration which is registered or protected on the register) shall be treated as if it were fraud or lack of proper care on the part of the claimant (and the reference in subsection (6) to the claimant’s share in the responsibility for the loss shall be construed accordingly).
(8) Where an indemnity is paid in respect of the loss of an estate or interest in or charge on land, the amount so paid shall not exceed-
(a) where the register is not rectified, the value of the estate, interest or charge at the time when the error or omission which caused the loss was made;
(b) where the register is rectified, the value (if there had been no rectification) of the estate, interest or charge, immediately before the time of rectification.”
Judgment of HHJ Maddocks
“In this case the land remained in a state which did not admit to any serious use or occupation. The rear flats were incomplete, derelict and uninhabitable. The land and the buildings were not appropriated to any alternative use, such as, for example, the parking of cars or the drying of clothes. As it is the only use relied upon is the temporary deposit of refuse items from the Hometel Flats – old mattresses and beds awaiting collection and removal in a skip, and the deposit of fencing panels to be broken up and used as hardcore on site.
Such casual use and intermittent activities could not as themselves be viewed as “actual occupation”. I attach greater significance to the secure fencing on all three sides, coupled as it was with the unfenced boundary with the Hometel site and with the access (being the only means of access) from the Hometel Flats which were within the same management and control.
Although the rear land and Hometel Flats were held by separate companies, both companies were under the same ownership (the Lee Chang Trust), both companies and both properties were under the same management as was Mrs Chang’s own company Home Management. Thus, Mr Donald, the joiner, carried out work on both properties and made use of the rear land for work on the flats.
The wooden fence and the high security fence were partly on the front land.
There was some evidence, which I accept, that some work was done, as required, to keep down the weeds in the yard, to maintain the fences that were damaged and to board up the window openings.
Taking the evidence as a whole, my conclusion is that the undoubted possession of Malory BVI amounted to “actual occupation” within the meaning of section 70 (1)(g).”
“Whichever side loses, it will be entitled to compensation under section 83. It may be that the compensation payable to Cheshire may be less than satisfactory or sufficient, not least by reason of the purchase of the side land. However, I do not see that as a major determining factor in the exercise of the Court’s discretion on the facts of this case. My conclusion, on balance, is that if (contrary to my view) Hometel’s status could be viewed as that of a proprietor in possession, it would still be unjust not to rectify”. (Judgment page 40). (In this passage the judge’s reference to Hometel’s status would appear to be a reference to the status of Cheshire).
“….. it appears to me that the jurisdiction to rectify carries with it jurisdiction to direct the date at which rectification is to take effect. In the case of documents, the general rule is that rectification takes effect from the original date of the document. The remedy, however, is equitable and may be granted subject to terms which preserve the validity of intermediate dealings. I see no reason to view the statutory jurisdiction any differently or as not being equally flexible, although it may be said that subsection 8(c) dealing with compensation points to the date of the order.
In the present case I am dealing with a proprietor company which was newly registered on 23 August 1993 and which ought never to have been displaced. It seems to me that the proper course is to simply restore that original registration as from that date but with the address 123 Deansgate, Manchester.
At the latest the date would be advanced to the date when the dispute arose and 12 July 1999. For the present purposes, the result would be the same.
As it is I shall declare that the true beneficial owner of the land is Malory BVI and order that the register should be rectified to show Malory BVI as proprietor from the original date.” (Judgment page 40).
i) whether the first respondent had an overriding interest;
ii) whether the court had jurisdiction to make an order for rectification from a prior date, and if that jurisdiction existed, whether the judge took into account the right factors;
iii) whether the judge was right to conclude that Cheshire was liable in damages for trespass.
(i) Overriding Interest
“All registered land shall, unless under the provisions of this Act the contrary is expressed on the register, be deemed to be subject to such of the following overriding interests as may be for the time being subsisting in reference thereto, and such interests shall not be treated as incumbrances within the meaning of Act (that is to say) –
(f) Subject to the provisions of this Act, rights acquired or in course of being acquired under the Limitation Acts;
(g) The rights of every person in actual occupation of the land or in receipt of the rents and profits thereof, save where enquiry is made of such person and the rights are not disclosed; …..”
i) no-one was living on the land;
ii) no-one could carry on a business there;
iii) no-one was parking a vehicle there;
iv) no-one was cultivating plants and no-one was mowing a lawn or doing any similar act;
v) there were no signs with the name of the owner; and
vi) no-one was carrying on building work on the land.
(2) Retrospectivity of Rectification
Submissions of the Chief Land Registrar
“5. Where the registered land is a freehold estate, the registration of any person as first proprietor thereof with an absolute title shall vest in the person so registered an estate in fee simple in possession in the land, together with all rights, privileges and appurtenances belonging or appurtenant thereto, subject to the following rights and interests, that is to say-
a) Subject to the incumbrances, and other entries, if any, appearing on the register; and
b) Unless the contrary is expressed on the register, subject to such overriding interests, if any, as affect the registered land; and
c) where the first proprietor is not entitled for his own benefit to the registered land subject, as between himself and the persons entitled to minor interests, to any minor interests of such persons of which he has notice.
but free from all other estates and interests whatsoever, including estates and interests of His Majesty.”
“20 (1) In the case of a freehold estate registered with an absolute title, a disposition of the registered land or a legal estate therein, including a lease thereof, for valuable consideration shall, when registered, confer on the transferee or grantee an estate in fee simple or the term of years absolute or other legal estate expressed to be created in the land dealt with, together with all rights, privileges and appurtenances belonging or appurtenant thereto, including (subject to any entry to the contrary in the register) the appropriate rights and interests which would, under the Law of Property Act 1925, have been transferred if the land had not been registered, subject-
a) to the incumbrances and other entries, if any, appearing on the register [and any charge for inheritance tax subject to which the disposition takes effect under section 73 of this Act]; and
b) unless the contrary is expressed on the register, to the overriding interests, if any, affecting the estate transferred or created.
but free from all other estates and interests whatsoever, ….”
“69 – (1) The proprietor of land (whether he was registered before or after the commencement of this Act) shall be deemed to have vested in him without any conveyance, where the registered land is freehold, the legal estate in fee simple in possession, and where the registered land is leasehold the legal term created by the registered lease, but subject to the overriding interests, if any, including any mortgage term or charge by way of legal mortgage created by or under the Law of Property Act 1925, or this Act or otherwise which has priority to the registered estate.”
" … if the plaintiff wins,… there would be no doubt that under the wide words of s 83(1) of the Land Registration Act 1925 [the defendants] would be within the category of ‘any person suffering loss by reason of any rectification of the register’, and therefore entitled to an indemnity.
That has led counsel for the plaintiff to submit to me that rectification and indemnity are complementary, the one being the mirror of the other, and that it must follow, since the plaintiff cannot get any indemnity against the defendants if they take free of the restrictive covenant for the duration of the lease, that that cannot be the right solution; whereas the fact that the defendants will be entitled to indemnity points to the fact that they are subject to the restrictive covenant. I see the force of that as an argument, but I think one is bound to take the Act as one finds it, and one of the odd things about rectification is that there is no provision in s 82, which is the section which deals with rectification, which states in terms or by implication what date is to be inserted against any entry which is inserted pursuant to rectification. One would perhaps have expected to have found some guidance as to the date, but no guidance whatsoever is given at all. It merely says,‘The register may be rectified’, and then, apart from setting out the provision, the circumstances under which it may be rectified and making certain qualifications as to when it may be and when it shall not be rectified, it does not, I think, tell one anything more about the date as from which the restriction takes effect.
Now, of course, if one were dealing with the ordinary sort of rectification with which courts of equity are accustomed to deal in relation to documents, that always relates back to the date when the document was itself executed; but, of course, correspondingly, the rights of all parties, who have in the meantime gained interests on the faith of the unrectified document for value without notice, are strenuously protected. So that I do not think that one can, having regard to the rather different provisions of the Land Registration Act 1925, really equate a rectification in equity with rectification under the Act."
“It is, perhaps, dangerous to suggest any test for what is essentially a question of fact, for “occupation” is a concept which may have different connotations according to the nature and purpose of the property which is claimed to be occupied. It does not necessarily, I think, involve the personal presence of the person claiming to occupy. A caretaker or the representative of a company can occupy, I should have thought, on behalf of his employer. On the other hand, it does, in my judgment, involve some degree of permanence and continuity which would rule out mere fleeting presence. A prospective tenant or purchaser who is allowed, as a matter of indulgence, to go into property in order to plan decorations or measure for furnishings would not, in ordinary parlance, be said to be occupying it, even though he might be there for hours a time.”
Lord Justice Clarke:
i) that Cheshire’s status as registered proprietor was subject to the rights of Malory BVI as beneficial owner because section 69 of the LRA only has the effect of vesting in Cheshire “the legal estate in fee simple in possession”;
ii) that Malory BVI has an overriding interest by virtue of its right to claim rectification;
iii) that the judge’s conclusion that Malory BVI was in “actual occupation” of the rear land within the meaning of section 70(1)(g) of the LRA should not be disturbed, with the result that any rights of Cheshire were subject to Malory BVI’s overriding interest; and
iv) that Malory BVI throughout had a sufficient possessory interest in the rear land to maintain an action in trespass against Cheshire.
Lord Justice Schiemann: