Land- Henry Steele

‘Recent case law supports a wide approach to the Land Registration Act’s alteration provisions. This is regrettable because it has the potential to undermine the promise of title by registration, as well as the Act’s priority promise. In light of this, it must be questioned whether we should bother to retain a land registration system at all.’ (Cambridge Law Tripos)

By Henry Steele

The statement’s objective characterisation of the approach taken to the LRA’s alteration provisions is plausible - the tenor of recent authority is indicative of a ‘wide approach’. Furthermore, it is credible to suggest that this has the capacity to undermine the referenced promises. However, having a ‘land registration system’ remains valuable, and the wide approach to alteration is defensible. Therefore, the issue is not whether we should have ‘a land registration system at all’, but how we should reformulate our current one.

Hypothetical for reference:

(i) A is our initial registered interest-holder. B’s registration is then procured without A’s consent and is mistaken. However, B acts on his erroneous title in order to dispose an interest to C, who registers it.

‘A very wide reach’?

Admittedly, there is some of support for the argument that the LRA’s alteration provisions have a relatively narrow reach. This view begins with premise that s.58 of the LRA operates to guarantee B’s title upon registration, subject to the alteration provisions (s.65 and schedule 4 LRA).77 However, because he also has ‘owner’s powers’ (s. 23 and s. 26 LRA) post registration, the guarantee enables him to convey his interest as an owner. Therefore, C is able to acquire it unencumbered by the ‘purchaser-friendly’ s.29 priority promise, with his title being guaranteed upon registration. This gives effect to the Law Commission’s view that the LRA would guarantee ‘title by registration’.78 Accordingly, a narrow view of the alteration provisions gives

77 Land Registration Act 2002 78 Law Commission, Updating the Land Registration Act 2002, 2018, Law Com No 380

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effect to this understanding by heightening protection of C’s title, as seen by the approach taken to ‘mistake’ in Stewart v Lancashire Mortgage Corporation.

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However, the thrust of the statement’s characterisation remains plausible given the tenor of recent case law. As Goymour has persuasively illustrated, several recent approaches to the alteration provisions suggest that the narrow view has fallen out of favour.80 Several approaches illustrate this point. First, given that a significant gateway for engaging the alteration/rectification provisions is the meaning of ‘mistake’ (Sch.4, para. 1(a); Sch.4, para 2(1)(a)), 81 this has been the epicentre of much of the wide approach. For example, some cases suggest ‘correcting a mistake’ entails correcting its consequences, thereby capturing C’s registration (Ajibade v Bank of Scotland).82 Alternatively, C’s mistake could be analysed as being ‘part and parcel’ of B’s erroneous registration (per Lord Neuberger in Barclays Bank v Guy (No.2)).83 A mistake in an early transaction can render later transactions of the same title mistaken also, as indicated by Gold Harp v Macleod84 and the reasoning in Bakrania v Lloyds Bank (informed by these authorities, albeit not formally binding).85 Finally, securing alteration can be relatively easier if one invokes a ‘right to rectify’. This can potentially bind C as an overriding interest under schedule 3, para 2 LRA (Swift 1st; 86 Crawley v Gudipati)87 , thereby burdening his land and indicating that sch.4, para 1(b) is not engaged (Re Chowood).88 Thus, whilst the range of authorities lends some support to Lees’ argument that the cases are in tension here, a ‘wide view’ of the alteration provisions is in the ascendency, giving force to the statement

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[2010] EWLandRA 2009_0086 80 Goymour, A., 2013. MISTAKEN REGISTRATIONS OF LAND: EXPLODING THE MYTH OF “TITLE BY REGISTRATION”. The Cambridge Law Journal, 72(3), pp.617-650.

81 Land Registration Act 2002

82 83 84 [2008] EWLandRA 2006-0163 [2010] EWCA Civ 1396 [2014] EWCA Civ 1084

85 86 87 [2017] UKFTT 364 (PC) [2015] 1 Ch 602 [2010] EWLandRA 2008-0602

88 [1933] Ch 574

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Undermining promises:

In addition, the suggestion that this wide approach has undermined the two promises referenced by the statement is a plausible conclusion. A wide approach to schedule 4’s alteration provisions does indeed undercut the promise of title by registration. This promise reflects the idea that registration is sufficient to confer title on C, and is reflected by section 58 of the LRA, and the reasoning in Swift 1st v Chief Land Registrar. 89 It is also supported by the Law Commission’s initial understanding that the LRA 2002 would usher in a system of title by registration. 90 Although Cooper has suggested that there is nothing in the Act which formally requires a narrow approach to schedule 4 as a result of this, this does not negate the suggestion that the register ostensibly promises title by registration (Lees).91 Accordingly, the wide approach risks undermining this because of how it undercuts C’s ability to trust that B had a robust title which he could convey to him, and correspondingly increases the likelihood that he is at risk of alteration proceedings.

Furthermore, the force of the wide approach can also undermine the ‘priority promise’ made by the LRA. Section 29 of the LRA indicates that C, as a purchaser of a registered estate for valuable consideration, will take the land unencumbered by any unprotected interests, or interests which do not override via Sch.3, paras 1 – 3. However, Underhill LJ’s reasoning in Gold Harp strongly suggests that, if A can establish the necessary elements of alteration/rectification, his title or interest can be reinstated in a manner which gives it prospective priority over C’s. Similarly, if a right to seek alteration is recognised as proprietary, it can avoid being postponed to C if the holder is in reasonably discoverable actual occupation, although this operates through Sch.3, para 2.

Moving forward:

Nevertheless, it does not necessarily follow that we must question the need of even having a land registration system ‘at all’. The more important issue is our understanding of how our current system should operate.

89 [2015] 1 Ch 602 90 Law Commission, Updating the Land Registration Act 2002, 2018, Law Com No 380 91 Cooper, S, Equity and Unregistered Land Rights in Commonwealth Registration Systems, 2003.

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Several concerns indicate that the current approach is undesirable. First, there is the lingering issue of authority, with Lees highlighting how the multiplicity of solutions to the problem at the heart of our hypothetical is conducive to uncertainty in an area which ought to highly regard the value of certainty. Second, there is an issue of transparency and coherence. As Goymour argues, the Act’s main body is making two promises which are being undercut in practice by the operation of the less alteration prominent provisions, which lack clearly defined parameters.92 This is problematic because it undercuts a purchaser’s ability to have confidence in the register, with it becoming more akin to a record of rights, rather than a source guaranteeing them.

However, these problems are not sufficient reasons to consider a land registration system valueless. It must be remembered that, outside this context, having a system of land registration does more to aid market confidence and performance than not having one (Law Comm (2018)).93 Furthermore, the wide approach to the alteration provisions is not entirely undesirable. The Act never promised complete indefeasibility and some potential for rectification to change priorities is necessary if rectification is to have meaning (per Dixon).94 As Cooper has argued, it also avoids the pitfalls of the narrower approaches, which would heavily prioritise the purchaser via a narrow view of mistake, thereby causing one to lose a potentially long-standing attachment to their home with even the mere consolation of an indemnity potentially curtailed by narrowly construing the ambit of ‘mistake’.95 Therefore, upon balancing these considerations, the better conclusion is that the value of our current system can be enhanced by reform, not removal. First, if the preference for a wider approach to alteration is in the ascendancy, then it would be better to transparently acknowledge this in a manner similar to the path pursued in Scotland. This would involve clearly rejecting the narrower view by prima facie rooting title in the general law, subject to legislative alterations in registration scenarios, perhaps involving C acquiring title after he has been in possession for a certain period of time. Second, we should remove specific avenues pursued by the wider approach. The most culpable is

92 Goymour, A., 2013. MISTAKEN REGISTRATIONS OF LAND: EXPLODING THE MYTH OF “TITLE BY REGISTRATION”. The Cambridge Law Journal, 72(3), pp.617-650.

93

Law Commission, Updating the Land Registration Act 2002, 2018, Law Com No 380 94 Dixon, Martin, The Reform of Property Law and the Land Registration Act 2002: a Risk Assessment, 2003

95 Cooper, S, Equity and Unregistered Land Rights in Commonwealth Registration Systems, 2003.

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the “Malory 2” suggestion that the right to rectify the register can take effect as an overriding interest (Swift 1st; 96 Bakrania97). Not only is it fundamentally unclear how this can be a ‘right’, it also risks defeating the policy of the LRA by burdening a purchaser in a manner which deprives them of an indemnity. Swift 1st’s ‘solution’ to this issue was premised on sch.8, para 1(2)(b) LRA and is therefore of limited applicability (per Dixon).98 Thus, the Law Commission was right to support the removal of this avenue.

Conclusion:

To summarise, the statement’s objective assessment of the current law is plausible, albeit in need of some qualification. It is correct to say that the implications of this can threaten the two promises referenced. However, both a system of land registration and a wide approach to the alteration provisions are desirable, and can be reconciled by reforming the current one, rather than abolishing it.

96 [2015] 1 Ch 602 97 [2017] UKFTT 364 (PC) 98 Dixon, Martin, The Reform of Property Law and the Land Registration Act 2002: a Risk Assessment, 2003

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