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REGULATING FALLIBILITY IN REGISTERED LAND TITLES

Published online by Cambridge University Press:  02 July 2013

Simon Cooper
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Abstract

This paper explores the circumstances in which a change in the land register should be stigmatised as a mistake and thereby introduce the discretionary power to correct it. Recognising the importance of clarifying the concept of mistake, due to its role in controlling the reliability of the register, the paper reviews and rejects various possible determinants for mistake. It proposes an account of mistake which rests on a set of rigid legal constructs about entitlement and registration and which pays respect to various traditional attributes of property.

Keywords

Landtitleregistrationindefeasibilityreliabilitycorrectionmistake
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Articles
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The Cambridge Law Journal , Volume 72 , Issue 2 , July 2013 , pp. 341 - 368
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Copyright © Cambridge Law Journal and Contributors 2013 

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References

1 Hansard HL Deb. vol. 313 cols. 27–28 (3 March 1887), proposing Land Transfer Bill 1887, cl.16(1). The first statutory embodiment occurred in Land Transfer Act 1897, s.7(2).

2 Later models commenced with a presumption that the land would be restored to the owner, with an overriding proviso permitting discretionary reversal of the rule on “special cause” or “special circumstances” being shown: see Lord Halsbury's Land Transfer Bill 1888 (February draft), cl.53(1), and Lord Herschell's Land Transfer Bill 1893, cl.3, respectively. See ‘Royal Commission on the Land Transfer Acts: Second and Final Report of the Commissioners’ (1911, Cd. 5483), para. 31, leading to Law of Property Act 1922, s.174(1), and Land Registration Act 1925, s.82(1).

3 Land Registration Act 2002, Schedule 4, paras. 2(1)(a), 5(a) (hereafter “L.R.A. 2002”).

4 McLean, J. (ed.) Property and the Constitution (Oxford 1999)Google Scholar; Alexander, G. and Penalver, E. (ed.) Property and Community (Oxford 2010)Google Scholar; Alexander, G., “The Social-Obligation Norm in American Property Law” (2009) 94 Cornell L.R. 745Google Scholar.

5 Radin, M., Reinterpreting Property (Chicago 1996)Google Scholar; Penalver, E., “Land Virtues” (2009) 94 Cornell L.R. 821Google Scholar.

6 Subject to very limited powers to correct clerical errors: Congregational Christian Church of Samoa Henderson Trust Board v Broadlands Finance Ltd. [1984] 2 N.Z.L.R. 704, Thomas v Johnson [1997] UKPC 65. For a rare exception, see Métis Settlements Land Registry Regulation (Alberta), s.34(3).

7 G.W. Hinde, “Indefeasibility of Title since Frazer v Walker” in G.W. Hinde (ed.) The New Zealand Torrens System Centennial Essays (Wellington 1971) pp. 75-6; A. Mason, “Indefeasibility – Logic or Legend?” in D. Grinlinton (ed.) Torrens in the Twenty-First Century (Wellington 2003), p. 19; P. O'Connor, “Registration of Invalid Dispositions” in E. Cooke (ed.) Modern Studies in Property Law: Volume III (Oxford 2005) p. 63; Joint Land Titles Committee, Renovating the Foundation: Proposals for a Model Land Recording and Registration Act for the Provinces and Territories of Canada (Edmonton 1990), p. 25; Toomey, E., “Fraud and Forgery in the 1990s?” (1994) 5 Canterbury L.R. 424Google Scholar. The rule's excesses are limited by statutory exceptions to indefeasibility and the so-called “in personam exception”: Frazer v Walker [1967] 1 A.C. 569, 585. Cf. rejection of discretionary correction in Scotland: Scottish Law Commission, Report on Land Registration Law Com. 222 (Edinburgh 2010), Part 39, Recommendation 82.

8 L.R.A. 2002, ss. 20(1)(a), 21(1)(a).

9 L.R.A. 2002, Schedule 4, paras. 2(1)(a), 5(a).

10 L.R.A. 2002, Schedule 8, para. 1(1)(a)-(g).

11 L.R.A. 2002, Schedule 10, para. 6(e); Land Registration Rules 2003, SI 2003/1417, r.130.

12 L.R.A. 2002, Schedule 4, paras. 2(1)(a) and 5(a).

13 L.R.A. 2002, Schedule 8, paras. 1(1)(a) and (b).

14 L.R.A. 2002, Schedule 8, para. 11(1).

15 See Smith, R.J., “Rectification of Registered Titles” (1993) 109 L.Q.R. 187Google Scholar, 190, discussing Norwich and Peterborough Building Society v Steed [1993] Ch. 116.

16 Landes, W.M., “An Economic Analysis of the Courts” (1971) 14 Journal of Law and Economics 61CrossRefGoogle Scholar; Erlich, I. and Posner, R.A., “An Economic Analysis of Legal Rulemaking” (1974) 3 J.L.S. 257CrossRefGoogle Scholar, 265; Baird, D. and Jackson, T., “Information, Uncertainty, and the Transfer of Property” (1984) 13 J.L.S. 299CrossRefGoogle Scholar; Rose, C., “Crystals and Mud in Property Law” (1987-8) 40 Stan L.R. 577, 591CrossRefGoogle Scholar; Kaplow, L., “Rules Versus Standards: an Economic Analysis” (1992) 42 Duke L.J. 557, 595-7CrossRefGoogle Scholar.

17 Mautner, M., “The Eternal Triangles of the Law: Toward a Theory of Priorities in Conflicts Involving Remote Parties” (1991) 90 Mich LR 95, 99CrossRefGoogle Scholar; C. Rotherham, ‘Proprietary Remedies in Context’ (Hart, 2002, Oxford) pp. 74, 129; Durfee, E., “Priorities” (1959) 57 Mich. L.R. 459 and “Priorities II” (1959) 57 Mich. L.R. 685CrossRefGoogle Scholar.

18 L.R.A. 2002, ss. 11, 12 (first registration); Land Registration Act 2002, s. 58 (subsequent proprietors).

19 “It is not logically possible to describe the register itself as mistaken”: G. Hill et al., The Land Registration Act 2002 (London 2005), para. 14.11.

20 Rectification is correction which prejudicially affects the title of a registered proprietor: L.R.A. 2002, Schedule 4, para. 1.

21 ss.95, 96, 98 Land Transfer Act 1875. The principle was comprehensively denigrated by ‘Report from the Select Committee of the House of Commons on Land Titles and Transfer’ (1879, HCP xi) 1. For its abandonment, see J.S. Anderson ‘Lawyers and the Making of English Land Law 1832–1940’ (1992, OUP, Oxford) pp. 176–180.

22 But see Malory Enterprises Ltd. v Cheshire Homes (UK) Ltd. [2002] EWCA Civ 151 at [65]. Torrens systems, conversely, deny vesting in cases of fraud: Cooke, E. and O'Connor, P., “Purchaser Liability to Third Parties in the English Land Registration System” (2004) 120 L.Q.R. 640Google Scholar.

23 Law Commission and HM Land Registry, Land Registration for the Twenty-First Century Law Com. 271 (London 2001), para. 3.47(1), states that the rights of an adverse possessor out of occupation at first registration of another would not create mistake “because [the proprietor] is not bound by [the squatter's] rights.” But first registration merely engages statutory vesting and freedom from incumbrances, and it would be a monojural fallacy to treat these doctrines alone as displacing the correction power.

24 See O'Connor, P., “Deferred and Immediate Indefeasibility: Bijural Ambiguity in Registered Land Title Systems” (2009) 13 Edin L.R. 194CrossRefGoogle Scholar.

25 Recognised in Report of the Commissioners to Consider the Subject of the Registration of Title with Reference to the Sale and Transfer of Land (1857, c. 2215), paras. 26, 30, 57, 86. This is achieved in Torrens systems by the use of an unregistered land comparison to determine indemnity: Stein, R., “The Torrens System Assurance Fund in New South Wales” (1981) 55 A.L.J. 150, 151Google Scholar. On account of indemnity being capped in cases of fraudulent transfer in Hong Kong, recent reforms have proposed realignment with unregistered land by awarding right holders an entitlement to mandatory rectification: “Consultation on the Amendments to the Land Titles Ordinance” (Hong Kong, 2008, HK Land Registry) para.24. See also the correction rule which apparently converges with the unregistered land rule of nemo dat in Belize where no indemnity is provided by statute: Quinto v Santiago Castillo Ltd. [2009] UKPC 15.

26 Land Registration Act 1925, s. 82(1)(g). For the Commonwealth commentary, see, e.g. D.J. Whalan, The Torrens System in Australia (Sydney 1982), p. 345; T.W. Mapp, Torrens’ Elusive Title (Edmonton 1978), p. 165.

27 E.g. Jackson, D.C., “Security of Title in Registered Land” (1978) 94 L.Q.R. 239Google Scholar; D.J. Hayton, Registered Land 3rd ed. (London 1981), p. 168. The comparison was arguably suggested by comments in Orakpo v Manson Investments Ltd. [1977] 1 All E.R. 666 and Norwich and Peterborough Building Society v Steed [1993] Ch. 116 as explained in Smith, R.J., “Rectification of Registered Titles” (1993) 109 L.Q.R. 187Google Scholar, 189. Except for the subordination of unprotected interests, general law rules nevertheless formed the basis for correction reforms in Law Commission, Third Report on Land Registration Law Com. 158 (London 1987), para. 3.34.

28 See M. Harding and R. Hickey, “Bijural Ambiguity and Values in Land Registration Systems” in S. Bright (ed.), Modern Studies in Property Law: Volume VI (Oxford, 2011), p. 281.

29 L.R.A. 2002, Schedule 4, para. 3(2).

30 L.R.A. 2002, Schedule 4, para. 3(2)(a), (b).

31 Law Commission, Land Registration for the Twenty-First Century Law Com. 254 (London 1998), para. 8.38; Scottish Law Commission, Discussion Paper on Land Registration: Void and Voidable Titles Discussion Paper 125 (Edinburgh 2004), para. 5.19. Torrens system reforms have proposed eliminating all comparison with unregistered land rules for compensation: Joint Land Titles Committee, Renovating the Foundation: Proposals for a Model Land Recording and Registration Act for the Provinces and Territories of Canada (Edmonton 1990), p. 29; Land Law Review Committee of the Northern Territory Guarantee of Torrens Title in the Northern Territory (Darwin 1990) pp. 3–4. See McCrimmon, L.A., “Compensation Provisions in Torrens Statutes: The Existing Structure and Proposals for Change” (1993) 67 A.L.J. 904Google Scholar, 915-6.

32 A. Nair, “Morality and the Mirror” in S. Bright (ed.), Modern Studies in Property Law (Oxford 2011), p. 268.

33 Directly pursued by the rule of statutory vesting and the rectification bar: Land Registration Act 2002, s. 58 and para. 3(2), Schedule 4, respectively. Indirect simplification by the curb on adverse possession (L.R.A. 2002, Schedule 6, para. 5), the erasure of unregistered chancel repair liability (The Land Registration Act 2002 (Transitional Provisions) (No.2) Order 2003, SI 2003/1953), and the proscription of mortgages by demise (L.R.A. 2002, s. 32(1)(a)).

34 See the corresponding concerns over limiting indemnity through contributory negligence, which has no counterpart in unregistered land: Wallace, A.E. and MacDonald, C.A.C., “A New Era in Torrens Title in Queensland” (1994) 68 A.L.J. 675, 680Google Scholar.

35 A tangential reference concerning indemnity suggests that procedural default was refuted in Law Commission and HM Land Registry, Land Registration for the Twenty-First Century Law Com. 271 (London 2001), para. 10.31(1).

36 L.R.A. 2002, Schedule 8, para. 1(1)(a), (b).

37 Originating in Land Transfer Act 1897, s. 7(2).

38 Human Rights Act 1998, Schedule 1, First Protocol, Art. 1.

39 Baxter v Mannion [2011] EWCA Civ 120.

40 Ibid. at [25]. See also Khalifa Holdings Aktiengesellschaft v Way [2010] EWLandRA 2008/1438.

41 Consider a hypothetical model where correction is determined by procedural default, but indemnity is available wherever rights cease to be enforceable by the unauthorised registration of another.

42 Fatemi-Ardakani v Taheri [2007] EWLandRA 2006/1313.

43 Land Registration Rules 1925, r. 82 at the time; now replaced by Land Registration Rules 2003, SI 2003/1417, r. 61.

44 Fatemi-Ardakani v Taheri [2007] EWLandRA 2006/1313, at para. [37].

45 That approach might, however, run into problems over due process. If a claimant applies to become proprietor by operation of law, the registry sends a warning letter to the proprietor at the wrong address, and the claimant is registered, the ousted proprietor must then disprove the validity of the new proprietor's registration, perhaps many years afterwards when evidence is no longer available.

46 The conditional obiter dictum to the contrary in Khalifa Holdings Aktiengesellschaft v Way [2010] EWLandRA 2008/1438, at para. [13], is wrong on this analysis.

47 E.g. Fatemi-Ardakani v Taheri [2007] EWLandRA 2006/1313.

48 E.g. Baxter v Mannion [2011] EWCA Civ 120.

49 L.R.A. 2002, s. 27(1).

50 Walsh v Lonsdale (1882) 21 Ch. D. 9, Lysaght v Edwards (1876) 2 Ch. D. 399.

51 Land Registration Act 2002, s. 93(2).

52 Khan v Rehman [2007] EWHC 439.

53 Law of Property (Miscellaneous Provisions) Act 1989, ss. 1(2)(b), 1(3)(a).

54 L.R.A. 2002, s. 2.

55 Sainsbury's Supermarkets Ltd. v Olympia Homes Ltd. [2005] EWHC 1235, [2006] 1 P. and C.R. 17.

56 Ibid. at para. [84]. Olympia purchased from a creditor holding a vesting order which permitted a sale of the equitable interest only.

57 It therefore includes entitlements which might lack proprietary status in unregistered land, such as restrictions on dealings, rights of pre-emption and inchoate estoppels: L.R.A. 2002, ss. 40, 115, 116 respectively.

58 See, for example, the elevation of rights of pre-emption and mere equities into fully binding interests; the phasing out of binding status for unregistered chancel repair rights and manorial rights; the suppression of proprietary effect during the e-conveyancing registration gap: L.R.A. 2002, ss. 115, 116, 117, 27, respectively.

59 For absence of consent as a ground for mistake, see Barclays Bank plc v Guy [2008] EWCA Civ 452 (forged transfer) and Iqbal v Najeeb [2011] EWLandRA 2009/1234 (revoked power of attorney). The proper treatment of dispositions voidable for overborne consent remains unclear. A further problem over consent is created by Land Registration Act 2002, Schedule 5, para. 8, which deems certain unauthorised transactions to be authorised. If the deeming operates for all purposes, it establishes a statutory mandate leaving the former owner with neither correction nor indemnity. A preferable balance might be to admit the discretionary correction power, reserving indemnity for the loser; but this would be possible under the mandate theory only if the statutory deeming were for limited conveyancing purposes during the pre-registration stages and could later be falsified in correction proceedings.

60 Fuller, L., “Consideration and Form” (1941) 41 Columbia L.R. 799CrossRefGoogle Scholar and P. Critchley, “Taking Formalities Seriously” in S. Bright and J. Dewar (eds.) Land Law Themes and Perspectives (Oxford 1998), ch. 20.

61 Khan v Rehman [2007] EWHC 439.

62 This full chain of reasoning was explained in Lewis v Sharpheale [2011] EWLandRA 2010/0855 at paras. [4]-[9]. The formalities for transfers are as for deeds: Land Registration Rules 2003, SI 2003/1417, r. 206(3) and Sched. 9. Legal charges in form CH1 must be executed as deeds.

63 Thompson v Hatherton Marina Ltd. [2007] EWLandRA 2004/0765, Baxter v Mannion [2011] EWCA Civ 120, Khalifa Holdings Aktiengesellschaft v Way [2010] EWLandRA 2008/1438, Mann v Dingley [2011] EWLandRA 2010/0582.

64 Clapich v Shah [2003] EWHC 2423.

65 Baxter v Mannion [2011] EWCA Civ 120 at para. [24].

66 R.J. Smith, “Land Registration: Reform At Last?” in P. Jackson and D. Wilde (eds.) The Reform of Property Law (Aldershot 1997) p.143.

67 Mann v Dingley [2011] EWL&RA 2010/0582.

68 Sainsbury's Supermarkets Ltd. v Olympia Homes Ltd. [2005] EWHC 1235, [2006] 1 P. and C.R. 17.

69 Baxter v Mannion [2011] EWCA Civ 120.

70 C. Harpum, S. Bridge, M. Dixon, Megarry and Wade: The Law of Real Property 7th ed. (London 2008), para. 7-133.

71 C. Harpum, S. Bridge, M. Dixon, Megarry and Wade: The Law of Real Property 8th ed. (London 2012), para. 7-133. The important revision is the inclusion of omissions.

72 Totton and Eling Town Council v Caunter [2008] EWHC 3630. See also Re De Leeuw [1922] 2 Ch 540 in which an uncontested judicial order of foreclosure in favour of a mortgagee (who thereupon became registered proprietor), did not prevent the beneficiaries claiming under the mortgagor from succeeding in a collateral challenge in rectification proceedings to delete the entry when it was shown that the mortgage had been made fraudulently.

73 Ibid. at para. [43].

74 L.R.A. 2002, Schedule 4, para. 3(2).

75 L.R.A. 2002, Schedule 4, para. 2(1)(b).

76 Totton and Eling Town Council v Caunter [2008] EWHC 3630.

77 L.R.A. 2002, s. 112.

78 Land Registration Act 2002, ss. 29, 30. Priority protection extends to leases though they are not registrable dispositions: Land Registration Act 2002, s. 29(4).

79 Law Commission and HM Land Registry, Land Registration for the Twenty-First Century Law Com. 271 (London 2001), para. 1.5.

80 L.R.A. 2002, Schedule 4, para. 2(1)(b). Its scope is not entirely clear and there are hints of a wider function of entering binding rights: Law Commission and HM Land Registry, Land Registration for the Twenty-First Century Law Com. 271 (London 2001), para. 10.7(2); M.P. Thompson, Modern Land Law 4th ed. (Oxford 2009), p. 156.

81 E.g. the recording of defects in title under L.R.A. 2002, s. 64, and the registrar's entry of restrictions ex proprio motu under L.R.A. 2002, s. 42.

82 See Fox, D., “Relativity of Title at Law and in Equity” [2006] C.L.J. 330, 351–361Google Scholar; Clarke, A. and Kohler, P.Property Law: Commentary and Materials (Cambridge 2005), pp. 394–5CrossRefGoogle Scholar.

83 Unprotected interests should not constitute a correctable mistake: Jackson, D.C., “Registration of Land Interests – The English Version” (1972) 88 L.Q.R. 93, 131Google Scholar; Smith, R.J., “Rectification and Minor Interests” (1976) 92 L.Q.R. 338, 342Google Scholar; Hayton, D.J., Registered Land 3rd ed. (London 1981), pp. 168, 170Google Scholar.

84 See Dixon, M.J., “Proprietary Rights and Rectifying the Effect of Non-Registration” [2005] Conv. 447, 455Google Scholar.

85 Oblique support for excluding these omissions from correction appears in Law Commission and HM Land Registry, Land Registration for the Twenty-First Century Law Com. 271 (London 2001), para. 10.7(1); see also M.P. Thompson, Modern Land Law 4th ed. (Oxford 2009), p. 155. Previous reform proposals had confronted the question directly: see Law Commission, Land Registration: Third Paper Law Com. W.P. 45 (London 1972), paras. 73 and 87, Law Commission Third Report on Land Registration Law Com. 158 (London 1987), paras. 3.6 and 3.9; R.J. Smith, “Land Registration Reform” [1987] Conv. 334, 342.

86 L.R.A. 2002, ss. 29, 30.

87 L.R.A. 2002, s. 11(3), (4), (5). See e.g. Rossetti Ltd. v Thresher Wines Acquisitions Ltd. (HMLR Adjudicator, REF/2008/0633).

88 In Sainsbury's Supermarkets Ltd. v Olympia Homes Ltd. [2005] EWHC 1235, [2006] 1 P. and C.R. 17 the omission from first registration was effectively treated as mistake; the option bound the applicant as a matter of property not privity and would have suffered destruction through the vesting effect of first registration. The same generosity in reinstating might not be true for overseas systems which establish procedural mechanisms to ensure that all rightholders are warned, offered due opportunity to present claims, but then foreclosed in the interests of finality: S.R. Simpson, Land Law and Registration (Cambridge 1976) p. 179.

89 Assuming an equitable easement which is binding on the applicant for first registration because either it was created by him, or it was recorded under the Land Charges Act 1972 before he acquired the land, or it was not so recorded but he was outside the class of protected purchaser. Cf. Horrill v Cooper (1999) 78 P and CR 336, Freer v Unwins Ltd [1976] Ch 288.

90 Initially confirmed in Barclays Bank plc v Guy [2008] EWCA Civ 452 and Stewart v Lancashire Mortgage Corporation [2010] EWLandRA 2009/0086, before rejection in Knights Construction (March) Ltd. v Roberto Mac Ltd. [2011] EWLandRA 2009/1459.

91 L.R.A. 2002, ss. 23-26 as explained by Cooke, E.J., The New Law of Land Registration (Oxford 2003), p. 129Google Scholar; Cooke, E.J., Land Law 2nd ed. (Oxford 2012), p. 68CrossRefGoogle Scholar. For an assessment of purchaser protection, see G. Ferris, “Making Sense of Section 26 of the Land Registration Act 2002” in E. Cooke (ed.), Modern Studies in Property Law Volume II (Oxford 2003), p. 101.

92 L.R.A. 2002, Schedule 4, para. 3(2).

93 The “negative warranty” and “curtain principle”: E.J. Cooke, The New Law of Land Registration (Oxford 2003), p. 128; Cooke, E.J., “Land Registration: Void and Voidable Titles” [2004] Conv. 482, 484, 486Google Scholar.

94 Royal Commission on the Land Transfer Acts: Second and Final Report of the Commissioners (1911, Cd. 5483), para. 80.

95 L.R.A. 2002, Schedule 8, para. 1(1)(a), (b).

96 Ajibade v Bank of Scotland [2008] EWLandRA 2006/0163, at para. [11], Stewart v Lancashire Mortgage Corporation [2010] EWLandRA 2009/0086, at para. [68], and Knights Construction (March) Ltd. v Roberto Mac Ltd. [2011] EWLandRA 2009/1459, paras. [61], [131]. It was anticipated by B. McFarlane, N. Hopkins and S. Nield, Land Law: Text, Cases and Materials (Oxford 2009), p. 534.

97 Human Rights Act 1998, Schedule 1, First Protocol, Art.1. The need for compatibility was appreciated in, amongst others, Kingsalton Ltd. v Thames Water Developments Ltd. [2001] EWCA Civ 20 at paras. [30] and [45], Knights Construction (March) Ltd. v Roberto Mac Ltd. [2011] EWLandRA 2009/1459, at para. [61], and pre-empted by H. Potter, The Principles and Practice of Conveyancing under the Land Registration Act 1925 (London 1934) p. 298, footnote (p).

98 Stewart v Lancashire Mortgage Corporation [2010] EWLandRA 2009/0086, at paras. [71], [78].

99 See Barclays Bank plc v Guy (No. 2) [2010] EWCA Civ 1396, [2011] 1 W.L.R. 681, at para. [35].

100 It has recently been accepted in a stream of case law: Ajibade v Bank of Scotland [2008] EWLandRA 2006/0163, Barclays Bank plc v Guy (No. 2) [2010] EWCA Civ 1396, [2011] 1 W.L.R. 681, Knights Construction (March) Ltd. v Roberto Mac Ltd. [2011] EWLandRA 2009/1459, Paton v Todd [2012] EWHC 1248.

101 See Malory Enterprises Ltd. v Cheshire Homes (UK) Ltd. [2002] Ch. 216, Crawley v Gudipati [2010] EWLandRA 2008/0602, at para. [12]. D. Fox, “Forgery and Alteration of the Register under the Land Registration Act 2002” in E.J. Cooke (ed.), Modern Studies in Property Law (Oxford 2005), pp. 30-31; Sheehan, D., “Rights to Rectify the Land Register as Interests in Land” (2003) 119 L.Q.R. 31Google Scholar; C. Harpum, “Registered Land – A Law Unto Itself?” in J. Getzler, Rationalizing Property, Equity and Trusts (Oxford 2003), pp. 198, 201.

102 Chief Land Registrar v Franks [2011] EWCA Civ 772, Cherry Tree Investments Ltd. v Landmain Ltd. [2012] EWCA Civ 736.