An order made under s19 of the Landlord and Tenant Act 1987 (being an order requiring transfer of a freehold) takes effect as an interest in land from the moment it is made.
In Prescott Place Freeholder Ltd and others v Batin and another [2023] EWHC 1445 (Ch), the court considered the priorities of interest that existed where an order had been made under s19 and equitable leases had subsequently been granted.
The s19 order had been made on 25 October 2019 and required that the relevant freehold be transferred to the first claimant, either on the same terms as had been acquired by the first defendant or on terms decided by the tribunal. A unilateral notice in respect of the order was entered on the charges register of the freehold title at HM Land Registry on 11 November 2019.
After the order was made (and before 14 January 2021), equitable leases were executed by the defendants in favour of the second defendant at no premium and for minimal rate. In its earlier related judgment, ([2023] EWHC 435 (Ch)), the court had concluded that such leases were legally permissible but found that the purpose of these was to devalue the freehold interest that would be acquired under the s19 order. On 15 January 2021, an interim injunction was granted restricting the second defendant’s ability to register interests arising out of the equitable leases with HM Land Registry.
The first claimant wanted the injunction to be made final. The second defendant (obviously) opposed this. Moreover, he wished to be permitted to register a notice in respect of the equitable leases against the freehold and/or to ensure that at the time of transfer to the first claimant he be in “actual occupation”, arguing that the equitable leases would then constitute an overriding interest.
The court considered this aspect. It applied general principles in order to ascertain whether the s19 order created an “interest in land” or conveyed a purely personal right and concluded that the s19 order was an interest in land from the moment it was made. As the correct analysis of s28 of the Land Registration Act 2002 is that it preserves the rule that competing equitable rights rank in the order in which they were created, when the first claimant acquires the freehold the second defendant’s interest under the equitable leases (even if protected) will be postponed to the first claimant’s interest.
Additionally, the court had no doubt that it had the power to make the final injunction requested, and in a belt-and-braces move made the injunctions sought. The conduct of the defendants had been unconscionable, not because the court disapproved on a moral level, but because it represented a concerted effort to deprive the s19 order of a good part of its intended effect. The court exercised its discretion to prevent such behaviour succeeding.
Elizabeth Haggerty is a barrister
