Option to renew underlease–Option not registered as a land charge, void as against a purchaser–Head lease assigned and title to it shortly afterwards registered–Assignee of head lease subsequently acquires freehold reversion–Freehold merges with head lease and absolute title registered, subject however to underlease–Option provision in underlease held to affect freehold–Lessee entitled to extension
This was a
preliminary point upon an originating summons by Mr Alan William Kitney, of Oak
Knoll, Furzefield Road, Beaconsfield, Buckinghamshire, for a declaration that
he was entitled to an extension of a lease of two shops in Harrow, Middlesex,
for a further term of 21 years from December 25 1974. The defendants were MEPC
Ltd, of Brooke House, 113 Park Lane, London W1, in whom the reversion expectant
upon determination of the lease was now vested, and Greater London Properties
Ltd, of 22 Conduit Street, London W1, the original lessors.
Mr M Browne QC
and Mr I L B Romer (instructed by Dale & Newbery) appeared for the
plaintiff, and Mr P M F Horsfield (instructed by Clifford-Turner & Co)
represented the first defendants. The second defendants took no part in the
proceedings.
Giving
judgment, WHITFORD J said: I have to consider a preliminary question in a
proceeding in which the plaintiff is a Mr Kitney and the defendants are two
companies, MEPC and Greater London Properties Ltd. Only MEPC are, however,
concerned with the preliminary point. The facts relevant to this point are not
really in dispute. In December 1932 the second defendants were granted a
99-year building lease of a property in Harrow, Middlesex. Hereunder in April
1933 the second defendants granted a lease, which I shall call ‘the
underlease,’ to a company, GB Outfitters Ltd. It was an underlease of two shops
and living accommodation over them. It was granted for a term of 42 years at a
yearly rental of £700. The only relevant provision for present purposes is to
be found in the proviso to clause 5 (2). The proviso, which is in substance an
option to renew, is in these terms:
Provided
always and the lessors hereby agree that if the lessee shall be desirous of
extending this lease for a further term of 21 years from the expiration of the
term hereby granted, and of such desire shall give to the lessor six months
previous notice in writing, then and in such case, provided the lessee shall
have punctually paid the rents hereby reserved and observed and performed all
the covenants and conditions on the lessee’s part herein contained, this lease
shall be continued for such further term of 21 years at the same rents as are
hereinbefore reserved, and subject to the same terms covering the conditions as
are herein contained except this proviso.
A memorial of
this lease was recorded in the Middlesex Deeds Department of the Land Registry
in June 1933. In October 1935 the underlease was assigned to Peters Outfitters
Ltd. In March 1946 it was assigned to the plaintiff and his sister-in-law, Mrs
E S Kitney, jointly. They occupied the shop premises, where they carried on the
business of gentlemen’s outfitters under the name of A E Kitney, also
collecting the rents of the residential flats, until December 5 1949, when the
underlease was assigned to a company, W & G Kitney Ltd. This latter company
changed their name to Alan Kitney Ltd in 1965. The underlease was assigned to
the plaintiff in October 1966. The plaintiff duly and understandably gave
notice of his desire to renew the underlease, and it is accepted that the
notice was properly given, but his right to enforce the option is contested.
I must turn
briefly to the changes of interest and title on the lessor’s side. The second
defendants assigned their lease to a company, Monument Property Trust Ltd, in
January 1934, and that company in their turn assigned it to the first
defendants on July 25 1947. In October 1947 this leasehold title was registered
at the Land Registry. In April 1962 there was a conveyance of the freehold, and
the freehold title was registered for the first time on April 16 1962. In March
1969 the freehold was transferred to the first defendants; the freehold and the
leasehold merged, and in May 1969 the first defendants were registered as
proprietors with title absolute. The first defendants assert that although the
plaintiff served his notice under and in accordance with the terms agreed in
the underlease, this is an option which he is not entitled to exercise because
it is a charge registrable under the Land Charges Act which has never in fact
been registered. The plaintiff accepts that in this court, in the light of the
decision of Buckley J in Beesly v Hallwood Estates Ltd [1960] 1
WLR 549, it is not open to him to challenge the assertion that this option to
renew is a registrable charge. He also accepts that it was not registered as a
land charge prior to registration of the leasehold and freehold titles. It
being agreed that this is a class C (iv) charge, the effect of section 13 of
the Land Charges Act falls next to be considered. Section 13 (1) provides that
certain class A charges shall be void as against purchasers unless the charge
has been registered in the register of land charges before completion of the
purchase. Section 13 (2) deals with the effect of failure to register, inter
alia, class C charges, and is accordingly the relevant subsection to be
considered. Here again these charges are declared void as against purchasers
unless the charge has been registered. But there is a difference, because the
requirement is that the charge shall be registered in the ‘appropriate’
register before completion. There was a certain amount of debate on the issues
as to whether the Middlesex Deeds Department of the Land Registry was in 1934
an ‘appropriate’ register for the purposes of section 13 (2),
and to July 1947, when it was acquired by the first defendants, nothing was
registered anywhere else. What was registered in the Middlesex Deeds Department
was a memorial of the lease, and the option was not specifically entered upon
that register.
The first defendants
at this stage stand in this position: they assert that as against them the
charge is void. They say that it is a registrable charge and was never
registered as such in any registry before their purchase was completed. I must
now turn to section 23 (1) of the Land Charges Act, which is (omitting the
words which are not of relevance to the particular issue which I have to
consider) in substance in these terms: ‘As respects . . . land charges . . .
required to be registered . . . after the commencement of this Act, this Act
shall not apply thereto, if and so far as they affect registered land, and can
be protected under the Land Registration Act 1925 by lodging or registering a
creditor’s notice, restriction, caution, inhibition or other notice.’ So if the land be registered land and the
interests can be protected by some appropriate notice, then the Land Charges
Act is of no effect. The plaintiff says that this is registered land and that
his option can be protected, and has indeed been protected, by the lodging of a
notice of his lease against a registration of the freehold title. That there is
a note of the lease on the land register stands admitted. What the position was
when the leasehold title was registered is not known and apparently cannot now
be ascertained. But against the registration of the defendants’ title absolute
is found on the charges register under head 2, ‘Lease dated April 2 1933 of the
land tinted pink on the filed plan to GB Outfitters Ltd for 42 years from
December 25 1932 at the rent of £700 and insurance rent.’ How the entry got there no one apparently
knows, nor is it known whether a corresponding entry was made against the
registration of the leasehold title. At all events, the plaintiff says, ‘This
is registered land. The lease upon which I base my case is registered, and that
registration has protected my option.’
Section 23 of the Land Charges Act provides that the Act shall not apply
to land charges affecting registered land, which by definition means land
registered under the Land Registration Act 1925 or any enactment replaced by
that Act.
By the
provisions of section 5 of the Land Registration Act, the first defendants’
registration of their title took effect subject to encumbrances appearing on
the register–in this case the underlease–and subject to over-riding interests.
Section 20 of the Act provides that dispositions of land registered in absolute
title shall confer an estate subject only to encumbrances on the register and
over-riding interests. Although under section 48 the plaintiff, or his
predecessors as underlessees, could have applied to register their underlease
under and in accordance with the terms of the Act, they never in fact did so.
Section 49 omits the separate registration of various other interests including
land charges. At the date the underlease was entered into, there was no
registration under the Land Charges Act. A memorial of the lease was entered
upon the Middlesex Deeds Register, but in 1937 Middlesex became a compulsory
area and that old register was closed. The entries upon the register can be
seen by the land registrar but by nobody else. The first certain entry on the
land register is the first defendants’ leasehold title in 1947. This title was
registered 30 years ago. When the freehold title was first registered in 1962,
as when the first defendants’ title was registered in 1969, the position is as
I have already stated it. The first defendants’ interest has been registered
for nearly 30 years, and the freehold title has been registered from the dates
stated. The first defendants say that this is all irrelevant, for they acquired
their interest at a time when the land was not registered land and when the
charge was not registered. At the time of their acquisition, section 13 (1)–so
they suggest–must necessarily have applied, and, having once applied it, it is
their argument that they are left free thereafter, for they purchased the land
before the land was registered land and completed before any registration was
effected. The exception in respect of registered land is not, they say, to be
regarded as applying to land which was not registered at the date of any
relevant transaction, though it may subsequently have become registered land.
Further, they say that in any event the charge on the register relates only to
the underlease, and there is no mention of the option, and in any event,
neither actual nor constructive notice of the option has any relevance to the
point at issue.
I am plainly
considering legislation in which the intention is that on one register or
another there should be sufficient notice of interests touching land to enable
prospective purchasers and other interested persons to know how far the land in
question may be encumbered. In the case of registered land, it is plainly considered
that the appropriate register is the land register, and it is no doubt for that
reason that there is an express exception so far as the Land Charges Act is
concerned against any necessity to register under that Act if the land be
registered land. At the date when the first defendants acquired the interest on
which they now rely, the land was registered land. The option was not only a
charge which could be protected, it was in my judgment protected by notice of
the lease. I am of the opinion that counsel for the plaintiff was right when he
submitted that this option is effective in the circumstances which I have above
outlined, and that the matter stands concluded by the entry on the register,
for this reason: that the first defendants are in fact suing in respect of
their possession of the freehold interest, and by the date that they acquired
that the land in question had become registered land. There were two other
matters on the plaintiff’s side to which I should make brief reference. It was
suggested that the entry in the Middlesex Registry would in itself be adequate
to protect their position, but I do not think that this is so, having regard to
the particular provisions of section 13 of the Land Charges Act. I do not think
it was an ‘appropriate registry.’ It was
not a register appropriate to the registration of an interest by way of land
charges on the material to which I have been referred. Secondly, it was
suggested as an alternative line of defence to the argument of the first
defendants that it was open to the plaintiff to assert that he had an
over-riding interest which was protected by reason, as I understood it, of the
occupation of the premises by himself and his sister-in-law and the fact that
they were collecting the rents for the residential flats over the period to
which I have already briefly referred. This argument, bringing into
consideration, as it does, other provisions under the Land Registration Act, is
essentially dependent upon the land being registered land as at the relevant
date, and as at that date the only registration that was noted was the entry on
the Middlesex Deeds Register. That was not, on the information available to me
and upon the submissions made by counsel with reference to the relevant Acts,
an Act which was in effect replaced by the Land Registration Act, and therefore
I am not of the opinion that this point either is good. It was said by counsel
for the defendants that if it were held that the entry on the land register
defeated his clients’ claim, he would seek to rectify the register. It was
agreed during the hearing that it would be premature at this stage to consider
any question of rectification, for the necessary information is not available.
Counsel for
the plaintiffs seeks an order for the execution of a new lease in terms to be
settled by the court in the absence of agreement. In the absence of agreement,
in my view, the consideration of the terms upon which a new lease should be
granted ought to be deferred, and I accordingly propose to declare that the
plaintiffs are entitled to a new lease in terms to be settled by the court, if
not agreed.
A declaration
was made accordingly, subject to any claim
pursue. His Lordship said that if leave to appeal was necessary, he would grant
it.
