Rectification — Beneficial ownership — Company fraudulently obtaining registration as owner of respondent’s land — Company selling land to appellant — Respondent granted rectification of register with retrospective effect to show it as owner — Whether respondent having beneficial ownership of land — Whether retrospective rectification permissible — Whether respondent in actual occupation — Section 82 of Land Registration Act 1925 — Appeal dismissed
The respondent, M Ltd, was a company incorporated in the British Virgin Islands. Until 1999, it was the registered proprietor of development land to the rear of a block of flats that it owned in Manchester. A different company, incorporated in the United Kingdom under the same name, later obtained a land certificate from the Land Registry by deception, and sold the land to the appellant, C Ltd, which was then registered as the proprietor.
Upon discovering this, M Ltd brought an action for rectification of the register under section 82 of the Land Registration Act 1925. The judge considered that M Ltd had, at all times, been in actual occupation of the land, with the result that its right to seek rectification had amounted to an overriding interest that prevailed over C Ltd’s title by virtue of section 70(1)(g) of the 1925 Act. Although he found that the state of the land meant that any serious use or occupation was unfeasible, he considered that basic maintenance work done to the land, and its use in the course of work done to the flats, was sufficient to amount to actual occupation. He concluded that C Ltd’s title was subject to the continuing rights of M Ltd, as beneficial owner, and its consequential right to be restored as the legal, registered proprietor, so that no purpose would be served by refusing rectification. He accordingly ordered rectification, with retrospective effect, and further held that C Ltd would be liable for trespass on the basis that M Ltd had been in possession of the land for the whole time.
On appeal, C Ltd did not dispute that an order for rectification was appropriate, but sought to avoid liability for trespass by contending, inter alia, that it, and not M Ltd, had enjoyed beneficial ownership of the land and hence the right to possession of it. C Ltd further submitted that there was nothing in the 1925 Act to warrant retrospective rectification.
Held: The appeal was allowed in part.
1. Section 69 of the Act conferred only a “legal estate” upon a proprietor at registration, since, unlike the provisions for first registration in section 5, that estate was not expressed to be vested “together with all rights privileges and appurtenances”. Nor could the transfer to C Ltd confer beneficial ownership upon it as a registered “disposition” of the land under section 20. The transfer could not, in law, have any effect in itself, and so did not amount to a disposition. It followed that C Ltd’s rights, as the registered proprietor were subject to those of M Ltd, which had remained the beneficial owner. M Ltd accordingly had sufficient standing to sue for trespass, even without seeking rectification of the register, because it was the true owner and had the better right to possession: Chowood v Lyall (No 2) [1930] 2 Ch 156 at pp163-164 applied.
2. There was no jurisdiction to order rectification with retrospective effect under section 82: Freer v Unwins Ltd [1976] Ch 288 and Clark v Chief Registrar [1993] Ch 294 considered. There were suggestions elsewhere in the Act that parliament had not intended to confer such a jurisdiction. For instance, no solution was provided for situations where the priority of charges depended not upon the date of registration, but upon the order in which the entries were made in the register. Further, if the court had power to order rectification with retrospective effect, it would also need a power to do so on terms that did not prejudice third parties whose interests did not require registration, and no such power existed: Kingsalton Ltd v Thames Water Developments [2001] EWCA Civ 20; [2001] NPC 16 considered. Moreover, a person who succeeded in obtaining rectification, but suffered loss, might be eligible for an indemnity.
3. The correct approach to the question of actual occupation, where the land was uninhabitable, was that residence was not necessary but that there had to be some physical presence, with some degree of permanence and continuity: see Strand Securities Ltd v Caswell [1965] Ch 958. The judge had correctly applied those principles, and his finding of fact that M Ltd was in actual occupation was not, therefore, susceptible to challenge.
John Martin QC and Richard Oughton (instructed by Aziz Sauders) appeared for the appellant; John Dagnall (instructed by Pannone & Partners) appeared for the respondent; Nicholas Caddick (instructed by the Treasury Solicitor) appeared for the second respondent chief land registrar.
Sally Dobson, barrister
