The Land Registration Act 2002 confers “title by registration”. Once registered, title is guaranteed and the legislation protects third parties that acquire an interest in the land in reliance on the register.
However, the legislation also contains provisions enabling the Land Registry to alter the register to correct a mistake, although its powers are limited if the correction would prejudicially affect the title of a proprietor in possession. In such cases, the Registry must obtain the proprietor’s consent unless it fraudulently or negligently caused or substantially contributed to the mistake or it would be unjust not to make the alteration. Unfortunately, there are conflicting views on the scope of the jurisdiction to correct mistakes where third parties have acquired an interest in land in reliance on the register.
The dispute in Knights Construction (March) Ltd v Roberto Mac Ltd [2011] PLSCS 121 arose because the title deeds to land were destroyed in the second world war. The landowner made an application for voluntary registration years later, accompanied by a statutory declaration identifying the property by reference to a plan that included additional land that it did not own. The Registry registered the property by reference to that plan. If the error had been discovered immediately, the mistake could have been corrected without difficulty because the registered proprietor was not in possession of the additional land. However, the proprietor sold the land to a buyer that had not caused or contributed to the mistake. It had bought in good faith and for valuable consideration.
The deputy adjudicator decided that the buyer was not in possession of the disputed land, which made it possible to rectify the register without the buyer’s consent. He also ruled that the paper owner had an overriding interest in some of the disputed land because it formed part of the service area for its building and its occupation of the area in question should have been obvious on a reasonably careful inspection. Consequently, the buyer had acquired the land subject to the paper owner’s rights and could not keep it.
However, the rest of the disputed land was not well cared for and a reasonably careful inspection would not have disclosed that it was occupied. Consequently, the paper owner could not claim an overriding interest. Could the Registry correct the mistake made on first registration now, in view of the conclusiveness of registration laid down in section 58 of the 2002 Act? The first registration of the disputed land had been a mistake – but was its registration in the name of the buyer also a mistake? The deputy adjudicator preferred to interpret the power to correct mistakes widely to enable the Registry to rectify the consequences of mistakes that flow through to the register. Alternatively, if the power to correct mistakes should be construed more narrowly, there was a mistake on the face of the register because it included too much land and the Registry could remove it from the title.
The conflicting decisions reviewed by the judge suggest that the issues of rectification and the Registry indemnities that are available to parties that suffer loss as a result require urgent clarification by a higher court.
Allyson Colby is a property law consultant