Land registration – Alteration of register – Rectification for mistake – Land Registration Act 2002 – Legal charge registered over property in favour of defendant bank – Claimant alleging signature forged – Claimant seeking rectification or alteration of registration – Whether claimant having standing to apply for alteration of register – Whether exceptional circumstance justifying refusal of alteration – Claim dismissed
From about 1993, the claimant had occupied a property owned by the local authority at 47 Moresby Road, London E5 as a secure tenant. By 1999, the claimant had acquired a right to buy the property under section 118 of the Housing Act 1985. She sought to exercise that right and the property was transferred into her name. However, she said that her application had been fraudulently hijacked in the course of which her signature was forged on a number of documents. The property was subsequently transferred to C Ltd which granted a legal charge over the property to the first defendant’s predecessor.
The claimant subsequently sought an order directing the rectification or alteration of the register maintained by the second defendant chief land registrar for the property, pursuant to para 2 of schedule 4 to the Land Registration Act 2002, by deleting the entry in the charges register relating to the legal charge.
The claimant maintained that the transfer of the property to C Ltd was void by reason of her signature, as registered proprietor, having been forged on the transfer document by which her title to the property was transferred to C Ltd. Although the charge was valid as between C Ltd and the first defendant, its entry should be removed from the property’s charges register because it was derived from the allegedly fraudulent transfer to C Ltd. Both defendants opposed the claim on a variety of different procedural and substantive grounds. The first defendant also argued that there were exceptional circumstances which would justify not making the alteration sought.
Held: The claim was dismissed.
(1) The rules applicable to the alteration of the register were contained in schedule 4 to the 2002 Act. The “mistake” concept referred to in para 1(a) and para 2(1)(a) of schedule 4 was not defined. However, it included the case where a person had been registered as proprietor pursuant to a void disposition such as a forged transfer. The further issue was the extent to which so-called “derivative” mistakes came within the scope of para 2(1)(a). That problem arose where there was a void disposition by a fraudster to B of a registered property registered in the name of A. In those circumstances, the legal estate was deemed vested in B even though it was a void disposition: section 58 of the 2002 Act. If B then granted a legal charge over the property to C, that charge was valid. It was now recognised that the power to correct mistakes included the power to remove the registration of such derivative dispositions. The power to correct mistakes extended to correcting the consequences of such mistakes: Barclays Bank Plc v Guy [2010] EWCA Civ 1396; [2011] 1 WLR 681; [2010] PLSCS 312, Macleod v Gold Harp Properties Ltd [2014] EWCA Civ 1084; [2014] 3 EGLR 133; [2014] EGILR 73 and NRAM v Evans [2017] PLSCS 154 and Antoine v Barclays Bank UK plc [2018] EWCA Civ 2846; [2018] PLSCS 49 followed.
(2) If the alteration sought (so far as relating to rectification) affected the title of the proprietor of a registered estate in land, no order might be made under para 2 of schedule 4 without the proprietor’s consent in relation to land in his possession unless it would be unjust for the alteration not to be made. However, if the alteration did not affect the title of a registered proprietor in possession then the court had to direct alteration unless there were exceptional circumstances which justified it not doing so: para 3(3). The phrase “the proprietor of a registered estate in land” applied to the claimant because she was the registered proprietor of the property who was in possession of it at all material times. It did not apply to the first defendant because it was not in possession even if it was to be treated as being the proprietor of a registered estate and not merely of a charge. It followed that the only proprietor relevant in this case for the purposes of para 3(2) was the claimant. However, both the defendants asserted that there were exceptional circumstances within para 3(3) that justified the order sought not being made.
(3) It was common ground that what constituted exceptional in the present context was to be tested applying the definition set out in Paton v Todd [2012] 2 EGLR 19, at para 67, that to be exceptional the fact or matter relied on had to be out of the ordinary course, or unusual or special, or uncommon. It could not be one that was regularly or routinely or normally encountered which had a bearing on the ultimate question whether such circumstances justified not rectifying the register.
The claimant was seeking to place herself in a better position than she could have been in by relying on a void disposition. She had no capital of her own. She rented the property but was in substantial arrears with her rent. On the evidence, it was improbable that she could have afforded to purchase the property otherwise than by selling it on at a profit and retaining the difference between the purchase price (including repayment of any right to buy discount) and the price at which it could be sold on. By not ordering the alteration sought, the claimant would be left in much the same position as she would have been in had the exercise of her right to buy proceeded in the only way that, on the evidence, it could have proceeded. She would be left with the property (now valued at in excess of £1m) but subject to a charge that could be discharged only by selling the property or obtaining replacement borrowing to discharge the first defendant’s secured loan.
Although the claimant had standing to apply for alteration of the charges register of the property by removing the charge, there were exceptional circumstances that justified not doing so.
Christopher McCarthy (instructed by Rainer Hughes Solicitors, of Shenfield) appeared for the claimant; Timothy Polli QC (instructed by Dentons UK and Middle East LLP) appeared for the first defendant; Nicholas Trompeter (instructed by Government Legal Department) appeared for the second defendant
Eileen O’Grady, barrister
Click here to read a transcript of Dhillon v Barclays Bank plc