Land registration – Set aside – Standing – Section 108(2) of the Land Registration Act 2002 – Appellant applying to First-tier Tribunal (FTT) to set aside deeds purporting to cancel restrictive covenants and impose fresh covenants – Appellant not being party to deeds – FTT holding applicant had no standing to apply to set aside deed – Appellant appealing – Whether appellant having standing to make application – Whether appellant liable for costs of two respondents – Appeal dismissed
The appellant applied to the First-tier Tribunal (FTT) to rectify or set aside documents under section 108(2) of the Land Registration Act 2002. The sole respondent was the Chief Land Registrar. The application referred to deeds which were said to affect 550 registered titles. The application referred to one title, as a sample, relating to 53 The Broadway, Thorpe Bay, Southend-on-Sea. The appellant was not party to any of the deeds. The appellant had owned a house in the area which was said to be subject to restrictive covenants. She sold that house in 2013 and did not enter into a deed of release and imposition of new covenants. Her case was that the deed was fraudulent because the second respondent misrepresented the position to the counterparty to the deed. She said that the deed falsely stated that the second respondent had the benefit of the covenants and falsely purported to release the covenantor from the former covenants when the benefit of those covenants was vested in a number of third parties who were not parties to the deed and who therefore were not parties to the release of the former covenants.
The application stated that the Land Registry had registered the deeds in question knowing they were fraudulent and specified the remedy sought by saying that the deeds ought to be removed from the registered titles because they created a false legal position which would cause both confusion and cost. It was alleged that the deeds were part of a fraudulent scheme in which the Land Registry was complicit. It was also alleged that the deeds recorded an unconscionable transaction which had been entered into by the counterparty to the second respondent by reason of fear, duress and misrepresentation. The application then set out contentions as to the history of the ownership of the land which was the subject of, or potentially affected by, the deeds.
The application was dismissed on the ground that the appellant did not have standing to make such an application. The appellant appealed to the Upper Tribunal.
Held: The appeal was dismissed.
(1) The appellant’s challenge to the deeds involved an assertion that they were voidable by reason of fraud, or misrepresentation or duress or on some other ground that made the deeds voidable. The only person who could apply to set aside the deeds was the innocent party. The general principle was that the innocent party was given a choice whether to apply to set aside a voidable contract or to affirm it and to continue to be bound by it. If the innocent party took action which the law said amounted to affirmation of the voidable contract, that party no longer had the choice to seek to set it aside. It was wholly incompatible with those principles that someone who was not a party to a voidable contract could apply to set it aside irrespective of the wishes of the innocent party to the contract and irrespective of whether they had already affirmed the contract. The right to apply to set aside a voidable contract was an equitable right (a mere equity). A person who had a right of that kind derived it from the contract and the relevant equitable rules. The appellant, who was not a party to the relevant deed nor involved in the facts which rendered the deed voidable, had no such right. There were rules as to how such a right could be transmitted and the existence of those rules was incompatible with the notion that anyone could apply to set aside a voidable contract: Mortgage Express Ltd v Lambert [2016] EGLR 41 followed.
(2) Section 108(2) of the 2002 Act provided that the FTT could make an order “which the High Court could make” setting aside a document. If the High Court could not make the order which the appellant sought in this case on her application then neither could the FTT. It was not possible to read section 108(2) as if it had said that “any person” could apply for an order if such an order could be made by the High Court on the application of the innocent party to the contract. That conclusion was strengthened by the further reference in section 108(4) to the general law as to the effect of an order of the High Court setting aside a contract applying also to an order under section 108(2). It followed that the appeal would be dismissed.
(3) The power to make orders for costs was conferred by rule 10(1)(b) of the Tribunal Procedure (Upper Tribunal) Rules 2008, read with rule 13(1)(c) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013. As the appellant’s appeal had been dismissed, she had in principle to pay the other parties’ costs of successfully resisting the appeal. In the present case, where the appellant applied to the FTT to set aside a large number of deeds to which the second respondent was a party, the obvious respondent would have been the second respondent. The appellant did not make it a party to her application but the FTT had ordered that it should be served with a copy of the application and of its decision to grant permission to appeal. If the appellant was to argue that the deeds should be set aside it was at least appropriate and might even have been necessary to make the second respondent a party to the appeal. If the first respondent had not already been a respondent, he would probably have been allowed to intervene because of the point of interest to the Land Registry as to the working of the 2002 Act and the fact that the appellant had made a large number of serious allegations against the Land Registry. Both respondents had filed respondent’s notices and skeleton arguments which were helpful to the court for their analysis of the legal position and for the citation of relevant authorities. If the appeal had been confined to the question of the interpretation of section 108(2) of the 2002 Act, the appellant would have had a reasonable argument that she should pay one set of costs only. However, her application to the FTT accused both respondents of fraud. It was clear that each respondent had separate interests and it was reasonable for both of them to be represented in response to the appeal. Accordingly, it was reasonable to order the appellant to pay the costs of both respondents.
The appellant appeared in person; Katrina Yates (instructed by the Treasury Solicitor) appeared for the first respondent; Simon Brilliant (instructed by Wallace LLP) appeared for the second respondent.
Eileen O’Grady, barrister
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