It is simple to register a unilateral notice but it can be a complicated process to remove it
Registration of a unilateral notice (a “UN”) under section 34 of the Land Registration Act 2002 (the “2002 Act”) requires simply completion of a short UN1 form and payment of a modest fee. Provided the UN1 reveals a claim/entitlement to an interest, it will be registered without reference to the proprietor. While not confirming validity of the interest, registration gives it priority if the claim is valid (section 32(3) of the 2002 Act). Registration of a UN often affects the ability to sell or charge a property.
The UN1 need only give the briefest details of the interest claimed. Such details need not be that precise (Bank of Scotland v Joseph [2014] 1 EGLR 21).
There are some safeguards against misuse. A false claim may amount to an offence under section 1 of the Fraud Act 2006. It is also a breach of section 77(1)(b) of the 2002 Act “to apply for entry” of a UN without reasonable cause. Such liability may extend to the individual completing the form (see Anderson Antiques (UK) Ltd v Anderson Wharf (Hull) Ltd [2007] PLSCS 203, where a company director was held personally liable in respect of a UN1 submitted by his company).
While section 77 is intended to discourage misuse, in Fitzroy Development Ltd v Fitzrovia Properties Ltd [2011] PLSCS 184, Morgan J held that “reasonable cause” requires no more than a “reasonably arguable case” for the interest claimed. The court left open whether the duty arises only on submission of the UN1 or whether it is a continuing duty.
Removal of a UN is via two routes:
The Land Registry route
The Registrar
Under section 36 of the 2002 Act and rule 86 of the Land Registration Rules 2003 (the “2003 Rules”), an application on form UN4 is made to the Registrar by the proprietor to “cancel” the UN. If there is no response to the application within 15 business days (which may be extended to 30 business days), the Registrar will cancel it. If there is objection to cancellation, the Registrar must consider the merits of the objection. If “groundless”, the Registrar can cancel the UN (section 73(6) of the 2002 Act). A costs order may be made in respect of costs incurred in proceedings before the Registrar, but only if the other party has acted unreasonably (section 76 of the 2002 Act and rule 202 of the 2003 Rules).
If there are grounds to oppose cancellation, a negotiation period is allowed for and if unresolved the dispute is referred to the First-tier Tribunal (Property Chamber) (the “FTT”) under section 73(7) of the 2002 Act.
The FTT’s role
The FTT’s jurisdiction stems from sections 108 and 110 of the 2002 Act and a “requirement” of the FTT is enforceable as an order of the court (section 112). Under section 110, the FTT may direct a party to issue court proceedings instead.
FTT procedure is governed by the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (the “2013 Rules”). Rule 28(3)(c) requires the FTT to decide which party is applicant and which respondent. This is important. The applicant has the burden of proof and only an applicant can be required to give security for costs (rule 12). The applicant is required (rule 28(4)) to file a statement of case and supporting documents, receipt of which trigger the filing of a “response” (rule 30). The FTT will likely issue such further directions as are required and the matter will proceed to a hearing. A respondent may apply for summary judgment striking out the case (rule 9(3)(e)) but an applicant may only apply to debar the respondent from defending (rule 9(7)).
The court route
Court proceedings may be issued even though the cancellation process before the Registrar or FTT is under way.
The High Court and County Court (section 132(3) of the 2002 Act) have power under paragraph 2 of Schedule 4 of the 2002 Act (and rule 126 of the 2003 Rules) to make an order “altering” the register to correct a mistake or bring the register up to date. Such power may be exercised to remove a UN, where there is no underlying right justifying it. Morgan J in Nugent v Nugent [2014] 1 EGLR 15 held that this jurisdiction could be exercised only after a full determination of the merits (by summary judgment or trial).
Summary judgment
If the case is suitable, a summary judgment application under CPR 24 will provide a relatively swift result. In a claim for specific performance, rescission and/or forfeiture/repayment of a deposit, an application can be made as soon as the claim is issued and before service of the Particulars of Claim, with the return date for the hearing being four, not fourteen days (Practice Direction 24, para 7).
Beware of the level of judge. Practice Direction 2B precludes a Chancery Master or District Judges (sitting in the Chancery Division) from making a declaration or from altering the register in anything other than a “plain case” (save with the Chancellor of the High Court’s permission).
Inherent jurisdiction
In Nugent Morgan J held that the High Court retains an inherent jurisdiction to cancel or vary a UN, without resolution of the underlying dispute. This jurisdiction is in addition to that in Schedule 4 and is suitable in an urgent case.
Such an application, Morgan J suggests, would be treated like an application for an interim injunction. If the proprietor wishes to sell or charge the property, in a very clear case the court may order removal of the UN. It is more likely (particularly where the beneficiary is seeking specific performance) that, at best, the proprietor will secure an undertaking in damages, as a condition of the notice remaining on the register. Such undertaking removes the need for reliance on breach of section 77 of the 2002 Act, but does not permit disposal of the property. If removal is the absolute goal, in an appropriate case it would be open to the proprietor to offer an undertaking in damages as a term of removal.
Neither route provides a means of cancellation comparable with the ease of registering a UN. The Land Registry route provides a specialist and likely cheaper, but slower, means of removal.
Michael Buckpitt is a barrister at Tanfield Chambers
