Mortgage lenders could seek money from the Land Registry if they lose out as a result of fraud following a judgment in the Court of Appeal today. In the judgment the Land Registry was today told to pay a lender almost a £100,000 due to a fraudulent charge that was entered on the register.
The case centres on Swift Group, which offers secured loans. In 2006 Swift gave a homeowner a loan secured against the owner’s house. The loan application was fraudulent, the owner had never applied for the loan and didn’t receive any money. The fraudster hasn’t been identified and the stolen money hasn’t been recovered.
The fraud came to light when no interest was paid and Swift issued proceedings seeking possession of the property. The charge on the title that Swift had relied upon as security was found to be void, leaving Swift out of pocket. The Land Registry deleted the charge from the property’s entry on the register.
Swift successfully sued the registry for £90,000, saying that the “register had been rectified to its prejudice by the deletion of the entry”, the judgment said. That decision was upheld today in the Court of Appeal.
“This case will provide some comfort to mortgage lenders who have been defrauded,” Roger Cohen, a real estate partner at law firm Berwin Leighton Paisner said in a telephone interview. He said the ruling went to the heart of exactly what registration actually did. Cohen isn’t connected to the case.
“The court has found that registration confers rights on the lender even under a forged charge,” he said. “So as things stand, a lender acting in good faith can recover money from the Land Registry even though the charge was forged.”
Lord Justice Patten, one of the judges in the case, wrote in today’s judgment that the case was complicated and highlighted an area of law that should be reviewed. “It is certainly an issue which deserves to be considered in the forthcoming review by the Law Commission of the workings of the LRA 2002,” he wrote.
Swift 1st Limited v The Chief Land Registrar Court of Appeal
Timothy Morshead QC (instructed by the Treasury Solicitor) acting for the Registrar. Josephine Hayes (instructed by Swift Group Legal Department) acting for Swift.
