The land registration system in
The High Court decision in Barclays Bank plc v Guy [2008] EWHC 893 (Ch) illustrates how these principles apply in practice. The proceedings concerned the validity of a charge that had been registered following the transfer of land to a new owner. The previous proprietor claimed that he had been induced to complete the transfer as a result of a fraud, and that part of the purchase price was still outstanding. He asked the court to rectify the register in his favour and to set aside the charge on the grounds that it was invalid or ineffective.
During the proceedings, the proprietor of the charge sought a declaration that it was entitled to sell the property as mortgagee, and to vest the property in a purchaser free from any interest or claims by the previous proprietor. The High Court upheld the lender’s claim.
The judge ruled that the transfer to the new owner was voidable, and not void. It was not a forgery, and the fact that it had been delivered subject to conditions under which it should have been held did not prevent the document becoming a deed. Consequently, the transferee was properly registered as the proprietor of the land.
The Land Registration Act 2002 provides that registration is conclusive. Registration vests the legal estate in the registered proprietor, even though the legal estate would not otherwise have become vested in that person: see section 58.
Consequently, the registered proprietor’s title had been conclusive, unless and until it was avoided, and a registered proprietor would be entitled to charge property as security for a loan. At the date on which the charge was taken and registered, the transfer had not been avoided. Therefore, the charge had been correctly registered, and the lender was entitled to exercise its powers as mortgagee to sell the land to repay the loan.
The judge indicated that the previous proprietor could have protected his position by registering a unilateral notice against the title as soon as he realised that he had grounds to apply to have the transfer set aside. This would have protected any rights that he had against subsequent buyers and lenders.
There was no need for the judge to consider whether the charge would have been effective if the transfer had been void, rather than voidable. However, the judge quoted a lengthy passage from an authoritative works on land registration law suggesting that the Land Registration Act 2002 has changed the law substantively. Practitioners must now await further judicial guidance to establish whether the rule that registration is conclusive has a Midas touch in cases like this too.
NB: There has been a Court of Appeal decision [2008] PLSCS 92 – this practice point will be updated once the transcript is made available.
Allyson Colby is a property law consultant