The Land Registration Act 2002 requires the Land Registry to keep comprehensive and accurate records so that third parties can investigate title with the minimum of enquiries and inspections.
Franks v Bedward [2011] EWCA Civ 772; [2011] PLSCS 174 highlights a flaw in land registration law and practice that undermines these principles. It concerned the accuracy of the day list, which is used to record applications for registration when they are received. The day list plays an essential part in protecting parties that are acquiring interests in registered land. It enables them to make official searches to establish whether any pending applications will have priority over the interest they are proposing to acquire.
In Franks, the Court of Appeal decided, by a majority, that the court can direct the Registrar to restore an application to the day list with retrospective effect – even though it has disappeared from the day list and a third party has acquired an interest in the land without notice of the application.
The case was triggered by a dispute concerning the title to part of a garden. The applicants claimed that they had been in adverse possession of the land, but the adjudicator ordered the Land Registry to cancel their application for registration for procedural reasons. The applicants succeeded in having their application reinstated on appeal, but the registrar had already acted on the adjudicator’s decision and had deleted the application from the day list.
The applicants asked the court to reinstate their application with retrospective effect in order to obtain priority over charges that were created before the outcome of the proceedings was known. The charge holders had no objection but the Land Registry argued that the day list is a “real time” index. Consequently, it would be wrong to backdate an entry because this would undermine the protection provided to third parties that acquire interests in registered land in reliance on the results of official searches.
The court ruled in favour of the applicants. It held that the court has jurisdiction to make a restoration order but indicated that it should not ordinarily exercise it if a “third party interest” has arisen because it cannot ordinarily be a proper exercise of the court’s jurisdiction to make an order that rearranges the priorities established by the legislation.
In a powerful dissenting argument, Arden LJ argued that the law should uphold the sanctity of official searches to give lenders confidence in the results of official searches. Lending against the security of land enables businesses to raise money and individuals to buy their own homes – and makes an important contribution to the economy.
Arden LJ noted that the adjudicator’s decisions are usually communicated to all parties simultaneously. Pending any alteration in the legislation, she suggested that the adjudicator should change his practice to accommodate applications to defer the effect of any order that he is proposing to make, pending the outcome of any potential appeal. This will ensure that disputed applications for registration remain on the day list until the courts finally dispose of the litigation.
Allyson Colby is a property law consultant