Please enable JavaScript.
Coggle requires JavaScript to display documents.
Indefeasibility: Alteration of the register & Indemnity - Coggle…
Indefeasibility: Alteration of the register & Indemnity
Tension
indefeasible
title (s 58 title promise, s 29 priority promise) vs.
reflect
the general law
should register be permanent
mirror
?
if can change often, why have register
fairness: theres a fraud, but third party already paid
"Title promise" and alteration
can A seek alteration against B, where transaction is void/voidable?
void
= never existed
e.g. forged signature
voidable
: valid until rescinded
e.g. B tricked A and A signed
typical scenario: Fraudster forge A's signature, sell to B, B pay (void disposition)
once B registered, owner by s 58
1)
Starting point
: registration --> Title
(s 58
title promise)
2)
A's claim to alter register
against B
LRA 2002 s 65 and
Sched 4
Grounds of Alteration (Sched 4)
1) Correcting a mistake
would the correction prejudicially affect the current registered proprietor's title?
NO
MERE ALTERATION
YES
RECTIFICATION
Defence
potentially available to RP in possession
Indemnity
potentially payable to losing party (Sched 8)
2) Bringing the register up to date
MERE ALTERATION
3) giving effect to any estate, right or interest expected from the effect of registration
Grounds of alteration
when pursuant to a court order
Correcting a mistake
Mistake
=
no underlying legal basis
for B to become RP
Rectification = sub-species of alteration
what is a
mistake
?
transaction underlying a disposition is
VOID
Land registry had NO RIGHT to register B
if it is
voidable
, land registry make
NO mistake
BUT if before B register A rescind, then land registry made mistake
void vs voidable (rescinded or not rescinded
Examples
Swift 1st
: mistaken registration of forged disposition
mortgage charge forged, VOID
Parshall v Bryans
double registration, one correct one mistake
Baxter v Mannion
mistaken registration of alleged squatter
(failed to satisfy Sched 6 requirement)
LRA 2002 Sched 4 Para 2
Bringing the register up to date
something happen post registration, registration need to be brought up to date
e.g. when transaction is
VOIDABLE
at the time of registration
NRAM v Evans
Antoine v Barclays Bank
registration pursuant to court order where court order was valid unless and until set aside
Extent of court's duty to order alteration
court under duty to alter
UNELSS
"exceptional circumstances
which justify not doing so"
1) are there exceptional circumstances?
2) does this circumstances JUSTIFY not making alteration?
LRA 2002 Sched 4 para 3(3)
the "possession defence"
(only for
rectification
claims)
another reason why alteration does NOT happen
LRA 2002 Sched 4 Para 3
where alteration involves r
ectification against a proprietor in possession
UNLESS
a) he has
consented
to alteration
b)
fraudulently
or
carelessly
contributed to mistake
c) would be
unjust
not to alter
Patel v Freddy's
if b/ the alleged disposition and registration
had
suspicion
or if through
proper care
would found out
then = fraudulently/carelessly contributed to the mistake
Baxter v Mannion
meaning of
unjust
UNLESS strong contravening factor, always be unjust NOT to rectify mistake in register
its a matter of simple justice
even though B has possession defence,
court order rectification against B
A end up getting land back
Walker v Burton
ownerless land mistakenly registered under the Brutons
CA refuse to rectify, dont want land become ownerless
Brutons rely on possession defence
no longer dominant force given
Baxter
(simple justice)
Indemnity
land registry pays if theres mistake in register
LRA 2002 Sched 8
CANT recover if C loss resulted from their own fraud/carelessness
sched 8 para 5
Registrar's right to recover indemnity against person responsible for loss
Sched 8 para10
If B paid the fraudster, B's title prejudicially affected, land registry indemnify B
IF B living in property + unjust to rectify, B keep title, A will be indemnified
If both innocent --> loser get money
land registry try get money from fraudster( very unlikely )
relatively recent controversy
where the underlying disposition is void,
A retains beneficial ownership
"Mallory one"
Fitzwilliam v Richall Holdings Services
A is RP, fraudster forge a transfer to B (innocent purchaser)
B in possession, A sought to recover, claim Sched 4
orthodox: mistaken registration of B, which if alter would prejudicially affect B's title, A can recitifcation
B could rely on possession defence, court decide unjust or not & theres also indemnity
COURT DECIDE DIFFERENTLY
B did become legal owner through s 58 BUT held on TRUST for A
Mallory
one argument: trust generated upon being registered pursuant to a fraud disposition
Mallory
was decided under old law
orthodox against this: s 58 would make B the FULL legal + beneficial owner, No trust
if TRUST --> alteration WONT COUNT AS RECTIFICATION
correction of mistake --> will NOT prejudicially affect B's title
a trust in A's favor, B's title in the 1st place is already encumbered by this trust
1 more item...
NO rectification, just alteration
B CANNOT have possession defence and NO indemnity
denying possession defence and denying indemnity
favoring A at the expense of B
no trust is generated, but A get proprietary right to seek alteration/rectification
"Mallory two"
Swift 1st
A is RP, fraudster forged mortgage over A's title in favor of B (leder)
VOID
--> registered by mistake
can B get indemnity (is it rectification OR mere alteration?)
following
Fitzwilliam
, B got a bare legal charge, removal of which deosnt prejudice B's title
no indemnity payable to B?
CA in
Swift 1st
TURNED ITS BACK on
Fitzwilliam
reject
Mallory
one
when B registered (s 58) got FULL LEGAL+BENE title, NO TRUST
when B title removed would prejudicially affecect B's title --> rectification? BUT NO
Mallory Two
A's right to seek rectification or alteration itself = PROPERTY RIGHT
if A in AO --> preventing an indemnity from being available
B is BOUND by A's right, when A seek correction, DOESNT prejudicially affect B's title
--> NOT RECTIFICATION
--> NO INDEMNITY
VERY SUS
even if A have this property right, seems WRONG to treat it as overriding interests
1) interest only overriding IF exist PRIOR to disposition
1 more item...
2) overriding interest ONLY apply in three party priority disputes
2 more items...
can B get
indemnity
?
Mallory 2
SHOULD meant that alteration wouldnt prejudice B --> NO rectification --> NO indemnity
BUT NO
ROUNDABOUT way to reward indemnity
Sched 8 para 1(2)(b) - LOSS for indemnnity = register rectified against someone in good faith (under forged disposition)
1 more item...
CA: since theres loss = alteration prejudice B's title --> is rectification --> indemnity payable
super ARTIFICIAL
3 more items...
Conclusion
: NO TRUST when B registered -->
Mallory
one gone
when B registered A MIGHT have proprietary right to seek alteration of register -->
Mallory
two
no generation of trust in A's favor except where B is fraudulent and responsible for taking A's tile
Nasrullah v Rashid
whether when B registered pursuant to a void forged disposition, a trust in favor of A is every generated?
CA: in
Swift
bank was innocent
when there is forged disposition to innocent party which is registered, NO TRUST
when B innocent, NO TRUST
BUT if B fraudulent --> TRUST ARISE in A's favor
A can alter register but NO indemnity payable to B since its NOT rectification
any correction to register would NOT be prejudicial to B cuz B only has technical legal title
B CAN'T rely on sched 8 para 1(2)(b) cuz B not acted in good faith
A get their title back, B CANNOT get indemnity
"Title promise" and alteration: can A claim to have register against C, where A-B disposition is void?
(Three party scenario)
A--B forged disposition, B by mistake the new RP
registration - s 58 title promise
then B creates interest in favor of C (transfer or loan)
can A undo registration against C?
Possible factual configurations
Fretwell v Graves
: Freehold-freehold-freehold
both A and C innocent, A want title back
Barclays bank v guy
: freehold - freehold - charge
both A and C innocent
forged conveyance A--> B, B charged property to bank for loan
Odogwu v Vastguide
: freehold - charge - freehold
policy tension
favor private owner (A) vs. title promise (B)
purchaser vs. prior owner
"easy come, easy go"
if C get title easy, then C's own title vulnerable to being lost in future frauds
not like favor C = favor purchaser, can make them more vulnerable
Competing approaches
former orthodox: C's title is indefeasible
C's title indefeasible, can't be touch by A
purpose of register is that C (innocent third party) can rely on B being registered
when B registered - is owner (s 58) and owner power (s 23)
mirror is
strong mirror
"midas effect" of
s 58: turning bad disposition to B into gold upon B's registration
Stewart v Lancashire Mortgage Corp
A + B --> B
B charged property to lender C, get loan
B die, A try get back title
Court: upholding mirror principle, s 58 --> preference for certainty of title > property rights of victim of fraud
judicial retreat from orthodox view
: C's title is vulnerable
increasing tendency favor A > C
judges try circumventing s 58, s 23/26 (owner's power)
1) Mistake interpreted broadly
give broad meaning to correcting mistake (sched 4)
so to say C must be removed
Ajibade v Bank of Scotland
A RP, transfer forged to B, B mortgage to C
A and C innocent
when B register its a mistake
to correct this
must undo all consequence of that mistake as well
B could be removed
Barclays bank v guy
C's registration simply part and parcel of B's
mistaken registration
Gold harp properties v MacLeod
find a mistake that justify
A alter register as mistake against c
echoed
Barclays
2) A's right to alter register against B OVERRIDE disposition to C
Mallory
two argument
CA in
Swift 1st
A's right to seek alteration --> proprietary might bind C (LRA 2002 priorities rules)
may override A-C disposition if A in AO within sched 3 (2) of LRA
A's right to seek alteration bind C's title
Crawley v Gudipati
A =RP, --> B, B --> C for loan
A-->B void (not witnessed)
A died, son want alter against B, C
SUCCEEDED,
A's right to seek alteration + live in the flat (AO) --> right to alter against B override C's registered charge
Swift 1st
B's registration pursuant to void disposition = conferring to A proprietary right to alter against B
if A in AO --> might override B-C disposition
C's title encumbered by A's proprietary right to alter = would NOT be prejudiced by alter
C suffers no further loss when register altered
A's claim to seek alteration against C = mere alteration NOT rectification
C CANNOT rely on possession defence or get indemnity
CANT use the convoluted way in
Swift 1st
either
(deemed to suffer loss, entitled to indemnity under sched 8 para 1(2)(b))
cuz sched 8 1(2)(b) only applies to person acquired under forgery - but B-C disposition is valid
C lose title, no indemnity
Criticism of the approach
removed protection for C
(possession defence & indemnity) unless if expansively interpret sched 8 1(2)(b)
C was completely reliant on register, nothing C could do, B--> C disposition valid
in A--> B: B usually keep the land (if possession) or get indemnity if title promise is repected
in A--> B-->C: if A has right to alter + AO, C loses possession defence(land gone) and indemnity
should just not let right to alteration becomes right
3
) A might acquire an interest under trust upon B's registration
, might override disposition to C
Swift 1st
and
Nasrullah
: only if B fraudulently takes A's title
e.g. if B forge disposition to himself
trust generated in A's favor over B's legal title
if A in AO, A's trust bind C
A seek alteration --> alteration wont cause loss--> C wouldnt be entitled to possession defence/indemnity
UNLESS sched 8 1(2)(b) given a broad meaning
makes problem for C
Law commission proposals
extend meaning of mistake
should make explicit that A can seek rectification against C
enable A to say that C's registration IS MISTAKE
right to seek alteration = non-proprietary
want to get rid of
Mallory
two
A shouldnt argue that theres property right which overrides disposition to C
when A seek alteration, C's title should be prejudice and can get indemnity
the "priority promise" and alteration: the availability of alteration in priority disputes
A= RP, X hold registered interest
X registered interest mistakenly deleted from register, A --> B, B registered
s 29 triggered when registrable disposition A--> B (assuming valuable consideration)
X's interest postponed unless protected
X would wanna argue OVERRIDING INTEREST
but need AO (sched 3 para 2)
s 29 made priority promise to B
can X get alteration against B?
if we allow X to succeed = undermining priority promise (s 29)
Sched 4 para 8: "changing for the future the priority of any interest..."
Gold Harp Properties v Macleod
A = RP, burdened by X's registered lease (135 yrs)
1)A delete X's lease from register, but it shouldnt have (land registry made mistake)
2) A grant new long lease --> B, B registered
lease to B triggered s 29, X's lease unregistered + not protected by AO = postponed to B's lease
Can X get old lease back that would bind B?
1) was there ground for alteration?
CA: land registry made mistake, there is ground
2) did
sched 4 para 8 prevent alteration?
para 8 only allowed priorities to be changed for future
meaning if X lease reinstated, alteration take effect from now onwards, not registered when B made lease --> B not bound
CA:
register can be rectify, B would bound by X's new lease
history could be re-written
judge protect earlier interest holder
3) what does "for the future" means in para 8?
reinstatement of X's lease bound B but ONLY from NOW ONWARDS
, not retrospectively
if B occupied property until this point NOT trespass
X only has better right once X reinstated on register
priority promise NOT immune from alteration provision
in the act
law commission: this was correct
recommend a 10 year long stop time limit for alteration
WORK ENDS HERE