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Balancing Fairness and Conveyancing in the Land Registration Act 2002

February 5, 2018

Land registration facilitates the conveyancing process to the extent that the register reflects legal title. Fairness, however, sometimes militates against this. This essay evaluates the degree to which the Land Registration Act 2002 (the ‘LRA 2002’ or the ‘Act’) has appropriately balanced this tension in its treatment of unregistered interests capable of taking priority on a transfer of registered land (the so-called ‘overriding interests’).[1] It is asserted that, while the balance it strikes is generally acceptable, the LRA 2002’s treatment of equitable easements and actual occupation is problematic.

 

The Balancing Exercise

If the goals of making conveyancing simpler, quicker and cheaper were paramount, the best way to achieve this would be to make the register absolute. This would, however, ignore the fact that it is sometimes unreasonable (and therefore unfair) to require rights to be registered.[2] Yet, for every overriding interest recognised, conveyancing is made more complex and expensive as the process of ascertaining the state of legal title becomes more intricate. The LRA 2002 balances fairness and simplicity by conferring overriding status on rights where it would be unreasonable to expect them to be registered, but only insofar as such rights are readily ascertainable by purchasers.[3] This approach is generally acceptable as a fair compromise between the competing interests at play. But it is not always appropriate, particularly where there are compelling countervailing policy factors or moral considerations to be weighed against the goal of improving the alienability of land.

 

Problem Areas

(i) Equitable Easements

Implied equitable easements are not included within paragraph 3 of Schedule 3 to the LRA 2002, whereas implied legal easements are.[4] This amounts to a deviation from the Act’s general approach. In this instance, the Act over-prioritises facilitating conveyancing, for it denies protection on the basis of a tangential consideration. The distinction was not taken in earlier works by the Law Commission.[5] Further, the distinction seems unjustifiable in principle. It is arguably less reasonable to expect implied equitable easements to be registered than implied legal ones, so a fortiori they should be overriding. The position that the Act takes is particularly problematic because easements may not receive residual protection under the actual occupation provisions of the LRA 2002.[6]

 

(ii) Actual Occupation

Under the LRA 2002, the interests of those in actual occupation are no longer overriding per se. Now, pursuant to paragraph 2 of Schedule 3 to the Act, such interests only override where: (a) the occupation would have been obvious on a reasonably careful inspection of the land or the transferee knew of the interest; and (b) if inquiry was made of the occupant, they did not unreasonably refrain from disclosing their interest. Narrowing the circumstances in which a failure to disclose occupation voids an occupant’s interest was a step in the right direction. However, the reforms concerning the interests of those in actual occupation nevertheless strike the wrong balance.

 

As Jackson notes, the LRA 2002’s insistence on ‘reasonably discoverable’ actual occupation and its focus on facilitating conveyancing is myopic as it does not adequately address the underlying policy questions raised by legal and social developments since 1925 such as the increase in cohabitation, the increase in mortgage financing and the widened scope of informal interests.[7] The domestic occupation context may raise sufficiently important policy considerations to justify overriding status beyond those instances the Act specifies. For example, past cases have raised delicate issues such as domestic violence,[8] mental illness,[9] spousal abandonment,[10] and the welfare of children.[11] To achieve substantial justice when these sorts of issues are involved, more flexibility is needed than the LRA 2002 legitimately permits.

 

As a consequence of the lack of an adequate statutory apparatus, judges have sought to achieve fairness through a liberal interpretation of ‘actual occupation’. The trend has been towards a subjective interpretation of ‘actual occupation’.[12] In the seminal case Williams and Glyn’s Ltd v Boland, ‘actual occupation’ was considered to be no more than objective physical presence on the relevant land.[13] Things look different post-2002. In Thompson v. Foy, a woman who moved out of her home for a short time was held not to be in actual occupation of it primarily because she had left with the intention not to return.[14] Similarly, in Link Lending v. Bustard, a vulnerable woman who had her home sold by a fraudster while she was involuntarily detained in a mental hospital was held to have remained in actual occupation principally on the basis of her continued intention to return to the premises and the reason for her absence.[15] Bustard was undoubtedly driven by policy considerations; in an earlier case, a Saudi Princesses’ voluntary absence from her London flat for a shorter period of time proved fatal to her claim.[16]

 

The flexible approach to interpretation adopted by the judiciary does not provide a level of protection equivalent to a well thought out statutory scheme. Occupants have thus been done a disservice by omission. But that is not all. The current judicial approach is also prejudicial to legal certainty and purchasers since subjective considerations are ex hypothesi hidden from them.[17] The ‘opportunity cost’ of the LRA 2002 in terms of achieving fairness in individual cases is therefore substantial.

 

A further problem with the LRA 2002’s treatment of actual occupation is that the ‘obvious on a reasonably careful inspection of the land’ requirement is too broad. In Bustard, had the fraudster removed the woman’s property, it is doubtful that her occupation would have met the requirement.[18] This is because there must be ‘visible signs of occupation’.[19] Regardless of when the purchaser ought precisely to bear the loss, as Dixon suggests, additional policy factors should have been incorporated into the LRA 2002 to make priorities more equitable.[20]

 

Conclusion

The LRA 2002 generally strikes a fair compromise between fairness and making conveyancing simpler, cheaper and quicker. However, the Act over-prioritises facilitating conveyancing in various ways: firstly, by varying the protection of implied easements depending on whether they are legal or equitable; secondly, by failing to adequately account for the policy concerns that arise in the context of domestic occupation. As Gardner notes, the LRA 2002’s approach to overriding interests was substantially influenced by its objective of introducing e-conveyancing.[21] Given that e-conveyancing has not yet been widely adopted, perhaps now is an appropriate time to revisit the subject.

 

Table of Cases

Chaudhary v. Yavuz [2011] EWCA 1314, [2013] Ch 249

Chhokar v Chhokar [1984] FLR 313 (CA)

Hoggett v Hoggett (1980) 39 P & CR 121 (CA)

Kingsnorth Finance Co. Ltd v Tizard [1986] 1 WLR 783 (Ch).

Link Lending v. Bustard [2010] EWCA Civ 424

Stockholm Finance Ltd v. Garden Holdings Inc. [1995] NPC 162 (Ch)

Thomas v. Clydesdale Bank plc [2010] EWHC 2755 (QB)

Thompson v. Foy [2009] EHWC 1076 (Ch); [2010] 1 P & CR 16

Williams and Glyn’s Ltd v Boland [1981] AC 487 (HL)

 

Table of Legislation

Land Registration Act 2002, Sch 3

 

Bibliography

Bevan C, ‘Overriding and over-extended? Actual occupation: a call to orthodoxy’ [2016] Conv 104

Bogusz B, ‘The relevance of "intentions and wishes" to determine actual occupation: a sea change in judicial thinking?’ [2014] Conv 27

Dixon M, ‘The reform of property law and the Land Registration Act 2002: a risk assessment’ [2003] Conv 136

Gardner S, ‘Land Registration Act 2002 – the Show on the Road’ (2014) 77 MLR 763.

Jackson N: ‘Title by registration and concealed overriding interests: the cause and effect of antipathy to documentary proof’ (2003) 119 LQR 660

Law Commission, Land Registration for the Twenty-First Century: A Conveyancing Revolution (No 271, 2001)

Law Commission, Land Registration for the Twenty-First Century: A Consultative Document (No 254, 1998)

Stevens J, ‘Is justice a priority in priorities? Law Reform and the Re-introduction of morality to Registered Conveyancing’ in F Miesel and P J Cook (eds), Property and Protection: Essays in Honour of Brian Harvey Property and Protection: Essays in Honour of Brian W (Hart 2000) 177

 

 

 

 

[1] Land Registration Act 2002, Sch 3.

 

[2] Law Commission, Land Registration for the Twenty-First Century: A Conveyancing Revolution (Law Com No 271, 2001), para 8.87.

 

[3] Nicola Jackson: ‘Title by registration and concealed overriding interests: the cause and effect of antipathy to documentary proof’ (2003) 119 LQR 660, 662.

 

[4] Chaudhary v Yavuz [2011] EWCA 1314, [2013] Ch 249.

 

[5] Law Commission, Land Registration for the Twenty-First Century: A Consultative Document (Law Com No 254, 1998) para 5.16.

 

[6] Yavuz (n 4).

 

[7] (n 3) 684-9.

 

[8] Hoggett v Hoggett (1980) 39 P & CR 121 (CA)

 

[9] Link Lending v Bustard [2010] EWCA Civ 424.

 

[10] Chhokar v Chhokar [1984] FLR 313 (CA).

 

[11] Kingsnorth Finance Co. Ltd v Tizard [1986] 1 WLR 783 (Ch).

 

[12] Barbara Bogusz, ‘The relevance of "intentions and wishes" to determine actual occupation: a sea change in judicial thinking?’ [2014] Conv 27.

 

[13] [1981] AC 487 (HL) 504-5 (Lord Wilberforce)

 

[14] [2009] EHWC 1076 (Ch), [2010] 1 P & CR 16

 

[15] (n 9).

 

[16] Stockholm Finance Ltd v Garden Holdings Inc. [1995] NPC 162 (Ch)

 

[17] Christopher Bevan, ‘Overriding and over-extended? Actual occupation: a call to orthodoxy’ [2016] Conv 104.

 

[18] (n 9).

 

[19] Thomas v Clydesdale Bank plc [2010] EWHC 2755 (QB).

 

[20] Martin Dixon, ‘The reform of property law and the Land Registration Act 2002: a risk assessment’ [2003] Conv 136, 148.

 

[21] Simon Gardner, ‘Land Registration Act 2002 – the Show on the Road’ (2014) 77 MLR 763.

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