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You are here: BAILII >> Databases >> The Law Commission >> Land Registration For The Twenty-First Century: A Conveyancing Revolution (Report) [2001] EWLC 271(10) (9 July 2001) URL: http://www.bailii.org/ew/other/EWLC/2001/271(10).html Cite as: [2001] EWLC 271(10) |
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PART X ALTERATION, RECTIFICATION AND INDEMNITY
INTRODUCTION
10.1 In this Part we explain the provisions of the draft Bill that govern the alteration of the register and the payment of indemnity. The Land Registration Act 1925 makes detailed provision for one particular type of alteration to the register, namely rectification. There are presently ten grounds on which rectification may be ordered under the Land Registration Act 1925 or the Land Registration Rules 1925.[1] These can be broadly summarised as follows-
(1) Where a court either makes an order which gives effect to an established property right or interest, or orders the removal from the register of an entry in respect of a right which has not been established.[2]
(2) Where the court or the registrar decides that the register is incorrect in some way.[3]
(3) Where the registrar decides that a clerical error needs to be corrected.[4]
Under that Act, rectification is always discretionary.[5] However, in practice, it is only where rectification is concerned with the correction of some mistake in the register -the cases summarised in (2) and (3) above -that the discretion is normally exercised. In cases where a court has concluded that a person is entitled to a right or interest in the land, rectification will usually, though not invariably, be ordered.[6] Indeed, it would be strange if it were otherwise. Where a person establishes his or her entitlement to some such right or interest, there will not often be any reason why a court should refuse to give effect to it, as this would leave the successful claimant with a mere right to indemnity.
10.2 Where the register is changed for some reason other than one of the statutory grounds for rectification, as where the registrar removes an entry on the register that is spent because the interest to which it relates has terminated, that alteration is not "rectification" for the purposes of the Act. Indeed, the Act has no specific name for it. It is simply part of the process of ensuring that the register is kept up to date. Although this distinction between rectification of the register and its alteration is implicit in the Land Registration Act 1925, it is not spelt out explicitly.[7]
10.3 Indemnity is, in some senses, the correlative of rectification. It is payable where a person suffers loss as a result of an error or omission in the register, whether or not the register is rectified, and in certain other circumstances.[8] The availability of indemnity is of great importance to the system of land registration. It is the basis of the so-called "State guarantee of title" which registration confers.[9]
10.4 In the Consultative Document, we explained that the practice that has developed both in the courts and in the Land Registry in relation to the rectification of the register was largely sound and that the deficiencies lay in the way in which the legislation was drafted.[10] The provisions of the Land Registration Act 1925 tend to obscure the real nature of rectification and the manner in which it operates. We considered that the main task of any new legislation should be to recast the legislation in a much more transparent form. However, we did make a number of recommendations to change the law where it was either unsatisfactory or could be improved.[11] We did not propose any substantive changes to the law governing indemnity because the subject had been considered recently by the Joint Working Group[12] and its recommendations had been implemented by the Land Registration Act 1997.[13] The recommendations in the Consultative Document on rectification, amendment and indemnity were strongly supported on consultation.
THE EFFECT OF THE BILL: ALTERATION
Introduction
10.5 In considering the effect of the Bill, we explain first the provisions governing alteration before examining those which deal with indemnity. The Bill makes separate provision for alterations to the register of title[14] and to the register of cautions.[15] The latter provisions are new, and reflect the fact that the register of cautions is to be placed on a clear statutory footing.[16]
The circumstances in which the register may be altered The meaning of alteration and rectification
10.6 The provisions of the Bill which govern the alteration of the register of title bear no resemblance to their equivalents in the Land Registration Act 1925. In accordance with the recommendations in the Consultative Document, they have been recast to reflect the present practice in relation to rectification and amendment of the register.[17] The basic concept that the Bill employs is that of alteration of the register[18] and the circumstances in which such an alteration can be made are explained below.[19] The Bill makes it clear that rectification is just one particular form of alteration, and it is defined as one which-
(1) involves the correction of a mistake; and
(2) prejudicially affects the title of a registered proprietor.[20]
The latter requirement is directly linked to the circumstances in which an indemnity is payable. This is explained below.[21] As a result of this latter requirement, the concept of "rectification" as it is used in the Bill is narrower than it is under the Land Registration Act 1925.
10.7 The principal differences may be summarised as follows-
(1) Rectification is confined to cases where a mistake is to be corrected. This will not include every case which is at present treated as rectification. It will not therefore cover cases where the register is altered to give effect to rights that have been acquired over the land since it was registered,[22] or where the register was originally correct, but subsequent events have made it incorrect.[23] In such cases the court will no longer have any discretion (albeit one that has seldom been exercised[24]) whether or not to give effect to the right so established.
(2) Not every correction of a mistake will constitute rectification. The correction must be one which prejudicially affects the title of a registered proprietor. Under the 1925 Act, if, in order to correct a mistake, the register is altered to give effect to an overriding interest, that is regarded as rectification.[25] However, no indemnity will be payable because the proprietor will suffer no loss in consequence. He or she had taken the land subject to any overriding interests.[26] Rectification in such a case therefore does no more than update the title and the registered proprietor is in no worse position than he or she was before.[27] In other words, there can be rectification under the present law even where an alteration to the register does not prejudicially affect the title of the registered proprietor. That will cease to be so under the Bill. The circumstances in which the register is rectified and those in which the proprietor will be entitled to an indemnity will coincide.
10.8 The Bill makes it clear that-
(1) rectification of the register, whether by order of the court or by the register can (as now[28]) affect derivative interests; but
(2) any such changes are prospective only,[29] which accords with the manner in which the analogous provisions of the Land Registration Act 1925 have been interpreted.[30]
Powers of alteration
10.9 Under the Bill, powers are conferred on-
(1) the court to order the alteration of the register;[31] and
(2) the registrar to alter the register.[32]
THE POWERS OF THE COURT
The circumstances in which the court may order the alteration of the register
10.10 The court may order the alteration of the register in three cases.[33]
(1) The first is for the purpose of correcting a mistake. As we have indicated above-
(a) under the Land Registration Act 1925 all such cases are treated as rectification of the register;[34] but(b) under the Bill this will cease to be so: the correction of a mistake will amount to rectification only if it prejudicially affects the title of a registered proprietor.[35]
(2) The second is for the purpose of bringing the register up to date. If, for example, a court decided that a claimant in proceedings had established his or her entitlement to an easement by prescription over a parcel of registered land, it could[36] order that the benefit and burden of the easement be recorded on the registers of the dominant and servient titles respectively. Similarly, if a court ordered the forfeiture of a registered leasehold title for breach of covenant, it could also order that the title to the lease be deleted from the register.
(3) The third is to give effect to any estate, right or interest excepted from the effect of registration. Under the Land Registration Act 1925, where land is registered with good leasehold, possessory or qualified title, the rights excepted from the effect of registration have the status of overriding interests.[37] It follows that, if the register is rectified to give effect to any such right, no indemnity will be payable, because the registered proprietor will not have suffered loss by reason of the rectification.[38] We have explained elsewhere that we do not consider that the rights excepted from the effect of registration need to have the status of overriding interests.[39] This is because, under both the Land Registration Act 1925[40] and the Bill,[41] any registered disposition will take effect subject to such rights. The inclusion in the Bill of an express power for the court to order the alteration of the register to give effect to such excepted rights merely reflects this change. It is a necessary consequence of this power that such an alteration will not amount to rectification. Nor will it give rise to a claim for indemnity.[42]
10.11 Where the court does order the alteration of the register under the powers explained in paragraph 7, the registrar is under a duty to give effect to the order once it has been served on him.[43] This is similar to, but wider than, the equivalent provision in the Land Registration Act 1925, which applies only in relation to an order of the court to rectify the register.
10.12 Normally, where a court determines that there is ground for the alteration of the register, it will order the registrar to make that alteration unless it amounts to rectification of the register,[44] to which special rules, explained below, will apply.[45] Under the Bill, the Lord Chancellor may make rules as to when a court must exercise its power to alter the register in cases which do not amount to rectification.[46] These rules are likely to restrict the court's duty to order an alteration to cases where it has made a determination in proceedings.[47] It is unlikely to extend to a case where the court incidentally discovers in the course of such proceedings that some entry on the register is incorrect or has ceased to have effect, but where that fact is not relevant to the outcome of the proceedings before it.[48]
Qualified indefeasibility: the protection for the proprietor who is in possession
10.13 Section 82(3) of the Land Registration Act 1925 embodies what we described in the Consultative Document as a principle of qualified indefeasibility.[49] It restricts the circumstances in which it is possible to rectify the register so as to affect the title of a "proprietor who is in possession" to four named circumstances, namely-
(1) for the purpose of giving effect to an overriding interest;
(2) for the purpose of giving effect to an order of the court;
(3) where "the proprietor has caused or substantially contributed to the error or omission by fraud or lack of proper care"; and
(4) where "for any other reason, in any particular case, it is considered that it would be unjust not to rectify the register" against the proprietor.
The thinking behind the protection of a proprietor in possession is obvious enough. When a person is registered as proprietor of a parcel of land and is in possession of it, there should be a presumption against rectifying the register against him or her. Thus, in the case where, by mistake, two neighbouring landowners are both registered as proprietors of a strip of land on their common boundary, the register should (in general) be rectified against the one who is not in possession of the strip. The registered titles thereby come to reflect the practical reality of the situation.
10.14 We explained in detail the shortcomings of section 82(3) of the Land Registration Act 1925 in the Consultative Document.[50] We sought views on whether it should (as we thought) have an equivalent in any new legislation and if so, how wide the scope of that equivalent should be.[51] The Bill reflects the outcome of that consultation.[52] The great majority of those who responded to this point favoured a provision which gave a wide meaning as to who was a proprietor in possession. This enhances the conclusive nature of the register by restricting the circumstances in which it can be rectified. However, it should be noted that-
(1) rectification has a narrower meaning under the Bill than it does under the Land Registration Act 1925;[53] and
(2) the principle of qualified indefeasibility contained in the Bill does not affect the circumstances in which the register can be altered in cases not amounting to rectification.
10.15 The Bill precludes an order for the alteration of the register that amounts to rectification[54] without the proprietor's consent[55] if it affects the title of a registered estate in land[56] that is in the possession of the proprietor except in two cases.[57] Those are-
(1) where the proprietor has by fraud or lack of proper care caused or substantially contributed to the mistake; or
(2) it would for any other reason be unjust for the alteration not to be made.
These two exceptions to indefeasibility replicate those that are presently found in section 82(3)(a) and (c) of the Land Registration Act 1925 respectively.
10.16 It will be noted that the Bill does not replicate the other two exceptions that are currently found in the opening words of section 82(3) of the 1925 Act, namely rectification to give effect to an overriding interest or to an order of the court.[58] Neither is needed for the following reasons.
(1) Under the Bill, if the register is altered to give effect to an overriding interest it will never amount to rectification. This is because the alteration does not prejudicially affect the title of the registered proprietor as the Bill's definition of rectification requires.[59] He or she already holds the land subject to the overriding interest and the alteration merely updates the register to record the true position.
(2) We explained in the Consultative Document that the obscure exception for orders of the court-
appears to have been intended to ensure that there were no restrictions on the powers of the court to order rectification... where the order gives effect to the substantive rights and entitlements of the parties.[60]
Under the Bill, an order by the court to give effect to such rights will no longer amount to rectification, either because the order will not involve the correction of any mistake,[61] or if it does, because the alteration does not prejudicially affect the title of the registered proprietor.
10.17 In the Consultative Document, we explained that there is some uncertainty as to who is a "proprietor who is in possession" for the purposes of section 82(3) of the Land Registration Act 1925.[62] We were particularly concerned to remove that uncertainty for the future. Under the Bill,[63] a proprietor will be a proprietor in possession of land for the purposes of the provision explained in paragraph 10.15 above, in the following circumstances -
(1) The first is where the land is physically in his or her possession.[64] This codifies the present law.[65]
(2) The second is where the land is physically in the possession of a person who is entitled to be registered as proprietor.[66] There is no obvious reason for differentiating this case from (1). There will be some cases where a person entitled to be registered as proprietor has the legal estate in the land vested in him or her by operation of law,[67] such as a proprietor's trustee in bankruptcy or a deceased proprietor's personal representatives.[68] In other cases, the land may be in the possession of a person entitled to be registered who has only an equitable interest. An example would be where a beneficiary under a bare trust was in physical possession of land and the registered proprietor was his or her nominee. A squatter who is entitled to be registered as proprietor under the provisions of Schedule 6 of the Bill[69] is not, for these purposes, a person entitled to be registered.[70] There is no obvious reason for extending the protection given to a proprietor in physical possession to a person whose claim to the land is essentially unlawful, being founded on trespass.[71]
(3) The third circumstance is in relation to specified relationships where the possession of another person is attributed to the registered proprietor.[72] This will be the case where-
(a) the registered proprietor is the landlord and the person in possession is a tenant;(b) the registered proprietor is a mortgagor and the person in possession is the mortgagee;[73](c) the registered proprietor is a licensor and the person in possession is a licensee; and(d) the registered proprietor is a trustee and the person in possession is a beneficiary under the trust.[74]
In fact the protection is wider than this. It applies not only where the second-named person is actually in possession, but where he or she is treated as being in possession.[75] This would cover the cases where (for example) a tenant had sublet, or a mortgagee in possession had exercised its power of leasing.[76]
10.18 Under the present law, where a proprietor is not in possession of the registered land in question (so that section 82(3) of the Land Registration Act 1925 is inapplicable), and a ground exists for rectification, "the court will normally grant rectification".[77] However, the matter remains discretionary and "there may still be circumstances which defeat a claim for rectification".[78] That principle is codified in the Bill. Where the court can order rectification of the register and the land is not in the possession of the proprietor (as defined),[79] "it must make an order... unless it considers that there are exceptional circumstances which justify its not doing so".[80]
THE POWERS OF THE REGISTRAR
The circumstances in which the registrar may alter the register
10.19 Most alterations to the register are made by the registrar rather than in response to an order of the court. His powers of amendment are therefore of considerable importance. Under the Bill, the registrar will be able to alter the register in the same three circumstances as those in which the court may order its alteration,[81] namely to correct a mistake, to bring the register up to date[82] and to give effect to an estate, right or interest excepted from the effect of registration.[83] In addition, he will also be able to alter the register in order to remove any superfluous entry.[84] This would, for example, cover cases where-
(1) a restriction had been entered on the register to freeze all dealings with a registered estate,[85] but the circumstances which made that precaution necessary had subsequently passed;
(2) an interest protected on the register by one entry was adequately protected by another; or
(3) a restriction on the powers of a registered proprietor had ceased to apply.
The registrar's power to remove spent entries is likely to become increasingly important with the advent of electronic conveyancing. Authorised practitioners will be able to register dispositions of, and the creation of rights and interests in or over, registered land.[86] However, the registrar will have an important role in policing the register to ensure that it is not cluttered with entries that are no longer operative.[87]
10.20 The Bill contains a power by which the Lord Chancellor may make rules which regulate the alteration of the register.[88] First, there is a power to specify when the registrar is under a duty to alter the register other than in cases of rectification.[89] In practice this will be an important power. It is likely that, subject to necessary qualifications, the registrar will be subject to a duty to alter the register whenever he discovers grounds for doing so (save in cases of rectification) regardless of the circumstances under which those grounds came to light.[90] Secondly, rules may be made dealing with the manner in which the registrar should exercise the power, applications for alteration of the register and the procedure for exercising the power of alteration, whether on application or not.[91] As we have mentioned in paragraph 10.19, it is envisaged that the registrar will be authorised to undertake periodic "audits" of registered titles. This is to ensure that the entries on the register are still current and to remove any that, on inquiry, are not. This is in accordance with one of the main objectives of the Bill, namely to ensure that the register should at all times be an accurate reflection of the true state of the title.
10.21 Where a person applies to the registrar to rectify the register, and the registered proprietor objects, and it is not possible to dispose of the matter by agreement, the registrar must refer the matter to the Adjudicator.[92] Any contested application for the rectification of the register will, therefore, be resolved by the Adjudicator.[93] The office of Adjudicator to HM Land Registry is a new one that will be created by the Bill,[94] and an explanation of his functions is given in Part XVI of this Report.[95] Qualified indefeasibility: the protection for the proprietor who is in possession
10.22 We have explained above the provisions which restrict the circumstances in which the register may be rectified against a proprietor of a registered estate in land who is in possession of land (in the extended meaning which that phrase has under the Bill) except where he or she consents.[96] These apply as much where the power to rectify is exercised by the Adjudicator as they do in proceedings before the court.[97] Similarly, where grounds for rectification of the register exist and the land is not in the possession of the proprietor, the Adjudicator must rectify the register -much as the court must order its rectification[98] -unless he considers that there are exceptional circumstances which justify his not doing so.[99]
Alteration under network access agreements
10.23 We explain in Part XIII of this Report how electronic conveyancing is intended to operate. The registration of many dispositions of registered land will no longer be conducted by the registrar directly, but will be initiated by solicitors or licensed conveyancers, who are authorised to do so under a network access agreement.[100] However, it will not merely be the process of registration of dispositions that can be delegated in this way. Under such a contract, a person may be authorised to initiate alterations to the register of title or to the cautions register.[101] This power to initiate alterations is an essential concomitant of the power to authorise practitioners to make dispositions that will change the register. Commonly, on a sale of land, a charge may be discharged on completion. Electronic conveyancing would be impossible if a practitioner could bring about the registration of the transfer but not initiate the removal of the discharged mortgage. However, the authority to alter the register is likely to be extended more widely. When a practitioner is examining a title in relation to a proposed disposition, he or she may (for example) discover spent entries on the register. The powers that the Bill are likely to give will enable him or her to set in train the removal of such entries.[102]
Costs in non-rectification cases
10.24 Under the Bill, where the register is altered by the registrar, whether of his own initiative or to give effect to a court order, and the case is not one of rectification, he may pay such amount as he thinks fit in respect of any costs or expenses reasonably incurred by a person in connection with the alteration.[103] The power may always be exercised by the registrar where the costs or expenses were incurred with his consent. Even where the registrar did not give his prior consent, he may pay costs and expenses where-
(1) it appears to him that they had to be incurred urgently and that it was not reasonably practicable to apply for his consent in advance; or
(2) he has subsequently approved their incurrence.[104]
10.25 This is a new power. Under the present law, the registrar may pay indemnity in respect of costs in cases of rectification where those costs have been either approved by him[105] or incurred in proceedings to determine the amount of any indemnity.[106] There is, however, no power to pay a party's costs in relation to any alteration that does not amount to rectification of the register.[107] The Bill therefore remedies this deficiency.[108]
The circumstances in which the register of cautions may be altered
10.26 We have explained the nature of the register of cautions against first registration in Part III of this Report.[109] This register does, of course, relate to an unregistered legal estate[110] and not to a registered estate. Its purpose is to provide a mechanism by which a person having the requisite interest in the land[111] may require to be notified of an application for the first registration of that land. Any such application cannot be approved until the cautioner has been given an opportunity to object within a specified period.[112] There may be circumstances in which it is necessary to alter the register of cautions, whether for the purpose of correcting a mistake or of bringing it up to date. Although these situations will not be common, the Bill makes provision for such alteration.[113] The register may be altered either by an order of the court,[114] or by the registrar,[115] for the purpose of correcting a mistake or bringing the register up to date. Thus, for example-
(1) if the court decides that a cautioner lacks the requisite interest to lodge a caution, it may order that it be cancelled;
(2) if the cautioner dies and her successor in title applies to the the registrar to be registered in her place, he may register that successor.
Where the registrar alters the register, he may pay such amount as he thinks fit in respect of any costs reasonably incurred by a person in connection with the alteration.[116] There are rule-making powers[117] under which (for example) provision may be made as to when there is a duty to alter the register.[118] As noted above, when electronic conveyancing is introduced, a practitioner may be authorised to initiate the alteration of the cautions register under a network access contract.[119]
Alteration of documents
(1) secure the consent of the registered proprietor affected to the correction; or (in the rare cases where such consent cannot be obtained)
(2) serve notice on him or her that he intends to correct the mistake unless he or she objects.
It will be noted that this power -which is widely used -does not just apply to the correction of errors in the register, but to mistakes in documents to which the register refers as well. A typical case might be where a lease is lodged with the registry and, either before or after it is registered, it becomes apparent that there is a mistake in the reddendum so that the annual rental appears as £6,050, when it is in fact £6,500. The registrar will correct the mistake unless there is an objection from either party to the lease.
10.28 In the Consultative Document, we provisionally recommended that the power contained in rule 13 was sufficiently important that it should be in primary legislation.[120] This view was supported on consultation and the Bill provides accordingly. It contains a specific rule-making power to make provision that will enable the registrar to correct a mistake in an application or accompanying document. In the circumstances prescribed in such rules, the correction will have the same effect as if made by the parties.[121] In other words, the registrar will, as now, be able to serve notice on interested parties of his intention to correct a mistake in a particular document and then make such a correction in the absence of any objection.
THE EFFECT OF THE BILL: INDEMNITY
Introduction
10.29 As we have explained above,[122] the provisions of section 83 of the Land Registration Act 1925, which govern the payment of indemnity, were amended by section 2 of the Land Registration Act 1997. For that reason, we did not make any recommendations for reform in the Consultative Document, although we did anticipate that there might be minor amendments to the law to reflect more clearly the current practice in relation to the payment of indemnity.[123] In the event, the provisions[124] have been completely recast in accordance with the style of the present Bill. The substance of them has not, however, been altered in any significant way.
The grounds on which indemnity is payable
10.30 The Bill sets out eight circumstances in which a person who suffers loss is entitled to be indemnified.[125] It should be noted that, under this provision, a claimant can recover any loss that flows from the particular ground, whether that loss is direct or consequential. A number of the grounds for indemnity arise out of a mistake of some description. A "mistake" in something is taken to include anything mistakenly omitted from it as well as anything mistakenly included in it.[126]
Loss by reason of rectification
10.31 There is an entitlement to indemnity where a person suffers loss by reason of rectification of the register.[127] This replicates the effect of section 83(1)(a) of the Land Registration Act 1925 and it is a common reason for the payment of indemnity. In two specific cases, both of which are carried forward from the Land Registration Act 1925,[128] a person is treated as if he or she has suffered loss by reason of rectification, even though, but for the provision this might not have been so.[129]
(1) The first is where he or she suffers loss by reason of the change of title resulting from the exercise by the registrar of his power to upgrade the title under Clause 62 of the Bill.[130] The purpose of this provision is to remove any doubt as to whether the registrar can be said to have made a mistake when he has upgraded a title, but where, under the Bill, he is not required to be satisfied as to that title.[131]
(2) The second case is where the register is rectified in relation to a proprietor of a registered estate or charge claiming in good faith under a forged disposition. That proprietor is treated as having suffered loss by reason of that rectification as if the disposition had not been forged. The reason for this provision is to reverse one effect of a case decided under the Land Transfer Acts 1875 and 1897, Re Odell.[132] The Court of Appeal there held that an innocent purchaser of a registered charge who was registered as proprietor of it on the basis of a transfer that turned out to be forgery, was not entitled to any indemnity. Because the transfer was a forgery and therefore of no effect, he was not regarded as suffering any loss, even though he had been registered.[133]
Loss by reason of a mistake
10.32 A person is entitled to an indemnity if he or she suffers loss by reason of a mistake, whose correction would involve rectification of the register.[134] No indemnity is payable, however, until a decision has been made about whether or not to alter the register. The loss suffered by reason of the mistake will be determined in the light of that decision.[135] It follows that this entitlement does in fact encompass two distinct situations.
(1) The first, presently covered by section 83(2) of the Land Registration Act 1925, is where, notwithstanding the mistake, the register is not rectified.[136]
(2) The second is where the register is rectified, but the person in whose favour rectification is granted still suffers loss as a result of the mistake. This can happen, because rectification has prospective and not retrospective effect. A person may suffer loss in the period between the occurrence of the mistake and its rectification.[137] To that extent the mistake is not corrected[138] and, for the loss so attributable, indemnity is therefore payable. This second situation did not give rise to a claim for indemnity until the Land Registration Act 1997 remedied the shortcoming[139] and provided for it in what is presently section 83(1)(b) of the Land Registration Act 1925.
Mistake in an official search
10.33 If there is a mistake in an official search and a person suffers loss as a result, he or she is entitled to be indemnified for that loss.[140] This is a necessary corollary of the provisions of the Bill governing official searches and the rules to be made under them,[141] and it replicates part of the provisions of section 83(3) of the Land Registration Act 1925.
Mistake in an official copy
10.34 Indemnity is payable where loss is suffered by reason of a mistake in an official copy.[142] This replicates in part the effect of section 113 of the Land Registration Act 1925. As we explain elsewhere,[143] the Bill makes provision both for the issue of official copies and their legal effect.[144] The terminology of section 113 of the Land Registration Act 1925, which refers rather Delphically to "office copies" has been abandoned in favour of the more comprehensible "official copies".[145]
Mistake in a document kept by the registrar which is not an original
10.35 Indemnity is to be payable if a person suffers loss by reason of a mistake in a document kept by the registrar, which is not an original and is referred to in the register of title.[146] The register may refer to extracts from or abstracts of conveyancing documents that the registrar does not retain. Furthermore, in relation to many conveyancing documents referred to in the register, such as leases, the registrar does not keep the original but only a copy. However, the Bill creates a presumption by which, where there is an entry in the register to a registered estate which refers to a document kept by the registrar that is not an original, the document kept by the registrar is to be taken as correct and to contain all the material parts of the original document.[147] As we explain elsewhere,[148] this presumption applies as between the parties to a disposition of or out of the registered estate in question, and also to dealings with interests in the registered land which are not themselves registered, such as leases granted for 7 years or less. The right to indemnity is a necessary concomitant of this presumption.
Loss or destruction of a document lodged at the registry
10.36 Following the provisions of the Land Registration Act 1925,[149] indemnity will be paid to a person if he or she suffers loss by reason of the loss or destruction of a document lodged at the registry for inspection or safe custody.[150] It is intended that the terms "loss or destruction" should be widely understood. It would include a case where the material part of a written document became illegible for some reason, as where it was damaged by water or smoke. As the provision will apply to documents in electronic form,[151] "loss or destruction" would encompass cases where an electronic file was mistakenly deleted or where it became corrupted and unreadable.
Mistake in the register of cautions against first registration
10.37 The Bill confers a right to indemnity where a person suffers loss by reason of a mistake in the register of cautions against first registration.[152] This right is new. It is a necessary concomitant of the formal establishment of the register of cautions against first registration under the Bill,[153] and of the provisions about the alterations of that register.[154]
Failure to notify a chargee of an overriding statutory charge
10.38 We have explained in Part VII of this Report, that when the registrar registers a person as proprietor of a statutory charge that has priority over a prior charge that is entered on the register,[155] he must notify the prior chargee of that statutory charge.[156] If he fails to do so, he is liable to pay the prior chargee indemnity for any loss that it may suffer in consequence.[157] The prior chargee is most likely to suffer loss if it makes a further advance to the registered proprietor in ignorance of the fact that there is an overriding statutory charge, and the security then proves to be insufficient to meet the advance.
Mines and minerals
10.39 There is one qualification to the rights to indemnity explained above. The Bill provides that no indemnity is payable on account of any mines or minerals or the existence of any right to work or get mines or minerals, unless it is noted on the register of title that the title to the registered estate includes the mines or minerals.[158] This replicates section 83(5)(b) of the Land Registration Act 1925. Registration of title to land under the Bill (as under the Land Registration Act 1925) includes mines and minerals, unless there is any entry to the contrary in the register.[159] However, the policy that is embodied in the Bill (as it is in section 83(5)(b) of the 1925 Act), is that the guarantee of title to registered land should not extend in all cases to mines and minerals in or under the land. To do so would expose the registry to a substantial risk of liability to pay indemnity. This is because of the difficulty of ascertaining on first registration—
(1) whether or not there has been some prior unrecorded severance of the mines and minerals; or
(2) whether the land was formerly copyhold and the lord of the manor's right to mines and minerals was preserved on enfranchisement, so that they are not in fact included in the title.
For this reason, indemnity is only to be available in those cases where the registrar is satisfied, after careful investigation, that the mines and minerals are included in the title and has made an entry in the register to that effect. That will not often be the case.
The measure of indemnity
Introduction
(1) the elements that are taken into account in assessing indemnity;
(2) factors that will bar a claim for indemnity or reduce the amount that can be recovered; and
(3) the mechanisms for the making of the assessment. We describe each of these in turn.
Elements to be taken into account in assessing indemnity
GENERAL
10.41 As we have explained, a person is entitled to be indemnified by the registrar if he or she suffers loss "by reason of" one of the circumstances listed above in paragraphs 10.31-10.38.[160] The Bill contains no restriction on the type of loss that is recoverable. It follows, therefore, that a claimant can recover any loss that flows from the particular circumstance, whether that loss is direct[161] or consequential.[162] However, where his or her loss includes or consists entirely of costs and expenses incurred in relation to the matter,[163] it will be recoverable by him or her as indemnity only if he or she meets certain requirements explained below.[164]
VALUING THE LOSS OF AN ESTATE, INTEREST OR CHARGE
10.42 Where the party is seeking indemnity for the loss of an estate, interest or charge, the Bill states what the maximum value of that estate, interest or charge is to be taken to be for the purposes of that indemnity.[165] Where indemnity is payable because the claimant has suffered the loss by reason of rectification,[166] it is the value of the estate, charge or interest immediately before rectification of the register of title, but as if there were to be no rectification.[167] By contrast, where the claimant has suffered the loss because of a mistake but where the register was not rectified, it is the value of the estate, interest or charge at the time when the mistake which caused the loss was made.[168]
10.43 A number of points about this provision should be noted.
(1) First, it merely states what the maximum value of the estate, interest or charge is taken to be for the purposes of assessing indemnity. It does not limit the entire claim to indemnity to that sum. For example, the claimant can recover additionally any consequential loss that he or she may have suffered.
(2) Secondly, where the register is not rectified, it has been the practice of the Land Registry in such cases to pay interest on the sum from the date of the mistake.[169] Express provision is made for the payment of interest in the Bill so that this practice can be placed on a more formal and transparent basis by rules made under the Bill.[170]
(3) Thirdly, there has been some criticism of the fact that, where the register is not rectified, the value of the estate, interest or charge is assessed at the time of the mistake.[171] However, there could be considerable difficulties if indemnity were to be assessed at the date on which any claim for rectification were refused. In the period between the making of the mistake and any such refusal, the character of the land could have changed fundamentally. This might be perhaps because substantial building work had been carried out by the registered proprietor, thereby considerably enhancing the value of the land, or it could be the converse, as where the registered proprietor had caused environmental damage to the land, thereby diminishing its value. As the claimant is entitled to an indemnity, he or she should be neither overcompensated nor penalised as a result of the acts of an independent third party which have affected the value of the land since the mistake. The two-fold strategy adopted by the Bill[172] of valuing the claimant's estate, interest or charge at the date of the mistake and then paying interest on that sum until the claim for indemnity is settled, overcomes this difficulty in a straightforward manner.[173]
INTEREST
10.44 The Bill makes provision -not found expressly in the present legislation on land registration -for the payment of interest on an indemnity.[174] The circumstances in which, the periods for, and rates at which interest is to be payable are to be prescribed by rules.[175] It can, however, be anticipated that those rules are likely to make provision for the case mentioned above in paragraph 10.43(2).
COSTS
10.45 The general principle under the Bill[176] is that a claimant is entitled to recover as indemnity costs or expenses in relation to the matter only if they were reasonably incurred by him or her with the consent of the registrar.[177] As we explained in an earlier Report, "this accords with the principle that an insurer should not be expected to settle a claim for costs incurred without his prior consent".[178] This general principle is subject to three exceptions.
(1) The first is where-
(a) the costs or expenses were incurred by the claimant urgently; and(b) it was not reasonably practicable for him or her to apply for the registrar's consent in advance.[179]
(2) The second is where the registrar subsequently approves the costs or expenses. These are treated as having been incurred with his consent.[180]
(3) The third arises where a person has applied to the court to determine whether he or she is entitled to an indemnity at all, or to determine the amount of any indemnity.[181] The applicant does not need the prior consent of the registrar in relation to the costs of the application.[182] The right of indemnity claimants to go to court would otherwise be compromised.
10.46 The Bill makes new provision for a case not presently covered by the Land Registration Act 1925. It sometimes happens that a person incurs expenses in determining whether or not he or she has a claim to indemnity, as where it appears that there may have been a mistake by the registrar but, on further investigation, this proves not to be the case. The Bill gives the registrar discretion to pay the claimant's costs or expenses provided that they were incurred both reasonably and with the consent of the registrar.[183] Once again, where the registrar's prior consent was not obtained, he may nonetheless exercise his power to pay indemnity where-
(1) it appears to him either that the costs or expenses were incurred by the claimant urgently or that it was not reasonably practicable for him or her to apply for the registrar's consent in advance; or
(2) he, the registrar, has subsequently approved the costs or expenses.[184]
Factors that will bar a claim for indemnity or reduce the amount that can be recovered
WHEN A CLAIM WILL BE BARRED
10.47 There are three circumstances in which a claim for indemnity will fail. The provisions in question are not new but replicate those found in section 83 of the Land Registration Act 1925.[185] (1) The first is where the claim is barred by lapse of time.[186] For the purposes of the Limitation Act 1980, the liability to pay indemnity is a simple contract debt.[187] It will therefore be barred six years after the cause of action arose.[188] The cause of action arises at the time when the claimant knew, or but for his or her own default might have known, of the existence of his or her claim.[189] (2) The second is where the loss suffered by the claimant is wholly or partly the result of his or her own fraud.[190] It is plainly right that a claimant whose conduct is tainted by fraud should recover nothing for any loss he or she suffers in consequence. (3) The third is where the loss suffered by the claimant is wholly the result of his or her own lack of proper care.[191] The registrar should not be required to indemnify a person who is entirely the author of his or her own misfortune. As regards situations (2) and (3), the bar on recovering indemnity extends beyond the case where the claimant was fraudulent or negligent. It also applies to any person who derives title from such a person, unless the disposition to him or her was for valuable consideration and his or her title was either registered or protected on the register.[192]
WHEN A CLAIM WILL BE REDUCED
10.48 Under the Land Registration Act 1925, in the form in which it stood prior to the Land Registration Act 1997, no indemnity was ever payable to an applicant who had caused or substantially contributed to the loss that he or she had suffered by his or her lack of proper care.[193] As a result of the Land Registration Act 1997, a principle of contributory negligence was introduced,[194] which the Bill replicates. Where any loss is suffered by a claimant partly as a result of his or her own lack of proper care, any indemnity payable to him or her is to be reduced "to such extent as is fair having regard to his share in the responsibility for the loss".[195]
The mechanism for determining indemnity
10.49 The Bill makes it clear that a person who suffers loss falling within one of the situations explained above in paragraphs 10.31-10.38, is entitled to be indemnified by the registrar.[196] In many cases a claim to indemnity will arise out of an application for the rectification of the register. In such a case, the application for rectification will be made to the registrar and will be in the form (if any) that is prescribed in rules made under Schedule 4, paragraph 7(c).[197] If there is an objection to that application that cannot be disposed of by agreement and which the registrar does not consider to be groundless, it must be referred to the Adjudicator.[198] He will also deal with any questions of indemnity arising from such applications. However, as will be apparent from the circumstances in which there is an entitlement to indemnity, not every case in which there is a claim for indemnity will arise out of an application for the rectification of the register.[199] In these other cases, subject to what is said in paragraph 10.50 below, application for indemnity will be made to the registrar.[200]
10.50 Under the Bill, a person is entitled to apply to the court for a determination of any question as to whether he or she is entitled to an indemnity, or, if he or she is, the amount of that indemnity.[201] This provision replicates the effect of section 2(1) of the Land Registration and Land Charges Act 1971.[202] There is no requirement that the person should have made any application to the registrar for indemnity. He or she can, if so minded, go to the court at the outset, though such applications are, in practice, rare.[203]
Rights of recourse
10.51 The Bill replicates the effect of the provisions of the Land Registration Act 1925 which enable the registrar, in certain circumstances, to recover from a third party the amount of any indemnity that he has paid to a claimant.[204] Where the registrar has paid an indemnity[205] to a claimant in respect of any loss, he is given three distinct rights of recourse.[206]
(1) First, he is entitled to recover the amount paid from any person who caused or substantially contributed to that loss by fraud.[207]
(2) Secondly, he is entitled to enforce any right of action (of whatever nature and however arising) which the claimant would have been entitled to enforce had the indemnity not been paid.[208] This is akin to an insurer's right of subrogation.
(3) Thirdly, where the register has been rectified, the registrar is entitled to enforce any right of action (of whatever nature and however arising) which the person in whose favour the register is rectified would have been entitled to enforce had it not been rectified.[209]
(1) Rectification is ordered in favour of X because of a mistake caused by the negligence of X's solicitor.
(2) As a result of the rectification, Y suffers loss for which the registrar duly indemnifies her.
(3) The registrar can recover from X's solicitor the amount of the indemnity he has had to pay Y. This is so, even though at common law, X's solicitor might not have owed any duty of care to Y.
As the registrar has had to meet the cost of X's solicitor's negligence, it does, in principle, seem right that he should have a right of recoupment against that solicitor.
Note 1 See Law Com No 254, paras 2.37-2.39; summary, paras 8.6-8.22 (where the provisions are analysed in detail). [Back] Note 2 Land Registration Act 1925, s 82(1)(a), (b). [Back] Note 3 Ibid, s 82(1)(d)-(h). There is also a power to rectify where all interested persons consent:ibid, s 82(1)(c). [Back] Note 4 Land Registration Rules 1925, rr 13, 14. [Back] Note 5 See Law Com No 254, para 8.5. [Back] Note 6 See Norwich & Peterborough Building Society v Steed [1993] Ch 116, 139; Law Com No 254, paras 8.12-8.13. However, see now Kingsalton Ltd v Thames Water Developments Ltd [2001] EWCA Civ 20; [2001] EGCS 12 where rectification was refused in a case that was held to fall within Land Registration Act 1925, s 82(1)(a) (though in reality, on the facts, it appears to have been a case involving a mistake that fell within s 82(1)(g), that is “where the legal estate has been registered in the name of a person who if the land had not been registered would not have been the estate owner”). On the power of the court to refuse rectification when s 82(1)(a) applied, see in particular the comments of Arden LJ at [2001] EWCA Civ 20, [39]. [Back] Note 7 Compare, for example, Land Registration Act 1925, ss 35 (discharge of charges), 46 (determination of leases and other registered estates), 50(3) (discharge of restrictive covenants), 75 (registration of adverse possessor) on the one hand with s 82 (rectification) on the other. [Back] Note 8 See Land Registration Act 1925, s 83 (as substituted by Land Registration Act 1997, s 2). [Back] Note 9 On this, see Ruoff & Roper, Registered Conveyancing, 2-10; 2-13; 40-02. [Back] Note 10 See Law Com No 254, para 8.1. [Back] Note 11 Ibid, paras 8.40-8.55. [Back] Note 12 See (1995) Law Com No 235, Part IV. [Back] Note 14 Cl 65; Schedule 4. [Back] Note 16 For the register of cautions, see above, para 3.65; and Cl 19. [Back] Note 17 See above, para 10.4. [Back] Note 18 Schedule 4, paras 2(1), 5. [Back] Note 19 See paras 10.10 (alteration ordered by the court), 10.19 (alteration by the registrar). [Back] Note 20 Schedule 4, para 1. [Back] Note 21 See para 10.30. [Back] Note 22 As where a court determines that X has acquired an easement by prescription over Y’s land subsequent to Y’s acquisition of that land as registered proprietor. [Back] Note 23 As where A was registered as proprietor, but B subsequently obtains an order setting aside the transfer to A on the grounds that A procured it by fraud on B. [Back] Note 24 See above, para 10.1. [Back] Note 25 See Chowood Ltd v Lyall (No 2) [1930] 2 Ch 156. In that case the mistake was to register X as proprietor of land when Y had already acquired title to it by adverse possession: seeibid, at p 168. [Back] Note 26 See Land Registration Act 1925, ss 20(1), 23(1). [Back] Note 27 Re Chowood’s Registered Land [1933] Ch 574, 582. [Back] Note 28 See Land Registration Act 1925, s 82(2). [Back] Note 29 See Schedule 4, para 8. [Back] Note 30 The Land Registration Act 1925 is not explicit on this point: see Freer v Unwins Ltd [1976] Ch 288, 296. [Back] Note 31 Schedule 4, paras 2-4. [Back] Note 32 Schedule 4, paras 5-7. [Back] Note 33 Schedule 4, para 2(1). [Back] Note 34 See above, para 10.1. [Back] Note 35 See above, paras 10.6, 10.7. [Back] Note 36 Cf below, para 10.12. [Back] Note 37 Land Registration Act 1925, s 70(1)(h). [Back] Note 38 Cf above, para 10.7(2). [Back] Note 39 See above, paras 8.81—8.84. [Back] Note 40 Sections 20(2), (3), 23(2), (3), (4). [Back] Note 41 See Cls 29(2)(a)(iii), 30(2)(a)(iii); above, para 5.11. [Back] Note 42 For the grounds on which indemnity is payable, see below, paras 10.30 and following. [Back] Note 43 Schedule 4, para 2(2). There is a power to make rules both as to the form of the court’s order and as to its service on the registrar: seeibid, para 4(b), (c). Such rules will be land registration rules and will be laid before Parliament only: Cls 125(3), 129(1). [Back] Note 44 See above, para 10.6. [Back] Note 45 See paras 10.15 and following. [Back] Note 46 Schedule 4, para 4(a). Such rules will be land registration rules and will be laid before Parliament only: Cls 125(3), 129(1). [Back] Note 47 Though it would be free to order an alteration in other cases if it considered it to be appropriate. [Back] Note 48 The rules which impose a duty on the registrar to alter the register are likely to be much more sweeping: see below, para 10.20. [Back] Note 50 See paras 8.23-8.31. [Back] Note 51 See Law Com No 254, paras 8.47-8.53. We deliberately did not express any provisional view on the width of the provision. [Back] Note 52 See Schedule 4, paras 3, 6; Cl 128. [Back] Note 53 See above, para 10.7. [Back] Note 54 Cf Schedule 4, paras 1, 2(a). [Back] Note 55 The proprietor commonly does consent in practice. [Back] Note 56 Including for these purposes the benefit of any registered estate, such as an easement, that subsists for the benefit of that title: Schedule 4, para 3(4). [Back] Note 57 Schedule 4, para 3(1), (2). [Back] Note 58 For these, see above, para 10.13. [Back] Note 59 Schedule 4, para 1(b); above, para 10.6. [Back] Note 60 Law Com No 254, para 8.29. [Back] Note 61 As where events subsequent to the acquisition of the land by the registered proprietor mean that the register no longer accurately records the true state of the title. Cf above, para 10.7(1). [Back] Note 62 Ibid, paras 8.24-8.26. [Back] Note 65 See Chowood Ltd v Lyall (No 2) [1930] 2 Ch 156, 166, 167; Epps v Esso Petroleum Co Ltd [1973] 1 WLR 1071, 1078. [Back] Note 67 See Cl 27(5). Normally, as that subclause makes apparent, where there is a vesting by operation of law, the legal estate does not vest until the transferee is registered as the new proprietor. See above, paras 4.16—4.20. [Back] Note 68 It is very common for personal representatives not to have themselves registered as proprietor. [Back] Note 69 See Part XIV of this Report. [Back] Note 71 Adverse possession has been described as “possession as of wrong”: see Buckinghamshire County Council v Moran [1990] Ch 623, 644, per Nourse LJ; Sze To Chun Keung v Kung Kwok Wai David [1997] 1 WLR 1232, 1233, per Lord Hoffmann. [Back] Note 73 This reverses the present law. It has been held that a mortgagee in possession is not a proprietor who is in possession for the purposes of Land Registration Act 1925, s 82(3): see Hayes v Nwajiaku [1994] EGCS 106. [Back] Note 74 Normally, where land is settled, the registered proprietor will be the tenant for life. He or she will then be a proprietor in possession within Cl 128(1). However, there may be some cases where settled land is vested in statutory owners and where the beneficiaries under the trust are in possession. This might happen if, for example, the person entitled to a life interest were a minor. See Settled Land Act 1925, s 23. [Back] Note 76 See Law of Property Act 1925, s 99(2). [Back] Note 77 Epps v Esso Petroleum Co Ltd [1973] 1 WLR 1071, 1078, per Templeman J. [Back] Note 78 Ibid, at p 1079, per Templeman J. [Back] Note 79 Or is in the possession of the proprietor, but in circumstances where rectification can nonethless be ordered: see above, para 10.15. [Back] Note 80 Schedule 4, para 3(3). [Back] Note 81 See above, para 10.10, where these are explained. [Back] Note 82 An example might be where a registered proprietor had died or become insolvent and his personal representatives or trustee in bankruptcy respectively applied to be registered as proprietor of his or her registered estate. In each case, the title to the registered estate would have vested in the applicant by operation of law: see above, para 4.19. [Back] Note 83 Schedule 4, para 5(a)-(c). [Back] Note 84 Schedule 4, para 5(d). There is obviously some overlap with para 5(b) (alteration to bring the register up to date). [Back] Note 85 See above, para 6.51. [Back] Note 87 For the power to make rules which will authorise the registrar to contract-out the making of alterations to the register, see below, para 10.23. [Back] Note 88 See Schedule 4, para 7. Such rules will be land registration rules and will be laid before Parliament only: Cls 125(3), 129(1). [Back] Note 89 Schedule 4, para 7(a). [Back] Note 90 Compare the position that is likely to apply to the court: above, para 10.12. There may be cases where the registrar cannot alter the register, because it is, in practice, impossible for him to discover in whom the land is now vested. For example, there are still some parcels of land which are registered in the name of “London County Council”. There have been a succession of statutory vestings since the dissolution of the London County Council, and it is often very difficult to ascertain the body in which the land is now vested. For an illustration, see Prudential Assurance Co Ltd v Eden Restaurants (Holborn) Ltd [2001] L & TR 480. [Back] Note 91 Schedule 4, para 7(b)-(d). [Back] Note 92 Cl 73; see below, para 16.6. [Back] Note 93 Cf Cl 106(1); below, para 16.7. [Back] Note 94 See Cl 105; Schedule 7; below, para 16.3. [Back] Note 95 See below, paras 16.6 and following. [Back] Note 96 See paras 10.15-10.17. [Back] Note 97 See Schedule 4, para 6. [Back] Note 98 See above, para 10.18. [Back] Note 99 Schedule 4, para 6(3). [Back] Note 100 See below, para 13.36. [Back] Note 101 Schedule5, para 1(2)(b). [Back] Note 102 See below, para 13.39. [Back] Note 103 Schedule 4, para 9(1). [Back] Note 104 Ibid, para 9(2). [Back] Note 105 See Land Registration Act 1925, s 83(9). [Back] Note 106 See Land Registration and Land Charges Act 1971, s 2. [Back] Note 107 It is easy to see how such costs might be incurred, as where the registrar seeks to verify whether certain entries on the register are spent, and the registered proprietor has to incur expense in taking legal advice to resolve the matter. [Back] Note 108 For the registrar’s power under the Bill to pay indemnity in respect of costs incurred in relation to a claim for rectification, see below, para 10.45. [Back] Note 109 See above, para 3.65. [Back] Note 111 See Cl 15(1), (2); above, para 3.56. [Back] Note 114 Cl 20(1). The order has effect when served on the registrar. He is under a duty to give effect to it: Cl 20(2). [Back] Note 116 Cl 21(3). When the court orders an alteration, it can award costs under the general rules found in CPR r 44. [Back] Note 117 Cl 20(3) (orders of the court); Cl 21(2) (alteration by the registrar). Such rules will be land registration rules and will be laid before Parliament only: Cls 125(3), 129(1). [Back] Note 118 Cl 20(3)(a) (orders of the court); Cl 21(2)(a) (alteration by the registrar). [Back] Note 119 See para 10.23; Schedule 5, para 1(2)(b). [Back] Note 120 Law Com No 254, para 8.43. [Back] Note 121 Schedule 10, para 6(e). See above, para 9.80. Such rules will be land registration rules and will be laid before Parliament only: Cls 123, 125(3), 129(1). [Back] Note 122 See para 10.4. [Back] Note 123 Law Com No 254, para 8.2. [Back] Note 124 See Cl 102; Schedule 8. [Back] Note 125 Schedule 8, para 1(1). [Back] Note 126 Ibid, para 11(1). [Back] Note 127 Ibid, para 1(1)(a). For the meaning of rectification, seeibid, para 11(2); and para 10.6, above. [Back] Note 128 Sections 77(5) and 83(4) respectively. [Back] Note 129 See Schedule 8, para 1(2). [Back] Note 130 See above, paras 9.16 and following. [Back] Note 131 An example might be where a possessory title was upgraded to an absolute one after 12 years under the power conferred by Cl 62(5). A person under a disability, whose rights had not been extinguished after 12 years, might be able to establish a claim that, by granting an absolute title, the registrar had deprived him of the power to challenge the validity of the original registration with possessory title. [Back] Note 132 [1906] 2 Ch 47. [Back] Note 133 Under the legislation then current, registration was merely a ministerial act by the registrar. It did not confer on the transferee any estate or right that he or she did not have before the registration. That principle was itself changed by the Land Registration Act 1925: see s 69(1). Its effect is replicated in Cl 58 of the Bill. See above, para 9.4. [Back] Note 134 Schedule 8, para 1(1)(b). [Back] Note 135 Ibid, para 1(3). [Back] Note 136 As where there is a “proprietor in possession”, and neither of the circumstances in which the register can be rectified against such a proprietor is applicable: see above, paras 10.15, 10.17. [Back] Note 137 See Freer v Unwins Ltd [1976] Ch 288. [Back] Note 138 See Schedule 8, para 1(3). [Back] Note 139 See s 2 of that Act, substituting a new s 83 in the Land Registration Act 1925. [Back] Note 140 Schedule 8, para 1(1)(c). In relation to land with registered title, the register is necessarily conclusive and prevails over the contents of any certificate of search. [Back] Note 141 See Cl 70; above, para 9.61. [Back] Note 142 Schedule 8, para 1(1)(d). [Back] Note 143 See below, para 9.45. [Back] Note 144 See Cl 67. Cl 67(2) provides expressly that a person who relies on an official copy in which there is a mistake is not liable for loss suffered by another by reason of that mistake. That other party will be entitled instead to indemnity under Schedule 8, para 1(1)(d). [Back] Note 145 See above, para 9.45 [Back] Note 146 Schedule 8, para 1(1)(e). [Back] Note 147 Cl 118; above, paras 9.48 and following. This provision is based upon, but substantially extends the scope of, Land Registration Act 1925, s 110(4). [Back] Note 148 See above, para 9.50. [Back] Note 149 Section 83(3). [Back] Note 150 Schedule 8, para 1(1)(f). [Back] Note 152 Schedule 8, para 1(1)(g). [Back] Note 153 See Cl 19(1); see above, paras 3.65, 3.66. [Back] Note 154 Cls 20, 21; above, para 10.26. [Back] Note 155 Such as a Community Legal Service charge under Access to Justice Act 1999, s 10(7). [Back] Note 156 Cl 50; above, para 7.40. This is a new duty: it has no parallel in the Land Registration Act 1925. [Back] Note 157 Schedule 8, para 1(1)(h). [Back] Note 158 Schedule 8, para 2. [Back] Note 159 This follows from Cls 11(3), 12(3) (effects of first registration); and 129 (definition of “land”). [Back] Note 160 Schedule 8, para 1(1). [Back] Note 161 Direct loss would include (for example) the value of the land of which the claimant for indemnity had been deprived. [Back] Note 162 As, for example, where a valuable contract to sell the land was lost as a result of one of the grounds that gives rise to indemnity. [Back] Note 163 That is, one of the circumstances listed above in paragraphs 10.31-10.38. [Back] Note 164 See Schedule 8, para 3; explained at para 10.45. [Back] Note 165 Schedule 8, para 6. Compare Land Registration Act 1925, s 83(8), from which this provision derives. Cf Kingsalton Ltd v Thames Water Developments Ltd [2001] EWCA Civ 20, [45], where Arden LJ held that the court’s power to decline rectification did not contravene Article 1 of the First Protocol of the European Convention on Human Rights because of the power to pay compensation under s 83(8). [Back] Note 166 Under Schedule 8, para 1(1)(a). [Back] Note 167 Schedule 8, para 6(a). [Back] Note 168 Ibid, para 6(b). [Back] Note 169 The basis for this practice is to be found in Land Registration and Land Charges Act 1971, s 2(5), which permits the registrar to settle by agreement claims for indemnity. That subsection will be repealed by the Bill. [Back] Note 170 Schedule 8, para 9; below, para 10.44. [Back] Note 171 See, eg, Roger J Smith, Property Law (3rd ed 2000), p 244. [Back] Note 172 Reflecting what has been the long-standing practice of the Registry. [Back] Note 173 It is true that, if the rate of increase in the price of land is greater than interest rates, the claimant will not be fully compensated. But that should be set against the possibility -which has occurred in comparatively recent memory -that land prices may fall, or may increase at a rate that is lower than interest rates. [Back] Note 174 Schedule 8, para 9. [Back] Note 175 Such rules will be land registration rules and will be laid before Parliament only: Cls 125(3), 129(1). [Back] Note 176 Replicating the effect of provisions of the Land Registration Act 1925, s 83(5)(c), (9). [Back] Note 177 Schedule 8, para 3(1). [Back] Note 178 Transfer of Land: Land Registration (1995) Law Com No 235, para 4.12. [Back] Note 179 Schedule 8, para 3(2). [Back] Note 180 Schedule 8, para 3(3). [Back] Note 181 Seeibid, para 7; below, para 10.50. [Back] Note 182 Schedule 8, para 7(2). This provision replicates in part the effect of s 2(2) of the Land Registration and Land Charges Act 1971 (which is repealed by the Bill). [Back] Note 183 Schedule 8, para 4(1). [Back] Note 184 Ibid, para 4(2). [Back] Note 185 As substituted by Land Registration Act 1997, s 2. [Back] Note 186 Schedule 8, para 8, replicating the effect of Land Registration Act 1925, s 83(12). [Back] Note 187 Schedule 8, para 8(a). [Back] Note 188 Limitation Act 1980, s 5. [Back] Note 189 Schedule 8, para 8(b). [Back] Note 190 Ibid, para 5(1)(a); replicating in part the effect of Land Registration Act 1925, s 83(5)(a). [Back] Note 191 Schedule 8, para 5(1)(b); replicating in part the effect of Land Registration Act 1925, s 83(5)(a). In determining whether the loss suffered by the claimant was wholly the result of his or her own lack of proper care, it is not appropriate to apply a “but for” test. If there are in fact several causes of the loss, even though all or some of them would not have occurred but for something done by the claimant, this provision will not bar his or her claim: see Dean v Dean (2000) 80 P & CR 457. [Back] Note 192 Schedule 8, para 5(3); replicating the effect of Land Registration Act 1925, s 83(7). [Back] Note 193 See Land Registration Act 1925, s 83(5)(a), as amended by Land Registration and Land Charges Act 1971, s 3(1). [Back] Note 194 See Land Registration Act 1925, s 83(6) (as substituted by Land Registration Act 1997, s 2). [Back] Note 195 Schedule 8, para 5(2). Land Registration Act 1925, s 83(6) employed the phrase “to such extent as is just and equitable having regard to his share in the responsibility for the loss”, echoing the words of Law Reform (Contributory Negligence) Act 1945, s 1(1). The substitution of “fair” for “just and equitable” in the Bill is not intended to change the law, but is merely a simplification and modernisation of the language. [Back] Note 196 Schedule 8, para 1(1). [Back] Note 197 See above, para 10.20. [Back] Note 198 Cl 73; below, para 16.6. Cf above, para 10.21. [Back] Note 199 See above, paras 10.33-10.38. [Back] Note 200 Cf Schedule 8, para 1(1) (“a person is entitled to be indemnifiedby the registrar...”). [Back] Note 201 Schedule 8, para 7(1). Cf above, para 10.45. [Back] Note 202 Which is to be repealed. [Back] Note 203 Land Registration and Land Charges Act 1971, s 2(3), presently provides that, on an application under s 2(1), the court shall not order the applicant, even if unsuccessful, to pay costs except his or her own unless it considers that the application was unreasonable. This provision is not replicated in the Bill because it has tended to encourage hopeless appeals to the court to contest awards of (or a refusal to award) indemnity. [Back] Note 204 See Land Registration Act 1925, s 83(10), (11). These provisions were introduced by the Land Registration Act 1997, with the intention of clarifying and strengthening the Registry’s rights of recourse: see Transfer of Land: Land Registration (1995) Law Com No 235, paras 4.10, 4.11. Prior to the 1997 Act, the Registry’s rights of recourse were much more limited: see Land Registration Act 1925, s 83(9) as originally enacted. These new rights of recourse are being enforced by the Land Registry: see HM Land Registry, Annual Report and Accounts 1999 ¾ 2000, p 25, showing that the Registry recovered nearly onefifth of the sum paid out in indemnity during that financial year. [Back] Note 205 Including any interest paid on an indemnity: see Schedule 8, para 10(3). [Back] Note 206 These are conferred without prejudice to any other rights of recourse that he may have:ibid, para 10(1). For examples of such other rights, see Housing Act 1985, s 154(5); s 171G; Sched 9A, para 9(2); s 547; Sched 20, para 17(2); Housing Act ss 81(9)(c), 133(8)(c). [Back] Note 207 Schedule 8, para 10(1)(a). In cases of fraud, there is no requirement that the recipient of any indemnity could have sued the perpetrator of the fraud if indemnity had not been paid, though there will be few cases where he or she could not have done. [Back] Note 208 Schedule 8, paras 10(1)(b), 10(2)(a). An example would be where the error in the register was brought about because of the negligence of the solicitor or licensed conveyancer who was acting for the party who suffered the loss indemnified by the Registry. [Back]
