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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(5) (9 July 2001) URL: http://www.bailii.org/ew/other/EWLC/2001/271(5).html Cite as: [2001] EWLC 271(5) |
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PART V PRIORITIES
INTRODUCTION
5.1 In this Part we consider the principles that determine the priority of interests in registered land under the Bill.[1] In the Consultative Document we examined the rules that presently governed such priority.[2] We did not consider that major changes were required to the law, though we did consider that there should be a clear statutory statement of what the relevant principles were.[3]
5.2 The essence of the present law is that the priority of interests in registered land is normally determined by the date of their creation, and this is so regardless of whether or not they are protected on the register.[4] This has been laid down in relation to minor interests on the basis that such interests are equitable.[5] The rules that determine the priority of competing minor interests[6] are therefore the traditional rules that govern competing equitable interests. These are compendiously expressed by the maxim, "where the equities are equal, the first in time prevails".[7] That maxim is not always easy to apply because of the uncertainty as to when the equities are not equal, namely in cases of negligence or gross carelessness. By way of an exception to this general principle, what the Land Registration Act 1925 calls "registered dispositions",[8] are given "special effect or priority" when made for valuable consideration.[9] The "special effect or priority" is that any interests not protected on the register are subordinated to a registered disposition unless such unregistered interests are overriding interests.[10]
5.3 The main reason why we did not consider that any elaborate new scheme was needed to determine the priority of interests in registered land was because of the impact of the scheme of electronic conveyancing that we proposed in the Consultative Document. The essential feature of that scheme, which we explain in detail below,[11] is that it will not be possible to create or transfer many interests in registered land expressly except by simultaneously registering them or protecting them by a notice in the register. The necessary corollary of that is that the register will in time become conclusive as to the priority of such interests because the date of the creation of an interest and its registration will be one and the same. The proposals in the Consultative Document were supported by nearly 70 per cent of those who responded to them.
5.4 In the Consultative Document, we also made recommendations in relation to certain specific "rights of uncertain status".[12] These proposals were directed at protecting the priority of the interests in question. We explain the provisions of the Bill in relation to these rights below. [13]
PRIORITY UNDER THE BILL
The general rule
5.5 Clause 28(1) states the general principle of priority under the Bill. Subject to the rules on registrable dispositions and Inland Revenue charges explained below,[14] the priority of an interest affecting a registered estate or charge is not affected by a disposition of the estate or charge. This is so whether or not the interest or disposition is registered.[15] It follows therefore, that in cases that fall within this general rule, the priority of any interest in registered land is determined by the date of its creation. Unlike the first in time rule that presently applies to competing minor interests, this rule is an absolute one, subject only to the exceptions provided for by the Bill. No question arises as to whether "the equities are equal". References in the Bill to an interest affecting an estate or charge are to an adverse right affecting the title to the estate or charge.[16]
The principal exception: registrable dispositions that have been registered
The exception
5.6 As now, there is, under the Bill, a significant exception to this general principle. If a registrable disposition of either a registered estate or a registered charge is made for valuable consideration, completion of the disposition by registration has the effect of postponing to the interest under the disposition any interest affecting the estate or charge immediately before the disposition whose priority is not protected at the time of registration.[17] The various elements of this important principle require explanation.
Applicable only to registrable dispositions
5.7 First, the exception applies only to a registrable disposition of a registered estate or charge. We have explained in Part IV of this Report that registrable dispositions are dispositions of a registered estate or charge that transfer or create a legal estate.[18] Such dispositions are required to be completed by registration and do not operate at law until they are registered.[19]
Made for valuable consideration
5.8 Secondly, the principle applies only to registrable dispositions made for valuable consideration. Valuable consideration does not include either-(1) marriage consideration; or (2) a nominal consideration in money.[20] As regards the first but not the second of these exceptions, the Bill changes the law.[21] It implements a recommendation in the Consultative Document[22] which was supported by all of those who responded to the point. As we explained, marriage consideration is an anachronism. A transfer of land in consideration of marriage is normally a wedding gift and we cannot see why one particular category of gifts should be treated as if it were not a gift.
Priority conferred
5.10 When the exception applies it gives the disposition priority over any interest-
(1) that affects the estate or charge immediately prior to the disposition; and
(2) whose priority is not protected at the time of registration.
A consequence of this is that if, in the period between the disposition and its registration, the disponee created an interest in favour of a third party,[23] the disponee would not be able to claim priority over it and the general principle in paragraph 5.5, above, would apply.[24] That is, of course, as it should be. The disponee should not be able to create an interest and then claim to take free of it because it had not been protected in the register before he or she happened to be registered as proprietor of the estate or charge.[25] In this context, there is one special case that has caused difficulties in the past,[26] namely the unpaid vendor's lien. An unpaid vendor's lien arises when the seller contracts to sell the land to the buyer and not on completion when the transfer is executed.[27] For that reason, it will not take effect as a right created by the transferee between transfer and registration. Because it pre-dates the transfer, it will not therefore be binding on the transferee when he or she is registered as proprietor unless the seller protects the lien by the entry of a notice against his or her own title prior to the registration of the transfer.[28] We gave this issue considerable thought. In the end, however, we have concluded that it is unnecessary to create any special regime to ensure that a buyer does not take free of an unpaid vendor's lien when the transfer to him or her is registered. Unpaid vendors' liens that are intended to survive completion are uncommon. It should be enough if practitioners are alerted to the need to enter a notice in respect of them prior to or simultaneously with the registration of the transfer.
When the priority of an interest will be protected
5.11 The Bill explains when the priority of an interest will be protected so that it will not be postponed to a registered disposition for valuable consideration.[29] This will be so in any case where that interest-
(1) is a registered charge;
(2) is the subject of a notice in the register;[30]
(3) is an unregistered interest that overrides a registered disposition under Schedule 3;[31] or
(4) appears from the register to be excepted from the effect of registration.[32]
5.12 The Bill provides that if an interest has been the subject of a notice in the register at any time since the coming into force of the Bill, it will not fall within paragraph 5.11(3).[33] In other words, if a notice were entered in the register in respect of an interest that fell within Schedule 3, it could never again become an overriding interest, even if the notice were, by mistake, removed from the register.[34] This is one facet of the policy of the Bill to reduce the numbers of overriding interests.[35]
5.13 Furthermore, in the case of a disposition of a leasehold estate, or of a charge relating to such an estate, the burden of any interest incident to that estate will also be protected.[36] This will include, for example, the burden of restrictive covenants affecting that estate. Such matters are not entered on the register, as there is no need for them to be. Any person dealing with the property will, in practice, always examine the lease.
The priority of registered charges
5.14 The Bill makes specific provision as to how registered charges on the same registered estate or charge are to rank between themselves.[37] This is explained in Part VII of this Report.[38]
The grant of leases that are not registrable dispositions
5.15 The Bill makes special provision for the effect of the grant of a lease out of a registered estate that is not a registrable disposition, such as the grant of a lease for seven years or less that is not otherwise required to be registered.[39] The exception to the general principle of priority that is set out above at paragraph 5.5, applies to the grant of such leases as if that grant did involve the making of a registrable disposition that was registered at the time of the grant.[40] This replicates the effect of the present law.[41] As regards other unregistered interests,[42] their priority when they are created or arise is, of course, determined by the general principle explained in paragraph 5.5 above.[43]
The irrelevance of notice
5.16 As a general principle, the doctrine of notice, which still has a residual role in relation to the priority of certain interests in unregistered land, has no application whatever in determining the priority of interests in registered land.[44] Whether or not a disponee of an interest in registered land is bound by a prior interest is determined by the principles set out above. Under those rules, subject to what is said below,[45] issues as to whether that disponee had knowledge or notice of a prior interest, or whether he or she acted in good faith, are irrelevant. Although the point is not completely free from doubt, we do not consider that this approach involves a change in the law.[46] It accords with a recommendation in the Consultative Document[47] that was overwhelmingly supported by those who responded to it.[48] It also accords with one of the principal objectives of the Bill, that all conveyancing inquiries should, so far as is possible, be capable of being conducted on line.[49]
5.18 First, whether a first registered proprietor is bound by interests acquired under the Limitation Act 1980 depends upon whether that first registered proprietor has notice of those interests.[50] We have explained in Part III of this Report why this is so.[51] It will be noted that in this situation, the issue is whether the first registered proprietor is bound by interests that arose when the title was unregistered.
5.19 Secondly, the effect of a disposition of registered land on an Inland Revenue charge is determined in accordance with the provisions of the Inheritance Tax Act 1984, under which principles of good faith are relevant. This is explained below.[52]
5.20 Thirdly, the effect of a disposition of a registered estate or charge after the proprietor has become bankrupt depends upon principles of good faith and notice. As we explain in Part XI of this Report, the Bill follows the provisions of the Insolvency Act 1986 in this regard.[53] It should be noted that neither a petition in bankruptcy nor a bankruptcy order is an interest affecting an estate or charge for the purposes of the Bill.[54] Such matters are, therefore, necessarily outside the priority provisions explained above.
(1) an interest belonging to a person in actual occupation where-
(a) that person's occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition; and
(b) the disponee does not have actual knowledge of the interest at that time;[55]
(2) a legal easement, or a profit à prendre not registered under the Commons Registration Act 1965, which at the time of the disposition-
(a) is not within the actual knowledge of the disponee; and
(b) would not have been obvious on a reasonably careful inspection of the servient tenement at the time of the disposition.[56]
What is in issue in each of these cases is, of course, whether a disponee is bound by an unregistered interest. However, the principles that determine this in relation to these two classes of interests are not drawn from the notice-based principles of priority applicable to unregistered land. They are, instead, derived by analogy from the rule of conveyancing law that a seller of land must disclose to the buyer prior to contract any irremovable latent incumbrances of which the buyer does not actually know.[57] An incumbrance is latent if it is not obvious on a reasonably careful inspection of the land. An incumbrance may be latent therefore -so that the seller is obliged to disclose it -even though a buyer has constructive notice of it.[58] It follows that a disponee may take free of an overriding interest falling within (1) or (2) above, even though he or she has constructive notice of it. This is in accordance with the policy of the Bill to reduce the burden of enquiries that have to be made when dealing with a registered estate or charge and to limit, so far as possible, those inquiries that cannot be conducted on line.[59]
SPECIAL CASES
Inland Revenue charges
5.23 Under the Inheritance Tax Act 1984 inheritance tax is chargeable on the value transferred by a chargeable transfer.[60] A chargeable transfer is a transfer of value which is made by an individual that is not an exempt transfer.[61] A transfer of value is, in essence, a disposition that brings about the diminution of the transferor's estate,[62] and the value transferred is the difference between the value of a person's estate immediately before the transfer and its value afterwards.[63] The persons liable to pay the charge include (for example) the transferor and any person whose estate is increased by the transfer.[64]
5.24 Under section 237 of the Inheritance Tax Act 1984, a charge is imposed on specified property in respect of unpaid tax[65] on the value transferred by a chargeable transfer. Where there is a disposition of property subject to an Inland Revenue charge, it takes effect subject to that charge.[66] This general principle is, however, subject to certain exceptions. In particular, where there is a disposition to a purchaser of registered land that is subject to such a charge and the charge is not protected by a notice in the register, the land ceases to be subject to the charge which attaches instead to the proceeds.[67] For these purposes, a purchaser is defined as "a purchaser in good faith for consideration in money or money's worth other than a nominal consideration and includes a lessee, mortgagee or other person who for such consideration acquires an interest in the property in question".[68]
5.25 The principles explained in paragraph 5.24 are presently applied to dispositions of registered land by section 73 of the Land Registration Act 1925.[69] Clause 31 of the Bill similarly provides that the effect of a disposition of a registered estate or charge on an Inland Revenue charge under section 237 of the Inheritance Tax Act 1984 is to be determined in accordance with the relevant provisions of that Act,[70] and not under Clauses 28 to 30 of the Bill, explained in paragraphs 5.5-5.15, above.
Rights of pre-emption
5.26 In the Consultative Document[71] we gave the following critical explanation of the present legal position of rights of pre-emption-
A right of pre-emption is a right of first refusal. The grantor undertakes that he or she will not sell the land without first offering it to the grantee. It is similar to but not the same as an option, because the grantee can purchase the property only if the grantor decides that he or she wants to sell it.
The precise status of a right of pre-emption was uncertain until the decision of the Court of Appeal in Pritchard v Briggs,[72] an uncertainty that that decision has not wholly dispelled. In some cases it had been held that it was merely a contractual right and could never be an equitable proprietary interest.[73] In others, the right was held to create an equitable interest in land from its inception.[74] There are also a number of statutory provisions which were enacted on the assumption that rights of pre-emption created interests in land.[75]
In Pritchard v Briggs,[76] a majority of the Court of Appeal expressed the view that a right of pre-emption did not confer on the grantee any interest in land. However, when the grantor chose to sell the property, the right of pre-emption became an option and, as such, an equitable interest in land.[77] It should be noted that the remarks of the Court of Appeal were only obiter[78] and have been recognised as such.[79] They have been much criticised,[80] and this criticism has not escaped judicial attention.[81] Not only was there no previous authority for "this strange doctrine of delayed effectiveness," [82] but if it is correct its effects can be unfortunate-
(1) It can lead to something "which a sound system of property law ought to strive at all costs to avoid: the defeat of a prior interest by a later purchaser taking with notice of the conflicting interest," [83] as indeed happened in Pritchard v Briggs itself. For example, if A grants B a right of pre-emption which B immediately registers, and A then mortgages the land to C, it seems likely that C will not be bound by the right of pre-emption because the execution of the mortgage probably does not cause the pre-emption to crystallise into an equitable interest. C could therefore, in exercise of his paramount powers as mortgagee, sell the land free from B's right of pre-emption.
(2) Although the person having the benefit of a right of pre-emption may register it at the time it is created either as a land charge (where the title is unregistered)[84] or as a minor interest (where the title is registered),[85] the right is effective for the purposes of priority only from the moment when the grantor demonstrates an animus to sell the land, not from the date of registration.[86]
(3) Similarly, if the grantee of the right of pre-emption is in actual occupation of the land to which it relates and the title is registered, the right of pre-emption takes effect as an overriding interest under section 70(1)(g) of the Land Registration Act 1925 only when the grantor does something to indicate an intention to sell.[87] The precise time when that occurs is uncertain, but it will be no later than the time when the contract to sell to a third party is executed.[88]
5.27 In the Consultative Document, we recommended that a right of pre-emption in registered land should take effect from the time when it was created and not, as Pritchard v Briggs suggested, only from the time when the grantor decided to sell.[89] This recommendation was supported by 96 per cent of those who responded to the point. It was clear from the tenor of the responses that the result in Pritchard v Briggs[90] was not well regarded because of the practical difficulties to which it gave rise.
5.28 The Bill provides that a right of pre-emption in relation to registered land has effect from the time of creation as an interest capable of binding successors in title (subject to the rules, explained above, about the effect of dispositions on priority[91]).[92] In other words, it takes its priority from the date of its creation. If the dicta in Pritchard v Briggs do represent the present law, then the Bill changes the law in its application to registered land.[93] The change is therefore prospective only. It applies to rights of pre-emption created on or after the Bill comes into force.[94]
An equity arising by estoppel
5.29 In the Consultative Document[95] we explained how the doctrine of proprietary estoppel operated,[96] as follows-The owner of land, A, in some way leads or allows the claimant, B, to believe that he or she has or can expect some kind of right or interest over A's land. To A's knowledge, B acts to his or her detriment in that belief. A then refuses B the anticipated right or interest in circumstances that make that refusal unconscionable. In those circumstances, an "equity" arises in B's favour. This gives B the right to go to court and seek relief. The court has a very wide discretion as to how it will give effect to this equity, but in so doing it will "analyse the minimum equity to do justice" to B.[97] It will not give him or her any greater rights than he or she had expected to receive. The range of remedies that the courts have shown themselves willing to give is very wide. At one extreme, they have ordered A to convey the freehold of the land in issue to B.[98] At the other, they have ordered A to make a monetary payment to B (in some cases secured on A's land).[99]
5.30 Our concern was with the status of B's "inchoate equity" that arises after he or she has acted to his or her detriment but before the court can make an order giving effect to it. Although the point is not finally settled, the weight of authority firmly favours the view that such an equity is a proprietary and not merely a personal right.[100] HM Land Registry treats it as such, permitting the entry of a caution or notice in relation to such equities.[101] It has also been assumed that a person in actual occupation can protect such an equity in relation to land as an overriding interest.[102] We pointed out in the Consultative Document that proprietary estoppel is increasingly important as a mechanism for the informal creation of property rights. To put the matter beyond doubt, we recommended that the proprietary status of an equity arising by estoppel should be confirmed in relation to registered land.[103] It could therefore be protected by the entry of a notice in the register or, where the claimant was in actual occupation of the land in relation to which he or she claimed an equity, as an overriding interest. This recommendation was more contentious than our proposal in relation to rights of pre-emption. It was supported by 55 per cent of those who responded to the point (of whom there were not many). Those who opposed it were mainly academics, several of whom were defending their published views. On the other hand members of the legal profession generally supported the proposal.[104] We have therefore decided to take the proposal forward, particularly as we consider that we are merely confirming what is probably the present law.
5.31 The Bill declares for the avoidance of doubt that, in relation to registered land, an equity by estoppel has effect from the time when the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority[105]).[106] As the provision is merely declaratory, there are no transitional provisions.
A mere equity
5.32 Although we did not make any specific recommendations in relation to mere equities in the Consultative Document,[107] it became clear to us that some provision would be needed in relation to them in the Bill. It has been said that— The Court of Equity has been careful to distinguish between two kinds of equities, first an equity which creates an estate or interest in land and, secondly, an equity which falls short of that.[108]
(1) it is an equitable proprietary right that is capable of binding successive owners of land;[109]
(2) as such it is capable of existing as an overriding interest in relation to registered land;[110]
(3) it is "ancillary to or dependant upon an equitable estate or interest in the land";[111]
(4) it appears to be used to denote a claim to discretionary equitable relief in relation to property, such as a right to set aside a transfer for fraud[112] or undue influence,[113] a right to rectify an instrument for mistake,[114] or a right to seek relief against the forfeiture of a lease after a landlord has peaceably re-entered;[115] and
(5) where title is unregistered, it is capable of being defeated by a bona fide purchaser of either a legal estate or an equitable interest for value without notice.[116]
5.34 There is no clear authority as to the priority of a mere equity in relation to registered land as against a later equitable interest. However, there seems to be nothing to displace the rule applicable to unregistered land that is explained above at paragraph 5.33(5). If this is so, then a mere equity will be defeated by the buyer of a later equitable interest without notice of that equity.[117] If this is so, it is intrinsically unsatisfactory, given that questions of notice are irrelevant as to the priority of interests in registered land.[118]
5.35 The present law governing mere equities has not escaped criticism. In particular, the rule that a mere equity can be defeated by a bona fide purchaser of an equitable interest for value without notice is considered to be anomalous. This is because the distinguishing characteristic of a mere equity -that it is a claim to discretionary equitable relief -does not justify treating it differently from other equitable interests. Thus an estate contract creates an equitable interest in land even though it is in fact dependent upon the availability of specific performance.[119]
5.36 The effect of the Bill is as follows.
(1) It declares for the avoidance of doubt that, in relation to registered land, a mere equity has effect from the time when the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority[120]).[121] In one sense this is, of course, no more than declaratory of the present law, because it is not disputed that a mere equity is a proprietary right of some kind.[122]
(2) Because a mere equity is an interest for the purposes of the Bill, it is brought within the general principles of priority applicable to registered land that are explained above in paragraphs 5.5-5.15. If our analysis in paragraph 5.34 above, is correct, this will involve a change in the law. It means that a mere equity will not be defeated by a later equitable interest in registered land that is created for valuable consideration, where the grantee was a buyer in good faith and without notice of the mere equity.
Inchoate rights arising under the Prescription Act 1832
5.37 There is one matter that we raised in the Consultative Document that we do not now propose to take forward because, on further examination of the relevant legal principles, we have concluded that no change to the law is needed. The matter was concerned with a facet of the law relating to prescription and was as follows.[123] There are three methods by which easements and profits à prendre may be acquired by prescription -at common law, by the doctrine of lost modern grant, and under the Prescription Act 1832. There is some uncertainty as to the status of rights in the course of acquisition by prescription over registered land under the 1832 Act due to the provisions of that Act. It provides that certain rights are deemed to be either free from challenge on the ground that they had not been enjoyed since 1189, or "absolute and indefeasible", depending on the nature of the right asserted and the length of time that it has been exercised without interruption.[124] However, each of the specified periods is "deemed and taken to be the period next before suit or action" in which "the claim or matter to which such period may relate shall have been brought into question."[125] This provision has been taken to mean that it is only on the commencement of legal proceedings that "the enjoyment... shall ripen into a right."[126] As a result of this, however long the period of enjoyment may have been, no indefeasible right can be acquired until it is put in issue in legal proceedings. Until then, if it is a right at all, it is an inchoate one.[127]
5.38 The concern that we raised in the Consultative Document was that a person, who had been exercising a right over registered land for more than the relevant period prescribed by the Prescription Act 1832,[128] might find that his or her right was defeated. We thought that this might be so because that right might be regarded as being too shadowy to exist as an overriding interest[129] and so not bind a buyer of the servient land. We are now satisfied that there is no such problem. The issue is not about whether a person is bound by an existing property right at all, but whether there has been user of a kind that satisfies the requirements for prescription[130] for the period and in the manner prescribed by the Prescription Act 1832.[131] Once prescription has begun against a freehold estate, it will not normally be interrupted by a disposition of the land affected.
Note 1 For issues relating to the priority of charges and of further advances, see below, Part VII. [Back] Note 2 See Law Com No 254, Part VII. [Back] Note 3 Ibid, paras 7.32-7.34. [Back] Note 4 Ibid, paras 7.12, 7.18. [Back] Note 5 As we pointed out in the Consultative Document, the principles that govern the priority of overriding interests (other than leases granted for 21 years or less for which specific provision is made) are obscure: see Law Com No 254, paras 7.12-7.14. [Back] Note 6 The Bill has no explicit concept of minor interest. [Back] Note 7 See Law Com No 254, para 7.17, where the authorities are summarised. [Back] Note 8 These are dispositions that create or transfer legal estates. [Back] Note 9 Land Registration Act 1925, s 3(xxii). [Back] Note 10 Seeibid, ss 20, 23. [Back] Note 11 See Cl 93; paras 13.74 and following. [Back] Note 12 Ibid, paras 3.28-3.38. The rights in question were rights of pre-emption, an equity arising by estoppel before effect had been given to it by a court order, and an inchoate right under the Prescription Act 1832. For reasons that we explain below, at paras 5.37-5.38, the Bill does nothing in relation to the last of the three rights in question. [Back] Note 13 See paras 5.26 and following. [Back] Note 14 See paras 5.6, 5.23 , respectively. [Back] Note 16 Cl 129(3)(b). Petitions in bankruptcy and bankruptcy orders are not interests for the purposes of the Bill: see Cl 86(1); below, paras 5.20, 11.42 [Back] Note 17 Cls 29(1) (dispositions of registered estates), 30(1) (dispositions of registered charges). The Bill necessarily refers to the prior interest being postponed to the later registered disposition. The disponee will thereby take free of the unprotected interest. That does not mean that the interest is necessarily destroyed. It may still remain valid as against interests other than that of the disponee under the registered disposition. [Back] Note 18 See Cl 27; above, para 4.16. [Back] Note 21 See Land Registration Act 1925, s 3(xxxi). [Back] Note 22 See Law Com No 254, para 3.43. [Back] Note 23 Which, of course, he or she may do: see Cl 24(1)(b); above, para 4.5. [Back] Note 24 This does, of course, mean that where a person acquires land in circumstances in which he or she holds it on a resulting or constructive trust for some third party as a result of a contribution to the cost of the acquisition by that third party, the disponee cannot claim to take free of the trust. Cf David Wilde, “Resulting trusts of registered land: when is recognising them consistent with the terms of the Land Registration Act 1925” [1999] Conv 382. [Back] Note 25 The problem will disappear in due course because, electronic dispositions will take effect and be registered simultaneously: see Cl 93; above, para 5.3; below, paras 13.74 and following. [Back] Note 26 See Orakpo v Manson Investments Ltd [1977] 1 WLR 347; at pp 360, 369 respectively, discussed in Law Com No 254, para 7.36. [Back] Note 27 “As soon as a binding contract for sale of land is entered into the vendor has a lien on the property for the purchase money and a right to remain in possession of the property until payment is made. The lien does not arise on completion but on exchange of contracts. It is discharged on completion to the extent that the purchase money is paid”: Barclays Bank Plc v Estates & Commercial Ltd [1997] 1 WLR 415, 419, 420, per Millett LJ. [Back] Note 28 A registered proprietor can of course apply for entries to be made on his or her own title. [Back] Note 29 See Cls 29(2), 30(2). [Back] Note 30 For the circumstances in which a notice may be entered in the register, see below, para 6.17. [Back] Note 31 See below, paras 8.53 and following, where such overriding interests are explained. [Back] Note 32 This will be the case where there is a disposition of a registered estate or of a registered charge affecting such an estate, where that estate is registered with some title other than an absolute one. See Cls 11, 12; above, paras 3.49 and following. [Back] Note 33 Cls 29(3), 30(3). [Back] Note 34 See below, para 8.95 [Back] Note 35 For that policy, see above, paras 2.24, 2.25; and below, para 8.1. [Back] Note 36 Cls 29(2)(b), 30(2)(b). Cf Land Registration Act 1925, s 23(1)(a). [Back] Note 38 See below, paras 7.13-7.15. [Back] Note 39 For the leases that are registrable dispositions, see Cl 27(2)(b), (c); above, para 4.20. For leases that are not required to be registered, see below, paras 8.9, 8.50. [Back] Note 41 Land Registration Act 1925, ss 19(2), 22(2). Cf Law Com No 254, para 7.10. [Back] Note 42 That is overriding interests within Schedules 1 and 3; see below, Part VIII. [Back] Note 43 We explained in Law Com No 254 that the priority of such interests is uncertain under the present law, but that issues of priority in relation to such interests when they come into being will seldom if ever arise: see Law Com No 254, paras 7.12-7.14. [Back] Note 44 See Megarry & Wade’s Law of Real Property (6th ed 2000), 6-105 (where the authorities are collected). [Back] Note 45 See paras 5.17 and following. [Back] Note 46 See Law Com No 254, para 3.44. [Back] Note 47 Law Com No 254, para 3.50. [Back] Note 48 83% of those who responded to the point supported the recommendation. [Back] Note 49 Above, para 2.1. The Bill preserves the principle, presently found in Land Registration Act 1925, s 74, whereby the registrar is not affected with notice of any trust: see Cl 78. [Back] Note 50 Cls 11(4)(c), 12(4)(d). [Back] Note 51 See paras 3.46 and 3.47. [Back] Note 53 See below, para 11.42. [Back] Note 55 Schedule 3, para 2(1)(c); see below, para 8.61. [Back] Note 56 Schedule 3, para 3(1); see below, para 8.68 [Back] Note 57 For these principles, see Megarry & Wade’s Law of Real Property (6th ed 2000), 12-068. The leading case is Yandle & Sons v Sutton [1922] 2 Ch 199. It should be noted in relation to (1)(a) above, that it is not the interest that has to be apparent but the occupation of the person having the benefit of that interest. See below, para 8.62. [Back] Note 58 See, eg, Caballero v Henty (1869) LR 9 Ch App 447. [Back] Note 59 See above, paras 2.24, 2.25, 5.16; and below, para 8.1. [Back] Note 60 Inheritance Tax Act 1984, s 1. [Back] Note 61 Ibid, s 2. For exempt transfers, seeibid, Part 2. [Back] Note 62 Ibid, s 3. A person’s estate is the aggregate of all the property to which that person is beneficially entitled:ibid, s 5. [Back] Note 66 Inheritance Tax Act 1984, s 237(6). [Back] Note 67 Ibid, s 238(1)(a). [Back] Note 70 Summarised above, para 5.24. [Back] Note 71 Law Com No 254, paras 3.29-3.31. Some footnotes have been abbreviated and references have been updated. [Back] Note 73 See, eg, Murray v Two Strokes Ltd [1973] 1 WLR 823. This was also the view of Goff LJ, dissenting, inPritchard v Briggs. [Back] Note 74 See, eg, Birmingham Canal Co v Cartwright (1879) 11 ChD 421. This was also the view of Walton J at first instance in Pritchard v Briggs [1980] Ch 338. [Back] Note 75 See, eg, Law of Property Act 1925, s 186; Land Charges Act 1972, s 2(4)(iv). [Back] Note 77 Goff LJ dissented, holding that a right of pre-emption was a mere contractual right and could never be an equitable interest in land. [Back] Note 78 The conflict in that case was between a right of pre-emption and an option that was granted subsequently. The terms of the right of pre-emption and the option were such that they did not in fact conflict: the former was exercisable only prior to the death of the grantor, the latter only after his death. The view of the majority of the Court of Appeal, that the option would have taken priority over the right of pre-emption in any event (because it created an equitable interest in land when it was granted, whereas the right of pre-emption created no equitable interest until the grantor decided to sell the land), was therefore necessarily obiter. [Back] Note 79 See London & Blenheim Estates Ltd v Ladbroke Retail Parks Ltd [1994] 1 WLR 31, 38. [Back] Note 80 See especially HWR Wade, “Rights of Pre-Emption: Interests in Land” (1980) 96 LQR 488; Megarry & Wade’s Law of Real Property (6th ed 2000), 12-061-12-063. [Back] Note 81 See the remarks of Peter Gibson LJ in London & Blenheim Estates Ltd v Ladbroke Retail Parks Ltd [1994] 1 WLR 31, 38, in which both Beldam and Ralph Gibson LJJ concurred. [Back] Note 82 HWR Wade, “Rights of Pre-Emption: Interests in Land” (1980) 96 LQR 488, 489. [Back] Note 84 Land Charges Act 1972, s 2(4)(iv). [Back] Note 85 Land Registration Act 1925, ss 49(1)(c), 59. [Back] Note 86 Ruoff & Roper, Registered Conveyancing, 35-18. [Back] Note 87 Kling v Keston Properties Ltd (1983) 49 P & CR 212. [Back] Note 88 Ibid, at p 217. [Back] Note 89 Law Com No 254, para 3.32. [Back] Note 91 See paras 5.5-5.15. [Back] Note 93 In an ideal world we would make provision for both registered and unregistered land. However that is not possible within the scope of the present Bill. We consider that the opportunity should be taken to change the law in relation to registered land, particularly as unregistered land is unlikely to have an extended future. [Back] Note 95 Law Com No 254, para 3.34. [Back] Note 96 For an account of the law, see Megarry & Wade’s Law of Real Property (6th ed 2000), Chapter 13. [Back] Note 97 Crabb v Arun District Council [1976] Ch 179, 198, per Scarman LJ. [Back] Note 98 See, eg, Pascoe v Turner [1979] 1 WLR 431. [Back] Note 99 See, eg, Baker v Baker [1993] 2 FLR 247. [Back] Note 100 See Megarry & Wade’s Law of Real Property (6th ed 2000), 13-028-13-032, where the authorities are collected. Those who support the view that an equity is merely a personal right point to the fact that the court may not grant a proprietary but merely a personal remedy, such as an award of monetary compensation: see Law Com No 254, para 3.35. However, the same may be said of an estate contract. This creates an equitable interest in land because the contract is specifically enforceable. However, specific performance is a discretionary equitable remedy and it may be refused, leaving the claimant to his or her remedy in damages. Cf Voyce v Voyce (1991) 62 P & CR 290, 293. [Back] Note 101 See Ruoff & Roper, Registered Conveyancing, 8-02, 35-33, 36-13. [Back] Note 102 Under Land Registration Act 1925, s 70(1)(g), see eg Lee-Parker v Izzett (No 2) [1972] 1 WLR 775, 780. For the rights of occupiers under the Bill, see Schedule 1, para 2; Schedule 3, para 2; below, paras 8.14 and following and paras 8.53 and following. [Back] Note 103 Law Com No 254, para 3.36. [Back] Note 104 Both the Conveyancing and Land Law Committee of The Law Society and the Bar Council were in favour of it. [Back] Note 105 See above, paras 5.5-5.15. [Back] Note 107 They are briefly mentioned: see Law Com No 254, para 7.17. [Back] Note 108 Westminster Bank Ltd v Lee [1956] Ch 7, 19, per Upjohn J. [Back] Note 109 National Provincial Bank Ltd v Ainsworth [1965] AC 1175, 1238. [Back] Note 110 Nurdin & Peacock Plc v D B Ramsden & Co Ltd [1999] 1 EGLR 119. [Back] Note 111 National Provincial Bank Ltd v Ainsworth, supra, at p 1238, per Lord Upjohn. [Back] Note 112 Phillips v Phillips (1861) 4 De GF & J 208, 218; 45 ER 1164, 1167. [Back] Note 113 Bainbridge v Browne (1881) 18 ChD 18. [Back] Note 114 Nurdin & Peacock Plc v D B Ramsden & Co Ltd, supra. [Back] Note 115 Fuller v Judy Properties Ltd (1991) 64 P & CR 176, 184. [Back] Note 116 See, eg, Phillips v Phillips, supra, at p 218; 45 ER 1164, 1167; Mid-Glamorgan County Council v Ogwr BC (1993) 68 P & CR 1, 9. [Back] Note 117 Cf Law Com No 254, para 7.17. [Back] Note 118 See above, para 5.16. [Back] Note 119 See R J Smith, Property Law (3rd ed 2000), p 26. [Back] Note 120 See above, paras 5.5-5.15. [Back] Note 121 Cl 114. Cf above, para 5.31. [Back] Note 122 There are, therefore, no transitional provisions. [Back] Note 123 See Law Com No 254, paras 3.37, 3.38. [Back] Note 124 Sections 1 (rights of common andprofits à prendre); 2 (rights of way and other easements); and 3 (rights of light). [Back] Note 125 Prescription Act 1832, s 4. [Back] Note 126 Cooper v Hubbuck (1862) 12 CB(NS) 456, 467; 142 ER 1220, 1225, per Willes J. [Back] Note 127 Hyman v Van den Bergh [1907] 2 Ch 516, 524-525; approved on appeal: [1908] 1 Ch167. See too Colls v Home and Colonial Stores Ltd [1904] AC 179, 189-190; Newnham v Willison (1987) 56 P & CR 8, 12. [Back] Note 128 The different periods laid down in that Act are measured backwards from the time when proceedings are brought in which the right is in issue: s 4. [Back] Note 129 For the overriding status of certain unregistered easements andprofits à prendre, see below, paras 8.23, 8.68 and following. [Back] Note 130 See Megarry & Wade’s Law of Real Property (6th ed 2000), 18-122-18-131. [Back] Note 131 Cf Megarry & Wade’s Law of Real Property (6th ed 2000), 18-128, and see Pugh v Savage [1970] 2 QB 373. [Back]
