Экзамен зачет учебный год 2023 / ELC, Land Registration II

capable of being a minor interest, but there would be no further investigation of the truth or the legal merits of the claim. This is because the protection afforded by registration is not permanent: the entry may be warned off.

(8)there would be a liability to pay damages and costs for lodging a unilateral notice without reasonable cause.

6.53This is our preferred option. It would provide a single straightforward system for the protection of all minor interests other than interests under trusts. Entry of a notice would confer proprietary protection on the right. However, this option would retain the distinction between entries which had been made consensually and which could not thereafter be challenged by the registered proprietor, and unilateral entries which would be open to challenge by the registered proprietor.

6.54We ask readers whether they wish to see—

(1)the retention without any change of the present law on notices and cautions;

(2)a reformed system in which the distinction between notices and cautions would be retained, but where the lodging of a caution would be a form of proprietary protection that conferred priority on the right in question, and where other defects in the present system would be eliminated; or

(3)a new system for the protection of minor interests (other than interests under trusts of land) which would combine in one form of protection the best features of notices and cautions in the manner outlined above in paragraph 6.52; or

(4)some other model and if so what?

Restrictions and inhibitions

The scheme in outline

6.55The options for the reform of restrictions and inhibitions are more straightforward than those in relation to notices and cautions. An inhibition is simply one form of restriction in that it precludes any dealing with the land by preventing any entry on the register. We can see no reason for its retention. Our scheme is therefore one by which restrictions and inhibitions would be assimilated and a number of other changes would be made to simplify existing procedures.

When could a new restriction be entered?

6.56The new restriction would be the appropriate form of entry whenever there was some reason to limit the dispositive powers of a registered proprietor of land or of a charge. This would include cases where—

(1)all dealings with the land were to be frozen;

(2)the registered proprietor’s dispositive powers were limited;

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(3)some precondition had to be satisfied before any disposition of the land could be made; or

(4)it was necessary to obtain one or more consents to a disposition.

Although restrictions could be employed to protect property rights - to ensure for example that, in the case of a trust of land, capital monies were paid to all of the trustees - it would not be the only function of such entries. As a corollary of this, the entry of a restriction would not confer priority on, or preserve the priority of, any right that it was entered to protect. Restrictions would also perform the function presently performed by inhibitions and could therefore be employed to prevent the registration of any dealings with property.

6.57We provisionally recommend that—

(1)the registrar should be able to enter a restriction to restrict the powers of disposition of a registered proprietor, in whole or in part, whether or not subject to conditions or the obtaining of some consent;

(2)the entry of such a restriction should confer no priority on, nor preserve any existing priority of a right or interest in property, where it was entered to protect that right or interest; and

(3)inhibitions should be abolished.

Do readers agree?

It would remain the case that the registrar would be able to refuse to enter any restriction that he deemed to be “unreasonable or calculated to cause inconvenience”.199 When electronic conveyancing is introduced, it will be necessary to have in place procedures for handling certain types of restriction which are of a sensitive or potentially oppressive kind.200

Who could enter a restriction on dealings?

6.58Because the primary function of the new restriction would be to control the dispositive powers of the registered proprietor, there is no reason to confine the range of persons who could apply for a restriction to those who have a proprietary interest in the land. In particular, we consider it important that it should be possible to register a restriction where a Mareva injunction has been issued that might affect registered land, even though such an injunction operates merely in personam.201 However, we consider that the entry of a restriction once made should not be vulnerable to challenge: it should

199Land Registration Act 1925, s 58(2).

200See below, para 11.13.

201“[A] Mareva injunction is not a form of pre-trial attachment but relief in personam which prohibits certain acts in relation to the assets in question”: Iraqi Ministry of Defence v Arcepey Shipping Co SA [1981] QB 65, 72, per Robert Goff J. Although in its Third Report, the Law Commission supported the retention of the inhibition - even though, as it acknowledged, a restriction could be employed to prevent any dealing with the land (Law Com No 158, para 4.29) - it recommended that it should be possible for an inhibition to be used to protect a

Mareva injunction: Law Com No 158, para 4.58.

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not be capable of being “warned off” in the manner of a caution.202 The procedure for entering a restriction should therefore provide for any objections by the registered proprietor to be resolved except where there was an order of the court or registrar.203

It would remain the case that the registrar would have power to enter a restriction and might be required to do so in certain circumstances.204

6.59In the light of these considerations, we provisionally recommend that—

(1)the registrar should continue to have the power and in some cases the duty to enter a restriction on the same basis as at present;

(2)the following should be entitled to apply for a restriction—

(a)the registered proprietor;

(b)any person who had the written consent of the registered proprietor;

(c)any person applying pursuant to an order of the court or registrar; or

(d)any person who could demonstrate that he or she had the benefit of a right or interest that should be protected by a restriction (such as an interest under a trust of land or the rights of a trustee in bankruptcy);

(3)if the applicant fell within (2)(d), no restriction would be entered before a notice had been served on the registered proprietor, giving him or her the opportunity to object to the entry and—

(a)the period for objection had expired;

(b)the proprietor had consented; or

(c)any objection by the proprietor had been resolved.

Do readers agree?

Discretion to override a priority search?

6.60As we have indicated above, there is at present some uncertainty whether, if an inhibition is entered on the register, that will prevail over the priority given to an

202It would of course remain the case that the proprietor would be able to apply to have a restriction cancelled where it had become spent: see Land Registration Act 1925, s 46; Land Registration Rules 1925, r 16 (as substituted). At present, a restriction may also be set aside by order of the court: Land Registration Act 1925, s 58(4). We propose that this should continue and that the registrar should have a similar power: see below, para 6.68.

203The registrar might have to enter a restriction that prevented any dealings or to give effect to a

Mareva injunction that had been granted ex parte.

204See above, paras 6.34, 6.35.

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intending purchaser under an official search.205 We consider that this point needs to be clarified one way or the other in relation to the new type of restriction that we propose, which could be employed to prevent any dispositions of the registered land. There is a conflict of principles in issue here. First, the function of giving an intending purchaser the ability to obtain priority by means of an official search is of course to enhance the security of title that the land registration system offers. That security should not be lightly undermined. Secondly, however, there is the countervailing consideration that an order to prevent any entry of any dealing with registered land will be made only in exceptional circumstances, such as where the land certificate has been stolen or obtained by fraud.206 We note that in some cases at least where it would be appropriate to “freeze” the register by means of a restriction, an interested party would also, and in any event, be able to obtain an interlocutory injunction restraining any disposition of the land. We consider that if there is to be any mechanism for conferring priority on a restriction, it should not be inflexible or over-prescriptive. In our view, only a discretionary approach is likely to be workable. We also consider that if there is to be any power to override a priority search, it should be confined to cases where the court (and not the registrar) makes the appropriate order.

6.61We deliberately make no provisional recommendation on this issue. However, we would welcome the views of our readers as to whether they consider that this is a problem, and if they do how they would resolve it.

(1)Do readers consider that the court should have power, when ordering that a restriction be placed on the register, to designate it as having absolute priority?

(2)If they do, do they think that a restriction so designated should take precedence over the protection given to an intending purchaser by an official search, so that no disposition of the land should then take place until the court or the registrar should so direct? 207

Cautions against first registration

6.62Although we have recommended the abolition of cautions against dealings, we consider that cautions against first registration should remain in much the same form as at present, subject to certain minor changes. However, we consider that it would be helpful to clarify and rationalise the incidents of such cautions. In particular, we consider that only a person having an ‘interest’, as defined in Part III of this Report208 should be able to apply for a caution. This would have the effect of codifying the present practice and would obviate the need to give a liberal interpretation to the wording of the statute209 to achieve this desired result. The caution would take the form

205See above, para 6.38.

206It should be noted that although our proposed restriction is not intended to confer priority on any property rights protected by it, the effect of an order freezing the register could, in reality, profoundly affect property rights and the priority of claims.

207See below, para 6.68, where we recommend that the court and the registrar should have power to order the discharge of a notice or a restriction.

208Above, para 3.2.

209Which as presently drafted requires the applicant to have an interest which “entitles him to object to any disposition” Land Registration Act 1925, s 53(1); see above, para 6.24.

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(as now) of an entry on the Land Registry index map and the creation of a caution title. It would be to the effect that the person lodging the caution should be notified of any application to register an interest in the land which affects his interest. Such a caution would, as now, have no effect on the priority of the interest.

6.63We consider that the power to “warn off” such cautions should be introduced so that, on discovery of the caution, the landowner (or any other person having a legal estate in or legal charge over the land) can take immediate steps to challenge the caution and to have it removed from the register. It would no longer be the case (as it is at present210) that the landowner would have to wait until the application for first registration before he could mount such a challenge.

6.64We therefore provisionally recommend that—

(1)any person having an interest in the unregistered land in question should be entitled to register a caution against first registration;

(2)a caution against first registration should not preserve the priority of the applicant’s interest;

(3)the landowner (or any other person having a legal estate in or legal charge over the land) should be entitled to challenge the registration of a caution at any time unless he or she had consented to it; but

(4)in all other respects, a caution against first registration should operate in the same manner as it does under the present law.

Do readers agree?

MAKING ENTRIES WITHOUT REASONABLE CAUSE

Introduction

6.65We have provisionally concluded that there should be a more comprehensive regime for dealing with the making of any form of entry without reasonable cause. In practice this would obviously be most likely to apply in those cases where an entry could be made unilaterally. The precise circumstances in which that would be possible will depend upon which of the options for the replacement of notices and cautions is favoured by readers.211 However, even in those cases where the registered proprietor will have been notified prior to the making of the entry, there may be cases where he or she decides not to object at that stage, but to deal with the matter later. It is therefore conceivable that such an entry could be made without reasonable cause. We consider that there should be safeguards to protect registered proprietors in any event, and that there should be—

(1)effective sanctions to discourage improper applications for registration; and

(2)a power for the registrar or the court to remove or modify entries, and to be able to do so expeditiously.

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Sanctions against improper registration

6.66To achieve the first of these objectives, we consider that the power that presently exists to award damages for the registration of a caution without reasonable cause212 should be made applicable to any entry in respect of a minor interest, whether it is a caution, a notice or a restriction. At present, compensation is assessed according to the rather vague standard of what “may be just”.213 We consider that it should be placed on a more principled footing. A person who lodges an entry on the register without reasonable cause is guilty of a form of wrongdoing. He or she has either acted deliberately or negligently. Such conduct should, in our view, be treated as a tort for the purposes both of assessing compensation and limitation.214 We therefore provisionally recommend that—

(1)where any person suffered loss in consequence of the entry without reasonable cause of a caution (if after consultation these are retained), a caution against first registration, a notice, or a restriction, the court should have power to award compensation against the person making the entry; and

(2)for the purposes of assessing compensation and limitation, such a claim to compensation would be treated as an action in tort.

We ask whether readers agree.

Unreasonably resisting the removal of an entry on the register

6.67Cases do arise where a person unreasonably resists the removal of an entry on the register that had been made quite properly. This might be the case where, for example, there was some dispute over a right which the parties have then resolved, but where an entry remained on the register. An example would be a contract for the sale of the registered land which has terminated effectively according to its terms, but where the party having the benefit of the entry seeks to deny that the contract is at an end and refuses to co-operate in its removal. We consider that the liability to pay damages for making an entry on the register without reasonable cause should be extended to cases where a person causes loss by resisting the removal of that entry without having reasonable grounds for so doing. We therefore provisionally recommend that the power to award compensation set out in paragraph 6.66 above, should also apply where loss is caused because a person resists the removal of an entry on the register without reasonable cause. Do readers agree?

Power to remove entries

6.68As regards the second objective, under the present law—

(1)the registrar has powers under the Land Registration Act 1925 and the Land Registration Rules 1925 to cancel entries on the register which are in some

212Land Registration Act 1925, s 56(3); above para 6.23.

213Land Registration Act 1925, s 56(3).

214Being unliquidated, any such sum would no longer be recoverable as a debt as is presently the case: see Land Registration Act 1925, s 56(3), above, para 6.23.

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way spent or unnecessary;215

(2)the court or registrar has a power to discharge or cancel an entry in relation to inhibitions;216and

(3)the courts have developed their inherent jurisdiction to enable them to vacate a caution on interlocutory motion.217

We consider that these powers should be rationalised and should be contained in one statutory provision. Both the court and the registrar would have jurisdiction to discharge or vary a caution,218 notice or restriction. This jurisdiction should be exercisable by the court on motion. We therefore provisionally recommend that there should be a power to discharge or vary a caution, notice or restriction and that it should be exercisable either by the court on motion or by the registrar. Do readers agree?

TRANSITIONAL ARRANGEMENTS

6.69We consider that our proposals should operate only from the date on which any legislation was brought into force. They would be prospective only. Existing entries on the register would be unaffected and would continue to be governed by the previous law. We therefore provisionally recommend that any changes proposed in this

Part should have prospective effect. Do readers agree?

SUMMARY AND KEY ISSUES

6.70In this Part we examine in turn each of the four methods of protecting minor interests under the Land Registration Act 1925 - notices, cautions, restrictions and inhibitions. We also consider cautions against first registration. We explain the defects in the present law and make recommendations for reform. Our recommendations would be merely prospective and not retrospective in their effect.

6.71We have identified two main defects in the law—

(1)its unnecessary complexity;

(2)the inadequate protection that is given by the entry of a caution, because it does not preserve the priority of a right.

We also draw attention to a number of other shortcomings in the present law.

6.72We examine options for the reform of the system of notices and cautions. The fundamental issue for readers is whether they wish to retain the present dual system of notices and cautions, or whether they would prefer to see just one form of protection. We ask whether readers want—

(1)to leave the present law on notices and cautions unchanged;

215See Land Registration Act 1925, s 46; and Land Registration Rules 1925, r 16 (as amended).

216Land Registration Act 1925, s 57(2); see above, para 6.40.

217See above, para 6.23.

218Whether a caution against first registration or, if retained, a caution against dealings.

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(2)to retain a dual system of notices and cautions, but to reform some of its main defects so that the lodging of a caution would confer priority on the right that it was entered to protect and would no longer merely be a personal form of protection; or

(3)to replace the existing system with a new one, under which minor interests, other than interests under trusts, were protected by the entry of a notice which might be either—

(a)consensual (and could not therefore be warned off); or

(b)unilateral (which could be warned off in the same way as a caution can be at present).219

Our preferred option is (3). Cautions would therefore be abolished. Interests under trusts would have to be protected by the entry of a restriction.220

6.73We consider restrictions and inhibitions and provisionally recommend that—

(1)restrictions should be retained but inhibitions should be abolished and their functions subsumed by restrictions;

(2)the registrar should be able to enter a restriction to restrict the powers of disposition of a registered proprietor, in whole or in part, whether or not subject to conditions or the obtaining of some consent;

(3)the entry of such a restriction should confer no priority on, nor preserve any existing priority of a right or interest in property, where it was entered to protect that right or interest.

6.74Under our preferred scheme, the registrar should continue to have the power and in some cases the duty to enter a restriction on the same basis as at present. However, others would be able to as well, namely—

(1)the registered proprietor or any person who had his or her consent;

(2)any person applying pursuant to an order of the court or registrar; or

(3)any person who could demonstrate that he or she had the benefit of a right or interest that should be protected by a restriction (such as an interest under a trust of land).

If the applicant fell within (3), no restriction would be entered before a notice had been served on the registered proprietor, giving him or her the opportunity to object to the entry and the period for objection had expired, the proprietor had consented, or any objection by the proprietor had been resolved.

6.75We raise a difficult issue as to whether a restriction of the kind that we provisionally

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propose should ever be able to override the priority that is obtained from a priority search by an intending purchaser. We make no provisional recommendation, but ask whether a court should have power, when ordering that a restriction be placed on the register, to designate it as having absolute priority. This would mean that the restriction took precedence over the protection given to an intending purchaser by an official search, and that no disposition of the land could then take place until the court or the registrar so directed.

6.76We examine cautions against first registration which provide a means whereby an interested party can be informed of an application for first registration of land. We consider that the present system should be retained, but we provisionally recommend that there should be some amendments to it.

(1)The legislation would make clear what is already the present practice, namely that any person having an interest in the unregistered land in question would be entitled to register such a caution against first registration.

(2)Such a caution would not preserve the priority of the applicant’s interest.

(3)The landowner (or any other person having a legal estate in, or legal charge over, the land) should be entitled to challenge the registration of a caution at any time unless he or she consented to it.

6.77We consider that there should be effective sanctions to discourage improper applications for registration and that the registrar or the court should have power to remove or modify entries expeditiously. To achieve these objectives, we provisionally recommend that—

(1)where any person had suffered loss in consequence of the entry without reasonable cause of a caution,221 a caution against first registration, a notice, or a restriction, the court should have power to award compensation against the person making the entry;

(2)any such compensation should be assessed on the basis that the person making the entry had committed a tort;

(3)the same right to compensation should exist where loss was caused because a person resisted the removal of an entry on the register without compensation; and

(4)there should be a power, exercisable by the court on motion or by the registrar, to discharge or vary a caution, notice or restriction.

221 If after consultation these are retained.

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PART VII

PRIORITIES

INTRODUCTION

7.1In this Part we examine the rules which determine the priority of competing interests in registered land and consider what reform, if any, is needed in relation to them. There are a variety of interests that may be in competition—

(1)registered dispositions as against overriding interests and minor interests;

(2)registered charges as against other registered charges;

(3)overriding interests as against registered dispositions and minor interests; and

(4)minor interests as against other minor interests.

The Land Registration Act 1925 lays down rules which regulate the first and second of these matters, but not (with one minor exception) the third and fourth. This reflects an implicit but very important feature of the land registration system as it presently stands. It is concerned first and foremost with the protection of registered dispositions. Not only are these guaranteed by the Registry, but a system exists for searches to preserve priority in the course of such a disposition. The fundamental issue for readers is whether there should be any change to that position, and if so what those changes should be.

7.2We begin with a brief statement of the present law in relation to each of the four situations mentioned in the previous paragraph. We then examine the recommendations that were made by the Law Commission in its Third and Fourth Reports. In the light of both of these, we comment on the state of the present law, outline the options for reform, and make a number of recommendations.

THE PRESENT LAW

The priority of registered dispositions

7.3The priority of registered dispositions is laid down by the Land Registration Act 1925 and it can be summarised as follows—

(1) On a registered disposition1 for valuable consideration, 2 the transferee or grantee takes subject to two matters, namely “the encumbrances and other entries... appearing on the register”, and overriding interests, “but free from all

1See Land Registration Act 1925, s 3(xxii). For the transactions which will, when registered, be registered dispositions, see above, para 2.21.

2“‘Valuable consideration’ includes marriage, but does not include a nominal consideration in money”: Land Registration Act 1925, s 3(xxxi). For our provisional recommendations as to the meaning of “valuable consideration”, see above, paras 3.44; 3.50.

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