Экзамен зачет учебный год 2023 / ELC, Land Registration II

the rectification.126 In neither case was the court willing to sanction such a rectification, and in the second of them, the court doubted whether it had power to do so.127 In the light of section 82(2), we consider that any power to rectify the register retrospectively is unnecessary.

THE RECOMMENDATIONS IN THE LAW COMMISSION’S THIRD AND FOURTH

REPORTS

Grounds for rectification

8.34There were two principal recommendations in the Third Report in relation to rectification. The first was as to the grounds of rectification. It was that—

[w]here the register does not reflect, whether through error or omission, the title to the land according to rules of land law which prevail apart from registration of title then, if it is just to do so, the register may be rectified on application either to the registrar or the court.128

It was clear that there was some uncertainty as to what these “rules of law” might be.129

It appears to have been some indeterminate mixture of the principles of registered and unregistered land. This uncertainty was not reflected in the draft Bill, contained in the Fourth Report, which was intended to implement the recommendations in the Third Report. Under it, the essential prerequisite to rectification was to have been “that there was an error on or omission from a register”.130

Restrictions on rectification

8.35The second main recommendation in the Third Report was that—

there is to be no rectification against a registered proprietor who has taken the care of a prudent purchaser and who is a bona fide purchaser in actual occupation of the land unless the rectification is in favour of a trustee in bankruptcy.131

This recommendation was fully reflected in the draft Bill contained in the Fourth Report.132 The reference to a bona fide purchaser follows from the view taken in the Third Report - which we have provisionally decided not to follow133 - that “purchaser” should be defined as a purchaser in good faith.134

CRITICISMS OF THE PRESENT LAW

126Freer v Unwins Ltd, above; Clark v Chief Land Registrar, above.

127Clark v Chief Land Registrar, above, at p 318.

128Law Com No 158, para 3.34(1).

129See ibid, paras 3.6 and 3.34(2).

130Law Com No 173, draft Bill, Cl 44(1)(a).

131Law Com No 158, para 3.34(4).

132Law Com No 173, draft Bill, Cls 44(3), (4).

133See above, paras 3.42, 3.50.

134See Law Com No 158, para 4.15.

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8.36The present law governing rectification works without undue difficulty in practice. Its defects lie primarily in the way it is drafted. These defects, which are summarised in the following paragraphs, are of a kind which suggest that those who conceived the Land Registration Act 1925 may not always have felt completely certain as to what they were seeking to achieve.

8.37No clear distinction is drawn between the rectification of an error or omission in the register (which is discretionary) and an amendment of the register because the court determines that A is entitled to an estate, right or interest in or over land of which B is the registered proprietor. The latter is not intrinsically different from an amendment to the register to indicate that, say, a lease has terminated.135 The first two grounds of rectification136 are situations where the court has determined the substantive rights of the parties and there is in practice no true element of discretion in its order that the register should be rectified to give effect to those rights.

8.38The yardstick for determining whether there is an error or omission is, in some cases, the position that would have existed had title not been registered.137 There are a number of objections to this. First, there is the risk that it may bring into play aspects of unregistered land, such as the doctrine of notice and the registration of land charges, which the registered system was meant to supersede. The difficulty with this approach is to know just how much of the unregistered system is brought into play. Secondly, as the great majority of titles are now registered, it is inappropriate, particularly as the principles of unregistered conveyancing are becoming unfamiliar to practitioners. Thirdly, it is unnecessary. The existence of an error or omission can be readily defined according to the principles of registered conveyancing.

8.39There is uncertainty as to the ambit of the restrictions on rectification that exist in favour of a proprietor who is in possession. Although this has not so far been the cause of much difficulty in practice, it could be, and it would be better to address the matter.

PROPOSALS FOR REFORM

The essentials of an effective scheme of rectification

8.40Any rectification scheme must overcome the deficiencies outlined above. To achieve this we regard as the essentials of any viable scheme the following features, which should be made clear in the legislation—

(1)The only function of the power to rectify is to provide a discretionary mechanism which enables errors and omissions in the register to be remedied. It should remain the case that indemnity is available for any loss that is caused as a result of rectification or where, as a matter of discretion, rectification is not ordered, its refusal.

(2)In the absence of any error or omission in the register, where a court makes a determination of substantive rights in or over registered land, it should do so in accordance with the principles of registered land. The principles governing unregistered land should come into play only if there is some issue which arises

135See Land Registration Act 1925, s 46.

136Ibid, s 82(1)(a); (b); see above, paras 8.6 - 8.13.

137See above, para 8.18, and compare para 8.11.

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from the time prior to first registration. Following any such determination, the register should be amended to reflect its outcome. That amendment, unlike rectification, should not be a matter of discretion.

(3)Normally, the register should be rectified to give effect to an overriding interest, though as it is an application of the power to rectify, it should remain a matter for discretion.

(4)The existing principle of qualified indefeasibility which applies to a proprietor who is in possession should be retained but its scope should be clarified.

Grounds for rectification

8.41As we have indicated, rectification is an issue where the register is in some way incorrect.138 We consider that rectification should be confined to that situation. The consequences of this view are as follows—

(1)It would no longer be appropriate to provide for rectification of the register to give effect to a court order that a person is entitled to an estate, right or interest in any registered land or charge.139 Where the court determines the substantive rights of the parties, the register should be amended to give effect to the order which it makes. There should be no element of discretion about it. Any determination would, of course, be undertaken in accordance with the principles applicable to registered land. This should preclude any possible argument that the principles of unregistered land are in some way relevant.

(2)We have recommended in Part VI of this Report that both the court and the registrar should be given a power to discharge or vary a caution, notice or restriction.140 The introduction of this general jurisdiction would obviate the need for the present power to rectify the register on the application by a person aggrieved by an entry.141 The exercise of this power to amend the register should cease to be regarded as rectification.

(3)There would be no need to have a list of grounds upon which rectification might be ordered as there are at present in section 82(1) of the Land Registration Act 1925. They would all be encompassed within the one general principle that the register could be rectified, as a matter of discretion, where there was an error or omission in it.

8.42In the light of this, we provisionally recommend that, subject to the qualifications that we explain below,142 the court and the registrar should have a power to rectify the register whenever there has been an error or omission in it. Do readers agree?

8.43That power would encompass all the cases presently included in section 82(1)(c) - (h)

138See above, para 8.3.

139See Land Registration Act 1925, s 82(1)(a) (Ground 1); above, para 8.6.

140See above, para 6.68.

141Land Registration Act 1925, s 82(1)a); above, para 8.9.

142See paras 8.48 and following.

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of the Land Registration Act 1925 (Grounds 3 - 8 above),143 as well as the ground listed in rule 14 of the Land Registration Rules 1925 (Ground 10 above).144 None of these would need to be replicated in the new legislation. As regards the correction of clerical errors, for which provision is made in rule 13 of the Land Registration Rules 1925 (Ground 9 above),145 we consider that it should be retained, but that it should not be regarded as rectification. The correction of clerical errors that cause no detriment to any registered interest cannot give rise to any claim for indemnity. However, there is no obvious reason why this important power should remain in the Rules. The legislation should set out comprehensively the circumstances in which the register can be changed in order to correct errors in it. For this reason we consider that it should be placed on a statutory footing. We therefore provisionally recommend

that—

(1)the power for the registrar to correct clerical errors in the register or any plan or document to which it refers, where there is no detriment to any registered interest, should be made statutory; and

(2)such a correction should not be regarded as “rectification” for the purposes of the legislation.

Do readers agree?

8.44There are two situations for which specific provision needs to be made. The first arises where, as a matter of discretion, the court or registrar decides not to rectify the register, even though there has been an error. Such a decision may sometimes require a correlative amendment to be made to the register of another registered title. Two examples may be given of this—

(1)The first is the simple case of a double registration - where A was by mistake registered as proprietor of land of which B was already the registered proprietor. If it was decided not to rectify A’s title because he was a proprietor in possession, then it would be necessary to rectify B’s. This would be so, even though there was no error in B’s title - B had been correctly registered as proprietor of it.

(2)The second is where A was granted an easement over B’s land, the extent of which was wrongly described on A’s title,146 but where the register was not rectified against A, because he or she was a proprietor in possession. In this case, B’s title must be rectified to ensure that it reflects the easement that A enjoys as a result of his or her title not being rectified.

8.45We consider that there should be no doubt as to the power of the court or registrar to

order the rectification of B’s title in such circumstances.147 We therefore

143See paras 8.14 to 8.20.

144See para 8.22.

145See para 8.21.

146As where it was recorded as a right of way for all purposes, whereas it was in fact a right of way on foot only.

147Cf Racoon Ltd v Turnbull [1997] AC 158, where precisely this difficulty arose in relation to the Registered Land Ordinance 1970 of the British Virgin Islands.

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provisionally recommend that where, notwithstanding an error or mistake in

the register, the register is not rectified—

(1)the court or registrar should have power to make any correlative amendment to any other registered title that is necessitated by that non-rectification, even though there was no mistake in that other title; and

(2)any such amendment shall constitute “rectification” for the purposes of the legislation, so that a claim for indemnity will lie if the registered proprietor suffers loss in consequence.

Do readers agree?

8.46The second situation for which specific provision is required concerns land which is registered with possessory, qualified or good leasehold title. We have explained in Part V of this Report that, in such a case, “all estates, rights, interests and powers excepted from the effect of registration” presently take effect as overriding interests.148 Should some matter come to light that is excluded from the effect of registration, the register will be amended to give effect to it. Such an amendment is not, in our view, a “rectification” of the register, because it does not involve the correction of any mistake.149 However, even if this is not the case, and such an amendment is to be regarded as rectification, it can be ordered even against a proprietor who is in possession, because the right or interest is an overriding interest.150 If our recommendations for reform are accepted, such rights and interests will cease to be overriding interests. There is therefore a possibility that, if the register were amended to record some interest or right that had been excluded from the effect of registration, that change might be regarded as rectification. As that amendment would no longer be to give effect to an overriding interest, it could not be ordered against a proprietor who was in possession. To avoid any possible argument of this kind, we provisionally recommend that an amendment of the register to give effect to any estate, right, interest or power which is excepted from the effect of registration should not be regarded as “rectification” for the purposes of the legislation. Do readers agree?

Rectification against a proprietor who is in possession

8.47At present, by virtue of section 82(3) of the Land Registration Act 1925,151 the register can only be rectified against a proprietor who is in possession in certain limited circumstances. We consider that this principle of qualified indefeasibility should be retained, but that its ambit should be clarified, and some guidance should be given as to the exercise of the discretion to rectify the register. Do readers agree with our provisional view that some form of qualified indefeasibility should be retained? If they do not, would they please give their reasons.

148Land Registration Act 1925, s 70(1)(h); above, paras 5.78, 5.79.

149See above, para 5.78.

150See Land Registration Act 1925, s 82(3); above para 8.28.

151See above, para 8.23.

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Qualified indefeasibility

8.48The first and most difficult question is as to the extent of the limitation that the register should not be rectified against a proprietor who is in possession. At present, there is considerable uncertainty as to who falls within the exception, and the wording of the legislation is unsatisfactory.152 The Joint Working Group considers that this is an issue where it would be inappropriate to make any recommendation. There appear to us to be two options, and we would welcome the views of readers as to which they prefer.

OPTION 1: ALL CASES OF LAWFUL POSSESSION

8.49The first option is to apply the principle of qualified indefeasibility153 very widely indeed. It would be applicable whenever—

(1)the registered proprietor;

(2)any tenant (whether for a term of years or at will);

(3)any licensee (whether gratuitous or for value, and including any agent or employee);

(4)any beneficiary under a trust of land or settlement; or

(5)any mortgagee;

was in physical possession of the land. In other words, the protection given to a proprietor in possession would apply in all cases where there was any form of lawful physical possession under the registered title. This would extend the protection further than does the present law, in that it would protect a mortgagee in possession.154 The case of the mortgagee in possession is not a clear cut one. In most cases, his or her interest can be regarded as a purely financial one that could be compensated by an award of indemnity, but this will not always be so.155 It is also not at present certain whether a proprietor is still in possession for the purposes of section 82(3) where he or she has granted possession to a gratuitous licensee.156 Under Option 1, the proprietor would be in possession. This option is perfectly logical and is simply an extension of the present position by which qualified indefeasibility applies where the proprietor and many other lawful occupiers are in physical possession of the land.

OPTION 2: SOME CASES OF LAWFUL POSSESSION

8.50The second option would be to confer qualified indefeasibility on a registered title in some but not all cases where persons were in lawful physical possession of the land. The drawback of this approach is that it could lead to anomalies. For example, if the registered proprietor in possession was protected but a tenant was not, and the proprietor leased part of the land for, say, a year, the register might be rectified against

152See above, paras 8.24 and 8.26.

153For this principle, see above, para 8.23.

154See above, para 8.26.

155A mortgagee normally takes possession as a prelude to exercising his or her power of sale, but this is not invariably the case.

156Ibid.

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the part leased but not the part retained by the proprietor.

8.51If readers agree with our provisional view in paragraph 8.47 above, do they prefer Option 1 (qualified indefeasibility in all cases of lawful possession) or Option 2 (qualified indefeasibility in some cases of lawful possession)? If readers favour Option 2, which of the following categories of persons in lawful possession of registered land should be protected—

(1)the registered proprietor;

(2)any tenant for a term of years;

(3)any tenant at will;

(4)any licensee (whether gratuitous or for value, and including any agent or employee);

(5)any beneficiary under a trust of land or settlement; or

(6)any mortgagee who had exercised his or her right to take possession?

Exceptions to indefeasibility

8.52In view of our earlier proposals,157 it would be unnecessary to retain one of the four exceptions to indefeasibility - to give effect to an order of the court.158 However, we consider that the three remaining exceptions should be retained,159 as there seems to be no obvious reason why they should be abolished. However, as now, even if one of these three grounds were established, although there would be a presumption in favour of rectification, the court or registrar would still have a discretion as to whether or not to rectify the register.160 We provisionally recommend that where the principle of qualified indefeasibility applied, it should remain the case that the register might be rectified against a proprietor who is in possession (however defined)—

(1)to give effect to an overriding interest;

(2)where that proprietor has caused or substantially contributed to the error or omission by fraud or lack of proper care; or

(3)where it is considered that it would be unjust not to rectify the register against him or her.

Where one of these grounds existed, there would be a presumption in favour of rectification, but the matter would still be discretionary. We ask whether

157See above, para 8.41.

158See above, para 8.29.

159See above, paras 8.30 and 8.31.

160The strength of the presumption may vary. In particular, it is almost always the case that the register will be rectified to give effect to an overriding interest. That is not necessarily the situation in relation to the other exceptions.

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readers agree with our view.

Rectification against a proprietor who is not in possession

8.53The position is that, where the proprietor is not in possession for the purposes of section 82(3) the Land Registration Act 1925, there is a presumption that the register will be rectified against him or her, if one of the grounds for rectification exists. We consider that this presumption is the right one, and that it should be stated in statutory form. We provisionally recommend that where the proprietor is not in possession (however that may be defined), there should be a presumption in favour of rectification where a ground for rectification exists, though it would still be a matter of discretion whether or not the court or registrar ordered rectification.161 We ask whether readers agree with our view.

Rectification and derivative interests

8.54We consider that the substance of section 82(2) of the Land Registration Act 1925, which enables the register to be rectified, “notwithstanding that the rectification may affect any estates, rights, charges, or interests acquired or protected by registration, or by entry on the register, or otherwise”, should be retained.162 However, we consider that the legislation should make it clear that when the register is rectified against a registered proprietor, the court or registrar may direct that the rectification should be binding on any person having an overriding interest in the land (such as a tenant under a lease granted for 21 years or less, or a person in actual occupation who has some proprietary right in the land). At present there is some doubt about this.163 As a correlative of this, we consider that it should remain the case that rectification is effective from the date of the application for rectification and cannot be made retrospective.

8.55We provisionally recommend that—

(1)the register might be rectified even though this might affect any estates, rights, charges, or interests acquired or protected by registration, or by an entry on the register, or any overriding interest; and

(2)any rectification of the register should be effective from the date of the application for rectification, and should not have retrospective effect.

We ask whether readers agree with us.

SUMMARY AND KEY ISSUES

8.56In this Part, we examine the situations in which the register can be rectified to correct mistakes. After considering the present law, we conclude that it is for the most part sound, and that it does not require fundamental change. The main objective of any reform should be to clarify the law.

8.57We consider that the essentials of any viable scheme should clearly set out on the face of the legislation the following features—

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(1)The only function of the power to rectify is to provide a discretionary mechanism which enables errors and omissions in the register to be remedied. It should remain the case that indemnity is available for any loss that is caused as a result of rectification or where, as a matter of discretion, rectification is not ordered, its refusal.

(2)In the absence of any error or omission in the register, where a court makes a determination of substantive rights in or over registered land, it should do so in accordance with the principles of registered land. The principles governing unregistered land should come into play only if there is some issue which arises from the time prior to first registration. Following any such determination, the register should be amended to reflect its outcome. That amendment, unlike rectification, should not be a matter of discretion.

(3)Normally, the register should be rectified to give effect to an overriding interest, though as it is an application of the power to rectify, it should remain a matter for discretion.

(4)The existing principle of qualified indefeasibility which applies to a proprietor who is in possession should be retained but its scope should be clarified.

8.58To achieve these objectives, we make a number of provisional recommendations of which the following are the most important—

(1)that, subject to the qualifications that we explain at (4) - (8) below, the court and the registrar should have a power to rectify the register whenever there has been an error or omission in it;

(2)where, notwithstanding an error or mistake in the register, the register is not rectified—

(a)the court or registrar should have power to make any correlative amendment to any other registered title that is necessitated by that non-rectification, even though there was no mistake in that other title; and

(b)any such amendment shall constitute “rectification” for the purposes of the legislation, so that a claim for indemnity will lie if the registered proprietor suffers loss in consequence;

(3)an amendment of the register to give effect to any estate, right, interest or power which is excepted from the effect of registration should not be regarded as “rectification” for the purposes of the legislation;

(4)some form of qualified indefeasibility to protect certain specified categories of proprietor from rectification should be retained;

(5)we offer two possible models of qualified indefeasibility: qualified indefeasibility in all cases of lawful possession, or qualified indefeasibility in some cases of lawful possession;

(6)as regards the second of those options, we seek the views of those who favour it as to which of the following categories of persons in lawful possession of registered land should be protected—

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(a)the registered proprietor;

(b)any tenant for a term of years;

(c)any tenant at will;

(d)any licensee (whether gratuitous or for value, and including any agent or employee);

(e)any beneficiary under a trust of land or settlement; or

(f)any mortgagee who had exercised his or her right to take possession;

(7)where the principle of qualified indefeasibility applied, it should remain the case that the register might be rectified against a proprietor who is in possession (however defined)—

(a)to give effect to an overriding interest;

(b)where that proprietor has caused or substantially contributed to the error or omission by fraud or lack of proper care; or

(c)where it is considered that it would be unjust not to rectify the register against him or her;

(8)where one of these grounds existed, there would be a presumption in favour of rectification, but the matter would still be discretionary;

(9)where the proprietor is not in possession (however that may be defined), there should be a presumption in favour of rectification where a ground for rectification exists, though it would still be a matter of discretion whether or not the court or registrar ordered rectification;

(10)the register might be rectified even though this might affect any estates, rights, charges, or interests acquired or protected by registration, or by an entry on the register, or any overriding interest; and

(11)any rectification of the register should be effective from the date of the application for rectification, and should not have retrospective effect.

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