Экзамен зачет учебный год 2023 / Sparkes, A New Land Law

investigated back to a good root of title – now possibly as recent as 15 years old112 – and accepting a short title gives constructive notice of anything on the documents not demanded.113 All links in the title after the root must be investigated.114 However a tenant is not entitled to see his landlord’s title, and has no constructive notice of adverse interests affecting it.115

3.Land charges search

[15.19] Registration of a land charge gives notice of a burden affecting unregistered land, so a diligent purchaser must effect a land charge search.116

4.Suspicious facts off an unregistered title

[15.20] Notice of suspicious facts relevant to the property being bought117 imposes a duty to go on and ascertain the truth.118 A buyer told of two mortgages on a property was bound to make inquiries and discover a third.119 Problems arise from the fluctuating nature of domestic relationships; for example in National Provincial Bank v. Ainsworth120 one question was whether a bank had notice of the fact that a husband had deserted his wife. In fact no, even though the manager’s secretary lived in the same road, and the address given by the husband indicated that he no longer lived at the matrimonial home.121 However Kingsnorth Finance Co v. Tizard reached an opposite conclusion.122 A married man living in the former matrimonial home with his children stated in his mortgage application that he was single, but told the lender’s surveyor the truth that he was separated. This discrepancy should have alerted the lender to the wife’s interest or at the least needed further inquiry.

F. OCCUPIERS OF UNREGISTERED LAND

[15.21] Inquiry of occupiers is required in order to avoid constructive notice of their rights. In Barnhart v. Greenshields123 Lord Kingsdown referred to notice derived from actual occupation by a tenant.124

112LPA 1969 s 23; Law Com 9 (1967); see above [9.04].

113Patman v. Harland (1881) 17 Ch D 353, 355; Imray v. Oakshette [1897] 2 QB 218, CA; Matthews v. Smallwood [1910] 1 Ch 777, Parker J; Re Nisbett & Potts’ C [1905] 1 Ch 391, 402, Farwell J.

114Pilcher v. Rawlins (1872) LR 7 Ch App 259, 272, Mellish LJ.

115LPA 1925 s 44(3); overruling Patman v. Harland (1881) 17 Ch D 353; Shears v. Wells [1936] 1 All ER 832; White v. Bijou Mansions [1937] Ch 610, 619, Simonds J; DW Logan (1940) 56 LQR 361.

116See below [21.26].

117West v. Reid (1843) 2 Hare 249, 260, 67 ER 104; Wyllie v. Pollen (1863) 3 De GJ & S 596, 604, 46 ER 767, Westbury LC (not if other property).

118Jones v. Smith (1841) 1 Hare 43, 66 ER 943; Knight v. Bowyer (1858) 2 De G & J 421, 450, 44 ER 1053; Espin v. Pemberton (1859) 3 De G & J 547, 554, 44 ER 1380: Bailey v. Barnes [1894] 1 Ch 25, CA.

119Jones v. Williams (1857) 24 Beav 47, 53 ER 274, Romilly MR.

120[1965] AC 1175, 1234, Lord Upjohn.

121[1964] Ch 665, 700, Russell LJ; [1965] AC 1175, 1250, Lord Wilberforce.

122[1986] 1 WLR 783; MP Thompson [1986] Conv 283; Peter Luxton (1986) 136 NLJ 771; P McHugh [1987] CLJ 28. It accords with earlier cases: Megarry & Wade (6th ed), [5.019] n 82.

123(1853) 9 Moo PCC 18, 14 ER 204.

124LPA 1925 s 14; City of London BS v. Flegg [1988] AC 54, 90F–G.

1.Tenants

[15.22] Possession by a tenant is notice of the tenant’s interest125 and of all the contents of the lease,126 but not of defects in the lease since a buyer is entitled to assume that the tenancy agreement states the agreed terms correctly.127 Similarly the presence of a wife in the matrimonial home is not notice of her right to apply for a transfer of it on divorce.128 Occupation also protects equitable rights enjoyed by the tenant outside the lease,129 and gives notice of other rights, such as the licence of an employee.130

2.Occupiers discoverable by inspection

[15.23] Modern buyers must inspect the land to look for occupiers, a duty of reasonable inquiry settled in Hunt v. Luck, equating the equitable duty applied at first instance131 with the statutory duty on appeal.132

The buyer should inquire of the seller who is in occupation of the property and by what right. The Law Society’s National Protocol133 requires the solicitor acting for the seller to ascertain the identity of all adults134 living in the dwelling and ask about any financial contribution they or anyone else may have made towards its purchase or subsequent improvement. Inspection must be used to verify this information.

Occupation must be discoverable, since unless it is obvious, the whole equitable basis of notice collapses.135 Case-law appears to impose an unrealistically high duty of inspection. In one case a discrepancy between the 14 visible chimney pots and the 12 flues inside the house, was notice of a neighbour’s easement to use two flues.136 Count your fireplaces! Kingsnorth Finance Co v. Tizard137 concerned a mortgage of a matrimonial home after the breakdown of the marriage. The husband lived in the house, but although the wife had left home and slept elsewhere, she returned every day to care for the children. A surveyor appointed by the finance company was on the lookout for signs of the existence of a girlfriend but properly drew the line at opening

125Barnhart v. Greenshields (1853) 9 Moo PCC 18, 14 ER 204; Knight v. Bowyer (1858) 2 De G & J 421, 449, 44 ER 1053, Turner LJ; Jones v. Smith (1841) 1 Hare 43, 60, 66 ER 943, Wigram V-C; Hodgson v. Marks [1971] Ch 892, 915G, Ungoed-Thomas J at first instance; Kemmis v. Kemmis [1988] 1 WLR 1307, 1333.

126Taylor v. Stibbert (1794) 2 Ves 437, 440, 30 ER 713, Loughborough LC; Hollington Brothers v. Rhodes [1951] 2 TLR 691, 694–695, Harman J.

127Smith v. Jones [1954] 1 WLR 1089, Upjohn J; Hunt v. Luck [1901] 1 Ch 45, 51, Farwell J at first instance.

128Kemmis v. Kemmis [1988] 1 WLR 1307.

129Meux v. Maltby (1818) 2 Swanst 277, 36 ER 621 (contract).

130Midland Bank v. Farmpride Hatcheries [1981] 2 EGLR 147, CA; RE Annand [1982] Conv 67; HW Wilkinson (1982) 132 NLJ 68. The case wrongly assumed that a contractual licence was proprietary.

131[1901] 1 Ch 45, 50, Farwell J; Green v. Rheinberg (1911) 104 LT 149, 150 Vaughan Williams LJ; Reeves v. Pope [1914] 2 KB 284, 290, Buckley LJ; Caunce v. Caunce [1969] 1 WLR 286, 293, Stamp J.

132[1902] 1 Ch 428, 433, Vaughan Williams LJ; Smith v. Jones [1954] 1 WLR 1089, 1091, Upjohn J.

133Encyclopaedia FP (5th ed, 1997 reissue) vol 35, [1326].

134[1979] 1 WLR 440, 444D, Templeman J; on registered land see Hypo-Mortgage Services v. Robinson [1997] 2 FLR 71, CA.

135Hodgson v. Marks [1971] Ch 892, 915G, Ungoed-Thomas J at first instance.

136Hervey v. Smith (1856) 22 Beav 299, 52 ER 1123.

137[1986] 1 WLR 783.

cupboards. However, inspection took place by appointment one Sunday, which gave the man an opportunity to eliminate signs of his wife’s occupation, and there ought, held the judge, to have been more than this pre-arranged inspection. Perhaps this application of notice doctrine was too severe,138 since professional people must work to diary appointments and repeated inspection would be unrealistically expensive. It should not be necessary to call in the CID.

3.Joint occupiers

[15.24] It might be occupation to the exclusion of the seller or joint with him, whether or not the presence of the claimant is inconsistent with the title.139 Husbands often held legal title in a matrimonial home occupied jointly by husband and wife. Until the 1960s it was probable that the wife was living in a house owned by her husband,140 but a purchaser can no longer rely on that outdated assumption. Today there is a strong possibility that a spouse or cohabiting partner has a beneficial interest through contribution. Dicta in Williams & Glyn’s Bank v. Boland141 repudiated the old law and indicated that, had title been unregistered, notice would have arisen from Mrs Boland’s joint occupation with Mr Boland.

4.Recipients of rent from unregistered land

[15.25] Occupation of unregistered land by a tenant does not give notice of the rights of his landlord, or whoever else is the recipient of the rent. There is no obligation to ask the tenant to whom he pays rent.142 However natural such an inquiry may seem, a line in the sand was drawn to exclude it by Hunt v. Luck.143 Dr Hunt had, apparently, been induced by fraud to convey 27 tenanted houses at Wimbledon to his agent Gilbert, who passed them by will to Luck, who in turn mortgaged them. After Dr Hunt’s death his widow sought to recover the houses, which required her to prove that the lenders had constructive notice of Dr Hunt’s beneficial entitlement. Rents were collected by a local estate agent, Woodrow, and the lenders may have known this fact, but even so it did not give constructive notice of Hunt’s interest.144 Lenders are not required to establish who collects rent and on whose behalf. Occupation by tenants is no notice of the landlord’s title.145 It would have been different had the lender known of rent payments to a person known to be claiming an interest adverse to the title offered by the borrower.146

138MP Thompson [1986] Conv 283; P Luxton (1986) 136 NLJ 771.

139Cavander v. Bulteel (1873) LR 9 Ch App 79.

140Caunce v. Caunce [1969] 1 WLR 286, Stamp J (unregistered); Bird v. Syme-Thomson [1979] 1 WLR 440; Williams & Glyn’s Bank v. Boland (1979) 26 P & CR 448 Ch D (both registered).

141[1981] AC 487, 505, Lord Wilberforce, 511, Lord Scarman; see below [15.38].

142Barnhart v. Greenshields (1853) 9 Moo PC 18, 34, 14 ER 204; Hunt v. Luck [1902] 1 Ch 428, 433, [1901] 1 Ch 45, 51; Knight v. Bowyer (1858) 2 De G & J 421, 44 ER 1053.

143[1902] 1 Ch 428, CA; [1901] 1 Ch 45, Farwell J.

144[1902] 1 Ch 428, 433.

145[1902] 1 Ch 428, 432, Vaughan Williams LJ; [1901] 1 Ch 45, 49, Farwell J; Green v. Rheinberg (1911) 104 LT 149, 151, Vaughan Williams LJ.

146Knight v. Bowyer (1858) 2 De G & J 421, 449, 44 ER 1053, Turner LJ; [1901] 1 Ch 45, 50, Farwell J.

G. PRIORITY IN REGISTERED LAND

[15.26] This section analyses the three factors relevant to becoming a protected purchaser of registered land: (1) the need for a protected interest; (2) value; and (3) diligence. It also considers (4) the absence of any requirement of honesty.

1.Protected interests in registered land

[15.27] Protection of a purchaser of registered land depends upon acquisition of a legal estate under a registered disposition. This in turn depends upon substantive registration. Equitable interests are created at the time of completion of a sale147 but these only mature into legal rights by registration so that protection of a buyer is dependent upon his becoming registered proprietor.148 A buyer hands over his money on completion, but only secures protection on the date of his application for registration.149 The registration gap between these two dates, during which time the buyer is at severe risk, needs to be covered by an official search with priority.150

2.Provision of value

[15.28] Protection is provided only for dispositions “for valuable consideration”, a concept now defined to exclude marriage.151 A nominal consideration in money is not sufficient.152 In Peffer v. Rigg a house was transferred by the proprietor to his ex-wife when they divorced in consideration of £1 as part of their divorce settlement. Graham J used the express consideration (£1), which was nominal, and so he refused to treat Mrs Rigg as a purchaser.153 Donees must take the land in the condition in which they find it, that is subject to all existing equities.154

3.Diligence

[15.29] Diligence is required in determining the state of the register. The register will reveal notices which protect burdens and which will bind the purchaser. There may also be restrictions to protect overreachable interests, which will be removed from the title if the terms of the restriction are complied with. Beneficial interests under trusts will normally be overreached on sale, but even if this was not the case they are likely to overridden on a sale.155 A purchaser takes free from other estates and interests

147Priority is based on first in time: LRA 2002 s 28.

148S 29.

149S 74.

150See above [8.21].

151LRA 2002 s 132(1); this reverses LRA 1925 s 3 (xxxi).

152LRA 2002 s 132(1); Re de Leeuw [1922] 2 Ch 540 (not a foreclosure order under pre-1926 law).

153[1977] 1 WLR 285, 293G, Graham J.

154LRA 2002 s 28; Peffer was decided on LRA 1925 s 20(4).

155LRA 2002 s 29; De Lusignan v. Johnson (1973) 230 EG 499, 499, Brightman J; Abbey National BS v. Cann [1991] 1 AC 56, 79A, Lord Oliver; City of London BS v. Flegg [1986] Ch 605, 617C, Dillon LJ.

which are registrable but are unprotected when he buys unless protected on the register156 or by occupation.157

Diligence is also required to discover overriding interests, and particularly those which override through occupation, and any other matters which take effect off the register.

It is axiomatic that a purchaser of registered land has no further duty to investigate title, to find non-occupiers,158 or to check suspicious circumstances or matters off the register.159 Registration is the only form of notice, purchasers being freed from the hazards of constructive notice and the need to make elaborate inquiries.160 An unfortunate gap is opened between the two conveyancing systems, with the unregistered system looking fairer.

4.Irrelevance of honesty

[15.30] Honesty is not a requirement of a buyer under the registered system.161 A person giving value is allowed to defeat an interest of which he knows. The reform process of report and counter-report wavered on this central and crucial issue, with a proposal to introduce a requirement of good faith at every stage162 except the last two. Finally the rule adopted and legislated was that the knowledge was made wholly irrelevant,163 harsh cases being resolved by the personal liability for interference with a trust or knowing receipt of trust property.164

This legislative provision is misguided. The crunch case is Peffer v. Rigg.165 Peffer and Rigg were the husbands of two sisters who agreed to buy a house for occupation by their joint mother-in-law (Mrs Bingle). The house was transferred to Rigg’s name since he would have the financial status to obtain a mortgage and an improvement grant, but he held on trust for both of himself and Peffer equally. Since the house was occupied by Mrs Bingle and a tenant, the contributor (Peffer) had no overriding interest. When the Riggs divorced, title was transferred to the ex-wife in consideration of a nominal payment of £1 which did not defeat Peffer’s contribution. Another way of looking at the case was that the former Mrs Rigg provided substantial consideration

156The only appropriate entry is a restriction (unilateral or mutual) which will merely facilitate overreaching by requiring two trustees to give the receipt. Many informal trusts will not be protected in this way.

157LRA 2002 sch 3 para 2.

158National Provincial Bank v. Ainsworth [1965] AC 1175, 1261E.

159LRA 2002 s 78 states that the registrar is not affected by any trust to which s 29 adds that a purchaser is not affected by matters unprotected on the register; LRA 1925 s 74 referred both to the registrar and to purchasers.

160Williams & Glyn’s Bank v. Boland [1981] AC 487, 503, Lord Wilberforce; Parkash v. Irani Finance

[1970] Ch 101, 109.

161LRA 2002 s 29(1); De Lusignan v. Johnson (1973) 230 EG 499, Brightman J (estate contract); Hodges

v.Jones [1935] Ch 657, Luxmoore J; Strand Securities v. Caswell [1965] Ch 373, 390, Cross J, 958, 987, Russell LJ.

162Law Com 158 (1987), [4.14–4.15].

163Law Com 254 (1998), [2.5], [3.39–3.50].

164At [3.48]. This non-proprietary remedy is unlikely to be successful after the insolvency of the defen-

dant.

165[1977] 1 WLR 285, Graham J; FR Crane (1977) 41 Conv (NS) 207; RJ Smith (1977) 93 LQR 341; DJ Hayton [1977] CLJ 227; JE Martin [1978] Conv 52; S Anderson (1977) 40 MLR 602; DC Jackson (1978) 94 LQR 239.

in settling her claims arising from the couple’s divorce. On that assumption, considered obiter by Graham J, Mrs Rigg was a purchaser for valuable consideration with notice of her brother-in-law’s contribution. Graham J166 found ways to finesse the language of the Land Registration Act 1925 to find a requirement that a purchaser of registered land must be honest before claiming to be a protected purchaser. That decision is much criticised for technical error, but is self evidently just.167 Mrs Rigg would have lost even if she had been a purchaser.

That is no longer the case. No room for doubt is left by the Land Registration Act 2002: a known but unprotected beneficial interest is destroyed by a purchaser for value. The purchaser is not required to be honest, nor to act in good faith. Honesty was required in order to place reliance on a search under pre-2002 law,168 but there is no longer any trace of this requirement.

H. OCCUPIERS OF REGISTERED LAND

[15.31] Occupation is a method of protection of an interest affecting registered land. A right overrides a disposition of the land if it is:

“an interest belonging to a person . . . in actual occupation.”169

If the main thrust of the old law is preserved, there are also significant differences, so the encrustation of jurisprudence which attached itself to the notorious and much litigated paragraph (g)170 must be carried forward with care. As re-enacted in the less euphonious paragraph 2 of schedule 3, registered land law is brought into close alignment with unregistered notice doctrine, a re-alignment long argued for by New Land Lawyers.171 It now becomes much easier to expound the law as one coherent whole.

1.Interests protected

(1) Occupiers without any interest

[15.32] Overriding status is awarded only to those claiming an interest, so it is not available to a person living in another’s house without having contributed or being promised any beneficial interest in it.172

(2) Beneficial interests under trusts of land

[15.33] Beneficial interests under trusts of land are one of the major kinds of interest protected by occupation.

166At 293H–294A citing Brickdale & Stewart Wallace’s, Land Registration Act 1925 (Stevens, 4th ed 1939), 107 note (1).

167P Sparkes NLL (1st ed), 150.

168SI 1993/3276 rr 2, 6; Smith v. Morrison [1974] 1 WLR 659, Plowman J.

169LRA 2002 sch 3 para 2 (dispositions); sch 1 para 2 (first registration).

170LRA 1925 s 70(1)(g); Megarry & Wade (6th ed), [6.047–6.064].

171P Sparkes [1989] Conv 342; P Sparkes NLL (1st ed), 152–157.

172National Provincial Bank v. Ainsworth [1965] AC 1175, HL; Lloyds Bank v. Rosset [1991] 1 AC 107, HL; see below [17].

Protection for tenants173 was extended to include all occupiers in 1925.174 Beneficial interests are essentially overreachable, but a dual status was established for bare trusts in Hodgson v. Marks.175 Beneficial interests used to be assigned to the category of minor interests (interests requiring protection on the register), but “dual status” ensured that such an interest could transfer to the category of overriding interests (enforceable off the register) when protected by occupation. Dual status was extended further by Williams & Glyn’s Bank v. Boland176 to trusts for sale, short shrift being given to the argument that the beneficial interest was inherently restricted to rights in the proceeds of sale. Three changes have occurred. All these trusts are treated as trusts of land, conversion to the proceeds has been abolished,177 and the two distinct categories of minor178 and overriding interests have been abolished.

So it is now indisputable179 that occupation can protect a beneficiary under a trust of land.

(3) Beneficial interests under two trustee trusts

[15.34] Beneficial interests under trusts of land should be protected by restriction, an entry which facilitates overreaching by ensuring that the transaction complies with the terms of the restriction. A beneficial interest held by an occupier appears to be overriding even while it is protected on the register by restriction. If the transaction overreaches properly the beneficial interest is transferred to the proceeds of sale and no longer attaches to the land, so it ceases to override.180

Under the 1925 scheme, overriding status was lost at the time of a protective entry on the register by restriction or a notice requiring the appointment of a second trustee, but not, apparently by entry of a caution against dealings.181 Under the 2002 Act the entry must be a restriction – unilateral or mutual – but this does not affect the overriding status of an occupier.182

(4) Strict settlements

[15.35] Beneficial interests arising under pre-1997 strict settlements183 do not enjoy dual status and can only be protected on the register by a restriction.

173Land Registry Act 1862 s 27; Land Transfer Act 1875 s 18.

174LPA 1922 sch 16 para 5(3)(i); LRA 1925 s 70(1)(g).

175[1971] Ch 892, 926E–H, Micklem’s argument rejected by CA.

176[1979] Ch 312, 331D–F, Lord Denning MR; [1981] AC 487, 506E–G, Lord Wilberforce. This is not what the 1925 legislators intended: P Sparkes NLL (1st ed), 151.

177See above [13.05].

178UCB Group v. Hedworth [2002] EWCA Civ 708, [2002] 46 EG 200.

179Wallcite v. Ferrishurst [1999] Ch 355, 370E, Robert Walker LJ.

180City of London BS v. Flegg [1988] AC 54, HL.

181Flegg [1988] AC 54, HL; P Sparkes [1988] Conv 141.

182LRA 2002 s 29(3) removes overriding status only from interests protected by notice.

183LRA 2002 sch 3 para 2(a); SLA 1925 ss 2, 117(1)(xxiv).

(5) Burdens

[15.36] Any interest belonging to an occupier and relating to the land may be overriding, so this includes all endurable burdens such as leases, the interests of adverse possessors, contracts, proprietary estoppel rights, rights to avoid voidable transfers, rights of rectification and so on.184 Occupation does not need to be indicative of the right claimed to be overriding, so an occupier could claim protection for an option.185 Overriding status is lost if the interest once becomes protected by notice.186

2.Actual occupation

[15.37] What constitutes occupation? The only real guidance in the Lords was given by Lord Wilberforce when he said in Williams & Glyn’s Bank v. Boland 187 that:

“If there is actual occupation, and the occupier has rights, the purchaser takes subject to them. If not, he does not. No further element is material.”

If one took this literally, it might seem that a purchaser would be bound by an undiscoverable occupier, but it now appears that Lord Wilberforce’s wider statement of principle was incorrect.

The occupation based overriding interest was clearly intended as a statutory restatement in 1925 of the unregistered notice doctrine of Hunt v. Luck (1902).188 “Actual occupation” itself was pasted in from Barnhardt v. Greenshields, a notice case decided by the Privy Council in 1852.189 This suggests therefore that the crucial quality of the occupation is that it should alert the purchaser to the need to make enquiry of the occupier. Subsequent cases vacillated between a notice based interpretation190 and a literal interpretation,191 but the Land Registration Act 2002 accepts the former view.192

That occupation of registered land must be “actual” merely emphasises the requirement of physical presence.193 Uncertainties of notice are replaced in registered land by a simple factual enquiry about occupation.194

184See below [20.16ff].

185Wallcite v. Ferrishurst [1999] Ch 355, 372D, Robert Walker LJ.

186LRA 2002 s 29(2)–(3).

187[1981] AC 487, 504E; Kling v. Keston Properties (1985) 49 P & CR 212 (car in garage).

188[1902] 1 Ch 428, CA; [1901] 1 Ch 45 Farwell J; Wallcite v. Ferrishurst [1999] Ch 355, 372C, Robert Walker LJ.

189(1853) 9 Moo PCC 18, 14 ER 204, PC; Taylor v. Stibbert (1794) 2 Ves Jun 437, 440, 30 ER 713.

190National Provincial Bank v. Hastings Car Mart [1964] Ch 665, 689, Lord Denning in, CA; on appeal as Ainsworth [1965] AC 1175, 1259F–1261, Lord Wilberforce; Boland [1979] Ch 312, 335H, Ormrod LJ; Boland [1981] AC 487, 493B–C, Lord Wilberforce; City of London BS v. Flegg [1988] AC 54, 88B, Lord Oliver; Strand Securities v. Caswell [1965] Ch 958, CA.

191C Fortescue-Brickdale & J Stewart-Wallace, The Land Registration Act (3rd ed, 1927); Hodgson v. Marks [1971] Ch 892, 915, Ungoed-Thomas J; Boland [1981] AC 487, 504F, Lord Wilberforce; Kling v. Keston Properties (1985) 49 P & CR 212, 219; JE Martin [1985] Conv 406.

192See below [15.42].

193Boland at 504F, Lord Wilberforce.

194At 505–506, Lord Wilberforce, 511, Lord Scarman.

3.Joint occupation

[15.38] A beneficiary who is in occupation jointly with the registered proprietor will be protected. The lodger (Evans) in Hodgson v. Marks195 was registered as proprietor but it was held that Mrs Hodgson was also in occupation of the house. Boland finally nailed the outdated heresy that regarded husband and wife as one196 which was inconsistent with the standing of women in our society today.197 The House of Lords was equally emphatic. Occupation can be relevant even if shared and even if an explanation can be imagined that would be consistent with the title of the seller.198 Rejection of the sexist explanation for a woman’s presence in the matrimonial home means that a woman can be in actual occupation, alone or joint, just as much as any man. Mr Boland mortgaged to Williams & Glyn’s Bank a matrimonial home at a time when it was occupied by both himself and Mrs Boland and so the lender took subject to Mrs Boland’s overriding interest in the house. The same is true with the genders reversed, or if the title is unregistered.199

4.Fleeting occupation

[15.39] Preparatory acts do not confer protection. In Abbey National Building Society v. Cann completion of the Cann’s purchase and mortgage took place at 12.20 one Monday lunchtime, 35 minutes after the seller had allowed carpet layers to begin laying carpets on behalf of Mrs Cann,200 and furniture removers had begin to move in Mrs Cann’s belongings. The Court of Appeal considered that Mrs Cann was in actual occupation at the time of completion201 but the House of Lords decided that fragmentary acts of this kind could not amount to occupation.202 Sneaking in 35 minutes early would not have put a lender on enquiry had title been unregistered, and the registered system simply had to follow suit. In another case a Saudi princess who had not set in foot in London for year was held not to be in actual occupation of her home there.203

5.Derivative occupation

[15.40] Derivative occupation creates problems for registered land. Occupation by a licensee is insufficient,204 and there is a recent decision which suggests205 that when a

195[1971] Ch 892, 934H, Russell LJ.

196Caunce v. Caunce [1969] 1 WLR 286, Ch D; FR Crane (1968) 32 Conv (NS) 254; JF Garner (1969) 33 Conv (NS) 240.

197[1979] Ch 312, 332E–F, Lord Denning MR.

198[1981] AC 487, 505, 510, Lord Wilberforce; [1979] Ch 312, 338, Ormrod LJ.

199Hodgson v. Marks [1971] Ch 892, 934–935; Boland [1979] Ch 312, 322D, Lord Denning, 334D–E, Ormrod LJ; Boland [1981] AC 487, 505E, Lord Wilberforce, 511G, Lord Scarman; Midland Bank v.

Farmpride Hatcheries [1981] 2 EGLR 147, 151D–E, Oliver LJ; Kingsnorth Finance Co v. Tizard [1986] 1 WLR 783.

200Query whether occupation taken without the permission of the owner could be overriding.

201Cann (1989) 57 P & CR 381, 388–389.

202[1991] 1 AC 56, 93D–94B, Lord Oliver; contrast M Beaumont [1989] Conv 158, 160–161.

203Stockholm Finance v. Gordon Holdings [1995] NPC 162; Grays’ Elements (3rd ed), 1030.

204Strand Securities v. Caswell [1965] Ch 958, CA.

205Lloyd v. Dugdale [2001] EWCA Civ 1754, [2002] 2 P & CR 13 at 167, [40–49], Sir Christopher Slade; M Dixon [2002] Conv 384.

company is in occupation of a shopping unit in a mill it does not give notice of the rights of the managing director of the company who had been promised a lease and spent £15,000 on refitting. However, occupation by a housekeeper or paid agent does protect,206 and Lloyds Bank v. Rosset207 suggests that the test is whether a person inspecting the land would discover the right. A majority of the court held that occupation via a builder employed jointly by husband and wife was sufficient to amount to “actual occupation” by the wife. Unregistered land notice doctrine gives a clear and coherent test to answer such questions – would a reasonable person discover it?

6.Inquiry

[15.41] Protection for an occupier is removed if inquiry is made of that person before the disposition and he fails to disclose his interest when he could reasonably have been expected to do so.208

7.Undiscoverable occupation

[15.42] The Land Registration Act 2002 contains a new provision209 that removes protection by occupation which is not reasonably discoverable by the purchaser. This should cope easily with cases which had the potential to could create enormous injustice before.210 It is perfectly possible for a buyer to act diligently and honestly and yet fail to discover an occupier. A borrower may deliberately conceal traces of a contributor’s occupation,211 in which case the lender’s liability ought to depend upon what he knew or could discover. As one unregistered case shows, an inspection may be arranged at a fixed time giving the seller a chance to make the property appear “clean”.212 At the crucial moment of inspection, the occupier may be on holiday or out shopping, and there would, of course, be no opportunity to discover a person who moves in after the purchaser’s inspection. The exception in the current law213 refers to a particular buyer before a particular disposition, that person being entitled to become a protected purchaser if two conditions are satisfied:

(1)Honesty – the purchaser must not have actual knowledge214 of the interest at the time of the disposition.215

206Not unpaid relatives: Strand Securities [1965] Ch 958, 981, Lord Denning MR; Abbey National BS v. Cann [1991] 1 AC 56, HL.

207[1989] Ch 350, CA; on appeal on different grounds [1991] 1 AC 107, HL.

208LRA 2002 sch 3 para 2(b); this reproduces the saving under LRA 1925 s 70(1)(g); Habermann v. Koehler (No 2) [2000] EGCS 125, CA; see below [15.53].

209LRA 2002 sch 3 para 2(c); Law Com 271 (2001), [8.60–8.62]; also Law Com 254 (1998), [5.71–5.73], Law Com WP 37 (1971), [74]; compare: Law Com 158 (1987) part II, Law Com 173 (1988), draft Bill.

210P Sparkes [1989] Conv 342; L Tee [1998] CLJ 328.

211Kingsnorth Finance Co v. Tizard [1986] 1 WLR 783, 793B.

212Tizard again, at 794H–795C.

213It seems to imply that undiscoverable occupation does fall within the main part of sch 3 para 2 and is only removed by sub para (c); this is important because if so undiscoverable occupation could override first registration: sch 1 para 2 has no equivalent exception.

214Rather than actual notice, so what is known by the buyer’s solicitor is not imputed?

215So an interest known about but forgotten can be defeated by the buyer. Why?