Fraud, mistake and rectification of the Register

Fraud, mistake and rectification of the Register

25 April 2018

Former solicitor Nicola Laver is a freelance legal journalist/editor and an author and legal copywriter

Where a mistake has been made, the registered proprietor can apply for rectification of a registered title under Land Registration Act (LRA) 2002 Sch 4 to correct that mistake. However, an entry on a register cannot retroactively become a mistake, the High Court has clarified. 

What amounts to ‘mistake’?

There is no definition of ‘mistake’ in the LRA, but the HM Land Registry (HMLR) gives useful examples of mistakes that could lead to alteration: omitting an entry for a right of way; or omitting a restrictive covenant from the register, including too much land and double registrations. 

In the case of Antoine (Administrator of the estate of Joseph Antoine deceased) v Barclays Bank plc and others [2018] EWHC 395 (Ch), 2 March 2018, the High Court considered a complex chain of events involving a London property. Two separate actions relating to the same property were heard together. A central issue was whether alteration of the register was appropriate where the underlying documents turned out to be forgeries, but where the ensuing registration followed a court order.

What’s the background?

JA was the registered proprietor and died in 1996. Even though his son, TA, was granted letters of administration, he failed to register himself as the registered proprietor of the property. The property itself required major renovations, and remained empty for some years. In the meantime, TA moved to New Zealand leaving no forwarding address for mail sent to the property.

One Mr Taylor (T) started proceedings based on two purported loan documents, claiming that the property was security for a £11,000 loan to JA in 1987, and the loan remained unpaid. T sought a vesting order, and this was granted by the court, in July 2007, in TA’s absence. T was registered as the proprietor, and soon afterwards he mortgaged the property to Barclays Bank.

In due course, TA discovered that T was having renovations done to the property. TA successfully applied to have the vesting order set aside on the basis that the documents were forged. TA was then registered proprietor, but without prejudice to the rights of Barclays and its registered legal charge. T died in 2013.

In 2016, TA commenced a claim against Barclays and the Chief Land Registrar seeking a declaration that the forged documents were null and void, and of no effect, and an order that the register be altered by the deletion of the charge in favour of Barclays on the basis of mistake. It was not disputed that the loan documents were forgeries.

At the heart of the case was ‘an important point of principle as to whether a court order said to have been obtained by reference to forged documents and given effect to by an entry on the register at HMLR results in a ‘mistake’ for the purposes of the Land Registration Act 2002 … such that the court has power to alter the register for the purpose of correcting that mistake’ (para 14).

What did the High Court decide?

The court ruled that only the vesting order of the court took effect as a registrable disposition. As a court order, this was valid and effective unless or until it had been set aside – and the Registrar had to give effect to it under the LRA. This meant that the vesting order entitled T to be registered as proprietor following the court order, and while registered as proprietor, he was entitled to exercise ‘owner’s powers’ under LRA s24 (para 121). This included charging the property to Barclays. 

Furthermore, the registration of the Barclays legal charge at a time when the July 2007 Order had not yet been set aside and T was registered as the proprietor, ‘could not possibly have been a mistake’ (para 121). The July 2007 Order was good on its face, and the registration of T as proprietor based on that Order was not a mistake ‘at the time, or at all’ (para 116). The charge was, therefore, valid and binding on the freehold.