LRA Rectification of the register – Fraud – ‘Correcting a mistake’ – second charge – Schedule 4 Paragraph 5(1)(a) of the Land Registration Act 2002
Ms Ajibade was the registered proprietor of a leasehold flat. Her sister forged a power of attorney in her own favour and in the purported exercise of that power transferred the property to a Mr Abiola (her husband). Mr Abiola took out a mortgage from the Halifax Building Society (which became part of the Bank of Scotland), and he subsequently took a further loan from a company called Endeavour; both loans were charged on the property and duly registered on the Charges Register. Mr Abiola did not oppose the rectification of the Proprietorship Register by removing him as registered proprietor. As regards the chargees, the Bank of Scotland apparently accepted that it followed that its charge also would have to be removed from the Charges Register; but Endeavour took a different line. As summarised by Mr Rhys: ‘It contends that whether or not the transfer in favour of Mr Abiola was a nullity, its second charge must remain on the register, even if the Applicant succeeds in having herself restored as proprietor. Essentially, it contends that Mr Abiola, once registered as proprietor, albeit by virtue of a fraudulent transaction, was entitled to charge the property to Endeavour, and consequently there is no ‘mistake’ within the meaning of Schedule 4 Paragraph 5 to relieve against.’
The bank relied in particular on the view expressed in Ruoff and Roper that a narrow view of the concept of ‘correcting a mistake’ should be adopted.
Mr Rhys rejected that argument: ‘In one sense, the arguments addressed to me by both the Applicant and Endeavour have been focussed on the wrong word – namely ‘mistake’. The Applicant contends that the registration of Endeavour is, in effect, a mistake. Endeavour contends that is not. However, it is manifest, and not disputed, that there was an operative mistake when the Land Registry registered Mr Abiola as proprietor of the Property. The real question, it seems to me, is to decide how far the registrar can go in ‘correcting’ that mistake. It is accepted that Mr Abiola should be removed from the register and the Applicant replaced as proprietor in the Proprietorship Register. It is also accepted that Halifax Plc should be removed from the Charges Register. Would these steps entirely correct the original mistake? The Property would still remain subject to the second charge created by the fraudulently-registered Mr Abiola, and the Applicant would regain her title but encumbered by this charge. It does not seem to me that, in such circumstances, the mistake has been fully corrected. Certainly, all the consequences of the mistake would not have been corrected, even though it would be open to the registrar to do so by rectifying the Charges Register by removing Endeavour’s charge. In my judgment, there is no basis for construing the expression ‘correcting a mistake’ in such a restrictive way. It seems to me that this formulation is intended to give the registrar wide scope to exercise the discretion to rectify in a fair and just way. It would have been possible to have imposed express limitations on the power in the sense contended for by Endeavour if this had been the intention – as indeed limitations have been imposed in regard to proprietors in possession (see Schedule 4 Paragraph 6). It seems to me that it would be perverse to limit the registrar’s power to rectify the register to the correction of only one consequence of the mistake, leaving uncorrected the other direct consequences of the original mistake. Protection for parties in the position of Endeavour is to be found both in the undoubted requirement that the registrar should exercise his power in a fair and just way, and in the existence of an indemnity from the Land Registry.’ He considered whether his approach went too far in undermining the ‘sanctity’ of the Register; but he believed that it did not. In that connection he noted that his conclusion was in line with the position under the 1925 Act and referred to Argyle Building Society v Hammond.
Judges:
Mr Rhys
Citations:
[2008] EWLandRA 2006 – 0163
Links:
Statutes:
Citing:
See Also – Ajibade v Bank of Scotland Plc (Formerly Halifax Plc), Endeavour Personal Finance Ltd LRA 8-Apr-2008
LRA Alteration and Rectification of The Register : Discretion of The Registrar and of The Adjudicator – Rectification of the register – Fraud – ‘Correcting a mistake’ – second charge – Schedule 4 Paragraph . .
Cited by:
Cited – Gold Harp Properties Ltd v Macleod and Others CA 29-Jul-2014
The company appealed against an order re-instating to the register leases which the company said it had forfeited for non-payment of rent. After the forfeiture, the landlord had granted new leases. It appealed saying that exceptional circumstances . .
Lists of cited by and citing cases may be incomplete.
Registered Land
Updated: 02 September 2022; Ref: scu.429592