Overreaching In Registered Land Law

Publication Date01 Mar 2006
DOIhttp://doi.org/10.1111/j.1468-2230.2006.00582.x
AuthorNicola Jackson
Overreaching In Registered Land Law
Nicola Jackson
n
Bene¢cial interests under a tr ust were not intended to be overriding interests under section
70(1)(g) of the Land Registration Act 1925. The position was altered by Williams & Glyn’s Bank
Ltd vBoland, which determined that an interest under a trust for sale would bind a purchaser if
the bene¢ciary were in actual occupation.The decision raised the question whether such interests
could be overreachedonce the be ne¢ciary wasi n occupation of the trust property.City of London
BuildingSociety vFlegg held that the relevant bene¢cial interest had been overreached.Both deci-
sions assume that overreaching in registered conveyancing takes e¡ect as it does in u nregistered
land. Yet there is considerable evidence that the Land Registration Act contains its own over-
reaching machinery.The House of Lords applied the wrong overreaching provisions in Boland
and Flegga ndthere is no legal basis on which to recognise that trust interests can override a sub-
sequent disposition under section 70(1)(g).
CURRENT INTERPRETATIONS OF OVERREACHING
Overreaching allows a purchaser of land on a conveyance of a legal estate to
take a title unencumbered by the bene¢cial interests under a trust or settlement,
whether he has notice thereof or not.
1
The interests are displaced or shifted
from being a burden on the land in the hands of the purchaser, and are
enforceable solely against the proceeds of sale or substitute property taken by the
trustees.
2
Both the mass di¡usion of private wealth and signi¢cant increase in owner
(mortgaged-to-a-building-society) occupation,
3
gave rise to a situation that the
framers of the 1925 legislation could not have foreseen. Contributions to the
¢nancial acquisition of property are now frequently made by persons who are
not owners at law, yet wholive with the legal owner. Suchcontributions give rise
n
University of Manchester. I am indebted to John Stevens, MarkThompson, Martin Davey, Gerard
McCormacka ndJean Howell for comments on previousdrafts and discussion on the topic, and to one
of the MLR’s anonymousreferees, whose comments helped me draw the correct inferences fromthe
theory, making the conclusions co nsiderablysharper.
1 C. Harpum,‘Overreaching,Trustees’ Powersand Reform of the 1925 Legislation’ [1990] CLJ 277,
hereafter Overreaching [1990]; D. Fox,‘Overreaching’ in P.Birks and A. Pretto (eds), Breach ofTrust
(Oxford:Hart Publishi ng,2002) 95; G. Ferris and G.Battersby,‘TheImpact of the Trusts of Land
and Appointment of Trustees Act 1996 on Purchasers of Registered Land’ [1998] Conv 168;
A‘purchaser’is de¢ ned by the Law of Property Act as including a mortgagee.
2 Sir Benjamin Cherry, D. HughesParry and J. R.Perceval Maxwell (eds),Wolstenholme and Cherry’s
Conveyancing Statutes (London: Stevens & Sons,12th ed,1932) clxxvi, 232, (hereafter Wo l st e n h o l m e
andCherry(12th ed)); B.L. Cherry,TheNewPropertyActs(London: Law Stationery Society,1926),a
series of lectures, with questions and answers given by Sir Benjamin L. Cherry at the Law
Society’s Hall, November-December, 1925 (hereafter Cherry,TheNew PropertyActs(1926)). Over-
reaching does not only applyto equitable interests:Wolstenholmea nd Cherry(12th ed) clxxvi, 232.
3 See for example, L. Whitehouse, ‘The Home-Owner: Citizen or Consumer?’ in S. Bright and
J. Dewar (eds), Land Law Themes a nd Perspectives (Oxford: Oxford University Press, 1998),
183^205; Midland Bank plcvCo oke [1995] 4 All ER 562, 575.
rThe Modern LawReview Limited 2006
Published by BlackwellPublishing, 9600 Garsington Road,Oxford OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA
(2006) 6 9(2) MLR 214^241
to an implied trust in favour of the contributor.
4
These trusts were held to take
e¡ect as tenancies in common under a trust for sale,
5
despite the apparent lack of
provision in the Law of PropertyAct for them to do so.
6
Williams & Glyn’s Bank
Ltd vBoland
7
held that these interests could override the estate of a subsequent
purchaser undersection 70(1)(g) of the Land Registration Act1925 when coupled
with the bene¢ciary’s actual occupation.
8
They were interests ‘subsisting in refer-
ence’to land despite being interests under a technical trust for sale. In City of L on-
don BS vFlegg,
9
the issue waswhether a legalcharge of registeredland executed by
a married couple overreached a substantial bene¢cial interest belonging to the
wife’s parents, the Fleggs.
10
Unli ke in Boland, the disposition satis¢ed the require-
ments of what were identi¢ed to be the relevant overreaching provisions: sections
2 and 27 of the Law of PropertyAct1925.The mortgage advance had been paidto
two trustees.Was overreaching to prevail over section 70(1)(g)?
11
In the Court of Appeal,
12
Dillon LJ reasoned that under the Land Registration
Act 1925, the de¢nition of minor interests’
13
includes those interests ‘capable of
being overridden
14
under the Law of PropertyAct 1925’; only minor interests are
capable of being overreached, because overreaching was referred to only in the
de¢nition of minor interests. Thus, once a trust interest became overriding by the
4DyervDyer (1788) 2 C ox 92.
5Bull vBull [1955] 1 QB 23 4, now ‘trust of la nd’ under the Trusts of Land and Appointment of
Trustees Act1996.
6 The relevant provisions were ss 34^36. Many argue that the draftsman by these sections had
obviouslyexcluded any other and new methods ofcreating tena ncies in common: Harpum, Over-
reaching [1990],297^302; also M. Friend and J. Newton,‘Undivided Shares and Trusts for Sale ^
A Draftsman’s Error’[1982]Conv 213.
7[1979]1Ch312;[1981]AC487.
8 Section 70(1)(g) protected unregistered rights in land belonging to persons i n actual occupation
of the land or in receipt of rents and pro¢ts: L.Tee,‘The Rights of Every Person in Actual Occu-
pation: An Enquiry i nto Section 70(1)(g)of the Land Registration Act 1925’[1998] CLJ 328. Sec-
tion 70(1)(g) was replaced by Land Registration Act 2002, sched 3(2). The Land Registration Act
1925was replaced by the Land RegistrationAct 2002. There is nothing in the reforms contained
in either the Trusts of Land and Appointmentof Trustees Act 1996 or the Land Registration Act
2002 that has any e¡ect on the analysis o¡ered in th is article. The 2002 Act built on the basic
structure of priority laid downi nthe 1925 Acta nd soughtonly to con¢rm, and improve on, the
purchaser-protection provisions laid down therein. For convenience, I continue to refer to the
1925 Act.The new terminology is ‘interests that override’: Land Registration Act 2002, scheds
1 and 3; see C. Harpum and J. Bignall, Registered Land Lawand Practice under the Land Registration
Act 2002 (Bristol: Jordan, 2004); R. Abbey and M. Richards,The Land Registration Act 2002
(Oxford:Oxford University Press, 2002).
9 [1988] 1 AC 54.
10 Norestriction had been entered on the register. The Fleggs rejected adviceto the e¡ect that the
property should be registeredin the names of all four because they thoughterroneously that they
might become liable under the mortgage:Harpum, Overreaching [1990], 307.
11 Anderson states that the draftsman of the 1925 legislation ‘had not. . . said what is to happen if
principles clash’: J. S. Anderson, Lawyers and the Making of English Land Law 1832^1940 (Oxford:
Clarendon Press,1992)330 (hereafterAnderson).Although I argue below that there is no such clash.
12 [1986]2 WLR 616; D. Hayton,‘Are Occupiers’Overreachable Interests ReallyOverriding?’ [1986]
NLJ 208, 20 9; D. Hayton, ‘No Overreaching of Occupying Bene¢ciariesWithout Their Con-
sent!’[1986]Co nv131; J.Greed, ‘Post-Flegg Problems’ [1987] Law Soc Gazette 1957;M. Thompson,
‘Dispositions byTrustees for Sale’ [1988] Conv 108.
14 The terminology ‘overridden’ and‘overreached’ is used interchangeablybetween the Land Regis-
tration Act1925 and the Law of PropertyAct 1925.
Nicola Jackson
215rThe Modern LawReview Limited 2006

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