Prestige Properties Ltd v Scottish Provident Institution
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE LIGHTMAN,Mr Justice Lightman |
| Judgment Date | 13 March 2002 |
| Neutral Citation | [2002] EWHC 330 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC 00 00795 |
| Date | 13 March 2002 |
[2002] EWHC 330 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Lightman
———
Case No: HC 00 00795
Mr Simon Browne-Wilkinson QC and Ms Elizabeth Weaver (instructed by Fladgate Fielder, 25 North Row, London W1R 1DJ) for the Claimant
Mr Mark Cunningham QC (instructed by The Treasury Solicitor, Queen Anne's Chambers, 28 Broadway, London SW1H 9JS) for the Second Defendant
The First Defendant did not attend and was not represented
Hearing dates : 30th January—8th February & 28th February 2002
——-
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
………………………………………
Mr Justice Lightman
In this action the Claimant Prestige Properties Limited ("Prestige") claims an indemnity from the Second Defendant The Chief Land Registrar ("the Registrar") for loss alleged to have been suffered by reason of an error in a filed plan of a registered title and the reflection of that error and the making of two other errors in a Certificate of Result of a Search dated the 31st July 1997 ("the 1997 Search Certificate") issued under Rule 9 of the Land Registration (Open Register) Rules 1991 ("the 1991 Rules"). The 1997 Search Certificate related to a City office block known as 20 St Mary at Hill, London EC3 ("the Property"). The thrust of the errors was to show as part of the Property a parcel of unregistered land ("Parcel 116') the area of which is 14 metres square. Parcel 116 consisted in fact of three narrow strips. The larger part of the parcel (hereinafter called "the Green Land"), the area of which is 9 metres square, formed part (but by reason of an error of the Land Registry was omitted from the filed plan) of the registered title to a freehold parcel forming part of the Property; and two strips making up the smaller part (hereinafter referred to as "the Blue Land" and "the Orange Land") measuring 5 metres square (which comprised part of a shared service yard) never did form part of the Property but formed parts of the registered titles (in the case of the Blue Land freehold and in the case of the Orange Land leasehold) belonging to two separate proprietors. In the belief induced by the errors in the filed plan and 1997 Search Certificate that the Property included the entirety of Parcel 116, in its contract dated the 15th July 1999 ("the Agreement") for the sale of the Property to the First Defendant The Scottish Provident Institution ("SPI"), Prestige agreed to transfer to SPI the entirety of Parcel 116 and that SPI should be entitled to retain £450,000 of the purchase price ("the Retention") if it could not obtain registration of title to the entirety of Parcel 116 within 6 months. The Transfer dated the 12th July 1999 giving effect to the Agreement ("the 1999 Transfer") contained a provision to like effect. Inevitably in the circumstances on its application for registration of title SPI could only obtain registration of title to the Green Land. Though it therefore obtained title to the entirety of the Property, SPI did not obtain, as the Agreement and the 1999 Transfer provided that it should obtain, registered title to the Blue and Orange Land. On this pretext SPI refused to pay over the Retention. Prestige sued SPI claiming by way of rectification of the Agreement and the 1999 Transfer the exclusion of any right on the part of SPI to withhold the Retention in the event that SPI obtained registration of title to the entirety of the Property without also obtaining registration in respect of the Blue and Orange Land and (consequent thereon) payment of the Retention. Prestige also sued the Registrar in the alternative claiming an indemnity in respect of the loss of the Retention. The claim by Prestige against SPI was compromised prior to trial on terms which provided for a payment by SPI to Prestige of £50,000, a sum for which Prestige gives credit in its continuing claim against the Registrar.
The critical issue in this case is whether (as alleged by the Registrar) Prestige is precluded in whole or in part from obtaining the indemnity which it seeks on the ground that the loss which it suffered was wholly or partly the result of its own lack of proper care. This issue raises novel and far-reaching questions of construction of the statutory provisions conferring rights of indemnity against the Registrar and (most important of all) questions as the extent to which a buyer or seller of registered land is entitled (in lieu of investigation of title) to place reliance upon a statement in a parcels index forming part of a Search Certificate.
HISTORY
This litigation focuses upon two events, namely the purchase in 1997 by Prestige of the Property from Legal and General Assurance Society ("L&G") and the subsequent sale by Prestige in 1999 of the Property to SPI. The principal actor in the events under consideration and the principal witness at the trial was Mr Norman Cohen ("Mr Cohen"). At the date of the purchase in 1997 he was a partner in the firm of Kaufman Kramer Shebson ("KKS"). Shortly thereafter in 1997 or early 1998 KKS merged with Fladgate Fielder ("FF") and Mr Cohen became a partner in FF and was such at the time of the sale. KKS acted as solicitors for Prestige on the purchase and FF acted for Prestige on the sale, and Mr Cohen had the conduct of both the purchase and the sale on behalf of those respective firms. A Mr Richard Kaufman ("Mr Kaufman") who was at all material times a partner of Mr Cohen in both firms, played a subsidiary role (most particularly) in the 1999 sale.
L&G became the registered proprietor of the Property on the 23rd July 1975. On the 16th October 1978 L&G granted a lease for 21 years from the 1st April 1978 of the Property ("the Lease") to Central Trustee Savings Bank Limited ("CTSB"). In 1997 L&G entered into negotiations with Prestige for the sale of the Property subject to the Lease to Prestige for the sum of £9,900,000. This purchase by Prestige was to be as an investment and was to be funded by a syndicate of lenders led by Rheinboden Hypothekenbank AG ("the Bank") which was to be granted a mortgage of the Property securing repayment of the funding. Separate partners in the firm of Lawrence Graham ("LG") acted as solicitors on this transaction for L&G and the Bank.
On the 18th July 1997 LG provided KKS with five files of documents relating to the title to the Property. The documents included office copy entries ("OCE") of the registers and the filed plans for seven registered titles ("the 7 Registered Titles"): NGL329711, LN130416, LN218734, LN216688, 244513, NGL242596 and NGL99884. All of the titles were freehold except for NGL3269711 which was held leasehold from the Corporation of London. The documents provided by LG also included a copy of the Lease which was registered under Title Number NGL339408. The papers provided did not include any documents deducing title to any unregistered land, a fact indicative of the fact that the title to the Property did not include any unregistered land. KKS did not obtain from LG or otherwise the OCE or filed plans in respect of the registered leasehold title NGL242448 (which included the Blue Land) or the registered freehold title NGL242406 (which included the Orange Land) because both firms thought (in fact correctly) that neither title related to any part of the Property.
As part of his investigation into title, in July 1997 Mr Cohen applied to the Land Registry for an official search of the Index Map pursuant to Rule 9 of the 1991 Rules. This search was calculated to reveal whether the land comprised in the reversion to the Lease was registered and, if so, under what title numbers, and accordingly calculated to enable Mr Cohen to check those title numbers against the 7 Registered Titles shown in documents provided by LG and satisfy himself that Prestige would get title to the Property. Mr Cohen therefore attached a copy of the plan from the Lease to the application on which he edged in red the area demised by the Lease (i.e. the Property) together with an area over which the TSB had rights of access under the Lease ("the Additional Area"). The legal position in respect of the Additional Area is not relevant to any issue in this action.
In response to that application on the 31st July 1997 in the 1997 Search Certificate the Land Registry "certified that the official search applied for has been made with the following result". It then went on to state the position as regards the registration of title to "the land" (i.e. the Property): "Please see attached copy of the index map 3280G parcel numbers [sic] which are highlighted." The extract from the index map (which is a scale Ordnance Survey Map) showed the parcel numbers of the various parcels of land shown on the map and highlighted eight parcels comprising the Property and the Additional Area, the subject of the search. The attached parcels index identified in respect of each of the parcels whether the title to the parcel was registered with a freehold or leasehold title and under the heading "remarks" spelt out the extent of the registered title in respect of each of the parcels. What is of critical significance in this case is that in respect of "Parcel 116', the parcels index stated that no freehold title was registered and that the entirety of the parcel was included within the registered leasehold title to the Lease (NGL339408). Mr Cohen checked the parcel numbers against the parcels index and the 7 Registered Titles as shown in the documents produced by LG. He noted that Parcel 116...
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