Serena Rees v 82 Portland Place Investments LLP
| Jurisdiction | England & Wales |
| Judge | Mr Justice Snowden |
| Judgment Date | 15 May 2020 |
| Neutral Citation | [2020] EWHC 1177 (Ch) |
| Court | Chancery Division |
| Date | 15 May 2020 |
| Docket Number | Case No: CR-2018-000282 |
[2020] EWHC 1177 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (ChD)
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Mr Justice Snowden
Case No: CR-2018-000282
Christopher Heather QC (instructed by David Conway & Co) for the Appellant
Philip Rainey QC (instructed by Cripps Pemberton Greenish) for the Respondents
Hearing date: 22 May 2019
Approved Judgment
This is an appeal by Serena Rees (“Ms Rees”) against the order made by HHJ Gerald in the Central London County Court on 4 October 2018 whereby he dismissed her claim to have the register in respect of her long leasehold property at Flat K at 82 Portland Place, London (“Flat K”) rectified pursuant to Schedule 4 of the Land Registration Act 2002 (“Schedule 4” and “the 2002 Act”). Ms. Rees' claim sought to correct the consequences of a mistaken failure by the Land Registry to enter a unilateral notice against the freehold title of Flat K to protect her claim to a 90 year lease extension under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993 (“section 42” and “the 1993 Act”).
The Court's jurisdiction to make an order for alteration of the register by way of rectification is contained in Schedule 4 to the 2002 Act. The relevant paragraphs are as follows:
“1. In this Schedule, references to rectification, in relation to alteration of the register, are to alteration which—
(a) involves the correction of a mistake, and
(b) prejudicially affects the title of a registered proprietor.
2.(1) The court may make an order for alteration of the register for the purpose of—
(a) correcting a mistake,
(b) bringing the register up to date, or
(c) giving effect to any estate, right or interest excepted from the effect of registration.
(2) An order under this paragraph has effect when served on the registrar to impose a duty on him to give effect to it.
3.(1) This paragraph applies to the power under paragraph 2, so far as relating to rectification.
(2) If alteration affects the title of the proprietor of a registered estate in land, no order may be made under paragraph 2 without the proprietor's consent in relation to land in his possession unless—
(a) he has by fraud or lack of proper care caused or substantially contributed to the mistake, or
(b) it would for any other reason be unjust for the alteration not to be made.
(3) If in any proceedings the court has power to make an order under paragraph 2, it must do so, unless there are exceptional circumstances which justify its not doing so.
(4) In sub-paragraph (2), the reference to the title of the proprietor of a registered estate in land includes his title to any registered estate which subsists for the benefit of the estate in land.
…
8. The powers under this Schedule to alter the register, so far as relating to rectification, extend to changing for the future the priority of any interest affecting the registered estate or charge concerned.”
Background
Ms. Rees took an assignment of the lease of Flat K on 1 September 2011 together with the benefit of a section 42 notice which had been given by her predecessors on 5 August 2011. The premium proposed in the section 42 notice was £1.8 million.
At the date the section 42 notice was given, the freehold of the building containing Flat K (“the Building”) was held by Howard De Walden Estates Limited (“HDWE”) as part of Title Number 357186. The Building was also subject to a headlease dated 28 November 1924 for a term of 99 years, the 12 year residue of the term of which was owned by 82 Portland Place Limited (“PPL”). Accordingly, when the section 42 notice was served, because of the limited duration of the remaining term of the headlease, HDWE was the competent landlord within the meaning of the 1993 Act and not PPL.
At the time the section 42 notice was served, a process of collective enfranchisement to acquire the Building from HDWE was already in progress. This had commenced by a notice under section 13 of the 1993 Act dated 11 September 2009, and it had the effect of suspending the operation of Ms. Rees' section 42 notice until completion of the collective enfranchisement process: see section 54 of the 1993 Act.
After Ms. Rees acquired Flat K, to protect the section 42 notice, her former solicitors (DKLM) applied on 19 September 2011 for registration of two separate unilateral notices (UN1) against the registered titles of the freehold reversion and the headlease. The Land Registry registered the unilateral notice against the headlease with effect from 19 September 2011 but rejected the application to enter a unilateral notice against the freehold title, on the grounds that the collective enfranchisement process prevented it from being registered. Explaining the rejection, an official at the Land Registry sent a letter dated 26 October 2011 to Ms. Rees' then solicitors which stated,
“I have also referred the matter to my lawyer who has considered Section 54 of the above Act and it appears that, as the effect of your client's notice has been suspended during the currency of the Section 13 notice served by the collective enfranchises, your application for a Unilateral Notice in the register is similarly prohibited.
In the absence of any contrary argument we propose to return your papers to you on 4 November 2011.”
It is common ground between the parties that this was wrong and the Land Registry made an error in rejecting the application to register a unilateral notice against the freehold title. Section 54 of the 1993 Act suspended the operation of the section 42 notice but did not preclude registration of a unilateral notice to protect it. Ms. Rees did not, however, pursue the point or commence proceedings for judicial review to challenge the decision of the Land Registry.
The collective enfranchisement process was completed on 7 March 2017 when the freehold reversion and the headlease of the Building were transferred from HDWE and PPL respectively to the Second Defendant as nominee purchaser. This had the effect of ending the suspension of the section 42 notice pursuant to section 54(4) of the 1993 Act. Also on 7 March 2017, the Second Defendant granted the First Defendant a concurrent superior lease of Flat K for a term of 999 years without payment of a premium and at a nominal rent.
The Second Defendant applied to the Land Registry on 4 April 2017 to be registered as proprietor of the freehold title to the Building and of the headlease, and for merger of the headlease into the freehold reversion. The merger took place on, or after, 4 April 2017 and the title of the headlease was closed.
The Second Defendant was then registered as proprietor of the freehold title to the Building with effect from 4 April 2017 and was given a new title number NGL968594. The First Defendant was registered as the proprietor of the concurrent superior lease with effect from 6 April 2017 and was given title number NGL968688.
At this time, and in accordance with what it claimed to be its normal practice on merger, the Land Registry transferred (“migrated” or “carried over”) the unilateral notice previously registered against the headlease to the Second Defendant's freehold title number NGL968594. The Land Registry initially dated it 4 April 2017 but later altered the date to 19 September 2011 following correspondence with Ms. Rees' solicitors. The Land Registry also migrated the unilateral notice which had been registered against the headlease to the First Defendant's new leasehold title number NGL968688 and dated it 6 April 2017.
The Defendants contended that the effect of the transfer for value of the freehold reversion from HDWE to the Second Defendant was that Ms. Rees' existing section 42 notice did not bind, and was not enforceable against, the Second Defendant; and was not binding and not enforceable against the First Defendant as successor to the Second Defendant. Without prejudice to that contention, on 9 May 2017 the First Defendant as the new competent landlord within the meaning of the 1993 Act by virtue of its superior lease, served a notice pursuant to section 54(8) of the 1993 Act to the effect that the suspension imposed by the collective enfranchisement process had come to an end; and served a counter-notice under section 45(3)(a) of the 1993 Act. The counter-notice proposed a premium of £3,590,750.
Ms. Rees then served a second section 42 notice on 31 October 2017, without prejudice to her contention that the first notice was valid and enforceable, proposing a premium of £3.7 million, to which the First Defendant responded by a counternotice proposing £5.64 million.
The Claim
Following the exchange of notices, Ms. Rees issued a claim on 13 March 2018 in the Central London County Court against the Defendants seeking, inter alia: (i) a declaration that the Defendants were bound by the original section 42 notice; and (ii) an order rectifying the register in relation to title numbers NGL968594 and/or NGL968688 pursuant to Schedule 4 of the 2002 Act so as to correct the mistaken failure by the Land Registry to enter a unilateral notice against title number 357186 in September 2011 and the consequences of that mistake. The Defendants counterclaimed for declarations that they were not bound by the original section 42 notice, and also sought an order altering the register in relation to title numbers NGL968594 and/or NGL968688 so...
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Steven John Williams v Alter Domus Trustees (UK) Ltd (formerly Cortland Trustees Ltd)
...Sch. 4, LRA 2002. iii) An order for rectification may be retrospective: per Snowden J in Rees v Portland Place Investments LLP [2020] EWHC 1177 (Ch) at [33]; see also Emmet at [9.029]. iv) In the present case there was a mistake on the register, as described above. Mr Waller and Ms Thorpe ......