Title by Registration: Rectification, Indemnity and Mistake and the Land Registration Act 2002
| Date | 01 January 2013 |
| Author | Emma Lees |
| Published date | 01 January 2013 |
| DOI | http://doi.org/10.1111/1468-2230.12002 |
Title by Registration: Rectification, Indemnity and
Mistake and the Land Registration Act 2002
Emma Lees*
Our understanding of the system of registered title is crucial to our understanding of real property
in general but there is no consensus as to the best way to interpret ‘correcting a mistake’ in
Schedule 4 LRA 2002. This provision should be interpreted to mean that subsequent registrations
following a ‘mistaken’ registration are not in themselves a mistake. Section 58 means that the
subsequent transferee is relying on good title and a valid transfer and this ought to protect them
from rectification.Where an original registered proprietor loses out as a result of this interpreta-
tion, they should be entitled to an indemnity however and this requires a change of approach to
the interpretation of Schedule 8 LRA 2002. This approach best accords with the logic of the
principle of title by registration whilst also avoiding a clash with Article 1,Protocol 1 ECHR.
INTRODUCTION
Often the most difficult situations that a legal system has to resolve are where
one of two innocent parties must lose out as a result of the actions of a third,
perhaps not so innocent, party. This problem has raised its head in relation to the
question of rectification of the land register under the Land Registration Act
2002 (LRA). There is however an additional complexity which arises here
because of the state guaranteed title that the register confers.The issue has been
considered at length by the Adjudicator to HM Land Reg istry, in the High
Court and in the Court of Appeal, but no consensus seems to be emerg ing as
to the best way to solve this practical and theoretical difficulty.It is argued here
that the starting point should be the meaning of section 58 of the LRA.
Furthermore, it is suggested that the discussion ought to shift from the meaning
of mistake to the question of indemnity. The significance of answering this
problem goes beyond simply examining when the register will be rectified, but
goes right to the heart of the pr inciple of title by registration and what that will
mean going forward.
The issue of rectification received considerable comment following the intro-
duction of the LRA.1The reality of the case law in front of the Adjudicator and
courts is however that there is nothing approaching a consensus as to how to
*University of Cambridge.Thanks go to Dr Mar tin Dixon for comments on earlier drafts of this article
and of course to the anonymous reviewers for their very helpful comments.All errors and opinions
remain my own
1 A. Hill-Smith, ‘Forgery and land registration: the decision in Malory Investments v Cheshire
Homes’ 2009 Conv 127; E. Cooke,‘Land registration: void and voidable titles – a discussion of the
Scottish Law Commission’s paper’ 2004 Conv 482; D. Sheehan,‘Rights to rectify the land register
as interests in land’ (2003) 119 LQR 31.The court’s discretion in relation to rectification has also
been recently considered in Walker vBurton [2012] EWHC 978.
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© 2013The Author.The Modern Law Review © 2013The Moder n LawReview Limited. (2013) 76(1) MLR 62–82
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interpret and apply the rectification provisions and so it is therefore worth
revisiting the question. The impor tance of doing so has very recently been
confirmed by the comments of Morgan J in Paton vTo dd .2He did not have the
benefit of argument on the question of his jurisdiction to rectify the register, and
admitted that there is considerable difficulty and contradiction in the case law,but
concluded that:
It was, in effect, common ground before me that the registrar has jurisdiction to
alter the register as against Mr Todd on account of the mistake in the original
registration of Mr Isaacs and Mr Brown. In view of that fact and with the further
assistance of the authorities to which I have referred, I am prepared to proceed on
that basis.3
His obvious acknowledgement however that there are such problems and
inconsistencies in the existing authorities is enough to show that this question
is one of some practical import.
The answer to this problem lies not simply in settling on a definition of
‘mistake’however.TheAdjudicator and courts are not failing to reach a consensus
because it is difficult to establish a definition of mistake which accords with the
logic of the LRA.They are finding it difficult because the logical solution, ie that
the registration of the subsequent interest-holder is not a mistake,has unfortunate
consequences. If there is no mistake,there can be no rectification.This is perhaps
satisfactory in itself, but if there is no mistake, then it may well be that there also
can be no indemnity, as demonstrated by the result in Barclays Bank vGuy4(Guy)
where the original proprietor was not entitled to an indemnity despite his title
being burdened with a charge in excess of £100 million.This was also the view
of the Deputy Adjudicator in Knights Construction vRoberto Mac5(Knights Con-
struction) who concluded that
there was a potential problem as to the relationship between the provisions as to
rectification and those as to indemnity, in that on one construction of the provisions,
a party might end up without the land or an indemnity as a result solely of the
provisions of the 2002 Act, although wholly without fault.6
A similar view is expressed by Mr Rhys in Ajibade vBank of Scotland & Endeavor
Personal Finance:
the instrument creating the Endeavour charge was not a nullity, and registration of
Endeavour was not therefore a mistake. Accordingly, it is difficult to see how the
Applicant could be entitled to an indemnity under paragraph 1(1)(b) since, in the
absence of any mistake, there was never any possibility of rectification.7
3ibid at [55].
5 HM Adjudicator, REF/2009/1459.
6ibid at [61].
7 HM Land Adjudicator,REF/2006/0163/0174 at [10].
Emma Lees
© 2013 TheAuthor.The Moder n Law Review© 2013 The Modern Law Review Limited. 63
(2013) 76(1) MLR 62–82
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