Land registration – challenging the established practice

James Chadwick and Thomas Rothwell consider a recent decision which confirmed that it is an abuse of process to seek to challenge the Land Registrar’s decision after expiry of the time limit for judicial review. The High Court has decided in Ainscough v Ainscough and another [2020] EWHC 2909 (Ch) that, although the doctrine of res judicata does not apply to decisions of the Land Registry, it is an abuse of process to seek to challenge such a decision by way of subsequent court proceedings if the registrar’s decision is not impugned by a judicial review. The case also provides a useful insight into when a “mistake” may be regularised by a decision of the Land Registrar and a further example of the application of the “exceptional circumstances” test in paragraphs 3(3) and 6(3) of Schedule 4 to the Land Registration Act 2002. Background The claim concerned a family dispute between two brothers, John Ainscough (the claimant) and Christopher Ainscough (the first defendant) relating to a property first purchased by John and later transferred into John and Christopher’s joint names in June 2006. In November 2006, while John was in prison, a forged transfer was executed transferring the property into the sole name of John’s son, Joseph Ainscough, and mortgaged to Bank of Scotland (the second defendant) for the sum of approximately £56,000. In March 2015, John applied to the Land Registrar for rectification of the title register to remove Joseph as the registered proprietor and the bank’s charge from the register. The assistant land registrar confirmed that while the mortgage constituted a mistake on the register, exceptional circumstances existed justifying a decision not to remove the mortgage as requested. On reviewing the available evidence, the assistant registrar concluded that John had adopted the mortgage and derived a benefit from it, having made mortgage payments and received £16,700 from the advance. Despite the above, John and Christopher were restored as joint proprietors of the property, the bank withdrawing its objection once it was confirmed that its charge would not be removed. In the current claim, John sought the removal of his brother’s name from the title deeds and the bank’s charge from the register. By its defence, the bank contended that: (a) the claim was an abuse of process and a collateral attack on the decision of the Land Registrar; (b) the bank’s charge was no longer a “mistake” because the Land Registrar had decided that exceptional circumstances existed justifying its presence on the register; and (c) exceptional circumstances existed that justified the court’s refusal to remove the bank’s charge. Determination The court held that, although the substantive doctrine of res judicata only applies to decisions of competent civil courts, it could nevertheless be an abuse of process to seek to collaterally attack the decision of an administrative body acting within its proper powers. The court accepted that the collateral attack principle applied to decisions of the Land Registry given its special capacity as the guardian of the land register. The question, as set out in Re Barings (No 3) [1999] 1 All ER 1017, was therefore whether in all the circumstances it would be manifestly unfair to a party to litigation before the court, or would otherwise bring the administration of justice into disrepute among right-thinking people, to allow the claim to proceed. In Ainscough, the assistant registrar had refused to remove the bank’s charge from the register pursuant to her statutory power set out in paragraph 6(3) of Schedule 4 to the Land Registration Act 2002. The court accepted that the proper course of action was to apply for judicial review within three months from the date of the Land Registrar’s decision. Any other decision would render the strict time limits for issuing judicial review proceedings entirely meaningless. The court noted that the bank had withdrawn its objection to John’s original application to the Land Registry on the faith of its belief that the bank’s charge was no longer in issue, thereby depriving the bank of the possibility of continuing with its objection to John’s application. Accordingly, the claim was dismissed. The court also accepted that: (a) the bank’s charge was no longer a “mistake” which might fall to be corrected by the court under the provisions of Schedule 4, the assistant registrar having exercised her discretion not to remove it because of exceptional circumstances; (b) applying the two-stage test in Paton v Todd [2012] EWHC 1248 (Ch); [2012] 2 EGLR 19, the circumstances of this case were clearly exceptional and justified non-alteration of the register. This was not a standard case in which a fraudster forges a transfer, takes out a mortgage and absconds with the proceeds but rather John had benefited from the mortgage monies. By contrast, if the charge were to be removed, John and Christopher would benefit from a windfall, taking the property free from any encumbrances, having already benefited from the mortgage advance. Comment This binding decision of the High Court will be of general importance to the legal profession and property owners. In cases in which the Land Registrar makes a decision of his or her own motion, practitioners must act promptly, if they are aggrieved by the Land Registrar’s decision, by commencing proceedings for judicial review within the three-month time limit. If that opportunity is missed, they risk being faced with an application to strike out any later proceedings as an abusive collateral attack on the decision of the registrar. Practitioners should be careful not to overlook the implications of this decision, which potentially applies to all property disputes where the registrar does not refer an objection to the First-tier Tribunal (Property Chamber) for determination but rather makes a decision his or herself. The case also sheds light on cases where a mistake can subsequently be regularised by a decision of the Land Registry. James Chadwick is a partner at UK law firm TLT and Thomas Rothwell is a barrister at Falcon Chambers Photo by Andy Lauwers/Shutterstock (915880b)