Rock Ferry Waterfront Trust v Pennistone Holdings Ltd

Land registration – Overriding interest – Actual occupation – Land transferred to appellant by offshore company – Appellant failing to register transfer so transfer taking effect only in equity – Transferor dissolved and land escheated to Crown extinguishing title – Crown transferring land to respondent – Respondent seeking possession – Appellant claiming overriding interest because of actual occupation – High Court holding respondent entitled to possession – Appellant appealing – Whether actual possession requiring physical presence – Appeal dismissed An offshore company owned land at Bedford Road East, Birkenhead, formerly occupied by an oil company. In 2012, it transferred the land to another offshore company (T) for a nominal sum of £1. In 2015, T transferred its registered title to the appellant for £2,750. The appellant deliberately failed to register the transfer because of the potential environmental and contamination issues and liabilities affecting the land as a former oil site. Therefore, legal title to the plot remained with T. In 2016, T was dissolved and title to the land passed by escheat to the Crown. In 2019, the Crown transferred the land to the respondent for £5,000. The respondent was registered as its legal owner. The respondent brought possession proceedings against the appellant on the basis that it was in possession as a trespasser. The appellant counterclaimed for a declaration that it was entitled to be registered as sole proprietor of the land, and an order directing the Land Registry to alter the register. The High Court held that the appellant had an equitable interest in the land which it had not disclaimed. The terms of the transfer from the Crown gave no guarantee of title and, when it acquired the site, the respondent had constructive knowledge of the appellant’s interest. However, under section 11 of the Land Registration Act 2002, the respondent obtained legal title to the plot on first registration. That title was not subject to the appellant’s equitable interest because it was not in actual occupation at the time of the Crown transfer: [2020] EWHC 3007 (Ch). The appellant appealed. Held: The appeal was dismissed. (1) Section 1012 of the Companies Act 2006 provided for the vesting of “all property and rights whatsoever” of a dissolved company in the Crown as bona vacantia. As T was dissolved under Manx law, the 2006 Act did not apply. Nevertheless, land in England was subject to English law. Where the corporation dissolved was not governed by the 2006 Act, there would be an escheat of its real property in England. The effect of an escheat was that the freehold interest was terminated. Following an escheat, a transfer by the Crown created a new freehold interest and a new registered title was created. It had been assumed that, although an escheat terminated an existing freehold interest, it did not terminate derivative interests, such as leases or mortgages created out of that freehold. The court was prepared to proceed on that assumption in respect of the equitable interest in the freehold created by the transfer from T to the appellant: Scmlla Properties Ltd v Gesso Properties (BVI) Ltd [1995] BCC 793; [1995] EGCS 52 followed. (2) Because the transfer from the Crown to the respondent amounted to the creation of a new freehold, the registration of that freehold title at HM Land Registry was a first registration. In the case of a first registration of an interest in land as a registered estate, it was the Land Registration Act 2002 that prescribed what did and did not bind the registered proprietor. Chapter 1 of Part 2 of the 2002 Act dealt with first registration. Section 11(4) provided that the estate was vested in the proprietor subject only to the certain interests, including unregistered interests which fell within any of the paragraphs of schedule 1. Among those paragraphs was “an interest belonging to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for an interest under a settlement under the Settled Land Act 1925”. If an interest fell within the scope of that paragraph, the first registered proprietor took subject to it. If not, not. On the basis that the appellant had an equitable interest in the land, the question was whether the appellant was “in actual occupation” of the land at the date of the registration within para 2 of schedule 1 to the 2002 Act: Williams & Glyn’s Bank Ltd v Boland [1981] AC 487 followed. (3) The appellant had argued that the judge overlooked the role of a caretaker who was in actual occupation of the land as representative of the appellant and, consequently, his actual occupation was to be attributed to the appellant. However, it was necessary to consider why the representative was in occupation. Someone might be in occupation through another, although the other had to be someone who was specifically employed for a purpose which entailed their being in occupation. If a site was uninhabitable, residence was not required, but there had to be some physical presence, with some degree of permanence and continuity: Lloyds Bank plc v Rosset [1989] Ch 350 and Malory Enterprises Ltd v Cheshire Homes (UK) Ltd [2002] EWCA Civ 151; [2002] PLSCS 46; [2002] Ch 216 considered. Even in the case of derelict land, some physical presence, with some degree of permanence and continuity, was required in order to amount to actual occupation. Whether or not particular facts amounted to actual occupation was a question of fact for the trial judge based on an evaluation of all the evidence. Unless the judge had misdirected himself in law, had plainly misunderstood the evidence or reached a conclusion that no reasonable judge could have reached, the appeal court should not interfere. On the judge’s findings, the caretaker did no more than keep an eye on the yard, and deter people from getting in. The functions he performed in a representative capacity did not entail his being in actual occupation of the land. The judge was careful to describe the caretaker’s attendance at the land as “visiting”. To the extent that he used the land at all, he did so for his own purposes as a gratuitous licensee. The judge was entitled to find that the caretaker’s activities did not amount to actual occupation by the appellant: Stockholm Finance Ltd v Garden Holdings Ltd (26 October 1995) [1995] NPC 162 followed. Malory distinguished. John de Waal QC (instructed by MSB Solicitors of Liverpool) appeared for the appellant; Richard Oughton (instructed by Johnson and Boon Solicitors of Wallasey) appeared for the respondent. Eileen O’Grady, barrister Click here to read a transcript of Rock Ferry Waterfront Trust v Pennistone Holdings Ltd