To restrict or not to restrict?

Section 42(2) of the Land Registration Act 2002 prohibits the registration of a restriction to protect the priority of an interest that is, or could be, protected by a notice. This means that buyers must register notices to protect contracts to purchase land – and not restrictions. But, if a seller contracts not to sell its land to anyone else without consent – which often happens where a seller grants an option – the buyer will be entitled to register a restriction preventing the registration of a disposition, unless it consents. In other words, notices and restrictions perform different functions. The facts behind the decision in Sensar Ltd v Chief Land Registrar [2021] EWHC 13 (Admin) are much more complicated than the summary that follows suggests. Suffice it to say that the litigation concerned joint venture agreements, pursuant to which companies advanced funds so that a landowner could construct dwellings on its land. The agreements were accompanied by correspondence stating that a legal charge will be registered “against the Property, which will protect your interest and stop the Property being sold without your consent”. The charges were never executed. But the companies sought to register restrictions anyway. The Land Registry rejected the applications because it could not identify any provision in the agreements prohibiting the sale of the land without the companies’ consent. But following subsequent litigation, culminating in a judgment (to be found at [2018] EWHC 888 (Admin)), the Land Registry’s decision was quashed because that it was not based on a sufficiently careful review of the documents and was not clearly explained. After further consideration, the Land Registry decided to accept the applications to register the restrictions – but, following the receipt of objections, referred the dispute to the First-tier Tribunal. The companies issued a claim for judicial review, arguing, among other things, that the objections were groundless and complaining that the Land Registry had not provided any reasons for deciding otherwise. The judge noted that the Land Registry is not required to explain why it considers an objection to be, or not to be, groundless. But he accepted that there was considerable force in the argument that reasons should be given if an objection is dismissed because it is groundless. The Land Registry had taken the opposite view here. However, given the history of this case and the fact that the Land Registry initially took the view that the objections were groundless and had communicated this to the companies before changing its mind, the judge considered that the Land Registry should have given reasons for, and at the time of, its decision. The agreements provided for legal charges that imposed a requirement for consent before any disposals could be registered. So it was arguable that the agreements themselves imposed requirements for consent – and the objections to the registration of the restrictions deserved proper consideration by the First-tier Tribunal. The judge accepted that, on the “very particular facts of this case”, the companies should have had an opportunity to comment before the Land Registry concluded that the objections that it had received were not groundless. Consequently, it had breached its public law duty of procedural fairness. But its decision was not unlawful or irrational, and there were no grounds to quash it. The judge addressed further points that will interest those interested in the detail of land registration practice and procedure. So too will his comments attaching little weight to “an exchange in a Land Registry blog” where an anonymous author had spoken for the Land Registry.   Allyson Colby, property law consultant