Why it pays to make no mistake

The Land Registration Act 2002 (the 2002 Act) introduced a system of “title by registration”. Registration is conclusive and title is guaranteed. However, the protection is not absolute. The 2002 Act also includes provisions for rectifying mistakes and for altering the register. When the register is rectified because there has been a “mistake”, as opposed to being altered, for example, to update it, those losing out may be entitled to an indemnity. So we need to understand what constitutes a “mistake” and the court’s jurisdiction where third parties acquire interests in land in reliance on the register. Soft target Antoine v Barclays Bank plc and others; Taylor v Antoine [2018] EWHC 395 (Ch); [2018] PLSCS 49 concerned property in London that sat vacant for many years after the proprietor died. The deceased’s son, Trevor Antoine, obtained letters of administration but did nothing with the property and went to New Zealand without updating the proprietorship register or providing the Land Registry with a different address for service. A third party, George Taylor, issued proceedings against the deceased on the basis of documentation recording that the property had been charged to him as security for a loan. The documents stated that he would be entitled to the property if the loan was not repaid. Antoine did not respond because he was not aware of the proceedings. So the court made an order in favour of Taylor, which enabled him to register himself as the proprietor of the property and charge it to a bank as security for a loan. On discovering what had occurred, Antoine applied, successfully, to have the court order set aside, and was registered as his father’s personal representative in the proprietorship register at the Land Registry. But the property remained subject to the bank’s charge. In due course, Antoine attacked the charge on the ground that the registration of Taylor and the charge had both been mistakes because the documents used to obtain the court order were forged. When the proceedings finally came to court, Taylor had died and the Land Registry and the bank accepted that the documents produced by him were forgeries. Mistake The 2002 Act does not define the term “mistake”, stating only that it includes mistaken omissions. However, the term is generally understood to encompass a wide range of circumstances, including changes to the register that would not have been made had the true state of affairs been known. A novel question arose in this case. If a court order, obtained on the “strength” of forged documents, leads to a change of proprietor at the Land Registry, is the registration a “mistake”? And, if the court order is subsequently set aside, what effect will that have on changes to the register made in the meantime? Court order Registration of a proprietor pursuant to a void disposition, such as a forged transfer, is a “mistake”. But the loan documentation did not have any dispositive effect in this case and the Land Registry could not have changed the register without the court order. It might seem odd to differentiate between the provision of forged documents to the Land Registry and the court. But, previous authorities on the validity of court orders have made it clear that they are valid and binding, unless and until they are set aside. Consequently, Joanna Smith QC, sitting as a deputy judge of the High Court, ruled that the changes to the register had been correct when they were made, even though the documents used to obtain the court order were forgeries. It was Kitchin LJ in NRAM plc v Evans [2017] EWCA Civ 1013; [2017] PLSCS 154 who stated, while differentiating between void and voidable dispositions, that one cannot call a change to the register a “mistake” if the entry is correct when made. It followed that the registration of Taylor pursuant to the court order – which the deputy judge likened to a voidable disposition – was not a mistake. And it did not retroactively become a mistake when the register was updated because the court order was set aside. This meant that the registration of the charge in favour of the bank was not a mistake either, because section 24 of the 2002 Act conferred owner’s powers on Taylor, enabling him to create a valid charge. The judge sympathised with Antoine. Her decision that the charge must remain on the register meant it would cost Antoine £150,000 to discharge it, failing which, the bank would be entitled to exercise its power of sale to recover the amount due. However, a point of public policy was involved. If registration pursuant to the court order, which was valid on its face, was a mistake, the inviolability of court orders in general could be affected and the principle that registration is conclusive would be undermined. Preventative measures The judge rejected a suggestion that Antoine’s failure to record his interest on the register as an administrator would have precluded rectification had it been possible to delete the charge (because he might then have been alerted to the fraud). He had no duty to do this and it was not the cause of the fraud. That will be cold comfort to Antoine. Preventative measures that might have helped, which landowners might wish to consider, include keeping the register and addresses for service up to date and using anti-fraud restrictions, if and when appropriate. Private citizens can also subscribe to the Land Registry’s Property Alert service. Key points A change of proprietorship ordered by a court, on the basis of forged documents, was not a “mistake” because the court order was valid until it was set aside As a result, the charge created by the new proprietor in the intervening period remained valid after the court order was set aside Allyson Colby is a property law consultant