This article describes and considers the three key questions which the court or registrar must take into account when dealing with alteration and rectification applications. It also looks at the potential effects of some of the Law Commission’s proposals in its consultation paper Updating the Land Registration Act 2002.
1 Is there a mistake? Is it capable of correction?
A mistake arises when the register is changed so that it does not reflect the true state of the title at the time the change is made. This may be because an entry is included which should not be there, or a right or entry which should be included is omitted.
A registration mistake does not necessarily involve any fault on the part of the registrar. Examples of such ‘no fault’ mistakes include double conveyancing (where the same piece of land is mistakenly conveyed twice, and the invalid title is registered first) or a notice which should have been entered on first registration to protect, for example, a restrictive covenant or option to purchase but was omitted because the relevant deed was not provided to the registrar on first registration.
A forged disposition such as a transfer or charge is, under the general law, a nullity; it is void and of no effect. Where such a document is registered because the forgery has not been detected, a mistake will be created in the register. In all these cases, although it is possible to identify the mistake at the point of creation, questions then arose as to the effect of the mistake following registration of a subsequent disposition, such as a transfer on sale or a charge.
The issue was clarified by the Court of Appeal in Gold Harp Properties Ltd v McLeod  EWCA Civ 1084, which states that the power under the Land Registration Act 2002 (LRA 2002) allows correction of a mistake, together with all its consequences through successive dispositions, and that this extends to correcting priority gained by a registered lease under section 29 of the LRA 2002, on restoration of a prior lease following its mistaken cancellation (a ‘priority mistake’). This confirmed the position after a series of Adjudicator cases had applied differing analyses.
The Law Commission consultation does not suggest that the established principles relating to mistakes should change, or that the act should be redrafted to define mistake more exhaustively. However, as explained below the Law Commission’s proposals would, if implemented, introduce some constraints on the circumstances in which a mistake in the register could be corrected.
2 Does the court or registrar have power to rectify it?
No alteration to correct a mistake which would amount to rectification can be carried out if the registered proprietor is in possession, unless that proprietor consents, or they have, by fraud or lack of proper care, caused or substantially contributed to the mistake, or it would for any other reason be unjust for the alteration not to be made (paragraphs 3(2) and 6(2) of schedule 4 to the LRA 2002). Land will be in the possession of a proprietor if it is physically in that proprietor’s possession, or of someone entitled to be registered as proprietor (section 131 of the LRA 2002). The proprietor must therefore be on the land or controlling it themselves or through tenants or licensees, and it appears that the principles from the law of adverse possession are applicable (see JA Pye (Oxford) Ltd v Graham  1 AC).
Correction of a mistake in the register will amount to rectification if it is prejudicial to a registered proprietor. In many cases – such as removal of a registered proprietor because the title purchased contained a mistake, or entry of a burden on the register which had been left off or removed in error where the title was not previously subject to the right – the question will be fairly easy to deal with. Where an alteration does amount to rectification, the issue of indemnity under schedule 8 to the LRA 2002 arises. However, the law concerning indemnity, and the Law Commission’s proposals in relation to it, are not the focus of this article.
Fraud or lack of proper care
One example of fraud or lack of care by the registered proprietor which may have caused or contributed to the mistake is incorrect factual assertions made in an adverse possession claim, which caused the registrar to complete the application based on the available facts, even though adverse possession had not actually been acquired. In Balevents Ltd v Sartori  EWHC 1164 (Ch), an applicant for adverse possession was held to have put forward a version of events which was ‘seriously untrue’, and which at the very least had been made without proper care, and that this had caused the mistaken registration of an adverse possession title. Rectification was therefore available against the registered proprietor, in spite of their being in possession.
As one would expect the Law Commission does not propose to limit alteration against a proprietor who has been fraudulent or careless.
Unjust not to rectify and the ‘long stop’ proposal
If fraud or lack of proper care are not applicable, there is a discretion to be exercised by the court or the registrar to rectify the register if “it would for any other reason be unjust for the alteration not to be made” (paragraphs 3(2)(b) and 6(2)(b) of schedule 4 to the LRA 2002).
This ground has been relevant in past cases. In Baxter v Mannion  EWHC Civ 120, it was found to be unjust not to rectify the register where an applicant for adverse possession secured registration based on evidence submitted, even though it later transpired that all the necessary ingredients for adverse possession had not been made out. In Sainsbury’s Supermarkets Ltd v Olympia Homes Ltd  EWHC 1235 (Ch), a purchaser knew of and expected to acquire land subject to an option to purchase, but the relevant entry was not made on the title on first registration; it was found to be unjust not to rectify the register and restore the subjective entry recording the option.
It is in this area that the Law Commission’s proposals, if implemented, would have the greatest impact. The Law Commission proposes the introduction of a 10-year ‘long stop’, after which the discretion conferred on the court and the registrar to rectify the register where it would be unjust not to do so would no longer be available. This would introduce a restriction on the circumstances in which certain mistakes could be corrected, without actually redefining or altering the nature of mistake itself, and it would introduce an element of indefeasibility of registered titles. It seems that, strictly speaking, it could still be said that the register contains a mistake, but where the long stop applied, it would no longer be possible to correct it.
The scheme would operate according to the type of case. Registered proprietors would be protected from removal from the register, and benefit from an indefeasible title, 10 years from their mistaken registration. Where a ‘priority mistake’ arises, the 10-year long stop would apply from the date on which the priority was lost because of the mistake, which usually arises on registration of a disposition for valuable consideration, after the prior derivative interest has been mistakenly removed from the register. Where there has been double conveyancing, the 10-year long stop would apply to protect the proprietor of the register containing the mistake after 10 years.
The Law Commission proposes that the register would, however, always be capable of rectification (in the absence of exceptional circumstances – see below) without time limit where the mistake had resulted in removal of the true owner from the register, but where that true owner was still in possession. Possession in such cases would be defined extensively, as it is currently in section 131 of the LRA 2002 for the benefit of the registered proprietor in possession.
3 Are there exceptional circumstances which would prevent rectification?
Even if the answers to 1 and 2 above are yes, there may be ‘exceptional circumstances’ which justify not making the alteration (paragraphs 3(3) and 6(3) of schedule 4 to the LRA 2002). If there are no such circumstances, the registrar or the court must rectify the register.
In Paton v Todd  EWHC 1248 (Ch), the court set out what ‘exceptional circumstances’ are. They must be out of the ordinary course, unusual, special or uncommon. They do not have to be unique, very rare or without precedent, but must not be regularly or routinely encountered. They must also have a bearing on the question of rectification, not merely be exceptional circumstances in the abstract. In Paton, the fact that the applicant had no proprietary interest in the land the subject of the application was capable of being an exceptional circumstance, which would have to be weighed in the balance when the court made its decision. See also Balevents v Sartori, in which there was the same circumstance (that the claimants in that case did not have any interest in the land in respect of which they were seeking rectification), but on balance, and in view of the defendant’s actions, these circumstances did not justify a refusal to rectify the register.
Rectification of a chargee’s title
There is one Law Commission proposal which may impact on this area. A chargee, faced with an application to rectify the register and remove its charge, cannot rely on the protection of a registered proprietor in possession, but, as the law stands, in theory at least, can argue that exceptional circumstances apply such that rectification should not be possible. The Law Commission proposes that a chargee, having an interest in the property which is merely financial, should not be able to oppose rectification to remove its charge, by relying on exceptional circumstances. It is unlikely that this would affect many cases, but the Law Commission takes the view that it would be a worthwhile simplification of the law, and be appropriate protection for chargees, who would (subject to other proposed changes being implemented) possibly be entitled to claim indemnity.
The Law Commission’s consultation on its proposals has closed and it is currently analysing the responses. If the ideas in respect of alteration and rectification are adopted, the basic steps and considerations to be taken into account and referred to above will continue to be relevant, the 10-year long stop intervening in some cases to introduce an element of indefeasibility into the current extensive and flexible alteration regime. It remains to be seen whether the proposals are adopted and, if they are, how frequently they will affect cases arising in the real world.
This article was first published in the June 2016 edition of Property in Practice, the magazine of the Law Society’s Property Section (www.lawsociety.org.uk/property).