The Land Registration Act 2002 – 10 years on
Part 6: Disputes procedure, alteration and rectification
In the last in our series on the anniversary of the Land Registration Act 2002, a Land Registry lawyer traces how disputes procedure has evolved
The last major change to the Land Registration Act 1925 (LRA 1925) brought about by the Land Registration Act 2002 (LRA 2002) was to change the procedure for resolution of disputed land registration applications by creating the Office of the Adjudicator to HM Land Registry to hear and resolve disputes (part 11, LRA 2002, sections 107-114) and recast the provisions relating to alteration and rectification of the register (s.65 and Schedule 4, LRA 2002).
The 1925 judicial function of the Solicitor to HM Land Registry
Under the Land Registration Rules 1925 (LRR 1925) (r. 299, LRR 1925), where a dispute which arose on an application before the Chief Land Registrar (CLR) could not be resolved by agreement, the CLR had an obligation either to hold a hearing to determine the questions in dispute or direct one of the parties into a court of law.
This unusual jurisdiction originated from the views of the Royal Commissioners who enquired into the failure of the land registration act of 1862. They concluded that one reason for that failure was that the CLR was required to refer all disputes to the court and had no power to decide them.
In time, as the jurisdiction grew from fewer than 10 hearings a year in the 1980s and 90s, this duty was delegated to the Solicitor to HM Land Registry (HMLR), and subsequently further delegated to serving Land Registrars who acted as Deputy Solicitors to HMLR for this purpose.
After informal negotiations and mediation between the parties by Land Registry lawyers, a formal procedure for exchange of documents and statements of case was implemented. The hearing was often held in the Chief Land Registrar’s office or a conference room at Head Office, at a local office if more convenient to the parties, or occasionally in other venues.
The jurisdiction included a power to make a costs order (r.321(1), LRR 1925), although there was a special provision generally placing the burden of costs for first registration, even including dispute costs, on the applicant (s.17(1), LRA 1925).
Instead of deciding the matter, the Solicitor to HMLR or their deputy could, at any stage, direct one of the parties to issue proceedings in the High Court within a specified time to determine all or any of the questions in dispute. A decision could be appealed to the Chancery Division of the High Court (r.300, LRR 1925).
The jurisdiction existed as a parallel jurisdiction of the courts under their inherent jurisdiction, and parties would sometimes voluntarily proceed to seek resolution of their disputes centring on a registration issue by court action.
This jurisdiction continued until approximately 2011, dealing with applications begun under LRA 1925 under transitional provisions.
A conclusion of the 2001 Quinquennial Review of the Land Registry (by Andrew Edwards for Lord Irvine, the Lord Chancellor) was that it would be more appropriate for such disputes to be heard by a body or person independent of Land Registry, as Land Registry had a statutory obligation to pay indemnity where proven mistakes in the register caused loss and this created a potential conflict of interest.
The office and powers of the Adjudicator to HM Land Registry
The powers contained in Part 11 of LRA 2002 are wider than those previously exercised by the Solicitor to HMLR and include:
(1) determining disputes referred by Land Registry concerning Land Registry applications, where it is ‘not possible’ to dispose of objections to the applications, and where those objections are not objections which the registrar is satisfied are groundless under s.73 of the Act
(2) determining disputes concerning network access agreements
(3) rectifying or setting aside documents effecting a qualifying disposition of a registered estate or charge, including dispositions which create an interest which may be the subject of a notice in the register, or transfers of such an interest, or of contracts to make such dispositions (s.108, LRA 2002).
There is also an augmented power in relation to disputed applications for title by adverse possession under paragraph 1 of Schedule 6 LRA 2002 (s.110(4), LRA 2002). Where the applicant relies on the first ground (unconscionable because of an equity of estoppel for the registered proprietor to seek to dispossess the applicant)(paragraph 5 (2) Schedule 6, LRA 2002) and where the Adjudicator determines that the unconscionability element is satisfied but not the second limb (that circumstances are such that the applicant ought to be registered as proprietor), the Adjudicator has the power:
(a) to determine how the equity due to the applicant is to be satisfied and
(b) to make for that purpose any order that the High Court could make in the exercise of its equitable jurisdiction.
This is a potentially very wide power and its extent has probably not yet been fully explored.
The first Adjudicator to HMLR, Edward Cousins, was appointed before the coming into force of the Act, with several part-time deputies to assist.
On 1 July 2013 the Land Registration division of the Property Chamber, First-tier Tribunal replaced the post of Adjudicator, with Mr Cousins sitting as Principal Judge with three other full-time salaried judges and 28 part-time fee paid judges.
Site inspections in conjunction with such hearings are still regularly undertaken and many litigants are not legally represented at hearing. There is a right of appeal to the Upper Tribunal (Tax and Chancery) Chamber subject to a permission filter.
The division expects to have dealt with approximately 1,200 cases in 2013/14. The practical procedure is now dealt with by general tribunal rules (The Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 SI 1169 of 2013), which also govern disputes before the other divisions of the chamber: Residential Property and Agricultural Land and Drainage, and a practice direction specific to land registration cases.
Section 110(1) still includes a power for the Adjudicator to direct a party to commence proceedings instead of deciding a matter themselves but it may be assumed that with the more formalised procedure of the tribunal structure, this is far less likely to happen. There may be occasions when a tribunal judge may wish to refer an application to a more specialised court, such as a commercial or family court.
However, the courts still retain an inherent jurisdiction to make orders directed to Land Registry. There are also specific provisions where the court has a parallel jurisdiction, such as the specific powers under paragraph 2 of Schedule 4 of the Act for the court to make an order for alteration of the register. The Registrar has a similar power under paragraph 5 of the same Schedule, and it is under this provision that most alteration applications are pursued.
Current procedure for disputes
The current procedure for the progress of a disputed application is for Land Registry to serve a formal notice of objection (notice B193) on the applicant, with a similar notice confirming this on the objector.
If the applicant confirms the intention to proceed in the light of the objection the parties are invited to indicate whether they wish to negotiate.
If all parties wish to do so, periods are set aside for the negotiations to proceed, but if any party does not confirm their intention to continue negotiations, or if negotiations appear to come to a stand-still, the disputed application is referred to the tribunal, with a brief outline of the issues involved, and copies of relevant papers lodged.
The parties then have to formalise their cases in accordance with the tribunal rules and practices, and it is unlikely Land Registry will have any contact with the matter until the decision is taken and the order returned.
Land Registry may attempt to facilitate settlement of some disputed applications before referral, by offers of indemnity or otherwise, in appropriate cases.
A Deputy Adjudicator took a decision that parties could not withdraw their application or objection without the deputy’s consent once the case had been referred to them pursuant to section 73(7), LRA 2002, and this position has been confirmed by the Court of Appeal (Silkstone v Tatnall ECWA Civ 801) and tribunal rules (r.22(3)).
Alteration and rectification applications under LRA 2002
The proposals under part X of Law Com 271 were to reformulate the discretionary power of rectification of the register by the Registrar or court under section 82, LRA 1925.
(1) Rectification was recast as just one form of alteration of the register which involved correction of a mistake and which prejudicially affected the title of a registered proprietor (others are alteration to bring the register up to date, give effect to any estate, right or interest excepted from the effect of registration, remove a superfluous entry under Schedule 4 and correct clerical entries under rule 130, LRR 2003). Rectification powers would no longer be the term used for alteration of the register to reflect rights acquired, or changes needed, due to events since the original correct registration, or the updating of the register to correctly show rights where the proprietor was already subject to these as overriding interests. Whereas the 1925 regime dealt with this problem by defining the change as rectification but providing that no indemnity was payable because the party suffered no actual loss (Chowood Ltd v Lyall (No2) 1 Ch 426), the new act changed the definition of rectification to remove alterations which reflect an existing binding interest.
(2) Payment of statutory indemnity under Schedule 8 was linked to this definition. A separate discretionary power to pay costs in non-rectification alteration cases to alleviate cases of hardship was created, now found in paragraph 9 of Schedule 4 of the Act.
(3) Whereas the power of rectification under the 1925 Act was discretionary in theory but always employed in appropriate cases in practice, the 2002 Act similarly cast the power to alter as discretionary and provided that if the registrar had power to make the alteration, the application ‘must be approved, unless there are exceptional circumstances which justify not making the alteration’ (paragraph 6(3) of Schedule 4, LRA 2002).
(4) The Act carried over the concept of the ‘qualified indefeasibility’ of the title of the registered proprietor in possession against alteration of their title in paragraph 6 (2) of Schedule 4. It adopted the wording of the exceptions from section 82 (3) LRA 1925 but strengthened the injunction that the register ‘shall not’ be rectified under the 1925 Act discretionary powers to the stronger ‘no alteration…may be made…without the proprietor’s consent’ under the 2002 Act. This effectively removed the power to alter the register of the registered proprietor in possession in a contested case unless either of the statutory exceptions could be proved.
(5) A new statutory definition of the phrase ‘proprietor in possession’ was provided in section 131, LRA 2002, removing the uncertainty of judicial interpretations in various cases under the 1925 legislation.
The provisions under Schedules 4 and 8 are coming under increasing scrutiny, both judicially and academically. There are concerns over the way that different parts of the Act interact with these two key schedules, for example the availability of rectification and indemnity in cases involving forgery, boundaries (Derbyshire County Council v Fallon  EWHC 1326 (Ch), Strachey v Ramage  EWCA Civ 384, Drake v Fripp  EWCA Civ 1279], Knights Construction v Roberto Mac Limited 2 EGLR 123, Paton v Todd  EWHC 1696 (Ch) and Parshall v Hackney  EWCA Civ 240) and overriding interests.
Indeed, at the time of writing a case is going through the courts on the very issue of forgery and its consequences, and we await the outcome of the litigation with interest and anticipation (Swift 1st Limited v Chief Land Registrar (Chancery Division) going to appeal).
However, the main structure and concept of the alteration/rectification framework under the 2002 Act appears to remain intact.