Land is elemental: it is where life begins and it is where life ends. Land provides the physical substratum for all human activity; it is the essential base of all social and commercial interaction. The significance of land in human affairs is therefore incalculable, although it is only in an era of global environmental threat that we slowly begin to realise how fragile and irreplaceable is the rich resource on which we so utterly depend. As one English law lord recognised, “[in] the case of real property, there is a defined and limited supply of the commodity”.
Gray & Gray, Elements of Land Law (3rd Edition, 2000)
Butterworths Before the 1925 property legislation, the mechanics of conveyancing were mired by formalism and plagued with danger even for the most conscientious purchaser. On one hand, purchasers of land were faced with numerous difficulties when trying to ascertain whether any other person has rights or interests in that land. The reliance on title deeds to prove ownership of land was both cumbersome and, for the purchaser, an expensive way to prove title, especially given the multitude of legal and equitable estates that could exist.
On the other hand, an owner of equitable interest in that land might find that the interest was destroyed by a simple sale to a purchaser who was unaware of its existence. To meet both of those problems, a decision was made to move towards full title registration wherein all titles and the diverse interests in land would be recorded and guaranteed by the state.
It was recognised, however, that this mammoth task had to proceed in stages and that a set of transitional provisions was needed.
Therefore, the Land Registration Act 1925 (“LRA 1925”)1 inaugurated a fundamental change in the law in England and Wales. In conjunction with the Law of Property Act 1925 (“LPA 1925”)2 and the Settled Land Act 19253, the LRA 1925 sought to simplify and codify. It aimed to bring certainty where there was obscurity and to bring equity where there was often inequality. The Land Registration Act 2002 (“LRA 2002”)4, which has replaced the 1925 Act completely, seeks to reinforce these goals and make the system fit for the twenty-first century and the electronic age.
Firstly, there is a need to clarify that land in the England and Wales today is divided into two distinct types, that of registered land and unregistered land. There is a need for this as the law governing them are separate and different. Therefore, there is a need to describe what is meant by ‘registered land’. If a plot of land is described as ‘registered’, this means that ‘title’ to it (that is, an estate of freehold, or leasehold) is recorded and guaranteed by the Land Registry. 5 In contrast, ‘unregistered land’ is land to which title is not registered but is established by the title deeds of the particular property6.
Unregistered land is now governed by the Land Charges Act 1972 (“LCA 1972”)7, while registered land is governed by the Land Registration Act 2002 (“LRA 2002”). As full title registration has yet to be achieved in England and Wales, therefore, a certain amount of unregistered conveyancing still remains. The LPA 1925 applies in full to unregistered land in the same manner as registered land. What is different is that the enforceability or rights and interests in unregistered land – being those rights and interests capable of existing under the provisions of the LPA 1925 – is governed by its own sets of rules and procedures.
Unregistered land can be said to present a whole different problem in itself and therefore, for the purpose of this assignment, we shall focus on the law relating to registered land. The basic principle of the LRA 1925, and now the LRA 2002 which governs registered land, is that title to land should be recorded in a register and guaranteed by the state through title registration and interests in land should either be apparent on physical inspection of the land itself or noted on the Register.
Registration of title replaces what were previously deeds of title and the Register should aspire to record the totality of land ownership throughout the entire country. Essentially, this encourages and effects a shift from unregistered to registered land. The original 1925 timetable called for full registration of all land by 31 December 1955, but regrettably, only on 1 December 1990 did all of England and Wales become subject to compulsory registration of title8.
It will be a while longer before near universal registration of title is achieved, but currently, over 85 per cent of all potentially registrable titles are in fact registered9 and the LRA 2002 does much to encourage voluntary first registration by owners of unregistered land by way of extending the situations which trigger compulsory registration, low fees for voluntary registration and the introduction of incentives10. It cannot be stressed enough that the advantages of registering land are obvious and aplenty.
Purchasers could buy land in the certainty that they were purchasing land suitable for their requirements because the existence of ‘hidden’ burdens were minimised, and owners of interests in land, such as easements11 and covenants12, had a relatively easy and inexpensive method of ensuring that their rights survived a conveyance of the land to a third party. However, this begs the question, is this really so? How certain can a purchaser be that the land about to be purchased by him is free from any burden and encumbrances whatsoever by just inspecting the Register?
Martin Dixon, in his book, ‘Modern Land Law, 6th Edition’ at page 38, said that “The inspection of the register should reveal the identity of the owner, the nature of his ownership, any limitations on his ownership and any rights enjoyed by other persons over the land that are adverse to the owner”13. This is what has come to be known as the ‘mirror principle’. The mirror principle is one of the three fundamental principles of land registration which was laid down by Theodore Ruoff in 1963, after he was appointed as Chief Land Registrar14.
This can be said to be akin to the concept of a personal identification card – it is supposed to provide certain information of a particular individual such as one’s home address, gender and nationality, and this information should indeed reflect that individual precisely. The mirror principle suggests that the Register should be a mirror for all the proprietary rights – both estates and interests – that exist in any given piece of land. Thus, the Register should amount to a comprehensive picture of the land for any prospective purchaser.
Sad to say, however, that “the register of title is not a perfect mirror of the title to a registered property. It is not possible to rely on entries on the Register as the complete record of everything that affects the title” (per Peter Gibson LJ, Overseas Investment Ltd. v Simcobuild Construction Ltd)15. Unfortunately, the 1925 Act failed to eradicate all ‘cracks in the mirror’, instead preserving the relevance of certain interests which may ‘override’ registration.
These ‘overriding’ interests burden registered land by operating on a superior plane to other registrable interests, binding purchasers outright and disproportionately empowering the overriding interest-holder. Under the former law, the class of overriding interests which caused the most litigation was contained under Section 70(1)(g) of the LRA 1925. This subsection protected the rights of persons in actual occupation of the land or in receipt of rent save where enquiry had been made of them and their interest had not been disclosed.
The justification for having such a category of interests which exists outside the Register is that they will be discoverable on inspection. The balance between the interest of the purchaser and the objective of the 1925 legislation should therefore be struck. The difficulty with this theory is that it assumes that overriding interests are all discoverable by inspection. Before the LRA 2002, this was not necessarily true. For example, the rights of an adverse possessor were protected under Section 70(1)(f) of the LRA 1925, but there was no requirement that he should be in actual occupation.
His rights might not, therefore, have been discoverable on inspection; indeed, they might not even have been known to the vendor, as in Red House Farms (Thorndon) Ltd. v Catchpole16 where the owner was unaware that the defendant was shooting fowl on its land, and Prudential Assurance Co. Ltd. v Waterloo Real Estate Inc. 17, where a neighbour took over a party wall without the owner’s knowledge. Moreover, when an overriding interest will take effect becomes a question to be answered.
A purchaser would have inspected the property before the completion of the disposition to him, but in registered land, this disposition does not itself transfer the legal estate to him and only happens when the registration is subsequently registered at the Land Registry. This then begs the question, should overriding interests be allowed to arise during the time between completion and registration? The majority of the House of Lords in Abbey National Building Society v Cann18 decided that the critical time was the date of registration except for interests arising under Section 70(1)(g) LRA 1925 which were a special case.
Their Lordships decided that the date when actual occupation should be relevant is the date of the completion of the registration. This means that all other types of overriding interests can be created, without the purchaser’s knowledge, between completion and registration. This situation clearly shows that the Register is not the mirror it is supposed to be. It was for this reason that Lord Bridge in the Abbey National case dissented on this point, preferring the date of disposition as the relevant date for all overriding interests (except for local land charges).
The concept of overriding interests within the system of conveyancing contrasts remarkably with the effect of the LCA 1972 in unregistered conveyancing. Any registrable interest left unprotected under that Act is void against specified categories of purchasers (Midland Bank Trust Co. v Green)19 to reflect the intention of the legislature in keeping the process of conveyancing simple and in protecting the purchaser. Overriding interests protected under Section 70(1)(g) of the LRA 1925 prove to be the most difficult.
This was apparent in the case of Williams & Glyn’s Bank v Boland20 where the equitable interest of Mrs Boland was held to prevail as an overriding interest against the legal mortgagee. There was nothing to prevent Mrs Boland registering protecting her interest as a minor interest on the register. For this reason, the legislature deemed that they should be protected regardless of their appearance on the Register. Paragraph 2, Schedule 3 of the LRA 2002 requires that inquiries are made of the occupier himself and not of his solicitor or the vendor’s solicitor.
At this point, it should be noted that interests which override on a first registration of title are contained in Schedule 1 to the LRA 2002, while interests which override on a registered disposition are contained in Schedule 3. They are both basically the same, except for the rights of a squatter, but it is slightly larger in scope for Schedule 1. Additionally, there is no restriction on the types of legal easements which will be overriding as there is in Schedule 3. The concept of actual occupation is not further defined in Schedule 3 of the LRA 2002. Case law decided on the meaning of ‘actual occupation’ and gave the term a wide meaning.
It could include, for example, occupation through an agent as in Lloyd’s Bank Plc. v Rosset21. Although the occupation must in general be continuous, a temporary absence from the property will not cause the interest to be lost, as in Chhokar v Chhokar22. A further problem with Section 70(1)(g) LRA 1925 was brought about by the case of Ferrishurst Ltd. v Wallcite Ltd. 23, where it was held that where a person who is in occupation of part only of property over which he has rights may assert those rights as regards the remainder of the property in the title of which he is not in occupation.
It must be accepted that overriding interests in general represent a considerable departure from the fundamental principle that the Register is a mirror of the title. The Law Commission therefore made perfect reflection a priority, and it remained the fundamental objectives of the land registration system. The Law Commission had been working on this task for some time, but the publication of the Law Commission report No 271, “Land Registration for the 21st Century – a Conveyancing Revolution”24 including a Draft Bill brought the process to fruition.
In this report, the Law Commission strived to “close the cavernous crack in the mirror. The Land Registration Bill 200125 eventually became the Land Registration Act 2002 and this statute came into force on 13 October 2003, completely replacing the LRA 1925. Consequently, the 2002 legislation attempts to reduce the effect of overriding interests, both by eliminating certain categories and by inaugurating a change in the way that we think about these important rights. The LRA 2002 can be said to achieve a reduction in the categories of overriding interests by making some of these interests registrable (leases over seven years and express easements), and by restrictions on the ‘actual occupation’ provision.
Rights of adverse possession have disappeared altogether as overriding interests, and an entirely new regime has been introduced for adverse possession. It must be noted, however, that overriding interests were not an accident in the 1925 legislation, and although redefined and narrowed in the 2002 Act, they remain crucial to the proper functioning of the system. They were deliberately created by the legislature and given automatic effect precisely because they should be obvious to any prospective purchaser or their enforcement is too important to depend on registration.
However, here is the problem: social and judicial developments have enlarged the opportunity for the existence of overriding interests with the result that it is conceivable that a purchaser might not be able to determine whether such interests exists by inspection of the land. The most obvious example is the right of equitable ownership, stemming from Pettitt v Pettitt26, whose effect under the old Section 70(1)(g) of the LRA 1925 on an unwary purchaser was first fully appreciated in Williams and Glyn’s Bank v Boland27.
Therefore, this difficulty concerning overriding interests was a major reason why the Law Commission recommended a reduction in their scope and effect and this has now been implemented in Schedule 3 of the LRA 2002, as explained above. It can be said that the 2002 legislation tackled much that was inaccurate, unwieldy, incomprehensible, inconvenient and downright wrong in the 1925 system. Many of its provisions deal with technical matters that, while important, establish no new principle. These are the ‘tidying up’ aspects of the legislation.
However, there is much that is groundbreaking or truly significant, not least the claim that the 2002 Act replaces ‘registration of title’ with ‘title by registration’. More disappointingly is the existence of overriding interests which remain, and therefore continue to deny the mirror principle. The register today is not yet a perfect reflection of reality. It is clear that the mirror principle is still not fully entrenched in the England and Wales system primarily because of the existence of overriding interests.
Although the LRA 2002 seeked to ensure that interests override only when they are (or should be) obvious to a purchaser conducting a reasonable inspection of the land, however, the point is this: even with overriding interests, the sensible purchaser should not be unaware of binding overriding interests. Therefore, it can be said that the 2002 Act only does so much to ensure – it is not clear-cut and apparent at first inspection of the Register, and this means that it leaves no space for a purchaser to be careless or flippant when inspecting the land.
For that reason, there is a need to ask the question: how then, can the mirror principle be truly effected in totality in the system of registered land in England and Wales in this present day and age? We look at the role of e-conveyancing and ask ourselves its role, and the direction it is heading towards. The mirror will only be a perfect reflection when all proprietary rights – both estates and interests – that exist in any given piece of land are registered on the Register.
Consolation lies at the advent of compulsory e-conveyancing, promoted heavily by the 2002 Act, which envisages synchronicity of disposition and registration in land transfers. This development will render many equitable interests unprotected unless registered, despite being currently overriding upon actual occupation. Schedule 3, paragraph 2 of the LRA 2002 will then be restricted only to the protection of those occupiers’ interests which arise informally, through resulting or constructive trusts or through estoppel, effectively narrowing an occupier’s ability to override registration.
The underlying and pervading expectation that overriding interests will eventually be drawn onto the Land Register through positive registration will ultimately abolish the subsistence of occupiers’ unregistered and overriding interests upon a transfer of registered land which so adversely affects purchasers. Section 71 of the LRA 2002 provides for a general duty of disclosure whereby an applicant for registration of a title must disclose a range or overriding interests that affect his land so that they may be protected by registration28.
E-conveyancing depends on the register being as up to date as possible and the duty of disclosure is one method by which the Register becomes more mirror-like. Therefore, it seems that that is the best way forward for the future of conveyancing and thus, it is lucid that the mirror principle does not reflect English land law today. Although the LRA 2002 is a good step forward, the mirror principle as it stands today is merely in theory, and it is flawed. However, it is hoped that with the development of the law and the future of e-conveyancing, the mirror principle will entrench itself as one of the hallmarks of English land law.