Leeman v Mohammed

An unregistered contract for the transfer of a registered lease may confer an equitable interest, but the registered proprietor remains capable of granting a later interest with priority until the transfer is registered. An underlease for 21 years or less takes effect as a legal estate without registration. Its priority is defeated only by an overriding interest, including actual occupation where the statutory conditions are met. Actual occupation is a question of fact, assessed in light of the nature and state of the property and all the circumstances. Fresh evidence on appeal remains subject to the court’s discretion, the overriding objective and considerations formerly reflected in Ladd v Marshall.

Mr Mohammed appealed from an order of His Honour Judge Bradbury requiring him to give possession of a flat to Mr Leeman and dismissing his counterclaim. Mohammed relied on an unregistered assignment of the residue of a lease, completed on 7 July 1999. Leeman relied on an underlease for 21 years granted on 8 July 1999 by the registered proprietor through an attorney.

The county court held that Mohammed’s transfer was ineffective for want of registration and that he was not in actual occupation when Leeman’s underlease was granted. Mohammed sought permission to adduce fresh evidence directed principally to actual occupation and sought a new trial. The central issues were the priority of the competing interests, the effect of the unregistered transfer and whether the fresh evidence should be admitted.

The appeal was dismissed with costs. Permission to adduce the fresh evidence was refused, except in relation to the two reversionary leases, which did not affect the result.

1. Mohammed’s equitable interest. The contract of 1 July 1999 validly conferred an equitable interest capable of being an overriding interest. Until the transfer was registered, however, Mr Mittee remained the registered proprietor and could grant a later interest with priority. The completed transfer of 7 July did not assist Mohammed because it was never registered. The intention not to register was immaterial.
2. Leeman’s legal estate. An underlease for 21 years or less takes effect as if it were a registered disposition. Leeman therefore acquired a legal estate on 8 July 1999, subject only to overriding interests under section 70(1)(g) of the Land Registration Act 1925.
3. Separate leases. The two further reversionary leases did not merge with the first lease at common law. Land Registration Rule 47 deemed qualifying leases to create one continuous term only for the purposes of registration under section 8. It did not alter the operation of section 22. The leases therefore remained separate for the priority issue.
4. Actual occupation. Whether a person is in actual occupation depends on the nature and state of the property and all the facts. The county court was entitled to find that Mohammed was not in actual occupation on 8 July 1999. His interest was consequently not overriding and was postponed to Leeman’s underlease.
5. Fresh evidence. Under CPR rule 52.11(2), the court’s discretion must be exercised consistently with the overriding objective. Relevant considerations included whether the evidence could reasonably have been obtained for trial, its prima facie credibility and its likely influence on the result. The evidence was available at trial, its credibility required cross-examination at a new trial, and it was not sufficiently compelling to justify reopening the case.

The possession order was upheld. Possession was ordered within 28 days and costs were payable within 28 days.

• Court of Appeal (Civil Division): Leeman v Mohammed, [2001] EWCA Civ 195. Appeal from the order of His Honour Judge Bradbury, Central London County Court, made on 12 July 2000. Appeal dismissed with costs.
• Central London County Court: Ordered Mohammed to give possession of the flat to Leeman and dismissed Mohammed’s counterclaim. Damages were adjourned for later determination.