Leeman v Mohammed

An unregistered transfer of a registered lease may confer an equitable interest, but the transferor remains the registered proprietor and may grant a later interest with priority until registration. A lease for a term not exceeding 21 years takes effect as a legal estate without registration. Reversionary leases granted pursuant to renewal options are not thereby merged into one lease, and Land Registration rule 47 does not alter the priority rules in section 22 of the Land Registration Act 1925. An equitable interest obtains overriding status only if the claimant was in actual occupation at the relevant date. Admission of fresh evidence on appeal remains discretionary and must be assessed under the overriding objective, including diligence, prima facie credibility and likely influence on the result.

Mr Mohammed appealed against an order of His Honour Judge Bradbury requiring him to give possession of a flat to Mr Leeman and dismissing his counterclaim. Mr Mohammed relied on an agreement and subsequent unregistered transfer of the lease from Mr Mittee. Mr Leeman had taken a 21-year underlease from Mr Mittee, acting through the same attorney, on the following day.

The appeal concerned priority between the unregistered equitable interest and the later underlease, whether Mr Mohammed was in actual occupation so as to have an overriding interest, the effect of two further reversionary leases, and applications to adduce fresh evidence.

The appeal was dismissed with costs. The order for possession was upheld.

1. The agreement of 1 July 1999 validly conferred on Mr Mohammed an equitable interest capable of being an overriding interest. Until registration of the transfer, however, Mr Mittee remained the registered proprietor and could grant a later interest with priority under section 22(1) of the Land Registration Act 1925. The unregistered transfer did not improve Mr Mohammed’s position.
2. The 21-year underlease granted to Mr Leeman on 8 July 1999 took effect as a legal estate under section 22(2), subject only to overriding interests under section 70(1)(g). The two further leases did not require the first lease to be treated as a single 63-year term. There was no common-law merger, applying the reasoning in Toyota (GB Ltd v Legal and General Assurance (Pensions Management) Ltd [1989] 1 EG 123, and rule 47 did not affect section 22.
3. Actual occupation is a question of fact depending on the nature and state of the property and all the circumstances. Mere fleeting presence is insufficient, although personal residence is not invariably required. The judge was entitled to find that Mr Mohammed was not in actual occupation on 8 July 1999. His interest was therefore not overriding and was postponed to Mr Leeman’s legal estate.
4. Under rule 52.11(2) of the Civil Procedure Rules, the court’s discretion to admit fresh evidence is governed by the overriding objective. The considerations reflected in Ladd v Marshall remain relevant, including reasonable diligence, prima facie credibility and the likely influence of the evidence on the result. The proposed evidence on occupation was available at trial, raised credibility issues requiring cross-examination, and was not sufficiently compelling to justify a retrial. Permission was granted only in relation to the two reversionary leases, which could not affect the result.

• Court of Appeal (Civil Division): Appeal from the order of His Honour Judge Bradbury, sitting at the Central London County Court, dismissed with costs. Possession was ordered within 28 days.