Bhullar & Anor v McArdle

A purchaser of registered land takes it free from interests unless they are protected on the register or qualify as overriding interests. Actual occupation is personal to the person occupying the relevant land; the law does not recognise constructive or transferred actual occupation under section 70(1)(g) of the Land Registration Act 1925. Rule 258 concerns incorporeal rights appurtenant to land, such as easements, and does not make a claim to beneficial ownership of the land itself overriding. A mutual benefit and burden argument may arise from a purchaser’s post-acquisition conduct, but it must be determined in properly constituted proceedings, with all affected parties joined and the issues pleaded. Rectification cannot be ordered selectively to enforce only part of an indivisible arrangement.

The appellants acquired Snitterfield Farm, including the Red Land, from mortgagees of the former registered proprietor. Before that acquisition, the former proprietor had made an oral tripartite agreement with the respondent and the McGoverns for exchanging small areas of land. Part performance gave the respondent an equitable interest in the Red Land, but he was not in actual occupation of it when the relevant charge and later transfer were registered.

The deputy High Court judge rejected the overriding-interest claim but ordered rectification of the register on the basis that the appellants were estopped from taking benefits under the agreement while denying its burdens. The appeal concerned whether the respondent had an overriding interest and whether rectification could properly give effect to the alleged mutual benefit and burden estoppel.

1. Appeal allowed. The order for rectification was discharged, rectification was cancelled, and the appellants were to remain registered as proprietors of the Red Land. The respondent’s caution was cancelled.
2. The respondent had no overriding interest under section 70(1)(g) of the Land Registration Act 1925. The factual finding that he was not in actual occupation of the Red Land was decisive. The occupation of the Blue Land by another party could not be attributed to him. Such an argument would introduce a constructive or transferred form of actual occupation unsupported by the statute or authority.
3. Rule 258 of the Land Registration Rules adds rights which appertain or are appurtenant to land and adversely affect registered land. It can apply to an equitable easement, as illustrated by Celsteel Ltd v Alton House Holdings Ltd and Douglas v Thatcher. It does not apply to an equitable claim to ownership of the registered land itself.
4. The court assumed, without finally deciding, that the mutual benefit and burden principle derived from Halsall v Brizell and discussed in Tito v Waddell (No 2) could apply in some form. Any equity arising before the appellants acquired the Farm could not bind them because it was neither registered nor overriding. A possible equity arising from their own continuing conduct after acquisition was a different matter.
5. The estoppel issue required pleadings, joinder of all potentially affected parties, including the McGoverns, and relief capable of giving effect to the whole indivisible arrangement. The deputy judge therefore exercised the section 82 discretion incorrectly by rectifying the register selectively in proceedings confined to the Red Land and the caution. The judgment was not to create an issue estoppel beyond the questions in the Originating Summons and their determination under the registration legislation.

• Court of Appeal (Civil Division): Bhullar & Anor v McArdle, [2001] EWCA Civ 510. Appeal allowed; the deputy judge’s rectification order was discharged and the caution cancelled.
• High Court, Chancery Division: Mr Peter Whiteman QC, sitting as Deputy High Court Judge, ordered rectification of the register on 22 June 1999.