UCB Group Ltd v Hedworth

Under the Land Registration Act 1925, a beneficiary’s equitable interest under a bare trust of registered land is a minor interest, not land for the statutory definition of rent. Payments under a tenancy by estoppel granted by that beneficiary derive from the beneficial interest rather than the legal estate. They therefore do not constitute rent issuing out of land under section 3(xxv), and their receipt does not create an overriding interest under section 70(1)(g). The appeal was allowed and summary judgment ordered for vacation of the caution.

UCB Group Ltd v Hedworth concerned UCB’s claim as chargee to vacate a caution registered by Mrs Hedworth against property owned by her husband. UCB accepted that, for present purposes, the husband held the property on bare trust for her and paid her £50 weekly under a tenancy by estoppel granted by her as beneficial owner. The High Court dismissed UCB’s Part 24 summary judgment application on 2 November 2001 and granted permission to appeal. The central issue was whether those payments were rents of the property within section 70(1)(g) of the Land Registration Act 1925, giving rise to an overriding interest.

Disposition. Lord Justice Jonathan Parker gave the leading judgment. Sir Christopher Slade agreed with the analysis and concurred in allowing the appeal. The High Court judgment was set aside, and summary judgment was entered for UCB for vacation of the caution.

1. Under the Land Registration Act 1925, a beneficial interest under a bare trust of registered land is not itself a registrable estate. It takes effect in equity as a minor interest and is protected through a restriction, notice or caution rather than substantive registration. It therefore falls outside the definition of land in section 3(viii).
2. The definition of rent in section 3(xxv) requires the relevant payment to issue out of or be charged upon land. The expression issuing out of land refers to rent payable under a tenancy carved out of the legal estate.
3. Rent payable under a tenancy by estoppel granted by a beneficial owner under a bare trust is derived from the beneficial interest. It is not carved out of the legal estate and is not rent issuing out of land for the purposes of section 3(xxv). Receipt of those payments consequently did not place Mrs Hedworth within section 70(1)(g) as a person in receipt of the rents of the property. Her claimed overriding interest therefore failed.
4. Sir Christopher Slade reinforced the conclusion by reference to the statutory purpose of section 70(1)(g). The provision was directed to rights discoverable by inspection and inquiry of persons other than the registered owner. A registered owner’s title speaks for itself, and a private arrangement creating an interest behind the registration could not confer a new overriding status against a registered charge.
5. The court recognised that receipt by the beneficiary of rents paid by tenants under leases granted by the registered proprietor could have produced an overriding interest. Mrs Hedworth had received no such rents.

• Court of Appeal (Civil Division): allowed the appeal, set aside the Deputy Judge’s judgment and entered summary judgment on UCB’s claim for vacation of the caution.
• High Court (Chancery Division): on 2 November 2001, the Deputy Judge dismissed UCB’s application for summary judgment under Part 24 and granted permission to appeal.