Odogwu v Vastguide Ltd & Ors

Under Land Registration Act 2002, rectification may be ordered where a registered proprietor’s entry is a mistake and the proprietor in possession caused or substantially contributed to it by fraud or lack of proper care, or where refusal would otherwise be unjust. Knowledge that the registered title arose through fraud, followed by completion of the purchase and registration without taking reasonable steps to avoid compounding the fraud, may satisfy the lack-of-care condition. The court must order rectification unless exceptional circumstances justify refusal. A party which has expressly conceded the court’s jurisdiction on an agreed understanding of the issue may be estopped from reviving the abandoned jurisdictional argument.

The claimant, who owned a London property as an investment, was impersonated by a fraudster who used a forged passport and signature to create a charge over the property. The chargee obtained registration, exercised its power of sale and sold the property to Vastguide. Vastguide completed the purchase and was registered as proprietor despite having been told that the charge resulted from fraud.

The claimant sought rectification under section 65 and Schedule 4 to the Land Registration Act 2002. Vastguide initially disputed whether the registration of its proprietorship was a mistake, but later conceded by consent order that the court had jurisdiction to remove its entry. The issues were whether Vastguide could revive that argument, whether its conduct satisfied Schedule 4 paragraph 3(2), and whether exceptional circumstances justified refusing rectification.

1. Jurisdiction and estoppel. Vastguide’s consent to the order determining the preliminary issue was intended, and reasonably understood, to abandon its only jurisdictional objection: that its own registration was not a mistake within Schedule 4. It was therefore estopped, or otherwise prevented as an abuse of process, from reviving that argument.
2. Alternative construction. Even without the estoppel, the court’s power under Schedule 4 paragraph 2(1)(a) concerned a mistake appearing on the current register. The forged charge had already been deleted, so it could not be treated as the current register mistake for which alteration was sought. The court left open whether correcting a mistake could in principle include correcting its consequences.
3. Lack of proper care. Vastguide knew, before completion, that the charge and the transfer depended on a fraud involving a forged passport. It nevertheless completed and applied for registration. The claimant’s serious failure to seek an injunction did not relieve Vastguide of its own obligation to take proper care. Vastguide thereby caused or substantially contributed to the admitted mistake within paragraph 3(2)(a).
4. Unjust refusal and exceptional circumstances. Independently, refusal would have been unjust under paragraph 3(2)(b). The claimant had been deprived of his property by fraud, while Vastguide chose to compound that fraud with knowledge of its source. The property’s investment value to both parties and the claimant’s potential indemnity claim did not alter that conclusion. No exceptional circumstances justified refusing the order under paragraph 3(3).
5. The court ordered alteration of the register to substitute the claimant for Vastguide as proprietor and reserved the form of the order for further submissions.