Barclays Bank Plc v Guy

Registration vests the legal estate in the registered proprietor and gives that proprietor the statutory powers of disposition, including the power to grant a charge. A later finding that the transfer to the registered proprietor was voidable does not make the charge or its registration a mistake, provided the transfer had not been avoided when the charge was created and registered.

The register is intended to be relied upon at face value. Actual or constructive knowledge of a competing claim does not, without more, defeat the registered charge. The doctrine of notice has no general application to priority in registered land, particularly where no overriding interest based on actual occupation is established.

Barclays Bank Plc sought summary judgment declaring that it could sell freehold land under a registered first legal charge granted by Ten Acres Limited, and that a purchaser would take free of any interest claimed by Mr Trevor Guy.

Mr Guy alleged that his transfer of the property to Ten Acres had been procured by fraud. He contended that the transfer was void, that the charge was invalid or ineffective, and that the register should be rectified. The fraud proceedings against Ten Acres were separate and had been stayed following its entry into administration.

The central issues were whether the alleged fraud gave Mr Guy a real prospect of challenging the registered charge and whether the bank was affected by alleged knowledge or circumstances concerning Ten Acres’ title.

1. Summary judgment. The draft defence disclosed no real prospect of defending the claim. The claimant was therefore entitled to the declarations sought.
2. Effect of registration. Under sections 23 and 24 of the Land Registration Act 2002, a registered proprietor may make dispositions permitted by general law, including charging the estate under section 23(1)(b). Section 58(1) deems the legal estate to be vested in the registered proprietor on registration. Ten Acres was therefore entitled to grant the charge when it was created and registered.
3. There was no mistake in the claimant’s registration as chargee. The charge was executed and duly registered while Ten Acres remained the registered proprietor. Rectification could not be ordered against the charge merely because the transfer to Ten Acres might later be challenged.
4. Voidable transfer. The transfer was voidable, not void. Mr Guy had signed and delivered it to his solicitor as agent, knew its purpose, and did not allege forgery, non est factum, incapacity or want of title. The fact that dates and consideration were inserted later, or that the solicitor allegedly released the document contrary to instructions, did not prevent it becoming a deed. Following Norwich Building Society v Steed [1993] Ch 116, the transfer had not been avoided when the charge was registered.
5. The court did not need to decide whether the result would have differed if the transfer had been void, nor the unpleaded suggestion of an overriding interest.
6. Notice and reliance on the register. The bank had no duty to investigate the previous proprietor’s title or to lend responsibly for Mr Guy’s protection. The register could be taken at face value. Actual or constructive knowledge, alleged lack of due diligence, and concerns about Mr Luqman’s background could not defeat the charge. Without an applicable overriding interest, knowledge of a competing claim was irrelevant to priority.

First-instance decision. The judgment does not state any prior appellate decision in this dispute.