Fitzwilliam v Richall Holdings Services Ltd

Registration of a forged transfer under the Land Registration Act 2002 vests the legal estate in the registered proprietor, but does not necessarily displace the true owner’s beneficial ownership. The Court of Appeal’s reasoning in Malory Enterprises Ltd v Cheshire Homes (UK) Ltd remains binding and applies to equivalent provisions of the 2002 Act. A void transfer is not a disposition for the purposes of section 29. The expression “landlord and tenant” in section 131(2)(a) includes parties connected only by privity of estate. For an application to the Registrar, possession is assessed when the application is made. The court indicated, obiter, that possession for a court application may instead be assessed when the issue is determined.

The claimant was the registered proprietor of a London house. A third party purported to sell it to the defendant under a forged power of attorney, and the defendant was subsequently registered as proprietor. The claimant sought alteration of the register under Schedule 4 to the Land Registration Act 2002, alternatively a transfer of the property, alleging that he had retained the beneficial ownership.

Two related claims were tried together. The first concerned the claimant’s entitlement to rectification and the consequences of the forged transfer. The second sought declarations concerning possession and the date at which the registered proprietor had to be in possession to invoke the restrictions on rectification. The claimant also applied to maintain an interim injunction preventing the defendant from taking possession.

1. Beneficial ownership and rectification. The claimant remained the beneficial owner notwithstanding the defendant’s registration. The reasoning of Malory Enterprises Ltd v Cheshire Homes (UK) Ltd was binding. Sections 58 and 29 of the Land Registration Act 2002 were materially equivalent to the provisions considered in that case. Section 58 vested the legal estate on registration, while leaving the true owner’s beneficial rights unaffected. A transfer which was void in itself could not be a “disposition” for section 29 purposes.
2. Since the claimant remained beneficially entitled, alteration of the register was appropriate. The register was ordered to be altered to show him as proprietor. He was required to reimburse the defendant £274,370.98, representing the sum used to redeem the charge in favour of Manchester Building Society. The defendant was required to account for rent received, less the cost of works carried out at the property.
3. Possession. The expression “landlord and tenant” in section 131(2)(a) includes persons between whom there is only privity of estate. For an application to the Registrar, possession is assessed at the date of the application, consistent with rule 20(1) of the Land Registration Rules 2003. The court indicated, without deciding the point as necessary to the result, that for a court application the relevant date may be the date on which the issue is determined, normally the hearing date.
4. Interim injunction. The injunction granted without notice was set aside because the claimant’s advisers failed to disclose that the claimant’s wife had changed the locks and thereby prevented the defendant from taking possession before the injunction was granted. The claimant’s lack of personal knowledge did not excuse the non-disclosure where he had left his wife to deal with the court application on his behalf.

This was a first-instance decision. The judgment records that:

• High Court (Chancery Division): Morritt C dismissed the claimant’s earlier application to continue the injunction on 21 July 2011 and adjourned the defendant’s application to set it aside to the trial judge.
• High Court (Chancery Division): Mr Justice Newey tried the two related claims, ordered alteration of the register, directed the financial accounting and set aside the injunction granted by Morgan J.