Bank of Scotland Plc v Joseph & Ors

Under the Land Registration Act 2002, a unilateral notice need not state every legal basis on which the beneficiary claims protection. Where it identifies a mortgage and the protected interest derives from the lender’s advance under that mortgage, it may preserve priority for a subrogated unpaid vendor’s lien, even if the lien is not expressly named. The interest should nevertheless be described as accurately as the applicant can provide. Inaccuracy or incompleteness does not necessarily invalidate protection. The statutory scheme provides mechanisms for notification, cancellation and correction. A successor in title cannot later challenge the notice’s scope where the registered proprietor failed to use the cancellation procedure and the registrar accepted the details.

The Bank brought possession proceedings concerning a flat against Ms Joseph and later Mr Lyons, who had acquired the flat from Wingfield Financial Heritage Limited. The Bank’s advance had funded the original purchase. It claimed priority either under its mortgage charge or, if that charge was forged, through subrogation to the developer’s unpaid vendor’s lien.

The District Judge granted summary judgment for the Bank on 8 February 2013. HH Judge Walden-Smith dismissed the first appeal on 18 July 2013. The second appeal concerned whether the Bank’s unilateral notice, which referred to the mortgage but not expressly to the unpaid vendor’s lien, preserved priority over Wingfield’s registered charge.

Appeal dismissed. The Court of Appeal upheld the summary judgment for the Bank.

1. The findings below were unchallenged that the Bank’s money had paid the developer. If the mortgage charge was invalid, the Bank was therefore subrogated to the developer’s unpaid vendor’s lien. Applying the approach in Abbey National Building Society v Cann [1991] 1 AC 56, the purchaser had only an equity of redemption subject to that security, and Wingfield’s charge was subject to it.
2. The Court accepted that a unilateral notice should describe the interest with as much accuracy as the applicant can provide. The duty to act reasonably under the Land Registration Act 2002 did not, however, make an inaccurate or incomplete description necessarily fatal to priority.
3. Sections 34 and 35 of the Land Registration Act 2002, read with rule 84(5) of the Land Registration Rules 2003, did not require the notice to spell out every alternative legal basis for protection. The registrar could accept such details of the interest as considered appropriate. An interest derived from lending under the identified mortgage could therefore be protected, including the subrogated lien.
4. The cancellation and correction procedures under section 36 provided the appropriate route for challenging or supplementing the notice. Wingfield did not use that procedure. It was therefore not open to Wingfield or Mr Lyons to contend in the possession proceedings that the notice failed to protect the Bank’s derived interest.

The Court did not need to determine the Bank’s alternative argument that the principle in Cann made registration of a notice unnecessary. Lord Justice Patten stated that he was far from persuaded that the Bank would succeed regardless of the notice’s effectiveness. Lady Justice Sharp and Sir Robin Jacob agreed.

• Court of Appeal (Civil Division). The second appeal was dismissed: [2014] EWCA Civ 28.
• County Court. HH Judge Walden-Smith dismissed the first appeal on 18 July 2013.
• County Court. District Judge Dixon granted summary judgment for the Bank on 8 February 2013.