Knightsbridge Property Development Corporation (UK) Ltd v South Chelsea Properties Ltd

The court held that the claimant, Knightsbridge Property Development Corporation (UK) Limited (KPDC), was entitled to have the register altered to restore the KPDC charge over the Bordean land and to correct the register as to title to the Alder Road land. The judgment applied the Land Registration Act 2002 Schedule 4 test for "mistake" and the authorities on the void/voidable distinction, concluding that the release of the KPDC charge and the registration of the transfer of the Alder Road land were not duly authorised and thus amounted to entries that should be rectified. The court found there had been no binding general settlement between the principal parties, that relevant documents had likely been backdated and executed without proper authority, and that the requirements of section 177 of the Companies Act 2006 were breached (rendering the Alder Road transaction voidable). An illegality defence was rejected. The court ordered rectification of the register and gave judgment for the money secured by the KPDC charge, confirming its priority over a later charge shown on the register.

The claimant, KPDC, sought orders to alter the Land Registry entries: (i) to restore a charge it formerly held over land at Bordean (the KPDC Charge) which had been removed from the register in 2014, and (ii) to correct title in respect of land at Alder Road to show KPDC as proprietor (challenging a 2013/2014 transfer which by then showed South Chelsea as proprietor). KPDC alleged that neither the discharge of the KPDC Charge nor the transfer of Alder Road had been duly authorised and that the register should be rectified under the Land Registration Act 2002 (Schedule 4).

The factual background included informal corporate arrangements within KPDC, disputed share transfers, prior dealings involving an Andorran company (Ibrid SL), and an asserted but unsupported "general settlement" in 2013. The key contested issues were whether a general settlement had been made in 2013 authorising the transactions, whether the DS1 and TR1/transfer were properly authorised by KPDC, whether the Companies Act 2006 (notably section 177 and section 190) affected validity, whether principles of agency and authority rendered the dispositions void, whether illegality barred relief, and whether rectification was appropriate under Schedule 4 to the Land Registration Act 2002.

The court examined contemporary documents and oral evidence and reached several subsidiary findings: there was no concluded general settlement; some registry documents were likely backdated; Mr Foote-Forster's account was found unreliable; Mr Brazell Junior probably signed the DS1 and transfer at or about the same time and was aware that they lacked approval from KPDC's managing director; the KPDC Charge had not in fact been paid off; and the discharge and transfer were not duly authorised. The judge applied the authorities on what constitutes a "mistake" for Schedule 4 purposes (including Baxter v Mannion and NRAM Ltd v Evans on the void/voidable distinction) and concluded that the removal of the KPDC Charge and the registration transferring Alder Road were mistakes allowing rectification, because the dispositions were not authorised (and in respect of Alder Road, the company law duties under section 177 had been breached making the transaction voidable, while agency failures rendered it not binding). The illegality defence was rejected as inadequately pleaded and unsupported by proper investigation; even if past misconduct existed, it did not prevent KPDC, as corporate claimant, from seeking rectification. The court ordered rectification of the register in favour of KPDC for both matters, confirmed that the KPDC Charge would bind the current proprietor and have priority over the Socao charge, and entered judgment for the debt secured by the KPDC Charge.

The claim is succeeded. The court ordered rectification of the Land Register to restore the KPDC Charge over the Bordean land and to correct title in respect of the Alder Road land in KPDC's favour. The court found there was no binding general settlement, the DS1 and transfer were not duly authorised, section 177 Companies Act 2006 had been breached (rendering the Alder Road transaction voidable) and agency/authority defects meant the transfer was not binding on KPDC. An illegality defence was rejected. The court also gave judgment for the money owing on the KPDC Charge and confirmed its priority over the Socao Charge.