Dhillon v Barclays Bank Plc & Anor

Under Land Registration Act 2002, Schedule 4, a forged disposition is a mistake capable of correction. The power extends to removing a derivative charge registered as a consequence of the forged disposition. The court must order alteration unless exceptional circumstances justify refusing it. In deciding whether circumstances are exceptional, the court assesses the whole factual context. A claimant cannot rely on a void disposition to obtain a better position than the fraudster would have held. Where removal of a charge would leave the claimant with an unencumbered property that she could never have acquired, that may constitute an exceptional circumstance. The possibility that the charge-holder may recover an indemnity does not prevent the alteration from being rectification.

The claimant sought alteration or rectification of the registered title to a property under Schedule 4 to the Land Registration Act 2002. She alleged that her signatures on two transfers were forged. The first transfer purported to transfer the property from Hackney to her; the second purported to transfer it to Crayford Estates Ltd. Crayford Estates granted a charge to Barclays Bank, which was later registered.

After Crayford Estates was dissolved, a vesting order transferred its interest to the claimant. The claimant then sought removal of Barclays’ charge. Barclays alleged abuse of process and relied on the claimant’s inability to obtain an unencumbered freehold through the alleged transactions. The central issues were whether the transfers were forged, whether the charge was a derivative mistake, whether its removal would constitute rectification, and whether exceptional circumstances justified refusing alteration.

1. The claim was dismissed. The court found, on the balance of probabilities, that both transfers bore forged signatures and that neither signature was authorised by the claimant.

2. A forged transfer is a void disposition and registration pursuant to it is a mistake for the purposes of Schedule 4 to the Land Registration Act 2002. The mistake may include the registration of a derivative charge. The claimant had standing to seek alteration, even though she did not claim a separate interest in the land.

3. The removal of Barclays’ charge would in principle correct a mistake. The vesting order did not transfer the property free of the charge, and Barclays could not collaterally attack that final order.

4. The court rejected the argument that the claimant’s occupation constituted an overriding interest eliminating prejudice. Following Swift 1st Limited v Chief Land Registrar, the alteration remained a rectification. The possible failure of a future indemnity claim was immaterial, particularly because Barclays had not brought such a claim.

5. Exceptional circumstances under Schedule 4, paragraph 3(3), are matters out of the ordinary, unusual, special or uncommon which bear on whether alteration should be refused. The claimant could not rely on the void first transfer to place herself in a better position than Crayford Estates. On the evidence, she could not have acquired the property without a resale or similar third-party-funded arrangement. Removing the charge would therefore give her an unencumbered property she could never have obtained. That was an exceptional circumstance justifying refusal of alteration.

6. Barclays failed to establish abuse of process. The applicable approach was broad and merits-based, with the burden on Barclays to show misuse of the court’s process or unjust harassment. Generalised assertions of prejudice were insufficient.

Not stated in the judgment. This was a first-instance trial in the High Court (Chancery Division).