Bakrania & Anor v Shah & Ors

On an application under CPR 3.4(2)(a) or CPR 24.2, a claim must be struck out or judgment entered where, on the pleaded and undisputed material, it is bound to fail. Registration under section 58 of the Land Registration Act 2002 vests the registered proprietor with the legal estate and equitable interests, but it does not necessarily extinguish trust rights between the former beneficial owners. A beneficiary may retain personal and proprietary rights against trustees, even without an overriding interest in the registered land. A solicitor acting on an ordinary transfer cannot ordinarily be liable for failing to foresee a later, separate fraud outside the scope of the solicitor’s responsibility.

The claimants alleged that two transfers of registered land had been executed by fraudsters without their knowledge. The first transfer moved the registered title from three siblings to two of them. The second transferred the property to purchasers who obtained a mortgage. The claimants had unsuccessfully sought alteration of the register in proceedings before the Property Chamber, First-tier Tribunal.

The first and third defendants, including the firm involved in the first transfer, applied to strike out the claim or obtain judgment. The claimants also sought permission to amend their claim against HM Land Registry to seek an indemnity for the costs of the tribunal proceedings. The issues were whether the first transfer caused recoverable loss and whether the proposed amendment should be permitted.

1. Disposition. The claim against the first to third defendants was struck out as bound to fail. The claim against HM Land Registry was also struck out because no subsisting claim remained. Permission to amend was refused.
2. The court applied the approach in EasyAir Ltd v Opal Telecom Ltd [2009] EWHC 330 (Ch). Although the applications arose under CPR 3.4(2)(a) and CPR 24.2, the tests produced the same result because there were no relevant factual disputes and the claimants did not rely on the second limb of CPR 24.2.
3. The individual solicitor defendants could not be liable merely because they were directors or employees of the defendant firm. The claim did not plead the necessary assumption of personal responsibility and reliance identified in Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830. The relevant duty was owed by the firm.
4. Under section 58 of the Land Registration Act 2002, registration of the first transfer vested the entire legal estate, including equitable interests, in the two registered proprietors. The court rejected the submission that registration extinguished the claimant’s rights altogether. The trust between the siblings continued, with the two registered proprietors holding for all three. The claimant retained personal and proprietary rights against them, although he had no overriding interest because he was not in possession.
5. The principles in Swift 1st Ltd v Chief Land Registrar [2015] Ch 602 did not make the first transfer actionable for the loss claimed. The only possible loss caused by that transfer was the nominal cost of altering the register, which was not claimed. The later fraud and second transfer were outside the pleaded scope of the firm’s responsibility and were not matters it should have foreseen.
6. The proposed amendment concerning tribunal costs lacked real merit. The tribunal claim ceased to have merit once the law was clarified by Swift 1st Ltd v Chief Land Registrar. At the late stage of the proceedings, allowing the amendment would unfairly prejudice HM Land Registry.

First instance decision. The judgment records earlier proceedings before the Property Chamber, First-tier Tribunal, including a decision dated 13 April 2017, but no appeal from this judgment.