Rock Ferry Waterfront Trust & Anor v Pennistone Holdings Ltd

A disposition of a registered freehold estate which is ineffective at law for want of registration creates an equitable interest, but not an estate contract requiring registration as a Class C (iv) land charge. The equitable doctrine of notice applies. A purchaser may therefore be fixed with constructive notice where reasonable inspection and enquiry would have revealed the interest. On first registration, an equitable interest overrides only if it falls within Land Registration Act 2002, Schedule 1. Actual occupation requires physical presence with sufficient permanence and continuity, assessed in the light of the nature of the property and the occupier’s circumstances. Possession by an unpaid caretaker, whose activities merely secure or maintain derelict land, does not necessarily amount to actual occupation by the beneficiary or company.

The claimants sought possession of land formerly registered in the name of Toluca Ltd. Toluca had transferred the land to the defendant, but the transfer was deliberately left unregistered. Toluca was later dissolved, causing the registered title to escheat to the Crown. The Crown transferred the land to the first claimant, which subsequently transferred the slipway to the second claimant.

The defendant counterclaimed for rectification of the register, asserting that its equitable interest bound the claimants. The principal issues were whether the unregistered transfer created an estate contract or merely an equitable interest; whether the claimants had constructive notice; and whether the defendant’s alleged presence on the land constituted actual occupation within Schedule 1 to the Land Registration Act 2002.

1. Outcome. The defendant’s counterclaim for rectification failed. The claimants’ claim for possession succeeded.
2. Under section 27(1) of the Land Registration Act 2002, failure to register the transfer meant that the legal estate remained in Toluca, while the equitable interest passed to the defendant. The defendant had not disclaimed that interest. Mere non-registration did not evidence an intention to refuse it.
3. The failed transfer was not an estate contract within section 2(4)(iv) of the Land Charges Act 1972. The court distinguished a defective lease, which may be treated as a contract to grant a lease, from the ineffective transfer of an existing freehold estate. The latter creates an equitable interest equivalent to the estate transferred, so the equitable doctrine of notice applies.
4. A reasonable purchaser who knew that a padlock had been installed on the land should have inspected it again before completion and made enquiries of the person apparently controlling access. The first claimant’s failure to do so gave it constructive notice of the defendant’s equitable interest. In any event, the Crown transfer expressly made the conveyance subject to existing equitable interests.
5. On first registration, section 11 of the Land Registration Act 2002 vested the estate in the registered proprietor subject to Schedule 1 interests. The relevant exception was paragraph 2, concerning an interest belonging to a person in actual occupation. Actual occupation requires physical presence with some permanence and continuity. The court adopted the approach summarised in Link Lending Ltd v Bustard and Thompson v Foy, including consideration of the nature of the property, the duration and continuity of presence, intention, absence and personal circumstances.
6. The defendant was not in actual occupation of the site, pier or slipway. The abandoned digger and containers did not indicate occupation by the defendant. Mr Robertson’s activities as an unpaid caretaker established, at most, possession or surveillance. They did not constitute actual occupation by the defendant.

The proceedings were issued in the County Court and later transferred to the High Court under section 42(2) and (3) of the County Courts Act 1984. The judgment was a first-instance decision of the High Court.