K&K Property Investments Limited v Southwark London Borough Council

A registered leasehold estate does not require a notice on the individual register of another registered estate in the same land to preserve its priority. Under section 23(1)(b) of the Land Registration Act 1925, “the register” means the register as a whole, not merely the individual register for the estate being transferred. A registered underlease therefore binds the assignee of a concurrent or superior lease even if it is not noted on that lease’s individual register. The registration of a lease and its noting on the superior title serve different functions: substantive registration secures the estate’s priority, while noting provides information. A mistake in omitting the note does not alter the legal relationship between the estates.

K&K Property Investments Limited claimed compensation for its long leasehold interest in 78 Rye Lane following compulsory acquisition by Southwark London Borough Council. The parties agreed that a preliminary title issue should be determined before valuation.

The claimant held a registered underlease. A concurrent lease, granted after the underlease and extending two days beyond it, was later registered in the same proprietor’s name. The underlease was not carried forward onto the individual register for the concurrent lease when that title was assigned and re-registered in 1992. The acquiring authority argued that the omission meant the concurrent lessee took free of the underlease and that the claimant’s compensatable interest was invalid or reduced in value. The central issue was the meaning of “the register” in section 23(1)(b) of the Land Registration Act 1925.

1. Preliminary issue determined for the claimant. The omission of the Underlease from the individual register of the Concurrent Lease did not affect the validity, priority or value of the claimant’s registered leasehold estate.
2. Section 23(1) of the Land Registration Act 1925 provides an exhaustive statement of the estates and interests binding the disponee of a registered lease. The reference in section 23(1)(b) to entries “appearing on the register” is a reference to the register as a whole. The 1925 Act does not use or define the concept of an individual register; that concept belongs to the land registration rules.
3. A construction limited to the individual register would make a registered legal estate materially weaker than the equivalent unregistered legal estate, which would bind the world. That consequence was implausible. The mirror principle concerns the title to the particular registered estate and does not require every interest affecting other registered estates in the same physical land to appear on one individual register.
4. The Tribunal declined to adopt the acquiring authority’s reading of Ferrishurst Ltd v Wallcite Ltd [1999] Ch 355. That case concerned actual occupation of part of land comprised in a registered title. The observations relied on were obiter and addressed the ordinary purchaser’s need to inspect the title to the land being bought. They did not address the unusual case of a registered concurrent lease subject to a registered underlease omitted from the concurrent lease’s individual register.
5. The Underlease was therefore binding on Ropehold Limited and its successors. They had no right to possession until the Underlease ended while the Concurrent Lease remained in existence. Even on the alternative assumption that the omission was legally significant, it was a correctable mistake under section 82 and following of the 1925 Act or Schedule 6 to the Land Registration Act 2002, so any effect on value would have been negligible. The parties were directed to file agreed directions for determination of the compensation reference within 14 days.