Gold Harp Properties Ltd v Macleod & Ors

This is an appeal against a decision of HHJ Gerald, dated 24 May 2013, in the Central London County Court, requiring the alteration of Land Registry titles relating to a property in North Kensington known as 72-74 St. Quintin Avenue, London W10 (“the Property”). Mr Philip Brown appears for the Appellant, and Ms Kerry Bretherton and Mr Robert Bowker for the Respondents. In order to explain the order which the Judge made, and the issues raised by the appeal, I need first to give an outline of the facts.

The Property consists of a three-storey house. Freehold title is registered under number BGL70889. The top floor, which has been referred to in these proceedings as “the roofspace”, has never been converted for occupation.

The Property was acquired in 1988 by a group of teachers – a Mr and Mrs Jessel and the First and Second Claimants, Mr Byrne and Mr Briars (to whom I will refer as “the Claimants”, though in fact their attorneys are also formally parties), with a view to its redevelopment into four flats – one each on the ground and first floors and two in the roofspace – which would provide teaching and accommodation facilities for autistic children. Four 135-year leases were created accordingly, the two Claimants each becoming tenant of half of the roofspace, for which they each paid £29,950.

By a sequence of events into which I need not go, Mr and Mrs Jessel lost the title to the two lower floors, which were in 1999 acquired by a company owned and controlled by a Mr Grahame Ralph, the Fifth Defendant, who is a property developer. Those floors were converted into four flats. The Claimants retained title to their respective parts of the roofspace, which were designated as “flats 5 and 6”. As part of that sequence of events fresh leases were entered into in 2000 in respect of those flats, with terms of 135 years running from 1988. The registered titles were numbers BGL36978 (flat 6) and BGL36979 (flat 5). Both leases were entered on the schedule of notices of leases relating to the freehold title (i.e. BGL 70889), to which I will refer as “the Leases Schedule”.

The roofspace continued unoccupied and unconverted. The Claimants work, and live for most of the time, in Africa; but their interests were represented by agents in London. Mr Ralph coveted the opportunity to develop the top floor. On the Judge’s findings – which indeed reflect his own candid admissions in evidence – he orchestrated a sequence of events which he hoped would enable him to acquire the roofspace without having to make any payment to the Claimants. The Judge found that Mr Ralph was aware that “the Claimants … and their agents were somewhat unworldly folk, not well attuned to defeating attempts to take their property”.

Mr Ralph’s plan developed as follows. On 13 February 2009 his son Matthew, the First Defendant, acquired the freehold of the Property. On the Judge’s findings, Matthew Ralph, whether or not technically a nominee for his father, operated entirely at his behest. The next payment of ground rent in respect of the roofspace, £50 for each “flat”, was payable on 25 March 2009. Payment was not made on the due date, and on 4 June Mr Ralph instructed a firm of bailiffs to effect a formal re-entry (though since the lease provided for re-entry only when the rent was more than three months in arrears any lawful re-entry could not be before 26 June). On the same date he made an application for planning permission in respect of the roofspace.

In ignorance of these developments the Claimants did, albeit belatedly, tender payment of the ground rent, by cheque payable to Mr Ralph junior, which was sent to him by post at his father’s address (which was the only address of which they had notice) on 11 June. Mr Ralph senior was aware of the receipt of the cheque, but he took no steps to forward it to his son.

On 27 July 2009 Mr Ralph junior made a statutory declaration to the effect that the Claimants’ leases had been determined by peaceable re-entry following non-payment of the rent: he exhibited a letter from the bailiffs claiming to have re-entered on that very day. To anticipate, the Judge found that no re-entry had in fact taken place; and that is accepted before us. On 30 July an application was made to the Land Registry for the closure of titles BGL36978 and BGL36979 on the basis of the forfeiture of the leases to which they related. The application was granted and the Register was amended accordingly on 5 August. At the same time, and most pertinently to this appeal the Registrar amended the Leases Schedule by removing reference to the leases.

In the meantime a long lease of the whole of the roofspace had been granted by Mr Ralph junior to a company called Insignia Property Ltd, the Third Defendant, apparently for a premium of £5,000: I will refer to this as “the new lease”. The sole director of Insignia was a Mr Qayoumi, a business associate of Mr Ralph senior. Title in respect of that leasehold interest was registered with effect from 2 September 2009, with the number BGL72632. The new lease was entered on the Leases Schedule. On 28 February 2010 Insignia assigned the new lease to a company called Lavender Estates Ltd, the Fourth Defendant, for, apparently, £10,000. Lavender on the same day assigned it on to Gold Harp Properties Ltd, the Second Defendant and the Appellant before us, apparently for £150,000: Gold Harp was also the intermediary lessee of the Property. Both Lavender and Gold Harp are owned and controlled by Mr Ralph senior.

I have referred to the “apparent” premium/price of each of the transactions in relation to the new lease because the Judge observed that no evidence had been produced that any money in fact changed hands. He said, at paragraph 28 of his judgment:

The Claimants commenced proceedings in the County Court in August 2011. They sued by their attorneys, Messrs Gibbons and MacLeod (who are the Third and Fourth Claimants). Initially the only defendants were Mr Ralph junior and Gold Harp. The claim form and the Particulars of Claim as originally pleaded claimed relief from forfeiture and damages for trespass and wrongful forfeiture. It was decided that there should be a trial of a preliminary issue as to whether the Claimants’ leases over the roofspace had indeed been properly forfeited.

That issue was tried before Judge Gerald on 18 and 19 March 2013. Mr Bowker and Mr Brown appeared for the Claimants and the Defendants respectively. By a reserved judgment dated 22 March the Judge held that the bailiffs had not effected a physical entry on 27 July 2009. He further found that even if there had been a physical entry on that date it would not have given rise to a forfeiture because the Claimants’ tender of the rent on 11 June had been effective. The finding that there had been no forfeiture of the Claimants’ leases was recorded in the recital to an order of the same date. The Claimants were given permission to amend to plead a claim for rectification of the Register and for damages for slander of title (though the latter claim has not been proceeded with). The Claimants were given permission to join Insignia and Lavender as further defendants. They also applied to join Mr Ralph senior for the purpose of applying for a costs order against him; that application was adjourned.

The trial of the rectification issue took place on 24 May 2013. Mr Bowker again appeared for the Claimants. Mr Brown appeared for both the original Defendants and Lavender. Mr Qayoumi appeared in person on behalf of Insignia. Judge Gerald in an ex tempore judgment decided that the Register should be rectified. His order dated 28 May 2013 reads (so far as relevant):

The effect of paragraph 2 of that order is that the Claimants, and their successors in title, will enjoy the right to occupy the roofspace under their respective leases in priority to Gold Harp, whose interest will thus be reversionary only and practically valueless save in the unlikely event of a future termination of the Claimants’ leases short of their terms. The present appeal, by Mr Ralph junior and Gold Harp, is against that part of the order.

I should briefly refer to a subsequent hearing, on 21 November 2013, which dealt with the Claimants’ application to join Mr Ralph senior as a fifth Defendant. The Judge made the order sought and directed that Mr Ralph pay the Claimants’ costs of the claim on the standard basis.

Before I turn to the issues raised by this appeal I should set out the relevant statutory provisions. Although the governing statute is the Land Registration Act 2002, it will be necessary to refer also to its predecessor, the Land Registration Act 1925.

I need not refer to Parts 1 and 2 of the 2002 Act. Part 3 deals with dispositions of registered land. Sections 28-31, which fall under Part 3, are headed “Effect of dispositions on priority”. Section 28 reads (so far as relevant) as follows:

It is convenient to note here, by way of anticipation, that counsel were agreed that section 29 had no application in the present case because, although the creation of the new lease involved a registrable disposition, it was not, on the Judge’s findings, made for valuable consideration. Accordingly the “basic rule” in section 28 applies.

Part 4 is concerned with notices on the Register. I need only note section 32, which is the statutory basis of the Leases Schedule to which the disputed part of the Judge’s order relates. It reads as follows:

Part 6 includes a number of general provisions about registration. These include section 65, which is headed “Alteration of the Register” and gives effect to Schedule 4. The relevant provisions of Schedule 4 are as follows:

Paragraph 1 is headed “Introductory” and reads:

The structure of paragraphs 1-3 is a little convoluted, but their effect can be summarised as follows:

Paragraph 2 confers the basic power to alter the Register in the specified circumstances. In this case we are concerned with head (a), i.e. alteration for the purpose of correcting a mistake.

Paragraph 3 prescribes how that power is to be exercised in the particular case of rectification, as defined in paragraph 1, i.e. an alteration which involves the correction of a mistake and prejudicially affects the title of a registered proprietor. In such a case the approach which the Court should take depends on whether the proprietor of the estate is in possession.

If the proprietor is in possession, then sub-paragraph (2) provides for a presumption against rectification, at least without his consent, although the presumption is rebuttable if either head (a) or head (b) applies.

If the proprietor is not in possession (and also, strictly, if he is but one of the exceptions at (a) or (b) applies), then sub-paragraph (3) provides for a presumption in favour of rectification.

Schedule 8 to the Act, which is given effect by section 103, provides for the payment of an indemnity by the Registrar where a person suffers loss by reason of various specified circumstances, including (at paragraph 1 (1) (a)) rectification of the Register.

The system of land registration thus provides only for qualified indefeasibility of registered title: that is, in the circumstances provided for by Schedule 4 the Register may be altered in order to correct a mistake even where that will, in the words of paragraph 1, “prejudicially affect the title of a registered proprietor”. The Court (or the Registrar) has a discretion as to whether to make such an alteration, though the guidance as to the exercise of that discretion given by paragraph 3 makes it clear that a proprietor in possession is protected to a much greater extent than a proprietor who is not in possession. Either way – that is to say, whether the discretion is exercised or not – there will be a loser; but he or she will be entitled to compensation by way of indemnity under Schedule 8.

The essential structure of the 1925 Act was, in the relevant respects, similar to that of the 2002 Act. But the detailed drafting was very different. The provision dealing with “rectification” (Footnote: ¹) of the Register is section 82. It can be summarised as follows:

Section 83 gave a right to an indemnity in circumstances broadly equivalent to those specified in the 2002 Act.

The Judge noted that he had been referred to very little authority, which is rather surprising in view of the quantity of authorities cited before us. He approached the issues by reference to the statutory provisions alone. It is sufficient if I give a summary of his reasoning, as follows:

He started, at para. 31 of his judgment, by recording that it was common ground that the closure of the Claimants’ leasehold titles had been a “mistake” within the meaning of paragraph 2 (1) (a) of Schedule 4; and that they should be reinstated. It should be noted that although the Judge clearly regarded the conduct of Mr Ralph senior as amounting to sharp practice he did not find that the mistaken closure of the Claimants’ titles was the result of fraud: it was mistaken simply because no effective forfeiture had in fact occurred. He said at para. 32 that it followed that the removal of the Claimants’ leases from the Leases Schedule on the freehold title was also a mistake.

At para. 33 he pointed out that any rectification of the Register to correct those two mistakes “would take effect as of today”. That would be “asymmetrical” because it would not restore the position as it was before the mistake, in that the Claimants’ leases would take effect only as reversionary leases behind the new lease.

He proceeded at paras. 34-39 to consider whether he had power under Schedule 4 to make an order requiring the Register to be amended so as to “reflect that which ought to be the position had there been no mistake”. He concluded that he did, by virtue of the power to change priorities expressly conferred by paragraph 8. As part of his reasoning he held that such an order would “prejudicially affect” the title of Gold Harp within the meaning of paragraph 1 (b), since it would lose its right to possession and enjoy only a reversionary interest, and that the relevant alteration would accordingly constitute a rectification.

The question accordingly was whether he should make such an order, applying the terms of paragraph 3 of Schedule 4.

As regards paragraph 3 (2), his primary conclusion was that it had no application since the roofspace had never been in the possession of Matthew Ralph or Insignia or any of its assignees (paragraph 41). But he also held, by way of alternative, that Mr Ralph senior had caused or substantially contributed to the mistakes, and that any party who might claim to have been in possession of the roofspace could not be treated as independent of him; and/or that it would be unjust for the Register not to be rectified (paras. 42-47). Thus one or both of conditions (a) and (b) were satisfied.

As regards paragraph 3 (3), he held that there were no exceptional circumstances which would justify not rectifying the Register (paras. 48-50). The only possible such circumstance which he considered was that rectification would be pointless because there was no prospect of planning permission being obtained for the conversion of the roofspace into two separate flats; but he decided that that did not satisfy the requirements of the sub-paragraph.

It followed that he was obliged to order rectification, and he so concluded at para. 51.

Finally, the Judge noted that the Claimants had argued that the title registered following the grant of the new lease (no. BGL72632) should be closed. He declined to take that step, holding that the correction of the mistakes identified above required only that the Claimants’ reinstated titles should rank in priority to (what was now) Gold Harp’s title. He held that the creation of the fresh title was not itself a mistake which required correction within the meaning of paragraph 2 of Schedule 4.

The Judge accordingly proceeded to make the order which I set out at para. 13 above.

Two grounds of appeal are pleaded. The first is that the Judge should have found that there were exceptional circumstances, within the meaning of paragraph 3 (3) of Schedule 4, which justified him in not ordering rectification. The second is that even if he was entitled to order the reinstatement of the Claimants’ leases on the Register he was wrong to order that they should appear on the Leases Schedule in such a way that they had priority over the new lease. It is the second point on which Mr Brown mainly relied, and I take it first.

Mr Brown’s primary case can be summarised as follows. The Judge based his order altering the priorities of the Claimants’ leases and the new lease on the provisions of paragraph 8 of Schedule 4: see para. 26 (3) above. But in doing so, says Mr Brown, he ignored the words “for the future”. Those words make it clear that, as he put it, rectification of the Register cannot operate retrospectively. The effect of the Judge’s order was necessarily retrospective because its aim was to treat the Claimants’ leases as if they had appeared on the Register at a date when they in fact did not. He submits that it was clearly established in the authorities decided under the 1925 Act that there was no power to rectify the Register retrospectively, and that it was clear from the Law Commission reports which led to the 2002 Act that Parliament intended that that should continue to be the case.

A subordinate theme in Mr Brown’s submissions was that the only “mistakes” with which we were concerned were those affecting the Claimants’ leases – that is, their de-registration and their removal from the Leases Schedule: the Judge had found in terms that the registration of the new lease was not a mistake within the meaning of the Act (see para. 26 (8) above). Accordingly it was not open to the Claimants to proceed on the straightforward basis that the new lease should not appear on the Register at all. This point was essentially pre-emptive. There is no Respondent’s Notice from the Claimants taking such a point and Ms Bretherton did not try to do so in her oral submissions: her case was that the Judge’s order was justified as part of the process of correction of the mistakes which he found. Nevertheless the authorities to which he referred us on this point do overlap to some extent with the issues raised by his primary point.

Those submissions make it necessary for me to review in some detail the case-law under both the old and the new Acts and the legislative history – although, as I have already noted, almost none of this material was put before the Judge. Before I do so, however, I should make one or two points by way of preliminary ground-clearing.

First, the subject-matter of paragraph 8 is the priority “of any interest affecting the registered estate … concerned” – paraphrased in the heading as “derivative interests”. The leases with which we are concerned – that is, the Claimants’ leases on the one hand and the new lease on the other – affect the freehold title and accordingly fall within the terms of the paragraph. That may seem obvious but it is worth stating as a foundation, if only because it is, at least in my experience, unusual to encounter questions of “priority” between two leasehold estates granted over the same land for the same or overlapping terms.

Secondly, the central question raised by Mr Brown’s primary case is the effect of the words “for the future” in paragraph 8. The submissions before us often resorted to the paraphrase “prospective” – or, as its opposite, “retrospective”; and, as will appear, those terms appear in the case-law and also the academic commentaries and the Law Commission reports to which we were referred. But it should be borne in mind that they are not the words used by the statute, and it will be necessary to be careful to identify the sense in which they are used in any particular context.

Thirdly, the Judge’s order proceeds on the basis that an alteration to the Leases Schedule is necessary in order to restore priority to the Claimants’ leases. I am not sure that that is in fact so. As section 32 of the Act says, the effect of an entry on the Schedule is to protect the priority of an interest “for the purpose of sections 29 and 30”. But, as noted at para. 18 above, it is common ground that section 29 has no application in this case and that the “basic rule” in section 28 applies. It would seem to follow that what appeared on the Schedule was immaterial to the issue of priority as between the parties; and if, as I would suppose, the result of the basic rule is that the Claimants’ leases enjoy priority irrespective of the Judge’s order, simply by being prior in time (Footnote: ³), there would on the face of it be no need for their priority to be changed by resort to paragraph 8. Unfortunately the point that this was not a case falling within section 29 and that paragraph 8 was accordingly irrelevant – which was not of course how the Judge approached it – was not raised in a Respondent’s Notice and only emerged at a late stage and by a side-wind and was not the subject of developed submissions before us (Footnote: ⁴). I am not wholly comfortable that the analysis is as straightforward as may appear at first sight. Since, as will eventually appear, I have reached a clear view that the appeal should be dismissed on the basis of the issues as they were before the Judge, which were also the focus of the argument before us, I do not consider this aspect further.

The story starts with Freer v Unwins Ltd[1976] Ch 288. In that case registered land comprising shop premises was subject to a restrictive covenant prohibiting their use for the sale of tobacco products and sweets. By mistake, notice of that covenant was not included on the Register. The (unregistered) leasehold of the premises was assigned to purchasers who wished to sell such products: since the covenant was not registered they had no notice of it. The beneficiary of the covenant then successfully applied to the Chief Land Registrar for the Register to be rectified so as to include notice of the covenant on the Charges Register. There was no appeal against that decision; but the purchasers maintained that notwithstanding the rectification the covenant was not binding on them. The beneficiary of the covenant sought an injunction.

Walton J, in an unreserved judgment, dismissed the claims. He expressed surprise that rectification had been ordered in the first place, but he held that in any event its effect was not to bind the purchasers. Part of the argument turned on the construction of section 50 (2) of the 1925 Act, which provided that (in short) an incumbrance would affect the title only from the date that it was entered on the Register. Counsel for the beneficiary of the covenant submitted that that was inconsistent with the general scheme of the Act. Walton J rejected that submission, saying (at p. 297 G-H):

Mr Brown submitted that those passages constituted plain statements that rectification under the 1925 Act could not have retrospective effect. However they have to be read in the context of the matters in dispute. The general proposition that priority depends on the date of registration is wholly unexceptionable, but it was not being advanced by Walton J as the answer to an argument that the Court can in ordering rectification alter the priorities that would otherwise apply. The case was not put that way, because rectification had already occurred, and there was no reference to section 82 (2). It is important to note that, as Ms Bretherton pointed out, in a later passage (at p. 299) Walton J does in fact contemplate that if the purchasers had had a registered leasehold interest the Court would have had jurisdiction to rectify in such a way that they were bound by the covenant, though he expresses the view that on the facts of the case the statutory discretion would have been exercised in their favour.

The next case is Argyle Building Society v Hammond (1984) 49 P&CR 148. The registered freehold proprietor of a property in London, Mr Steed, lived abroad, and his mother held a power of attorney. His sister and her husband, Mr and Mrs Hammond, had the register altered to show themselves as the freehold proprietors. It was Mr Steed’s primary case that they had forged the mother’s signature on the transfer documents. A building society mortgage was charged on the property and duly entered on the Charges Register. Mr and Mrs Hammond subsequently defaulted on the payment of the mortgage, and the building society sought possession. It was accepted that if Mr Steed had indeed never transferred the property Mr and Mrs Hammond had no right to create any charge over it, but the building society claimed that the “statutory magic” of registration meant that the charge was nevertheless effective. Mr Steed contended that that effect could be reversed by the rectification of the Register.

On the trial of a preliminary issue, for the purpose of which it was assumed that the transfer had been forged as alleged, the County Court judge held that the Court had no jurisdiction to make an order for rectification which would deprive the building society of the benefit of its charge. However, that decision was reversed by this Court. Slade LJ, giving the judgment of the Court, held that the effect of section 82 (2) of the 1925 Act was that the Court had jurisdiction not only to rectify the Proprietorship Register by restoring Mr Steed as the registered proprietor but also to rectify the Charges Register by removing the building society’s charge. If it exercised its discretion to do so the society would be entitled to an indemnity under section 83. The reasoning is fully developed at pp. 156-163 and I need not set it out here. I need only cite a passage from p. 161 which summarises the Court’s conclusion:

The reasoning in Argyle Building Society v Hammond makes it clear that under the 1925 Act, where the proprietor of a registered interest had been mistakenly removed from the Register, the power to rectify extended to the removal of a competing interest which had been duly registered at a time when the first interest did not appear on the Register: the building society could have had no notice of Mr Steed’s interest, and yet its charge was liable to be invalidated. In one sense the rectification in such a case can be characterised as retrospective, because the charge was valid when created and is only invalidated by the subsequent order of the Court; and that is the sense in which Mr Brown submits that the order made in the present case was retrospective. I defer discussion of that for the time being.

The trial ordered in Argyle Building Society v Hammond duly took place. Mr Steed abandoned the allegation that his mother’s signature on the transfer had been forged by Mr and Mrs Hammond but argued instead that she had been tricked into signing it. Knox J found that that was the case, but he rejected a case of non est factum, with the result that he found the transfer to be voidable but not void. On that basis he ordered the rectification of the Proprietorship Register to reinstate Mr Steed in place of Mr and Mrs Hammond; but he declined to order rectification of the Charges Register so as to remove the building society’s charge.

Mr Steed’s appeal to this Court – reported as Norwich and Peterborough Building Society (Footnote: ⁵) v Steed [1993] Ch 116 – was dismissed. The Court, agreeing with Knox J, held that the circumstances of the case did not fall within any of the heads of section 82 (1). Scott LJ held that the intention of heads (d)-(h) was “to enable errors to be corrected” (see p. 134 G-H); but the registration of the charge was not an error because the transfer to the Hammonds was only voidable and had not at the material time been avoided (p. 135 A-C). Counsel for Mr Steed sought to rely on certain passages in the judgment in Argyle Building Society v Hammond. Scott LJ held that those passages were not properly applicable to the case of a merely voidable transfer. But he made it clear that he agreed that if the transfer had been a forgery, as had been assumed for the purpose of the preliminary issue, the Court would indeed have had jurisdiction to rectify the Charges Register against the mortgagees: p. 137 B-C. It follows that there is nothing in the judgment to cast doubt on the ratio of Argyle Building Society v Hammond.

In Clark v Chief Land Registrar[1993] Ch 294 registered land was held by two judgment debtors under a statutory trust for sale. The plaintiffs were judgment creditors who obtained a charging order over the land, which they had protected by the appropriate cautions on the Register. The judgment debtor mortgaged the property to a lender. The Land Registry failed to give the plaintiffs notice of the lender’s application to register its charge. They brought proceedings seeking, inter alia, a determination whether their charge had priority over the lender’s. Ferris J held that it did not. The Registrar, who on that basis was prima facie liable to indemnify the plaintiffs, sought to argue that they could restore their priority (and thus avoid any loss) by seeking rectification of the Register. Ferris J rejected that argument on the basis that such a claim would be “fraught with difficulty” (see p. 318 C-D). The principal difficulty to which he referred was whether the Court would have power to “order that [the plaintiffs’ charge] be entered on the Register immediately before the entry relating to [the lender’s] charge”. He doubted whether the Court had such a power, referring to Freer v Unwins; but he said that even if it did it would not be right as a matter of discretion to order rectification in the circumstances of the case (see p. 318 A-D).

When the case came before this Court – [1994] Ch. 370 – the Registrar did not pursue the rectification argument. Nourse LJ observed in passing (p. 385H) that there was no doubt that Ferris J’s decision on it was correct, but he did not say why.

Clark does not in truth take matters any further. Ferris J referred with approval to Freer v Unwins, but it was not necessary to his decision; and in any event any such decision would not have been binding on us.

In Hayes v Nwajiaku (unreported, 10.6.94) one of two joint proprietors of registered land forged the signature of the other and sold the property. The purchaser charged it to mortgagees who had no notice of the forgery. Mr John Cherryman QC, sitting as a deputy High Court Judge, held that the original proprietor was entitled to have the Charges Register rectified so as to remove the charges in favour of the mortgagees. The judgment is only shortly reasoned, the deputy Judge evidently believing that he was applying settled law. I cite it simply because it is referred to in some of the subsequent authorities and books and is a straightforward illustration of the understanding of the effect of section 82 (2).

In Malory Enterprises Ltd v Cheshire Homes (UK) Ltd[2002] Ch 216 the claimant, a BVI company, was the registered proprietor of freehold land. A fraudster established a UK company with the same name and purported to sell the land to Cheshire Homes Ltd, which was duly registered as the proprietor. Cheshire Homes took possession of the land and carried out some demolition work on it. The claimant brought proceedings seeking rectification of the Register by its reinstatement as the registered proprietor with effect from the original date of registration, together with damages against Cheshire Homes for trespass in respect of the demolition works. The Judge found that the claimant was at all material times in actual occupation of the land so as to enjoy an overriding interest. He ordered rectification, “such rectification to be (insofar as necessary) retrospective to [the date of the registration in favour of Cheshire Homes]”.

On appeal Cheshire Homes accepted that rectification should be ordered but contended that it should take effect only from the date of the order, so that – as it contended – it could not be liable for trespass in respect of the intervening period. This Court upheld the finding that Cheshire Homes was liable for trespass, but it allowed the appeal to the extent of removing from the Judge’s order the provision for retrospectivity which I have quoted above.

The principal ratio was that Cheshire Homes’ status as registered proprietor was subject to the claimant’s rights as beneficial owner, and that those rights gave it sufficient standing to sue for trespass without seeking rectification. That reasoning has been much criticised by academic commentators at the time and since: see the discussion in Fitzwilliam v Richall Holdings Services Ltd [2013] EWHC 86, [2013] 1 P&CR 19, and the recent case-note by Dr Martin Dixon at (2013) 129 LQR 320.

For present purposes, however, we are concerned with a different point. Arden LJ expressed the view that the rectification ordered by the Judge was not simply unnecessary, which followed from her primary ratio, but wrong, because the Court had no jurisdiction under section 82 to order rectification with retrospective effect. The relevant passage is at paras. 71-79 of her judgment (pp. 233-6). After referring briefly to Freer v Unwins and Clark and noting the contents of consultation documents issued by the Law Commission in 1987 and 1998 (which I consider below), she set out at paras. 75-77 a number of what she believed to be indications that Parliament did not intend to confer power to order rectification with retrospective effect. Her principal concern was the absence, as she saw it, of any power in the Court to protect the interests of third parties which might be prejudiced by rectification with retrospective effect (see para. 76). She stated her conclusion in para. 79, as follows:

Clarke and Schiemann LJJ declined to endorse that part of Arden LJ’s reasoning, pointing out that it was not necessary to the disposal of the appeal. Clarke LJ said, at para. 87 (p. 238):

Mr Brown placed considerable weight on Arden LJ’s conclusion at para. 79 of her judgment, while recognising that it was not binding on us because it was not part of the ratio of the majority. But, again, it is necessary to consider the context. I think it most unlikely that Arden LJ had overlooked the provisions of section 82 (2) of the 1925 Act or the decision in Argyle Building Society v Hammond, both of which are referred to elsewhere in her judgment; likewise she will have been well aware of the protection of the rights of third parties afforded by section 82 (3) and the indemnity provisions in section 83. The issue in Malory was different, namely whether Cheshire Homes was liable for acts done at a time when, so far as the Register showed, it was the registered proprietor. This is, to anticipate, a crucial distinction.

The last decision under the 1925 Act to which we were referred is that of Blackburne J in Pinto v Lim[2005] EWHC 630 (Ch), which I mention, again, only because it is referred to in some of the subsequent case-law and commentaries. The claimant was the registered joint owner of a freehold property with his wife, Ms Lim. Following their divorce Ms Lim forged his signature on a transfer of the property into her sole name and then sold it to her brother, who took out a mortgage with Woolwich plc: both he and the Woolwich acted in good faith, without knowledge of the forgery. He was registered as the sole proprietor, and the Woolwich’s charge was registered in the Charges Register. Mr Pinto sought rectification of the Proprietorship Register to restore the registration of his joint interest. He did not seek to have the Charges Register rectified, “acknowledging that rectification would be prospective only” (see para. 75 of the judgment). Beyond that, however, the issue of the retrospectivity of any rectification did not arise: Blackburne J decided, on the particular facts of the case, not to order rectification.

At the risk of repeating myself, it is authoritatively established by Argyle Building Society v Hammond that the effect of section 82 (2) of the 1925 Act was that the Court (and the Registrar) had the power to remove from the Register a derivative interest created by a person who at the material time was, albeit as the result of a mistake, the registered proprietor, and in that sense – without prejudice to whether this is a relevant sense – to make a “retrospective” order. If, which is debatable (to put it no higher), the reasoning of Walton J in Freer v Unwins and of Arden LJ in Malory are inconsistent with that conclusion they are not authoritative.

In Argyle Building Society v Hammond the competing interests were those of the “true” proprietor of the freehold title and of the proprietor of a derivative interest affecting the freehold, and not – as in the present case – two derivative interests. But the language of section 82 (2) – which refers comprehensively to “any estates, rights, charges, or interests acquired or protected by registration, or by any entry on the register” – does not lend itself to any such distinction and it is hard to see any principled basis for one.

I would add for completeness that, although the cases to which I have referred mostly arise as a result of frauds, that is not necessary to existence of the jurisdiction. All that matters is that the de-registration was effected on a mistaken basis.

Between 1983 and 1988 the Law Commission published four reports on land registration. The first and second reports were implemented, but they contain nothing material for our purposes. The third report was published in 1987 ([1987] EWLC 158). Professor Julian Farrand was the Commissioner primarily responsible.

The 1987 report contained, at Part III, a thorough review of the law about rectification and indemnity as it then stood. Its general conclusion was that section 82 embodied the correct principles but that it would benefit from some clarification and simplification. Para. 3.6 reads:

A fourth report the following year set out a draft bill giving effect to the changes recommended in the third report; but no legislation eventuated at that point.

In 1994 a working group representing the Law Commission, the Land Registry and the Lord Chancellor’s Department was set up in order to see which of the recommendations in the earlier reports could be implemented without legislation. A first report of the working group was published in 1995, but it contains nothing material for our purposes.

A second report, in the form of a consultation paper, was published by the Commission and the Land Registry in 1998 entitled “Land Registration for the Twenty-First Century” ([1998] EWLC 254): notwithstanding the dual authorship I will refer to it for convenience simply as a Commission document. Mr Charles Harpum was the Commissioner with primary responsibility. By this time things had moved on, principally because of the move towards electronic conveyancing, and what was proposed was the wholesale replacement of the 1925 Act.

The issue of rectification of the Register is dealt with in Part VIII of the 1998 report. This starts with a review of the existing law. Under the heading “The Effect of Rectification” the Commission points out, by reference to section 82 (2), that rectification of the Proprietorship Register may have an adverse impact on other estates or interests protected by registration (see para. 8.32). In that connection it suggests at para. 8.33, as it had done in 1987, that Freer v Unwins was wrongly decided, probably because Walton J had overlooked section 82 (2). It continues:

The thinking expressed in those two paragraphs – i.e. 8.33 and 8.54 – is the germ of the provision against retrospectivity in paragraph 8 of Schedule 4 to the 2002 Act. I find it in some respects rather opaque, but three points can be made:

In 2001 the Law Commission published its final report following the responses to consultation. (Footnote: ⁶) It was again entitled “Land Registration for the Twenty-First Century” ([2001] EWLC 271), and was in the form of a draft bill and commentary. As regards rectification the draft bill substantially corresponds to the 2002 Act in its final form. Rectification is discussed in Part X. Para. 10.8 reads as follows:

There is nothing in the drafting of the bill or its exposition in the 2001 report to suggest any change from the thinking in the 1998 consultation paper as summarised above, namely that the effect of section 82 (2) should be preserved but on the basis that any changes should be “prospective only”. The Commission appears to say that in the relevant respects the bill reflects how section 82 (2) had been understood and applied and thus that it was not intended to effect any change in the law.

In Sainsbury’s Supermarkets Ltd v Olympia Homes Ltd., [2005] EWHC 1235, [2006] 1 P&CR 17, Sainsbury’s claimed to have an equitable interest under an option to buy a parcel of unregistered land. Olympia subsequently acquired an equitable interest in the same land which by mistake was registered as a freehold interest. Sainsbury’s sought to have the Register rectified by deleting Olympia’s title together or so as to ensure that it was recorded as being subject to the option. Mann J held that it was entitled to rectification. A point then arose which is recorded in the judgment as follows (see para. 96, at p. 328):

It was not necessary for Mann J’s purposes that he should consider precisely what Freer v Unwins had decided or whether its effect had been embodied in paragraph 8 of Schedule 4 to the 2002 Act. The effect of his reasoning is that what was said to be its conclusion about the retrospective effect of rectification had no application in the circumstances before him. This passage cannot therefore be taken as endorsing the arguments advanced by Mr Brown.

The only decisions of this Court arguably bearing on the issue in the present case (Footnote: ⁷) – though, as will appear, they are ultimately inconclusive – arise out of a case called Barclays Bank plc v Guy. The facts can be sufficiently summarised as follows. Mr Guy was the owner of a large parcel of development land in Manchester. Pursuant to a transfer apparently signed by him the land became registered in the name of a company called Ten Acre Ltd., who created a mortgage in favour of Barclays Bank, which was duly registered on the Charges Register. Ten Acre became insolvent and the bank sought to execute its charge and sell the land. Mr Guy alleged that the transfer to Ten Acre was a forgery and that he was accordingly entitled to have the Register rectified to have the bank’s charge removed.

The bank sought a declaration that its charge was effective. Mr Terence Mowschenson QC, sitting as a deputy High Court Judge, granted summary judgment ([2008] EWHC 893 (Ch)). He did so on the basis that Mr Guy’s allegations did not raise an arguable case of forgery but only of fraudulent misrepresentation, with the result that the transfer to Ten Acre was at most voidable and not void: he relied on Norwich Building Society v Steed.

Mr Guy sought permission to appeal. Permission was refused by Carnwath and Lloyd LJJ – [2008] EWCA Civ 452, [2008] 2 EGLR 74. On ordinary principles that decision is not authoritative and should not be cited (Footnote: ⁸); but it is necessary nevertheless to refer to it here because of how it features in the subsequent case-law. Lloyd LJ was prepared to accept that Mr Guy (who was unrepresented) had an arguable case that the transfer to Ten Acre was not voidable but void and that the registration of Ten Acre as proprietor was a mistake that should be corrected. But he said that it did not follow that the registration of the bank’s charge was also a mistake within the meaning of paragraph 2. Lloyd LJ referred to a difference of opinion between the editors of Ruoff & Roper and Emmet and Farrand on Title about the scope of the term “mistake” and continued (at para. 23):

Two years later Mr Guy sought to re-open the appeal under CPR 52.17 (2): see Barclays Bank plc v Guy (no. 2)[2010] EWCA Civ 1396, [2011] 1 WLR 681. This Court (Lord Neuberger MR and Patten and Black LJJ) held that the application did not fall within the criteria established by Taylor v Lawrence[2003] QB 72, and it did not consider the substantive issues. But in the course of his analysis of the way that the case had been argued on the first occasion, Lord Neuberger MR did say this, at para. 35 (p. 687 F):

I have felt obliged to summarise the effect of these decisions because Mr Brown referred us to the judgment of Lloyd LJ: this was also, it seems, the only authority to which the Judge was referred. The issue with which they were concerned is not the same as that which is before us, but they do nevertheless have some relevance, as discussed below.

I turn to a group of decisions by Deputy Adjudicators to HM Land Registry to which we were referred which concern the exercise of the Registrar’s powers under paragraphs 5-7 of Schedule 4: these are, as I have noted, substantially identical to the Court’s powers under paragraphs 2-4.

The first is the decision of Mr Owen Rhys, dated 9 April 2008, in Ajibade v Bank of Scotland plc [2008] EWLandRA 2006/0613. Ms Ajibade was the registered proprietor of a leasehold flat. Her sister forged a power of attorney in her own favour and in the purported exercise of that power transferred the property to a Mr Abiola (her husband). Mr Abiola took out a mortgage from the Halifax Building Society (which became part of the Bank of Scotland), and he subsequently took a further loan from a company called Endeavour; both loans were charged on the property and duly registered on the Charges Register. Mr Abiola did not oppose the rectification of the Proprietorship Register by removing him as registered proprietor. As regards the chargees, the Bank of Scotland apparently accepted that it followed that its charge also would have to be removed from the Charges Register; but Endeavour took a different line. As summarised by Mr Rhys:

Mr Rhys rejected that argument. He said, at para. 12:

In Odogwu v Vastguide Ltd.[2008] EWHC 3565 (Ch), which was decided shortly afterwards, Sir Donald Rattee expressed some doubt about whether Ajibade was correctly decided; but the issue did not arise before him and he did not expand on his reasons.

In Piper Trust Ltd v Caruso (UK) Ltd [2010] EWLandRA 2009/0623 a charge in favour of Piper Trust was removed from the Register on the basis of a forged document. A further charge was then created in favour of Caruso. Piper sought the restoration of the charge to the Register with priority over Caruso’s charge. The Deputy Adjudicator, Mr Michael Michell, was prepared to restore the charge to the Register but not to make an order changing the priority as between the two charges. At para. 11 of his Decision he referred to paragraph 8 of Schedule 4 and said:

In Stewart v Lancashire Mortgage Corporation [2010] EWLandRA 2009/86 a different Deputy Adjudicator, Mr David Holland, declined to follow Ajibade. This was another case of a forged transfer, the issue being whether a charge created during the period that the fraudster was the registered proprietor should be removed from the Register. Mr Holland relied on the judgments of Mr Mowschenson and of Lloyd LJ in Guy and also on what he understood to be the effect of the decision of the Court of Appeal in Norwich Building Society v Steed. He concluded, at para. 73:

In Knights Construction (March) Ltd v Roberto Mac Ltd. [2011] EWLandRA 2009/1459, [2011] 2 EGLR 124, the Deputy Adjudicator, Mr Michael Mark, believed that it was necessary to resolve the conflict between Ajibade and Stewart. A hearing was fixed to deal specifically with that issue, and the Chief Land Registrar was added as a party and was represented by leading counsel. The facts can be summarised as follows. In 2007 the Salvation Army applied for, and was granted, first registration of unregistered land adjacent to its chapel in March; and the land was in 2009 sold to a developer, Roberto Mac Ltd (“RM”), which was duly registered on the proprietorship register. Unfortunately the title as registered erroneously included adjacent land belonging to Knights (Construction) March Ltd. (“Knights”). Knights applied for rectification of the Register to remove the land in question from RM’s registered title. As it is succinctly put in the headnote to the EGLR report:

Mr Mark, from whose learned and lucid decision I have derived considerable assistance in tracing the legislative history, held, following Ajibade, that he had jurisdiction to remove RM from the title notwithstanding that the Salvation Army had been the registered proprietor at the time that it acquired its interest. His reasons can be summarised as follows:

It was established that such a jurisdiction existed under the 1925 Act by virtue of section 82 (2) as applied in Argyle Building Society v Hammond: see paras. 82-89 of his judgment. He carefully analyses Norwich Building Society v Steed to show that in the relevant respects it supports the reasoning in Argyle Building Society v Hammond. As will be apparent from my own analysis above, I agree with him.

It was clear on a proper reading of the Law Commission reports that there was no intention that the 2002 Act should alter the effect of section 82 (2) as it had been interpreted: see paras. 70-80. At para. 80 he says:

The decision in Knights Construction has been accepted as authoritative by the Land Registry. The Practical Guide to Land Registry Adjudication, edited by two Deputy Adjudicators, says, at para. 18-6 (example 2):

The final decision in this series, DB UK Bank Ltd v Santander UK plc [2012] EWLandRA 2011/1169, is another forgery case, where the essential facts were on all fours with those of Piper Trust. It was common ground that the mortgagees, DB, whose charge had been wrongly removed from the Register should have it restored, but the Deputy Adjudicator, Ms Sara Hargreaves, refused an application that it should rank in priority to the subsequently-created charge in favour of Santander, on the basis that paragraph 8 of Schedule 4 did not permit retrospective changes in priority. The case is of particular interest because Santander was represented by Mr Harpum, who – as noted above – was the principal midwife of the 2002 Act. The Adjudicator accepted Mr Harpum’s submission that paragraph 8 of Schedule 4 represents a “statutory codification of Freer v Unwins”.

Those cases fall into two groups. Two of them – Piper Trust and DB – are explicitly concerned with the question of priority, and in both the Adjudicators held that they were precluded by the terms of paragraph 8 of Schedule 4 from making an order giving the wrongly de-registered but now reinstated charge priority over a charge created during the period of mistaken de-registration. They are thus closely analogous to the present case and support Mr Brown’s submission. The other three – Ajibade, Stewart and Knights Construction – are all (like Guy) concerned with the different question of whether the power to correct the original mistake extends, by one route or another, to correcting the consequences of that mistake by the removal of the later-created interest. They were not concerned with priority between derivative interests. I do not, however, believe that they are for that reason irrelevant, for reasons which I will give in due course.

The most recent authority to which we were referred is Cherry Tree Investments Ltd v Landmain Ltd. [2012] EWCA Civ 736, [2013] Ch 305. The principal issue in that case was to what extent it was permissible to refer to extrinsic material in order to interpret the meaning of a legal charge and, in that connection, where the boundary line lies between purposive construction and (contractual) rectification. That of course has no bearing on the issues with which we are concerned. But Lewison LJ included as part of the relevant context the fact that the charge was intended to be registered under the 2002 Act, and in that connection he briefly summarised the background to the Act and the core provisions. He refers to Schedule 4 and sets out the terms of paragraphs 2 and 8. He then says, at para. 119:

That observation about the effect of paragraph 8 does not take matters any further. It is entirely general and is not directed at its meaning or effect in any particular situation.

It is unnecessary to review the full range of academic and textbook opinion bearing on this question, but I should refer to Emmet and Farrand, Ruoff & Roper, and Megarry and Wade. Professor Farrand is one of the editors of Emmet and Farrand and Mr Harpum is one of the editors of Megarry and Wade: both of course were involved at different stages of the consideration of this issue by the Law Commission.

At paras. 9.027-028 of Emmet and Farrand there is a very full discussion of the authorities. The editors emphasise that under the 1925 Act it was well established that “where there was a void transfer, there would be power to rectify the register against a bona fide purchaser for notice”, citing in particular Argyle Building Society v Hammond (Footnote: ⁹); and on the basis that that remains the law they contend that the reasoning of Lloyd LJ in Barclays Bank v Guy was wrong. Para. 9.029 is headed “Retrospectivity of Rectification”. It begins:

Para. 46-017-18 of Ruoff & Roper reads as follows (Footnote: ¹⁰):

Para. 7-136 of Megarry and Wade (8^th ed) reads as follows:

It affects the proprietor of the registered estate or charge from the time that rectification is ordered.

It affects the priority of any interest affecting the registered estate or charge concerned that is created or arises after rectification is ordered.

It does not affect the priority of derivative estates and interests that were created between the time of the mistake and the order for rectification.”

It is clear that there is at least some difference between the views expressed in Emmet and Farrand on the one hand and in Ruoff & Roper and Megarry and Wade about the shape of the law in this area.

I have concluded that the Judge was entitled to make the order that he did. My reasons are as follows.

It is useful to start by spelling out the essentials of the situation in which paragraph 8, whatever its effect, is intended to apply. It is a situation in which at the point of rectification there are two competing derivative interests – A and B. Interest A has been mistakenly omitted or removed from the Register (Footnote: ¹²), but that mistake is to be corrected by its reinstatement. Subject to the effect of the rectification, interest B would have priority: otherwise the question of changing priorities would not arise. It is important to appreciate that the only reason why that would be so is because interest B was created before (obviously) the restoration of interest A to the Register but after the date of its mistaken omission or removal.

The primary effect of paragraph 8 is to confirm that the power of the Court or Registrar in that situation is not limited to restoring interest A to the Register but “extends” to changing what would otherwise be the priority as between it and interest B – in other words, to giving it the priority which it should have had but for the mistake. The words “for the future” no doubt qualify that power – the question being in what way – but that is the context in which they fall to be interpreted.

The Appellant’s case has to be, and is, that the effect of the words “for the future” is that if interest B has been registered after the mistake but before the rectification, and thus would otherwise enjoy priority, that priority cannot be altered: an alteration to a priority which already exists cannot be described as an alteration “for the future”. But if that is right then their effect is to prevent the Court from changing priorities in the very situation which paragraph 8 is intended to address. There is no problem of competing priorities once the rectification has been achieved. The only priorities that could be changed relate, necessarily, to interests which have already been created.

It is worth recalling that Schedule 4 is concerned with “correcting” mistakes in the Register, and it is established by the decisions to which I have referred that the power to do so extends to correcting the consequences of such mistakes. It should be noted that that power is in some circumstances a duty: see paragraph 3 (3). The Appellant’s construction would mean that in all cases where derivative interests have been created during the period of mistaken de-registration that correction would be less than complete and that in some cases, such as the present, it would be valueless.

Quiet apart from those points, the Appellant’s construction does not correspond to the words actually used in the statute. What paragraph 8 permits (for the future) is “changing the priority” of an interest. What an interest having priority means is that the owner can exercise the rights which he enjoys by virtue of that interest to the exclusion of any inconsistent rights of the owner of the competing interest. The concept of priority thus bites at the moment that those rights are sought to be enjoyed. Once that is appreciated the effect of the words “for the future” seems to me straightforward. They mean that the beneficiary of the change in priority – that is, the person whose interest has been restored to the Register – can exercise his rights as owner of that interest, to the exclusion of the rights of the owner of the competing interest, as from the moment that the order is made, but that he cannot be treated as having been entitled to do so up to that point. The distinction can be illustrated by the facts of this case. The effect of the Judge’s order is that thenceforward the Claimants were entitled to exercise their rights as leaseholders – primarily, that is, their rights to occupy the roofspace – to the exclusion of Gold Harp. But until that point they had no such right: they could not, for example, claim mesne profits from Gold Harp or its predecessors in respect of any occupation (though in fact there was none) up to that date. Other illustrations can be found in the facts of the earlier cases reviewed above. On facts similar to those of Freer v Unwins, for example, the Court could have made an order by way of rectification which rendered the leasehold subject to the restrictive covenant for the future, but the beneficiary could not have sued in respect of breaches prior to that date. And on facts similar to those of Malory – and ignoring the controversial ratio on which it was in fact decided – the claimants could not have claimed damages for the demolition carried out pre-rectification.

I draw support for my conclusion from what I might call, by way of shorthand, the survival of Argyle Building Society v Hammond, as confirmed in Knights Construction. If the law isthat a derivative interest registered during a period where a relevant freehold interest is wrongly omitted from the Register may be lost as a result of the reinstatement of that interest, I can see no relevant difference of principle or policy in the case where the conflict is between two derivative interests. In both cases the essential issue is the same, namely whether an interest created during the period of mistaken de-registration may be prejudiced by the reinstatement of an interest to which it would have been subject but for that mistake.

I see no difficulty with this construction on policy grounds. It is true that it means that the indefeasibility of the Register is qualified to a greater extent than would be the case on Mr Brown’s construction. But, as all the Law Commission reports acknowledge, the Act was not intended to provide for absolute indefeasibility. Schedule 4 explicitly recognises that the rectification has the potential to prejudice the interests of third parties who have relied in good faith on the Register. The carefully structured provisions of paragraphs 2 and 3 (and their equivalents in the case of rectification by the Registrar), with the special protection given to a proprietor in possession, allow a fair balance between the competing interests to be struck in any particular case; and Schedule 8 gives the loser the right to an indemnity.

I am naturally concerned that my interpretation of paragraph 8 appears to be contrary to that advanced in Ruoff & Roper and Megarry and Wade and accepted by the Deputy Adjudicators in Piper Trust and DB – particularlygiven the involvement of Mr Harpum in one of those works and one of those decisions (Footnote: ¹³). It is some comfort, however, that Emmet and Farrand appears to be (to put it no higher) doubtful about the effect of paragraph 8; also that the views of Ruoff & Roper in this area have failed in the past to attract judicial favour (see paras. 39 and 74-75 above). But I have also to say that the reasoning advanced in support of their conclusions seems to me unconvincing. The essential points relied on are twofold – first, the need to preserve what is referred to in Megarry and Wade as “the integrity of the register”; and secondly, that their preferred construction accords with the authorities on the meaning of the 1925 Act, with particular weight being placed on Freer v Unwins and on Arden LJ’s observations (not adopted by Clarke and Schiemann LJJ) in Malory. As to the first, I have already made the point that the guarantee of title conferred by registration is well understood not to be absolute. As to the second, for the reasons already given I do not think that Freer v Unwins or Malory – quite apart from the fact that they are not binding on us – can safely be regarded as addressing the issue raised by the present case; and the legislative history generally does not support the broad propositions advanced. Indeed, as I have noted, the editors of Ruoff & Roper recognise the difficulty posed by Argyle Building Society v Hammond and adopt the dual strategy of (unjustifiably) doubting its authority and submitting that it has no application under the 2002 Act notwithstanding the avowed intention of the Law Commission to re-enact the substance of section 82 (2).

As recorded at paragraph 27 (6) above, the Judge held that there were no exceptional circumstances which would justify him departing from the presumption in favour of rectification that would otherwise apply under paragraph 3 (3) of Schedule 4. Mr Brown submitted that that conclusion was wrong for, in effect, two reasons (though they are pleaded as three).

First, the Claimants had first learnt of the cancellation of their leases in October 2009; but it was not until the conclusion of the first hearing in March 2013 that they had sought an order for rectification. The Judge should have treated that delay as an exceptional circumstance but he did not advert to it in his judgment at all.

Secondly, the expert evidence adduced by the Appellant had been to the effect that if each of the Claimants sought to develop his part of the roofspace as a separate flat they would be unlikely to obtain planning permission because the units were too small; whereas Gold Harp should have no difficulty in converting it as one flat. The Appellant’s case that it followed that the loss to it if rectification was granted would be much greater than the loss to the Claimants if it were refused. As to that, the Judge had said, at paragraph 50 of his judgment:

I cannot accept either ground. I take them in turn.

As to the delay, the Claimants had issued proceedings in August 2011 but it is correct that they only very belatedly pleaded a claim for rectification of the Register. But it is not axiomatic that delay in advancing such a claim constitutes an exceptional circumstance which would justify not making an order that the Court would otherwise be obliged to make. On the contrary, it seems to me that it would be very unlikely to do so unless the delay had given rise to some substantial identifiable prejudice. No such prejudice was alleged. In those circumstances, while ideally the Judge should have dealt with the point, however briefly, I do not believe that his failure to do so renders his decision wrong.

As for the evidence about the development potential of the roofspace, the points made by the Judge seem to me perfectly sufficient to support his finding that the matters relied on did not justify him in not making the order. Even if Gold Harp’s loss if rectification was ordered would clearly have been greater than the Claimants’ if it was not, I doubt if in the circumstances of this case – where Gold Harp was neither independent of Mr Ralph nor had given any value – that would be a sufficient reason for withholding rectification. But, as he pointed out, it was not definitively established that planning permission would be unavailable; and in any event, as he again pointed out, they could have come to a deal which enabled someone else to realise the development value (if necessary by putting the two “flats” together). Judgments of this kind are matters for the trial judge which only in a clear case can be said on an appeal to be wrong. This is far from being such a case.

I would dismiss the appeal on both grounds.

I agree.

I also agree.