Odogwu v Vastguide Ltd & Ors

SIR DONALD RATTEE: The claimant, Chief Odogwu, lives in Nigeria. In 1986 he bought, as an investment, a residential property, 2 Victoria Rise, London NW6 ("Victoria Rise"). He was registered by the Land Registry as proprietor on 15th December 1986. In July 2006 someone impersonated the Claimant by means of a forged passport purporting to be that of the Claimant. The fraudster then forged the Claimant's signature on a legal charge of Victoria Rise in favour of Credit & Mercantile plc ("Credit & Mercantile") and by means of that charge fraudulently obtained some £750,000 from the chargee. He has not subsequently been identified. Credit & Mercantile was registered as proprietor of that charge on 28th July 2006. In due course that company exercised its power to appoint a receiver in relation to Victoria Rise, and sold the property in exercise of its power of sale as chargee. That sale was to the first defendant in these proceedings ("Vastguide"), a shell company which had no assets and borrowed the whole of the purchase price. The sale was completed on 17th April 2007 and on 19th April 2007 Vastguide was registered as proprietor of Victoria Rise. The forged charge was thereupun deleted from the current edition of the register relating to the property. Vastguide bought the property as an investment, it being part of a group of property investors.

The primary purpose of these proceedings is for the Claimant to obtain rectification of the register to delete the entry of Vastguide as proprietor and thereby restore his proprietorship. The application for such rectification is made under Section 65 of and Schedule 4 to the Land Registration Act 2002. It is opposed by Vastguide.

Before I recite the facts as I find them in more detail, it is convenient at this stage to refer to the relevant provisions of the Land Registration Act 2002, ("The Act"). The reason why it is essential to the Claimant's recovery of his property, Victoria Rise, that he should obtain an order for rectification of the register to remove the entry of Vastguide's proprietorship is, of course, to be found in what has been called the statutory magic wrought by section 58(1) of the Act.

Section 58(1) provides as follows:

Section 65 of the act provides simply "Schedule 4 (which makes provision about alteration of the register) has effect".

Schedule 4, paragraph 1, provides:

Paragraph 2.1 provides:

Then paragraph 2.2 provides that:

Paragraph 3 of Schedule 4 provides:

Subparagraph 4 of paragraph 3 is not material for present purposes.

The next provision of the Act to which I should refer is section 103, which provides again simply "Schedule 8 [which makes provision for the payment of indemnities by the registrar] has effect."

Schedule 8 paragraph 1 subparagraph 1 provides "A person is entitled to be indemnified by the registrar if he suffers loss by reason of (a) rectification of the register, (b) a mistake whose correction would involve rectification of the register." The remainder of that subparagraph is not material for present purposes.

Subparagraph 3 of paragraph 1 provides "no indemnity is payable under subparagraph (1)(b) until a decision has been made about whether to alter the register for the purpose of correcting the mistake; and the loss suffered by reason of the mistake is to be determined in the light of that decision".

Those are the relevant provisions as the Act. It is the Claimant's case that the registration of Vastguide as proprietor of Victoria Rise is a mistake that can and should be corrected by rectification of the register under the provisions of Schedule 4 to the Act. The registration of Vastguide as proprietor is, according to the Claimant, a mistake within the meaning of paragraph 1(a) of Schedule 4, because it is an entry which would not have been made on the register were it not for the forgery committed by the fraudster. The Claimant accepts, as he has to, that Victoria Rise is in the possession of Vastguide, and that therefore he cannot obtain an order for the rectification he seeks unless he can show that one of the conditions set out in paragraph 3(2)(a) and (b) of schedule 4 is satisfied, but he submits that one or other condition is satisfied on the facts as I should find them.

Vastguide accepts that the court has jurisdiction to order the rectification sought by the Claimant, but submits that that jurisdiction can only be exercised if the court is satisfied that the condition in paragraph 3(2)(b) is satisfied, namely that it would for some reason be unjust for rectification to be refused. This submission is based on the submission by Vastguide that the relevant mistake for the purpose of Schedule 4 is not the registration of it as proprietor, but the registration (deleted on the registration of the purchase of Victoria Rise by Vastguide) of Mercantile & Credit as chargee of Victoria Rise. It is impossible, submits Vastguide, for the court to find that condition (a) in paragraph 3(2) of Schedule 4 is satisfied in relation to this latter mistake, because it cannot possibly be said that Vastguide "caused or substantially contributed" to the mistake consisting of the registration of the fraudulent charge, in which Vastguide had no involvement. Vastguide denies that there would be anything unjust about refusing rectification, leaving the Claimant to seek indemnity from the Land Registrar under section 103 of and Schedule 8 to the Act.

According to Vastguide's submission, the registration of it as proprietor of Victoria Rise cannot be said to be a mistake in the register, because it correctly recognised the effect of section 58(1) of the Act that, despite the fact that the charge of Victoria Rise to Credit & Mercantile was a forgery, the registration of that company as proprietor of the charge gave it all the powers of such a proprietor, including the power to sell to Vastguide. Therefore the transfer to Vastguide is to be deemed to be valid, and its registration no mistake.

Before considering these submissions further, I should set out the surrounding facts as I found them to be.

As I have said, Victoria Rise was bought by the Claimant in 1986 as an investment. He has never occupied it. He suggested that some of his staff had occupied it from time to time, but I am satisfied that it remained unoccupied for the vast majority of his period of ownership, and that, when Vastguide bought it, it was in a state of considerable disrepair. The Claimant gave evidence to the effect that he intended at some stage to site his office there. However this never happened, and would have required planning permission for a change of use and release from a restrictive covenant, and there is no evidence that either was ever applied for, let alone granted.

The Claimant instructed a Mr Vassie, a semi-retired solicitor, who worked from home as a sole practitioner, to deal with his affairs on his behalf in this country. In 2001 Mr Vassie instructed another solicitor, a Mr Milton, to act on the Claimant's behalf in relation to the acquisition of a substantial property in Finchley Road, London, and in October 2006 Mr Vassie instructed Mr Milton to act on behalf of the Claimant and a company owned by him in relation to the proposed sale of that property or part of it. Mr Milton always received his instructions via Mr Vassie, and not from the Claimant personally. It appears that the Claimant led a very peripatetic lifestyle in Africa, and it was often difficult for Mr Vassie to contact him.

In the course of acting in relation to the Finchley Road property, Mr Milton became aware of certain apparently fraudulent dealings by one or more unidentified persons with the Claimant's title to that property, which apparently involved the use of a forged passport in the name of the Claimant. I am not concerned directly with that property. However on 26th January 2007 Mr Milton was telephoned by another solicitor, a Mrs Vasuki, and, from what she told Mr Milton, it became apparent to him that someone had been impersonating the Claimant by use of a forged passport, and that such unknown person had succeeded in obtaining money from Credit & Mercantile by use of a forged charge. On 30th January 2007 Mr Milton reported this fraud to the police.

Mr Milton then discovered that the charge over Victoria Rise in favour of Credit & Mercantile had been registered on 28th July 2006. On 14th February 2007 Mr Milton applied to the Land Registry to enter a unilateral notice to prevent dealings with Victoria Rise, but that application was not accepted by the Land Registry. On 15th February 2007 Mr Milton was told by the Land Registry that an application for a search of the register relating to Victoria Rise had been made by a company proposing to buy the property, and that that company was represented by a Mr Moan of Kingsley Napley, solicitors.

Mr Milton telephoned Mr Moan on the same day and told him that he, Mr Milton, understood that a charge in favour of Credit & Mercantile apparently executed by the Claimant and registered against Victoria Rise had been made fraudulently, and that he, Mr Moan, would be unwise to proceed with any purchase of the property. Mr Moan told Mr Milton that his client, Vastguide, had decided not to proceed with the purchase of Victoria Rise anyway. In fact it appears that Vastguide had lost in a contract race, and Credit & Mercantile was proceeding with another purchaser. Mr Moan gave Mr Milton details of the solicitor who was acting on behalf of Credit & Mercantile, a Mr Carlton of Nabarro Nathanson. Mr Moan telephoned Mr Carlton and gave him the same information as he had given to Mr Moan about the forgery of the charge.

On 16th February 2007 Mr Milton wrote to Mr Carlton a letter which I should read:

On the same day as he wrote that letter, 16th February 2007, Mr Milton wrote a letter to Mr Moan in the following terms:

On 19th February 2007 Mr Moan wrote to Mr Milton enclosing a copy of a letter of the same date to the Land Registry asking for cancellation of the priority search which Mr Moan had previously applied for in respect of Vastguide's then intended purchase of Victoria Rise. On 22nd February 2007, unbeknown to Mr Milton, negotiations were reopened between London & Mercantile and Vastguide for the sale of Victoria Rise to the latter, this time at the price of £985,000.

On 8th March 2007 Mr Carlton wrote to Mr Milton in the following terms:

Mr Milton replied to that on the 22nd March 2007 saying this:

To that Mr Milton received no reply.

On 10th April 2007 contracts were exchanged between Credit & Mercantile and Vastguide for the sale by the former to the latter of Victoria Rise at the price of £977.500, with completion to be on 17th April. In fact, a previous contract had been entered into by Credit & Mercantile for sale of the property to another company, Gromore Ltd. However, on learning of the allegations made by the Claimant, Gromore Ltd had asked Credit & Mercantile to release it from the contract, and the contract was rescinded by agreement.

On the 11th April Mr Moan, on behalf of Vastguide, wrote to Mr Milton as follows:

This was the first communication Mr Milton had had from anyone on behalf of Vastguide since 19th February when Mr Moan sent to Mr Milton a copy of his letter to the Land Registry asking for cancellation of his priority search.

On 12th April 2007 DS Richard Abraham of the Metropolitan Police wrote to a Mr Winston of Credit & Mercantile a letter telling Mr Winston that the passport in the name of the Claimant which was used to obtain money from Credit & Mercantile was a forgery, and that it was never issued to the person named in it -- ie the Claimant. The letter also said that the police had at present no lines of enquiry which could identify the person who had impersonated the Claimant. This letter (or a copy of it) was passed to Mr Moan.

On 13th April 2007 Mr Moan telephoned Mr Milton, and in their conversation confirmed that his instructions were to complete on 17th April and asked Mr Milton what he was going to do about it. Mr Milton told him he was likely to make an application to the court before then. On 16th April a firm of solicitors called Segens, with whose practice Mr Milton had recently merged his, and who had taken over acting for the Claimant in this matter, faxed to Mr Carlton (on behalf of Credit & Mercantile) and Mr Moan (on behalf of Vastguide) a letter in the following terms:

Mr Moan was in fact in Hong Kong on 16th April, but on the following day, 17th April 2007, (the date fixed for completion of the sale to Vastguide), a Mr David Walsh of Kingsley Napley wrote to Segens a rather extraordinary letter in these terms.

I refer to this letter as rather extraordinary having regard to the opening paragraph of it, which completely ignores the fact that Kingsley Napley had had confirmation from the police that a forged passport had been used by an impostor for the purpose of obtaining the loan from Credit & Mercantile.

The Claimant did not make any application to the court, and the sale to Vastguide was completed on 17th April. On 19th April 2007 Vastguide was registered as proprietor and the forged charge to Credit & Mercantile was deleted from the current edition of the register relating to Victoria Rise. After completion Vastguide carried out various works of improvement to Victoria Rise.

On 30th April a letter before action was written to Vastguide, and on 9th May 2007 the present proceedings were started under CPR Part 8, claiming rectification of the register to remove the entry of Vastguide as proprietor.

On 31st May 2007 Vastguide executed a charge over Victoria Rise in favour of the second Defendant, which charge was registered on 15th June 2007. On 12th September 2007 the Chief Land Registrar indicated that he wished to be joined in the Claimant's proceedings, and on 29th October he and the second defendant were added as defendants.

I must now go back a little in time to explain the facts relevant to an argument on estoppel which has featured largely in submissions before me. By its Claim Form issued on 9 May 2007 the Claimant sought an order for rectification of the register by removing the name of Vastguide and restoring the name of the Claimant as proprietor. In setting out the legal basis of the claim on the Claim Form the Claimant alleged that the charge to Credit & Mercantile was forged and a nullity, and went on to allege that "in the premises the sale and transfer of [Victoria Rise] to [Vastguide] were void as against the Claimant and [Victoria Rise], and the registration of [Vastguide] as the proprietor in place of the Claimant was a mistake which falls to be rectified under schedule 4 to [the Act]."

Vastguide's solicitors indicated that they did not accept the proposition that the registration of Vastguide as proprietor could be a "mistake" within the meaning of schedule 4 to the Act, because, by virtue of the effect of section 58 of the Act to deem the charge effective once registered, Credit & Mercantile was deemed to have power to pass title to Vastguide, and the Land Registry had accordingly been bound to register Vastguide as proprietor. This objection to the claim for rectification was in line with advice which had been received from counsel on 22 March 2007 - before Vastguide's purchase. It was also in line with the view of the law that was apparently taken by the Land Registry at the time, though no longer. Before me counsel for the Chief Land Registrar said that, obviously subject to any contrary decision of the court, he now takes the view that in the circumstances of the present case the registration of Vastguide was itself a mistake rectifiable by an order under Schedule 4 to the Act. His earlier view, adopted by counsel advising the Claimant, was also adopted by the editors of Ruoff & Roper on Registered Conveyancing. Paragraphs 46.024 et seq. of the then current edition of that work deal with several examples of forgeries and void dispositions in relation to which rectification may be relevant. In paragraphs 46.028 and 46.029 one finds the following:

In view of Vastguide's contention that the court had no jurisdiction to rectify the register so as to remove the registration of Vastguide as proprietor, because that registration was not a mistake within the meaning of Schedule 4 to the Act, the Claimant proposed and Vastguide agreed that the Court should be asked to determine as a preliminary issue the question whether the court did have jurisdiction to remove the registration of Vastguide on the assumption that the charge to Credit & Mercantile was a forgery. The court was so asked, and on 2 July 2007 Master Moncaster ordered that:

On 29 October 2007, when he ordered that the second defendant and the Chief Land Registrar should be added as parties to the proceedings, the Master also ordered the trial of a further preliminary issue, namely whether the court had power to rectify the charges register relating Victoria Rise by removing the second defendant's charge.

On 2 November 2007 the Chief Land Registrar filed a defence to the Claimant's claim in which he conceded that, "if the Claimant establishes the fact and matters relied on," the court would have jurisdiction to rectify the register as against both Vastguide and the second defendant. On the 7 January 2008 Vastguide's solicitors wrote to the Treasure Solicitor, on behalf of the Chief Land Registrar, in which (inter alia) they said this:

On the same day Vastguide's solicitors sent a copy of that letter to the Claimants's solicitors with a request that they prepare a form of consent order. On 8 January the second defendant's solicitors wrote to the Claimant's solicitors confirming their agreement with the proposal made by Vastguide's solicitors. Accordingly the Claimant's solicitors prepared a form of consent order, and on 22 January 2008 Ms Susan Prevezer QC, sitting as a Deputy Judge of the Chancery Division, made an order ("the Consent Order") by consent of all parties, which included the following recitals:

The order went on to give directions for the further conduct of the proceedings.

In my judgment there can be no doubt that the intention of Vastguide by its agreement recited in that order was to dispose of the argument that had been raised by Vastguide to the effect that the court had no jurisdiction to rectify the register by removing the entry of Vastguide as proprietor because that entry was not a mistake within the meaning of schedule 4 to the Act. That was the only issue that had been raised by Vastguide on jurisdiction and therefore the only reason for the formulation of and order for the trial of a preliminary issue between the Claimant and Vastguide. This finding is material to the question of estoppel that was argued before me.

On 29 January 2008 Vastguide's solicitors and the solicitors acting for the second defendant each acknowledged, for the purpose of these proceedings, that the purported signature of the Claimant on the charge in favour of Credit & Mercantile was a forgery. On 15 May a consent order was made by Briggs J staying proceedings against the second defendant on terms set out in the schedule to the order. That schedule provided that the second defendant confirmed its acceptance that, if the claimant's claim to rectification of the charges register as against Vastguide should succeed, then so also shared its claim to rectification of the register as against the second defendant. The schedule also confirmed that the Claimant accepted that, if he failed to obtain rectification as against Vastguide, then his claim for rectification of the charges register as against the second defendant should be struck out. Consequently the second defendant was not represented before me.

Finally, on the facts, there has been service of pleadings in claims by the Claimant and Vastguide for indemnity from the Chief Land Registrar. I am not concerned to determine such claims.

Such then are the facts. The Claimant seeks an order for rectification of the register relating to Victoria Rise to remove the entry of Vastguide as proprietor, on the basis that that entry represents a mistake within the meaning of schedule 4 to the Act. It is submitted by counsel for the Claimant that the question whether the entry is such a mistake is not one for this court now to determine, because it has been determined in the Claimant's favour by Vastguide's concession recorded in the Consent Order that the court does have jurisdiction to rectify the register by removing the entry of Vastguide as proprietor. The Claimant submits that it is clear (as indeed I have found it is) that Vastguide and the Claimant intended and understood that the only possible basis of that concession was that the entry of Vastguide on the proprietorship register was a mistake within the meaning of Schedule 4 to the Act. Vastguide, submits the Claimant, cannot properly now be allowed to go back on that concession and argue that the entry is not such a mistake. It is estopped from so doing.

Counsel for Vastguide seeks to escape from this apparent estoppel in the following way. Of course he accepts, as he has to, that he is now estopped from denying that the court has jurisdiction to order the rectification sought by the claimant. However, counsel submitted that it has that jurisdiction, not because the entry on the register of Vastguide is a mistake, but because the entry of the Credit & Mercantile charge was a mistake (because it was a forgery), and the court's jurisdiction under paragraph 2 of Schedule 4 to the Act to make an order for alteration of the register for the purpose of correcting a mistake includes jurisdiction to make an order for such alternation for the purpose of correcting, not only a mistake on the register, but the consequences of such a mistake. This, submits Vastguide, would include jurisdiction in the present case to remove its entry as proprietor as being a consequence of the mistaken entry of the Credit & Mercantile charge, even though (according to Vastguide's argument) its own entry as proprietor was not itself a mistake.

The motive of Vastguide in now raising this argument is clearly that it prefers the relevant mistake for the purposes of Schedule 4 to the Act to be the entry of the charge to Credit & Mercantile rather than its own entry as proprietor, because it can scarcely be said that Vastguide caused or substantially contributed to the entry of the Credit & Mercantile charge within paragraph 3(2)(a) of Schedule 4, whereas it is the Claimant's case that Vastguide did cause or substantially contribute to its own entry as proprietor.

Counsel for Vastguide submits that its concession recorded in the consent order that the court has jurisdiction to grant the rectification sought by the Claimant therefore did not amount to a concession that the entry of Vastguide as proprietor was a mistake. For the court's admitted jurisdiction is based not on the premise that that entry is itself a mistake, but on the premise that it is a consequence of another mistake, namely the entry of the Credit & Mercantile charge.

I find this argument unattractive and unconvincing. As I have already said, I am quite satisfied that when Vastguide made its concession recorded in the consent order, it did so, and was inevitably understood by the Claimant as doing so, on the basis that it conceded that it was abandoning the only argument it had previously put against the court's jurisdiction, namely that its entry on the register as proprietor was not a mistake for the purposes of Schedule 4 to the Act. If the Claimant had understood that Vastguide's concession did not amount to abandoning that argument, then no doubt the Claimant would have reformulated the preliminary issue ordered to be tried to include specifically the issue of whether the entry of Vastguide on the register was a mistake. Otherwise the concession and any trial of the preliminary issue as formulated would have left unresolved the one argument that the parties had clearly intended it to lay to rest.

In my judgment, Vastguide made its concession intending it to be understood as an abandonment of the only argument it had raised against jurisdiction, namely that its entry on the register was not a mistake within the meaning of Schedule 4 to the Act. The Claimant entirely reasonably understood it as such. In those circumstances it is an abuse of the process of the court for Vastguide now to seek to resurrect that argument. In my judgment it is estopped by its own concession from doing so. Whether such estoppel is to be characterised as issue estoppel (as counsel for the Claimant and Vastguide called it) or estoppel by representation matters not. It would in my judgment be thoroughly inequitable now to allow Vastguide to go back on its concession and rely on the argument it had clearly abandoned.

However, in case I am wrong in this conclusion, I will proceed to consider Vastguide's new argument, namely that the court has jurisdiction to remove the entry of Vastguide on the register on the ground that such removal would constitute the correction of the consequences of the previous mistake consisting of the registration of the Credit & Mercantile charge.

The relevant jurisdiction of the court is that conferred by paragraph 2(1)(a) of Schedule 4 to the Act, namely "to make an order for alteration of the register for the purpose of correcting a mistake." In my judgment the reference in that quotation from paragraph 2(1) to a mistake must be to a mistake on the register, so that it can be corrected by an alteration of the register. I accept the submission of counsel for the Claimant that a fundamental objection to Vastguide's argument is that the Credit & Mercantile charge, which Vastguide argues is the relevant mistake, is no longer on the register. It was deleted on completion of the sale to Vastguide when Credit & Mercantile was paid its debt.

Counsel for Vastguide sought to overcome this initial obstacle by submitting that, for this purpose, the register is not limited to the current edition of the register showing currently effective entries, which admittedly does not show the charge, but extends to the records still held by the Land Registry showing all previous entries, including those since deleted. I find this argument misconceived. In my judgment the reference in paragraph 2 of schedule 4 to the Act to a mistake is to a mistake appearing on the current edition of the register which shows subsisting entries. Only such a conclusion makes sense in the context of the jurisdiction in paragraph 2 to alter of register for the purpose of correcting a mistake. I cannot see what purpose would be served by making an alteration to a previous edition of the register to remove an entry such as the Credit & Mercantile charge which has already been deleted.

In my judgment Vastguide's new argument is bad for this reason alone. However, quite apart from this point it does not seem to me obvious that the reference to "correcting a mistake" in paragraph 2(1)(a) of Schedule 4 to the Act can properly be construed as including a reference to correcting the consequences of the mistake, which is the next step in Vastguide's argument. However, counsel for Vastguide relied in this context on a recent decision of a Land Registry Adjudicator in Ajibade v. Bank of Scotland plc in the course of which the Adjudicator seems to have taken the view that the correction of a mistake by rectification of the register could extend beyond the correction of an entry on the register to include the correction of the consequences of such a mistake. As it is not necessary for me to decide this point in this case in the light of my rejection of Vastguide's argument on the ground that the Credit & Mercantile charge has already been deleted from the register (a point that did not arise in the Ajibade case) I do not think it appropriate that I express any conclusion on it.

Thus, even if I had not concluded that Vastguide is estopped from relying on the argument I have just been considering, I would have rejected the argument as misconceived. Counsel for Vastguide accepted that, if he failed on that argument, Vastguide would be estopped by the concession recited in the consent order from denying that the entry in the register of Vastguide as proprietor was a mistake within the meaning of Schedule 4 to the Act, since that would then be the only ground on which the court would have the jurisdiction which Vastguide had accepted by its concession. It is accordingly unnecessary, and therefore inappropriate, for me to express any conclusion on the question whether, as a matter of law, the entry of Vastguide as proprietor is capable of being such a mistake. I proceed to consider the parties' cases on the footing that it is such a mistake which the court has jurisdiction in these proceedings to rectify by removing that entry from the register, subject to the provisions of paragraph 3 of schedule 4.

Since such alteration of the register would affect the title of the proprietor of a registered estate in land who is in possession of the land, by virtue of paragraph 3(2) of Schedule 4 I may not make an order for such alteration unless I am satisfied that one or other of the conditions specified in paragraph 3(2)(a) and (b) is satisfied. Thus I have to be satisfied either (a) that Vastguide has by fraud or lack of proper care caused or substantially contributed to the mistake, ie the registration of itself as proprietor, or (b) that it would for any other reason be unjust for the alteration not to be made.

The Claimant submits that I should find that condition (a) is satisfied, in that Vastguide clearly caused or substantially contributed to the registration of itself as proprietor by making the application for such registration without which it would not have been made, and that it did so by failing to exercise proper care to prevent the true owner of Victoria Rise being deprived of his property as a result of fraud. It failed to exercise proper such proper care in that it took a transfer of Victoria Rise from Credit & Mercantile and applied for that transfer to be registered with knowledge that Credit & Mercantile only obtained power to transfer the property as a result of a forgery.

It is, in my judgment, clear from the facts that I have recited that, when it completed its purchase from Credit & Mercantile, Vastguide did know that Credit & Mercantile had only acquired its power to sell by reason of a forgery by an unknown third party. It had been told that by the Claimant's solicitor and knew that the police had confirmed that the passport in the name of the Claimant used by the third party to impersonate the Claimant in relation to the borrowing from, and charge to, Credit & Mercantile was a forgery.

Counsel for Vastguide submitted that this did not show that Vastguide caused or substantially contributed to the mistake -- ie the registration of itself as proprietor -- by any lack of proper care. It had only completed the purchase from Credit & Mercantile after giving the Claimant, by his solicitor, repeated opportunities to prevent such completion by making an application to the court, which the Claimant never did. Vastguide had taken counsel's opinion and had been advised that, if it completed its purchase, there would be only a small chance of the Claimant succeeding in obtaining rectification of the register to remove the entry of Vastguide as proprietor. On the other hand, submitted counsel for Vastguide, the Claimant (at least by his solicitor) was fully aware of the facts of the forgery and the proposed sale by Credit & Mercantile to Vastguide, and must - or at least shold have appreciated that his property was at risk if he took no steps to protect it by obtaining an order of the court to prevent the transfer to Vastguide. On this basis counsel for Vastguide submitted that what caused or substantially contributed to the registration of Vastguide as proprietor was not any lack of proper care by Vastguide, but the lack of proper care by the Claimant in failing to protect his property.

I entirely accept that it is extraordinary that the Claimant did not make any attempt to obtain an order of the court to prevent completion of the sale to Vastguide, and did not make any earlier application for rectification of the register once he knew of the forgery. I can find no excuse for his idleness in this respect. However this does not, in my judgment, alter the fact that Vastguide did take its transfer and apply for its registration with actual knowledge that its ability to do so depended on the perpetration of a fraud on the Claimant by use of a forged passport. In my judgment it did not take proper care to minimise the consequences of such fraud. Vastguide relied on the fact that, by the time it had confirmation from the police that the passport used by the fraudster was a forgery, it was contractually bound to complete its purchase. However it apparently did not think fit to ask Credit & Mercantile to release it from its contract, as its predecessor as a possible purchaser from Credit & Mercantile, namely Gromore Ltd., successfully did, once it had knowledge of the fraud. Moreover, even before entering into the contract to purchase Victoria Rise from Credit & Mercantile, Vastguide knew from Mr Milton's letter of 16 February 2007 that the police had confirmed that a forged passport had been used to enable a fraudulent person to grant the Credit & Mercantile charge.

I consider Vastguide's reliance on this point on its having taken advice from counsel is misconceived. Vastguide's only purpose in doing so was, for its own protection, to see whether its title would be liable to be upset by rectification of the register after completion. Neither do I see any merit in Vastguide's counsel's argument that Vastguide cannot be said to have caused or contributed to its registration as proprietor by lack of proper care because the provisions of the Act entitled it to apply for such registration.

In my judgment Vastguide did, by a lack of proper care within the meaning of 3(2)(a) of Schedule 4 to the Act, cause or substantially contribute to the admitted mistake on the register consisting of its registration as proprietor despite the fact that its title was the consequence of fraud by a third party on the true owner. This means that I have power to order alteration of the register to sustitute the Claimant for Vastguide as the proprietor of Victoria Rise.

I am also of opinion that, even if I were wrong in finding the condition in paragraph 3(2)(a) of Schedule 4 satisfied, I would have power to make the order sought by the Claimant, because condition (b) in paragraph 3(2) is satisfied. In my judgment in all the circumstances that I have described, it would be unjust not to make such an order. Counsel for Vastguide relied in this context on the Claimant's own failure to take steps open to him to protect his own property and title to it, and the fact that, if I refuse to order rectification, the Claimant would prima facie be entitled to compensation from the Chief Land Registrar for the loss of his property, which was of no interest to him except as an investment.

I take those points into account, as I do also the facts that Victoria Rise is of interest to Vastguide only as an investment and that Vastguide has a claim against the Chief Land Registrar for compensation in the event that I do order rectification of the register. In my judgment, however, it would be unjust not to order rectification as sought by the Claimant in the present circumstances when I am satisfied that the Claimant has been deprived of his property by means of the fraud of an unknown third party and that Vastguide chose to compound the effect of that fraud by entering into and completing a purchase of the property with knowledge that it was able to do so only because of that fraud.

The remaining question is whether I should exercise that power. Paragraph 3(3) of Schedule 4 to the Act requires me to exercise it unless there are exceptional circumstances which justify my not doing so. In his closing submissions counsel for Vastguide accepted (rightly in any judgment) that, if he failed in his arguments on paragraph 3(2) of Schedule 4, he could not point to any other exceptional circumstances within paragraph 3(3). In my judgment there are none.

Accordingly I will make the order for alteration of the register sought by the Claimant. I will hear counsel as to the form that order should take.