Malory Enterprises Ltd v Cheshire Homes (UK) Ltd [2002] Ch 216

Key point

  • The right to rectification of the land register can be an overriding interest by virtue of actual occupation

Facts

  • Malory (C) was the registered proprietor of a derelict building
  • A transfer in favour of Cheshire (D) was forged by a third party

Issue

  • Did C have an overriding interest claim against D based upon its right to rectify the land register under s82(3) LRA 1925?

Held (Court of Appeal)

  • C had an overriding interest enforceable against D

Arden LJ

Can the right of rectification be overriding?

  • The right to seek rectification is a proprietary interest that can be overriding when protected by actual occupation
  • The discretionary nature of the right to seek rectification under s82(3) LRA 1925 did not stop C from having an overriding interest due to the fact that they were in actual occupation of the property
  • The exercise of discretion by the court is necessary for fulfilment of the right but not necessary to bring it into existence

What amounts to actual occupation?

  • If a property was uninhabitable, residence is not required for actual occupation but there had to be some physical presence with a degree of permanence and continuity
  • C had erected fences, boarded up windows to keep out trespassers and kept the building locked

Commentary

  • The ratio should apply to the right to rectification under the Land Registration Act 2002 that replaced the 1925