Swift 1st Ltd v Chief Land Registrar [2015] Ch 602

Key points

  • Where a claimant derives an interest in good faith under a forged disposition, he will be entitled to an indemnity following rectification
  • The statutory right to rectification can subsist as an overriding interest by virtue of actual occupation

Facts

  • A third party purporting to be the owner of land that actually belonged to R fraudulently executed a mortgage in favour of Swift 1st (C) and the charge was registered
  • After the fraud was discovered C agreed to the rectification of the register to the remove the charge
  • C issued proceedings against the Chief Land Registrar seeking an indemnity under Schedule 8 Land Registration Act 2002
  • The Chief Land Registrar argued that no indemnity could be granted under Paragraph 1(1)(a) Schedule 8 LRA 2002 as C had suffered no loss by the alteration: C’s charge was never enforceable against R since R had a right to rectification which bound R as an overriding interest by virtue of R being in actual occupation

Held (Court of Appeal)

  • C was entitled to an indemnity

Patten LJ

  • The statutory right to rectification can subsist as an overriding interest where the owner remains in actual occupation: [61]
  • Although rectification neither amounted to loss nor created a prejudicial effect, where there was a forged disposition the deemed loss provision in Paragraph 1(2)(b) of Schedule 8 prevailed
    • Paragraph 1(2)(b): the proprietor of a registered estate or charge claiming in good faith under a forged disposition is, where the register is rectified, to be regarded as having suffered loss by reason of such rectification as if the disposition had not been forged
  • Therefore, the existence of R’s overriding interest did not oust C’s right to an indemnity

Commentary

  • Forgery renders a transaction void, thus the alteration of the register was the correction of a mistake amounted to a rectification – this is consistent with NRAM v Evans
  • It is currently unclear what the position would be if there was a void transaction entered into by good faith, void not because of forgery but because of some other factor such as mistake or non est factum