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Glenda Ferneyhough

Partner, Pickworths Solicitors

Land Registry fraud and errors

Land Registry fraud and errors


Glenda Ferneyhough discusses recent cases considering errors in registrations, negligence costs, event fees, and noise nuisance claims

The Land Registry has to grapple on a regular basis with the outcomes of fraud on the registers. In the case of Chief Land Registrar v Caffrey & Co [2016] EWHC 161 (Ch), the High Court had to consider whether a conveyancer was liable to the Land Registry for loss suffered by the deletion of a registered charge from the register when it transpired that the DS1 form it had filed was a forgery.

The conveyancer had accepted the DS1 executed under power of attorney from their borrower client and relied on the client's assertion that the lender was represented by another firm. This was untrue. The ID rules appear not to have been considered in this case, but it was accepted by Master Matthews that the conveyancer had a duty of care to the Land Registry which had been breached on the facts presented.

In the case of Isaaks v Charlton Triangle Homes Ltd [2015] EWHC 2611 (Ch), an error in a lease registered at the Land Registry was only discovered when Bank of Scotland enforced its mortgage due to the lessee falling into arrears. The bailiff was instructed to enforce a possession order for the third-floor flat, but when he arrived at the block of flats, he discovered that he had an order for the wrong property as the flat in question was actually on the second floor. A claim was made for rectification of the lease and plan, and the mortgagee also made a claim for rectification of the title after the Land Registry declined to register a deed of rectification, as it treated the document as a surrender and regrant rather than a rectification.

Master Matthews considered the difference between rectification and alteration under the Land Registration Act 2002. He was satisfied that in this case there was merely a mistake in the register and ordered the Land Registry to alter it under rule 126 of the Land Registration Rules 2003.

I wonder whether a lease of the third-floor flat had actually been granted and registered, as surely the error would then have come to light at an earlier stage. Conveyancers are not shown in a good light here.

These cases act as timely reminders to conveyancers of the need for vigilance in dealing with the Land Registry, with the public consultation on the government's proposals to offer the service to the private sector having closed at the end of May.

Practitioners bewail the slowness of the service, but in my experience Land Registry staff try very hard to provide a good service, to engage with their customers, and to assist busy practitioners in dealing with the everyday issues that arise in their work. Would the quality of the service be assured in private hands?

Assessing damages in negligence claims

As if these cases were not sufficient food for thought, Bacciottini and another v Gotelee and Goldsmith [2016] EWCA Civ 170 concerns a negligence claim against solicitors in relation to the purchase of a residential property in Suffolk in 2007.

In 2008 the buyers discovered that the property was subject to a planning condition affecting its residential use, but they were later able to secure release of the planning condition by an application to the planning authority. The solicitors admitted the failure to advise their former client of the effect of the planning condition, but a dispute arose as to how the measure of damages should be assessed. Should it be the difference in value of the property at the time of acquisition between its assumed use and the actual permitted use, or should the subsequent release of the planning condition be taken into account?

At first instance the High Court ordered damages of £250, representing the cost of the application to the planning authority. The owners appealed but the Court of Appeal upheld the decision, stating that there was no rule that the loss had to be assessed at the date of purchase. The subsequent steps taken did mitigate the loss and should be taken into account.

The solicitors were lucky that the error was cured so easily, but the costs incurred by the insurers in defending the proceedings must have been considerable - a salutary warning to us all to read the planning conditions in planning permissions affecting property to be purchased.

Retirement properties and event fees

There has been long-running concern from owners of retirement properties about the fees that are charged by landlords when properties change hands. It might be assumed that controls already exist to prevent a landlord charging these sums, but that is not the case.

In the case of Burrell and others v Helical (Bramshott Place) Ltd [2015] EWHC 3727 (Ch), the lease in question entitled the landlord to request as much as 15 per cent of the open market value from the assignee. The claimants together owned four out of the 15 dwellings on the estate in Liphook. They argued that the arrangements in the leases were consumer credit agreements, as the income received from these fees was described by the landlord as a return on capital invested in the facilities in the retirement estate, and effectively deferred consideration for the grant of the leases.

The claim was struck out as no credit was involved - the leases did not require these payments to be made to discharge any existing debt so ultimately the Consumer Credit Act did not apply. The case is, however, continuing as the leaseholders are also claiming that the transfer provisions are unfair under the terms of the Unfair Terms in Consumer Contract Regulations 1999. The trial is expected in the summer.

The consultation period for the Law Commission's review of event fees in retirement properties, which deals with the topic of transfer fees charged on the resale of retirement properties, ended in January and its report is due this summer.

Noise nuisance injunctions

Householders suffering from noise from aerodromes will take comfort from the case of Peires v Bickerton's Aerodromes Ltd [2016] EWHC 560 (Ch), in which the owners of a house close to Denham Aerodrome in Buckinghamshire, which was affected by the noise from helicopter training, were successful in securing an injunction limiting helicopter training to two periods of 15 minutes a week. They did not object to the sound of the aircraft but found the noise from the helicopter training intolerable.

The previous owners had protested about the noise from helicopter training since 1970 so no argument could be made that a right to undertake the noisy activity had arisen by prescription (as had been considered in the Supreme Court decision of Coventry v Lawrence [2014] UKSC 13). The judge stated that in the absence of an injunction, damages of £583,000 would have been appropriate.

Glenda Ferneyhough is a partner at SA Law @SA_Law