Mirror principle

From Lawiki - The law notes repository
Jump to navigation Jump to search
Lawiki for and by law students - find us on Facebook if you want to help us edit this Law Wiki.

Not professional advice - LAWIKI cannot guarantee the validity of any information




A fundamental intention of the 1925 law of property reforms was to make conveyancing simpler, by establishing a register that would take the place of title deeds. It was envisaged that a person who was considering purchasing an interest in land could find all the information necessary to make a decision by inspection of the register. That is, the register would be a 'mirror' of the actual state of the proprietor's title, and disclose any benefits or encumbrances associated with the title. One of the Law Commission's objectives in the preparation of the Bill that led to the Editing Land registration act (2002) was to make it possible eventually to conduct property sales using on-line mechanisms. For this reform to realize its full potential, it needs to be possible to investigate title as well as transfer title on line. This will only be practicable when the overwhelming majority of relevant information about the title is recorded on the register. This is not the case at present, as will be discussed.

A full implementation of the mirror principle requires that there be no place for the Doctrine of notice, which is such a prominent feature of unregistered conveyancing. The doctrine clearly conflicts with the principle that the register is an accurate reflection of the interests in the land, as some interests would depend for their enforcement on the fact of notice, not on their presence on the register. The absence of a doctrine of notice means, in principle, that if rights that are obliged to be entered on the register are not so entered, a purchaser can take an estate in land from the vendor free of those rights, even if the purchaser has full knowledge of them. This state of affairs has disturbed certain judges, despite the robust rejection of the doctrine of notice by the House of lords in Williams and Glynns Bank v Boland. For example, in Peffer v Rigg, the claimant had been deceitfully dispossessed of an equitable interest in a house to which he had contributed purchase money. He sought to argue that the defendants had notice of his interest, which was undoubtedly true, and should therefore take subject to it. The judge was unable to apply the doctrine of notice, but was able to find for the claimant by exploiting other provisions of the 1925 legislation to give the same effect. In short, the absence of a requirement of notice should make the register more reliable, but one cannot assume that a court will not give effect to the doctrine of notice by other means where it appears just to do so. It can also be argued that some element of notice has been reintroduced by the 2002 Act, as discussed below.

Despite the absence of the doctrine of notice, in reality the register does not provide a perfect picture of the rights subsisting in the registered land, for a number of reasons.

Probably the most important reason is the existence of certain 'overriding' interests (see: Overriding interest), which are deemed to bind a purchaser, whether or not they are registered. Some overriding interests are not easy for a prospective purchaser to discover. Major overriding interests protected by the Lra (1925) (and the Lra (2002)) include rights of persons in actual occupation; legal leases of 21 years or fewer; legal easements; rights arising out of adverse possession; interests that were excepted from the registered title (usually when the category of title is 'qualified'); and local land charges. It also appears that the category of overriding interests under the 1925 legisliation is not closed, as s.144 allows for delegated legislation to be created by the Lord Chancellor. r.258 of the Land Registration Rules (1925) states that any right which is adverse to another title, and which is routinely exercised, is to be overriding. In celsteel v alton house (1986), r.258 was held to apply to an equitable easement, even though such an interest would have been considered a minor interest under the LRA. Celsteel was a first-instance decision, but it was upheld by the Court of Appeal in Thatcher v Douglas.

Of the main overriding interests, it is almost certainly the rights of persons in actual occupation or receipt of rents - s.70(1)(g) of LRA 1925 - that have proved most troublesome. These rights are suppressed if the purchaser makes enquiry of the person in occupation and they are not disclosed, but they will be upheld if the purchaser fails to discover them, despite adequate enquiries. The Law Commission recognized that paragraph (g) imposed more stringent obligations on the purchaser than was probably intended, and in the 2002 Act its scope has been somewhat reduced. Most obviously, overriding status no longer applies to persons in receipt of rents, only in actual occupation. Moreover, the wording of Schedule 3 of the Act provides that the purchaser can take free of the occupiers' rights if they would not have been obvious on reasonable inspection. In its consulation document, The Law Commission were quite definite that this provision did not reinstate the doctrine of notice, but clearly it has some features in common with it. It remains to be seen how the courts will interpret 'reasonable inspection', but it is likely that fewer rights arising out of actual occupation will now be overriding.

As well as the rights of persons in actual occupation, the 2002 Act cuts down the scope of other overriding interests, while increasing the number of interests that are substantively registerable. The 2002 Act also distinguishes, as the 1925 Act did not, between interests that override first registration, and those that override on later dispositions. For example, under LRA 1925 legal leases of less than twenty one years were not substantively registerable, and therefore overriding; under the 2002 Act the length is cut down to seven years. While a lease of less than seven years, with certain exceptions, is capable of being overriding on first registration, on subsequent disposition a registerable lease of any duration will not be overriding.

The 2002 Act continues to recognize legal easements and profits as overriding. However, as the Law Commission report 'Land Registration for the 21st Century' points out, since legal easements and profits that are expressly granted are registerable dispositions, and do not take effect in law until registered, it follows that an express easement or profit cannot override a registered disposition of land. If the easement is entered on the register then it need not, and cannot, be overriding; if it is not entered, then it cannot be a legal easement, and so again cannot be overriding. Moreover, after a three-year transitional period, even legal easements will lose their overriding status if they are unknown to the purchaser, or not discoverable on reasonable inspection.

Certain less common interests - such as franchises and manorial rights - are to lose their overriding status after ten years.

In short, the 2002 Act makes provision to reduce greatly the number of interests that are capable of being overriding on a registered disposition.

It is not only the presence of overriding interests that mitigates against reliance exclusively on the register as an indicator of title. For example, the register does not normally contain details of previous owners of the interest, except where this relates to the grant of easements and covenants. Such information was not considered relevant to registered conveyancing, since there is no requirement for the purchaser to establish an unbroken chain of title. However, s.69 of the LRA 2002 now does provide for the establishment of a scheme for provision of historical information regarding title. According to the Law Commission, this provision was inserted specifically to satisfy the requirements of conveyancing practitioners, who claimed that the absence of historical information caused practical difficulties. An example cited of such a difficulty is determining whether an easement that benefits neighbouring land has been extinguished by common ownership of both the dominant and servient land. Of course, when land is registered or dealt with it should be possible to investigate the effect the disposition has on the third-party interests affecting other titles on the register. That this is not done reflects a weakness in the computer technology underlying the register, not a requirement to extend the amount of information held on the register itself.

A further deviation from the 'mirror' principle is created by ss.82 and 83 of the LRA 1925, and Sch. 4 of the LRA 2002, which allows the register to be 'rectified' in the event of error, even against a person who has relied on it. While a person who has suffered loss as a result of rectification may be indemnified by the state, it remains the case that if the register can be found to be in need of rectification, it cannot be perfectly accurate both before and after the rectification.

Land and Property Law