• In the case of Malory Enterprises Ltd v Cheshire Homes UK Ltd 2002 Ch 216, it is established that the right to rectify the land register can be an overriding interest by virtue of actual occupation.

Facts of the Case

  • A company dishonestly acquired a land certificate from the land registry and sold this land to the defendant (Cheshire Homes (D)).
  • This land contained a block of flats, and the original owner of the land, Malory Enterprises (claimants (C)) used this as storage. They erected fences, boarded up windows to keep trespassers out, and kept the building locked.
  • The defendants ended up partially destroying this building, which resulted in the claimants bringing up a charge against them. The claimants sought rectification of the register and damages for trespass.

Issues in Malory Enterprises Ltd v Cheshire Homes UK Ltd 2002 Ch 216

  • The Land Registration Act 1925 s70(1)(g), states that the interest of a person in occupation overrides any registered disposition of land. Here the defendant argued that the claimant had obtained no overriding interest in land under s.82(3) of the 1925 Act.
  • Defendants claimed that this right to seek rectification of the register was neither a legal nor an equitable interest but something purely discretionary. Thus, arguing that the claimant had no interest in the land and was instead seeking to recover something they’d lost.
  • Did the claimants have an overriding interest claim against the defendant based upon its right to rectify the land register under s82(3) Land Registration Act 1925?

Held by the Court of Appeal

  • The appeal was dismissed, and the claimant was declared to hold an overriding interest enforceable against the defendants.

Lord Justice Arden

Can the right of rectification be overriding?

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

What amounts to actual occupation?

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