Rashid v Nasrullah, Court of Appeal - Civil Division, November 29, 2018, [2018] EWCA Civ 2685

Resolution Date:November 29, 2018
Issuing Organization:Civil Division
Actores:Rashid v Nasrullah
 
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Case No: A3/2017/3066

Neutral Citation Number: [2018] EWCA Civ 2685

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM UPPER TRIBUNAL

(TAX AND CHANCERY DIVISION)

Upper Tribunal Judge Cooke

[2017] UKUT 0332 (TCC)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 29/11/2018

Before:

LORD JUSTICE LEWISON

LADY JUSTICE KING

and

LORD JUSTICE PETER JACKSON

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Between:

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Mr Michael Paget (instructed by Direct Access) for the Appellant

Ms Stephanie Tozer & Ms Tricia Hemans (instructed by Green and Olive Solicitors ) for the Respondent

Hearing date: Tuesday, 20th November, 2018

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JudgmentLord Justice Lewison:

Introduction

  1. The registered proprietor of land is deprived of his title in May 1989 in consequence of a series of forged documents, including a forged transfer. The new registered proprietor transfers the land to his son by way of gift later in that year. The son, who is complicit in the fraud, enters into occupation. Over 20 years later the original registered proprietor applies for rectification of the register. Can his claim be defeated by adverse possession on the part of the current registered proprietor? Both the First-tier Tribunal and the Upper Tribunal said ``No''. The current registered proprietor appeals.

  2. At the time of the forged transfer the legal regime in force was the Land Registration Act 1925. Under that regime it was possible to acquire title to registered land by adverse possession, if the registered proprietor had been dispossessed for 12 years. In that event he was deemed to hold his registered title on trust for the squatter. It is necessary to emphasise the fact that since the coming into force of the Land Registration Act 2002 the legal landscape as regards adverse possession has been radically changed. This case is concerned with events that all took place before that change.

  3. The facts are somewhat confusing because both the fraudster and the former registered proprietor have the same name: Mohammed Rashid. I will call the fraudster MR1 and the former registered proprietor (and original Respondent to this appeal) MR2. In short, what happened was this. The land in question, 40 Henley Street in Birmingham, has been registered land throughout the relevant period. MR2 was registered at proprietor in November 1985. On 13 April 1989 a forged transfer was executed which purported to transfer the property from MR2 to MR1. It was supported by other forged documents which purported to show that MR2 held the property on trust for MR1. MR1 was registered as proprietor on 18 May 1989. MR2 was in Pakistan at the time. He returned from Pakistan in June 1989; but did not dare return to the property (for reasons that do not matter). After some months in a hostel he was rehoused by the local authority. At about this time he was told by MR1 that the property was now in his (MR1's) name. MR2 contacted the police; but was told that it was a civil matter; and without relevant documents he was unable to persuade solicitors whom he consulted that he had a case. On 25 October 1989 MR1 transferred the property to his son, Mr Farakh Rashid (the Appellant in this appeal) by way of gift; and he was registered as proprietor on 1 November 1990. The purpose of the transfer was to facilitate the provision of the property to Mr Farakh Rashid as an investment opportunity. Mr Farakh Rashid was well aware of the circumstances of the transfer of the property to MR1 before the gift to him. 12 years from the date of that registration expired on 31 October 2002. The Land Registration Act 2002 came into force on 13 October 2003. MR2 applied to rectify the register on 12 September 2013. MR2 has sadly died since the hearing before the Upper Tribunal. His executor now resists the appeal.

    The Land Registration Act 1925

  4. Section 2 (1) of the Land Registration Act 1925 provided:

    ``(1) After the commencement of this Act, estates capable of subsisting as legal estates shall be the only interests in land in respect of which a proprietor can be registered and all other interests in registered land (except overriding interests and interests entered on the register at or before such commencement) shall take effect in equity as minor interests...''

  5. Section 3 contained a number of definitions, of which the following are relevant:

    ``(xi) ``Legal estates'' means the estates interests and charges in or over land subsisting or created at law which are by the Law of Property Act 1925, authorised to subsist or to be created at law; and ``Equitable interests'' mean all the other interests and charges in or over land; an equitable interest ``capable of subsisting at law'' means such as could validly subsist at law if clothed with the legal estate...

    (xv) ``Minor interests'' mean the interests not capable of being disposed of or created by registered dispositions and capable of being overridden (whether or not a purchaser has notice thereof) by the proprietors unless protected as provided by this Act, and all rights and interests which are not registered or protected on the register and are not overriding interests, and include--

    (a) in the case of land subject to a trust of land, all interests and powers which are under the Law of Property Act 1925, capable of being overridden by the trustees, whether or not such interests and powers are so protected...

    (xx) ``Proprietor'' means the registered proprietor for the time being of an estate in land or of a charge''

  6. Section 20 provided:

    ``(1) In the case of a freehold estate registered with an absolute title, a disposition of the registered land or of a legal estate therein, including a lease thereof, for valuable consideration shall, when registered, confer on the transferee or grantee an estate in fee simple or the term of years absolute or other legal estate expressed to be created in the land dealt with, together with all rights, privileges, and appurtenances belonging or appurtenant thereto, including (subject to any entry to the contrary in the register) the appropriate rights and interests which would, under the Law of Property Act 1925, have been transferred if the land had not been registered, subject--

    (a) to the incumbrances and other entries, if any, appearing on the register and any charge for capital transfer tax subject to which the disposition takes effect under section 73 of this Act; and

    (b) unless the contrary is expressed on the register, to the over-riding interests, if any, affecting the estate transferred or created,

    but free from all other estates and interests whatsoever, including estates and interests of His Majesty, and the disposition shall operate in like manner as if the registered transferor or grantor were (subject to any entry to the contrary in the register) entitled to the registered land in fee simple in possession for his own benefit.

    ...

    (4) Where any such disposition is made without valuable consideration, it shall, so far as the transferee or grantee is concerned, be subject to any minor interests subject to which the transferor or grantor held the same, but, save as aforesaid, shall, when registered, in all respects, and in particular as respects any registered dealings on the part of the transferee or grantee, have the same effect as if the disposition had been made for valuable consideration.''

  7. Section 69 (1) provided:

    ``(1) The proprietor of land (whether he was registered before or after the commencement of this Act) shall be deemed to have vested in him without any conveyance, where the registered land is freehold, the legal estate in fee simple in possession, and where the registered land is leasehold the legal term created by the registered lease, but subject to the overriding interests, if any, including any mortgage term or charge by way of legal mortgage created by or under the Law of Property Act 1925, or this Act or otherwise which has priority to the registered estate.''

  8. It is also necessary to refer to section 114 which provided:

    ``Subject to the provisions in this Act contained with respect to indemnity and to registered dispositions for valuable consideration, any disposition of land or of a charge, which if unregistered would be fraudulent and void, shall, notwithstanding registration, be fraudulent and void in like manner.''

  9. Section 75 provided:

    ``(1) The Limitation Acts shall apply to registered land in the same manner and to the same extent as those Acts apply to land not registered, except that where, if the land were not registered, the estate of the person registered as proprietor would be extinguished, such estate shall not be extinguished but shall be deemed to be held by the proprietor for the time being in trust for the person who, by virtue of the said Acts, has acquired title against any proprietor, but without prejudice to the estates and interests of any other person interested in the land whose estate or interest is not extinguished by those Acts.

    (2) Any person claiming to have acquired a title under the Limitation Acts to a registered estate in the land may apply to be registered as proprietor thereof.''

    The Land Registration Act 2002

  10. As mentioned, the Land Registration Act 2002 came into force on 13 October 2003. Schedule 12 of that Act contains transitional provisions. Paragraph 18 of that Schedule provides:

    ``(1) Where a registered estate in land is held in trust for a person by virtue of section 75 (1) of the Land Registration Act 1925 immediately before the coming into force of section 97, he is entitled to be registered as the proprietor of the estate.

    (2) A person has a defence to any action for the possession of land (in addition to any other defence he may have) if he is entitled under this paragraph to be registered as the proprietor of an estate in the land.

    (3) Where in an action for possession of land a court...

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