Clause 94: The communication and storage of electronic documents

154.     Because different considerations apply to the storage of electronic documentation from those applied to paper documents, Clause 94 provides that rules may make provision about how that documentation is stored. Rules may also deal with the communication of electronic documents to the registrar.

PART 9: ADVERSE POSSESSION

155.     At present, in broad terms, where a squatter has been in adverse possession of land for the required period (the basic period is twelve years, the period within which actions for the recovery of land must be commenced), the proprietor of the land holds the land on trust for the squatter who may apply to be registered as proprietor of a new estate, where the registered land is freehold, or as proprietor of the registered estate where that estate is leasehold.

156.     The Bill provides a new scheme for adverse possession in relation to a registered estate in land. The essence of the scheme is that:

• Adverse possession of itself, for however long, will not bar the owner's title to a registered estate in land or a registered rentcharge.

• A squatter will be entitled to apply to be registered as proprietor after ten years' adverse possession and the registered proprietor, any registered chargee, and certain other persons interested in the land will be notified of the application.

• If the application is not opposed by any of those notified, the squatter will be registered as proprietor of the land.

• If any of those notified oppose the application it will be rejected, unless the adverse possessor can bring him or herself within one or more of three conditions.

• If the squatter's application for registration is refused but the squatter remains in adverse possession for a further two years, he or she will be entitled to apply once again to be registered and will this time be registered as proprietor whether or not the registered proprietor objects.

• Where the registered proprietor brings proceedings to recover possession from a squatter, the Bill allows the squatter to establish certain limited defences which are consistent with the three conditions mentioned above.

Clause 95: Disapplication of periods of limitation

157.     Clause 95 provides that, in relation to a registered estate in land or a registered rentcharge, no period of limitation runs in relation to:

• actions for the recovery of land except in favour of a chargee, or

• actions for redemption

and so the title to such an estate or rentcharge cannot be extinguished. The exception in favour of chargees means that section 15 of the Limitation Act 1980 will continue to apply to an action by a chargee for possession or foreclosure, to enforce its security. As regards actions for redemption, at present, once a mortgagee has been in possession for twelve years, the mortgagor loses his or her right to redeem the mortgage and his or her title is extinguished. This will no longer be the case.

Clause 96: Registration of adverse possessor

158.     Even though no period of limitation runs in relation to a registered estate in land or a registered rentcharge, it will still be possible for a person in adverse possession to be registered in place of the proprietor of a registered estate or rentcharge. This clause introduces Schedule 6 which makes provision for such registration.

Clause 97: Defences

159.     Under this clause a squatter can defend an action for possession of the land if the day before the action was brought he or she was entitled: to apply under paragraph 1 of Schedule 6 and the third condition (reasonable mistake as to boundary) would have been satisfied (subsection (1); or to apply under paragraph 6 of that Schedule (subsection (3)). If a court holds that the defence applies then it must order the registrar to register the squatter as proprietor of the affected estate (subsection (5)).

160.     Because the defences under this clause are additional to any other defences a squatter may have (subsection (6)), if he or she has some independent right to possession of the land, such as an equity arising in his or her favour by proprietary estoppel, he or she can rely upon it.

161.     Under subsection (2) or (4), where a proprietor or chargee has obtained a judgment for possession of land against a squatter and:

• when the proceedings in which the judgment was given were commenced, the squatter was entitled to apply for registration, under paragraph 1 of Schedule 6 (ten years adverse possession); or

• two years after the judgment, the squatter is entitled to re-apply for registration under paragraph 6 of Schedule 6 (two years adverse possession since rejection of his or her paragraph 1 application);

then the judgment ceases to be enforceable against the squatter two years after the judgment (rather than, as is usual, six years). If in either of these cases the proprietor or chargee were to bring fresh proceedings the squatter would have a defence and the court would be required to order the registrar to register the squatter as proprietor of the land, under subsection (5).

162.     Subsection (7) enables rules to made about the recovery of rentcharges. The Limitation Act 1980 bars the rights of an owner of a rentcharge where no rent is paid for 12 years (when the charge is extinguished), or where the rent is paid to a third party for 12 years (when the rentcharge can still be enforced, but the previous owner's title is extinguished and the third party becomes entitled instead). Rules under the subsection will be able to preserve the position of someone who has received rent whilst in adverse possession.

PART 10: LAND REGISTRY

Administration

Clauses 98, 99 and 100: The land registry; Conduct of business; and Annual report

163.     Except as to judicial matters (dealt with under Part 11), the administrative structure and business of the Land Registry are not changed in any very material respect by the provisions of the Bill. Clause 98 provides for the continuation of the Registry with the Chief Land Registrar, appointed by the Lord Chancellor, at its head. As now, the registrar is supported by staff who may be authorised to carry out any of his functions. The Lord Chancellor can, as now, make regulations to cover the situation when a vacancy arises in the office of Chief Land Registrar and can make an order specifying which office deals with particular applications. A district registries order may specify the office to be used either on the basis of the geographical location of the land affected, as now, or on the basis of application type, enabling special expertise to be built up, or applications relating to a single, very large development to be handled more effectively. The registrar may prepare and issue forms and directions to facilitate the land registration process, a power which he has exercised from time to time under the current system. The registrar must also produce an annual report on the business of the land registry to the Lord Chancellor. That report must be published and laid before Parliament. Clause 98 incorporates the provisions in Schedule 7.

Fees and indemnities

Clause 101: Fee orders

164.     Replicating the existing system, Clause 101 provides that the Lord Chancellor may prescribe fees for dealing with the Land Registry but that the order must be made with the advice and assistance of the Rule Committee (see clause 124(2)) and with the consent of the Treasury. The fee order will not however deal with fees for the new consultancy and advisory services (see clause 104). The fee order, as under the current system, may stipulate how the fees should be paid.

Clause 102: Indemnities

165.     Clause 102 incorporates the provisions of Schedule 8. Although the provisions introduced by the Land Registration Act 1997 have been recast in accordance with the style of the Bill, the substance of them has not been altered in any significant way.

Clause 103: General information about land

166.     This clause gives the registrar power to publish information about land in England and Wales if it appears to him to be information in which there is a legitimate public interest. The registrar already publishes data about changes in property prices on a quarterly basis, and these are widely used. Because all sales of freehold land are required to be registered, the Registry's figures are the most accurate available. The extension of compulsory registration to leases with seven or more years to run will considerably extend the market data available.

Clause 104: Consultancy and advisory services

167.     Clause 104 gives the registrar power to provide such consultancy and advisory services as he sees fit, and enables him to negotiate appropriate fees for those services. This power will enable the registrar to offer consultancy services both within England and Wales and elsewhere. In particular, it is likely that his expertise may be in demand in relation to the development of electronic registration systems in other countries.

PART 11: ADJUDICATION

Clause 105: The adjudicator

168.     Clause 105 provides for the appointment by the Lord Chancellor of an adjudicator to HM Land Registry. This office is new and its function will be to determine any contested application to the registrar that cannot be disposed of by agreement between the parties. At present this function is performed by the Solicitor to HM Land Registry and those acting under his authority. Notwithstanding that the Solicitor adjudicates only in disputes between parties and not those involving the Registry, issues can still arise in such cases which involve the decisions of officials of the Registry. There could therefore be a perception that he is not sufficiently independent. This clause creates a completely independent office for adjudication, and will continue a system of determinations which are cheap, swift and more informal than court hearings. Further provisions about the adjudicator are contained in Schedule 9.

Clause 106: Jurisdiction

169.     Clause 106 lists the matters within the adjudicator's jurisdiction. They are:

a)     disposing of an objection to an application (see clause 73(7));

b)     dealing with refusal to grant a network access agreement, and disputes over the level of access applied for, or the termination of such an agreement (see paragraph 4 of Schedule 5); and

c)     making an order for rectification or setting aside of a document which disposes of a registered estate or charge in some way which would be reflected in the register (for example, this is wide enough to cover the grant of a restrictive covenant as well as a sale or mortgage), a contract to make such a disposal of a registered estate or charge, or which effects the transfer of an interest which is the subject of a notice on a register.

170.     The category referred to in sub-paragraph (c) above is new to this Bill. The registrar has no power to rectify or set aside a document under the present law, which has meant that he has had to refer matters to the High Court which he could otherwise have resolved. The general law applicable to orders of the High Court also applies to orders made by the adjudicator under this clause. This means, for example, that rectification relates back to the time when the instrument was executed and after rectification the instrument is to be read as if it had been drawn up in its rectified form.

Clause 107: Procedure

171.     As at present with proceedings before the Solicitor, hearings before the adjudicator are to be held in public unless the adjudicator is satisfied that the exclusion of the public is just and reasonable. Rules will, as now, govern the practice and procedure to be followed in relation to hearings. The clause lists a number of matters which may be covered by the rules.

Clause 108: Functions in relation to disputes

172.     Clause 108 makes provision for the powers of the adjudicator in relation to the disposal of objections to applications. The adjudicator may, instead of determining the matter himself, direct one of the parties to commence court proceedings by a specified date. These proceedings may be to determine specific issues or the entirety of the matter. This replicates the power given to the Solicitor to HM Land Registry under the present law and is likely to be used: when the application raises an important or difficult point of law; when there are complex disputes whose resolution is better suited to the court process; when other issues between the parties are already before the courts; or to make use of the wider powers available to the court, for instance, the award of damages for lodging an objection without reasonable cause.

173.     Rules will make detailed provision about the procedure for referring the matter to court, the adjournment of proceedings before the registrar whilst the court proceedings are ongoing, and to specify the adjudicator's powers in the matter if the party directed fails to commence proceedings as directed. These rules may empower the adjudicator to dismiss an application in whole or in part if the defaulting party is the applicant. They may also empower the adjudicator to give effect to the application in whole or in part if the defaulting party is the objector. Additional rules may deal with the functions of the adjudicator following a court decision on all or part of the issues in the case. In particular, these additional rules will cover the adjudicator's ability to determine (or give directions about the determination of) applications to which the reference related, and such other present or future applications as the rules provide. Special provision is made in relation to applications for registration of title based on ten years' adverse possession (see paragraph 1 of Schedule 6). If the adjudicator decides that it would be unconscionable for the adverse possessor to seek to dispossess the registered proprietor, but that the adverse possessor ought not to be registered as registered proprietor, he must decide how to satisfy the entitlement of the adverse possessor and can make any order which the High Court would be empowered to make to resolve the matter.

Clauses 109 and 110: Appeals, and Enforcement of orders etc

174.     In a similar way to the present system, determinations of disputes can be the subject of an appeal to the High Court and any requirement of the adjudicator is enforceable as a court order.

PART 12: MISCELLANEOUS AND GENERAL

Miscellaneous

Clause 113: Rights of pre-emption

175.     A right of pre-emption is a right of first refusal. The grantor undertakes that he or she will not sell the land without first offering it to the grantee. It is similar to but not the same as an option, because the grantee can purchase the property only if the grantor decides that he or she wants to sell.

176.     There is uncertainty as to the legal position of rights of pre-emption. The position may be that a right of pre-emption does not confer on the grantee an interest in land but when the grantor chooses to sell the property, the right of pre-emption becomes an equitable interest in land.

177.     If this is the legal position then, for example, if A grants B a right of pre-emption over registered land which B immediately protects by entry of notice in the register, and A then mortgages the land to C, it seems likely that C will not be bound by the right of pre-emption because the execution of the mortgage probably does not cause the pre-emption to crystallise into an equitable interest. C could therefore, in exercise of his paramount powers as mortgagee, sell the land free from B's right of pre-emption.

178.     This clause provides that a right of pre-emption in relation to registered land has effect from the time of creation as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority).

179.     So, if on or after the coming into force of the Bill the facts were as in the above example, the effect of this clause would be that B's right of pre-emption would have priority over C's mortgage. If, however, B did not protect his right by notice before C registered his mortgage (and B was not in actual occupation of the affected land), C would not be bound by the right because of the effect of dispositions on priority.

180.     If the law relating to rights of pre-emption is as discussed above, then this Bill will change the law in its application to registered land so this clause provides that it applies to rights of pre-emption created on or after the Bill comes into force.

Clause 114: Proprietary estoppel and mere equities

181.     Proprietary estoppel The following is an example of how the doctrine of proprietary estoppel operates:

• The owner of land, A, in some way leads or allows the claimant, B, to believe that he or she has, or can expect, some kind of right or interest over A's land. To A's knowledge, B acts to his or her detriment in reliance on that belief. A then refuses B the anticipated right or interest in circumstances that make that refusal unconscionable. In those circumstances, an "equity" arises in B's favour. This gives B the right to go to court and seek relief. The court has a very wide discretion as to how it will give effect to this equity, but in so doing it will "analyse the minimum equity to do justice" to B. It will not give him or her any greater rights than he or she had expected to receive. The range of remedies that the courts have shown themselves willing to give is very wide. At one extreme, they have ordered A to convey the freehold of the land in issue to B. At the other, they have ordered A to make a monetary payment to B (in some cases secured on A's land).

182.     Although the point is not finally settled, the weight of authority favours firmly the view that B's right or "inchoate equity" which arises after he has acted to his detriment but before the court can make an order giving effect to it is a proprietary, and not merely a personal right.

183.     To put the matter beyond doubt, this clause confirms the proprietary status of an equity arising by estoppel in relation to registered land. This means that it can be protected by entry of notice in the register, or, where the claimant is in actual occupation of the affected land, as an interest whose priority is automatically protected without the need for registration.

184.     Mere equities A "mere equity" appears to be used to denote a claim to discretionary equitable relief in relation to property, such as a right to set aside a transfer for fraud or undue influence, a right to rectify an instrument for mistake, or a right to seek relief against forfeiture after a landlord has peacefully re-entered.

Clause 115: Reduction in unregistered interests with automatic protection

185.     The following unregistered interests are amongst those that override first registration and registered dispositions:

• A franchise;

• A manorial right;

• A right to rent which was reserved to the Crown on the granting of any freehold estate (whether or not the right is vested in the Crown);

• A non-statutory right in respect of an embankment or sea or river wall;

• A right to payment in lieu of tithe.

186.     This clause provides that at the end of the ten years which it specifies, the above interests will cease to be capable of overriding first registration or a registered disposition. They will not then cease to have effect but a first registered proprietor or a purchaser under a registered disposition will only be bound by them if they are the subject of a notice in the register.

187.     Where the relevant land is not registered, the lodging of a caution against first registration will ensure that the owner of the interest is notified of an application for first registration and so can by objecting ensure that a notice is entered in the register in respect of the interest. Equally, if the land is registered and notice of the interest is entered before the end of the ten year period the owner of that interest will be protected. For these reasons, subsection (2) of this clause provides that no fee may be charged for lodging a caution against first registration or applying for the entry of a notice in respect of the interest during the ten-year period.

Clause 116: Power to reduce the qualifying term

188.     Under the Bill, subject to certain exceptions, only a legal lease which has more than seven years unexpired at the time of application may be registered with its own title. Under this clause the Lord Chancellor may, after consulting such persons as he considers appropriate, by order reduce the length of registrable leases. If this is done then it will be necessary to make consequential amendments (and possibly transitional provisions). Under Clause 125, such an order will be subject to annulment in pursuance of a resolution by either House of Parliament.

Clause 117: Power to deregister manors

189.     At present a manor - that is the lordship of the manor - is registrable with its own title. Manors are wholly incorporeal, and impose no burden on the land within the manor. The registration of manors gives rise to many practical difficulties in the Land Registry. The Bill therefore changes the law by making it no longer possible to register a manor. This is achieved by omitting manors from the interests in land which may or must be registered to enable the register to be cleared of manors already registered. This clause provides that if a proprietor of a registered manor applies, the registrar may remove the title to the manor from the register.

Clause 118: Conclusiveness of filed copies etc

190.     This clause, amongst other things, provides for the possibility that where an entry in the register relating to the legal estate refers to a document kept by the registrar which is not an original (for example, a document setting out restrictive covenants which purports to be a full copy of the original) the document may not be an accurate copy of the original.

Clause 119: Forwarding of applications to registrar of companies

191.     Where a company creates a legal charge over its property, that charge will not only be registrable under the Bill, but it will also be required to be registered under the Companies Act 1985. Registration in the Companies Register under the Companies Act 1985 fulfils a wholly different function from registration in the register of title. It does not affect the priority of competing charges over a company's property. Its intended purpose is to protect actual or potential creditors by making the liabilities of a company apparent on the face of the register.

192.     If rules were made under this clause and other provisions of the Bill it might, for example, be possible to make a combined application in electronic form to the Land Registry to register the charge in the register and for that application then to be forwarded to Companies House for registration in the Companies Register.

Offences etc.

Clause 120: Suppression of information

Clause 121: Improper alteration of the registers

193.     At present there is an offence concerned with the suppression of documents and facts relating to title in proceedings before the registrar or court and one concerning the fraudulent procurement of changes to the register or to any land or charge certificate. These clauses create three new offences, which replace those offences. The penalties for the offences are put in modern form.

Clause 122: Privilege against self-incrimination

194.     This clause replicates the effect of section 119(2) of the Land Registration Act 1925 and its approach is one which has been adopted in a number of statutes such as the Theft Act 1968, section 31 and the Supreme Court Act, section 72.

Land registration rules

Clause 123: Miscellaneous and general powers

195.     This clause gives effect to Schedule 10.

Clause 124: Exercise of powers

196.     At present, rules made under the Land Registration Act 1925 are made by the Lord Chancellor with the advice and assistance of a Rule Committee. This clause provides for a Rule Committee to advise and assist the Lord Chancellor when he is making land registration rules. The membership of the Rule Committee is broadened to include a person nominated by the Council of Mortgage Lenders and a person nominated by the Council of Licensed Conveyancers. The Lord Chancellor may also nominate further persons in the mentioned circumstances. The Rule Committee will no longer include a person chosen by the Minister of Agriculture and Fisheries.

Supplementary

Clause 125: Rules, regulations and orders

197.     This clause includes provision that the Lord Chancellor's powers to make subordinate legislation are to exercised by statutory instrument and lays down the Parliamentary procedure to be used.

Clause 126: Crown application

198.     If enacted the Bill will bind the Crown.

Clause 127: Application to internal waters

199.     At present, the land which can be registered under the Land Registration Act 1925 is, in practice, determined by reference to local government administrative areas. This means the counties of England or Wales, Greater London and the Isles of Scilly. Although the seaward limit of a county (or administrative area) is generally the low water mark, there are tidal waters which are within the body of a county, as (for example) where there is an estuary. The county boundary is at the seaward limit of that estuary as determined by the Ordnance Survey. The Bill applies, by virtue of paragraph (a) of this clause, to land covered by internal waters which are within the administrative area of England or Wales. This reproduces the present position.

200.     Paragraph (b), however, extends the scope of the land that may be registered to land covered by internal waters which are adjacent to England or Wales and which are specified for the purpose by order made by the Lord Chancellor. This power to extend registration of title to land under adjacent internal waters would enable the Crown Estate to register submarine land not only within the body of a county, but under waters on the landward side of the baselines, fixed in accordance with Article 4 of the Convention on the Territorial Sea of 1958. These baselines are employed for the purposes of defining the territorial limits of the United Kingdom. Registration of such lands would protect them against encroachments by adverse possessors who might (for example) construct pipelines or other works within internal waters but outside the body of a county.