Acquiring authority loses Upper Tribunal battle over effect of defect in title

K&K Property Investments took the case against Southwark, which was heard by Upper Tribunal Judge Elizabeth Cooke and tribunal member Mark Higgin.

An error by HM Land Registry, never corrected, came to light in the case, which concerned a reference under section 5 of the Land Compensation Act 1961, in which K&K sought compensation for the value of its long leasehold interest in 78 Rye Lane, following its compulsory acquisition by Southwark.

But Southwark said there was a defect in the claimant's title which means either that no compensation was payable or that the value of the building was affected by the defect.

Judge Cooke said that before compensation could be decided the tribunal had to determine a preliminary issue.

This was that in March 1992, Ropehold was registered as proprietor of the concurrent lease, but the underlease was not noted against the title to the concurrent lease.

Southwark said this meant Ropehold took free of the underlease and had a better right to possession of 78 Rye Lane - and any potential compensation - than did K&K.

The judge said the essential question was what was the effect on K&K’s title of the fact that the underlease was not noted against the register of title to the concurrent lease in 1992?

She said this could mean that K&K was liable to be dispossessed by the proprietor of the concurrent lease and therefore either had no compensation claim or a reduced one,”or did it have no effect upon the legal relationship between the concurrent lease and the underlease, so that the concurrent lessee remained the immediate landlord to the underlease?”

She noted K&K’s solicitor had asked HM Land Registry how notice of the underlease came to disappear from the title to the concurrent lease and it said an error meant a note of the underlease remained but under the wrong title number.

The concurrent lease was also given a new title number, but the caseworker concerned at HM Land Registry did not carry forward the notice of the underlease to the new title to the concurrent lease, because the old title number for the underlease had been closed and it was not appreciated that the underlease itself remained registered, under a different number.

Judge Cooke said this mistake made no difference to the position of the underlease, but even if it had, this could have been corrected as section 82 of the Land Registration Act 1925 made provision for ‘rectification’.

The tribunal concluded: “Accordingly even if the mistake in 1992 had put at risk the claimant's right to possession of the property, any effect on its value would be negligible in light of the fact that the mistake could have been corrected.

“The preliminary issue raised by [Southwark] had no consequences for the validity of the claimant's title to or its right to possession of 78 Rye Lane, nor for the value of its interest.”

Mark Smulian