Land Registration Act
Question one: Building that has been sub-divided into four substantial office suites. For the purpose of letting these four suites of offices, and while he is In Australia on a six month holiday, he appoints Florence as his agent and gives her full authority to enter into any agreement for these purposes. Florence then enters into the following agreements on Sebastian’s behalf:
(i) an oral agreement granting a lease of office no.1 to Dougal for a period of three years taking effect in possession and at a monthly rent which is the market rent for that suite of offices (without taking a fine or premium for the lease);
(ii) a written agreement for a lease of office no.2 to Zebedee for a period of five years taking effect in possession but at a monthly rent which is only three quarters of the market rent for the offices in question albeit in the written agreement Zebedee has covenanted not to use office no.2 for any illegal or immoral purposes.
Sebastian has recently returned from Australia and is disappointed with Florence’s efforts.
Dougal has not paid any rent for the last four months and has apparently sub-let part of office no.1 to Ermintrude.
Zebedee, on the other hand, having paid monthly rent and on time, is now using office no.2 for the purpose of publishing pornographic literature.
Advise Sebastian as to his remedies against Dougal, Ermintrude and Zebedee500.
In order to determine if any person has any equitable or legal rights over Sebastian one has to consider if it is capable of being an equitable or legal interest. The first consideration under 1(1)(a) is that for there to be a legal interest it has to be an estate in fee simple absolute in possession and (b) A term of years absolute. The second consideration is under 1(2) which identifies only those interests which can be legal interest, which includes such examples as a legal lease of which both leases are.
The first question is whether Sebastian is bound by the leases created by Florence. The first note to make is that Sebastian has allowed Florence to act as his personal representative therefore all leases that are valid are binding. All the leases could be binding with extra protection if it was a case of residential accommodation under Street v Mountford where the only circumstances are that residential accommodation is offered and accepted with exclusive possession for a term at rent, the result is a tenancy The courts will, save in exceptional circumstances; only to be concerned to inquire whether as a result of an agreement relating to residential accommodation the occupier is a lodger or a tenant.In this case it is a business tenancy; however as Florence have concluded it as a tenancy not a license then it is a legal tenancy between these the parties, unless exceptions apply. Does this tenancy hold all the protections of the law, as it would be classed as a legal estate as it is for set period of years absolute? If it is a legal estate then it should be enforceable against the world. However there is a problem when there are arrears or a clause of the tenancy is in directly violated, then it is more than likely that Sebastian is not bound. The first avenue is to determine if the tenancy breaches fall as an exception held under the Street v Mountford formula because a tenant in direct violation of a clause is an exception to this formula, as is a tenancy in arrears. These exceptional circumstances that have been defined as; occupancy under a contract for the sale of land; pursuant to an employment contract; holding of an office; the owner has no power of tenancy; there was no intention to create legal relations, e.g. family relationship or act of friendship. The sub-let to Ermitrude falls under this category though, because Dougal has no power of tenancy and Sebastian can start the eviction process.
Also Dougal can be evicted on the basis that he has not paid his rent for four months and like a repossession of a house in respect to mortgages the owner can take possession through re-entry. Finally the lease that Zebedee holds has been breached through the publication of pornographic material, under contract law this would mean that the lease is breached and eviction proceedings can occur; however the question falls on whether this is a fair contract term. If the court determines it is not then the lease will stand, if it is considered fair then the lease will be breached and re-entry can occur. If Zebedee’s lease stands Sebastian would have to uphold the lease and seek remedy for any losses through Florence on both counts.
Question two: ‘The biggest crack in the mirror principle, upon which the system of registered land is based, is created by the interests which override.’ Critically evaluate this statement in the light of the Land Registration Act 2002500.
The decision was made not reform overriding interests as suggested by the law commission, rather parliament decided to phase out archaic rights and create two schedules dealing with overriding interests. Schedule 1 deals with overriding interests that will remain to be binding, which includes actual occupation. Therefore it seems that problems discussed are still very real; however Schedule 3 deals with the limitations on certain overriding interests listed in Schedule 1 and one of these are the actual occupation interests. The limitations that are most important to this discussion on the interest succeeding are in respect to those where inquiry has been made and that individual has failed to disclose; and those individuals who are not in obvious occupation on careful inspection. Therefore this would cause significant problems with the cases of Chhokar, Cheshire Homes and Tizard because at the point of sale and enquiry there was no obvious proof of actual occupation. The case of Chhokar in the interests of equity may have the same outcome post-2002 as both the seller and buyer were acting fraudulently to sell the house without Mrs. Chhokar’s knowledge whilst she was on holiday; however under normal circumstances if the buyer was without fraudulent motive and the husband had hidden her occupation this would result in an inequity under the new law. Therefore this will cause major problems with the 2002 act and the rights of actual occupation. As well as ensuring that the law is predictable, i.e. the law is like a mirror, like cases equal like treatment and outcomes.
The actual law therefore has tried to deal with the suggested changes of the Law Commission, as well as considering the problems with registering all interests. Rather the numbers of interests that override have been reduced and it provides a manner in which subsequent purchasers and creditors have not been bound. In respect to the notion of actual possession the law has been defined, whereby if possession is not apparent on a reasonable exploration of the property there is no possession. This would be interesting if one considers the case of Malory v Cheshire Homes Ltd this has caused an interesting problem, because the Court of Appeal held that there could be actual possession of vacant land; however how can one explore vacant land and find a reasonable circumstances of possession? This decision by the Court of Appeal is contrary to the LRA 2002, which was prior to its inception. The law reform has tried to balance out the problems with overriding interests, but is it enough to protect the buyer and those persons whom hold beneficial interest in property?
The changes in respect to overriding interests have been minimal, the law reform has eliminated some of the obsolete interests but it has not properly cleared up the problem of occupiers rights. It has defined what actual occupation is but if this definition holds how would this have effected the case of Chhokar v Chhokar because Mrs Chhokar was not in physical occupation, but it would be unjust for Mr Chhokar and Mr Parmar to succeed in their unjust and fraudulent dealings; which goes against the purpose of overriding interests, which is to ensure fairness and justice. Therefore the uncertainty and confusion in this area will still be apparent and even if clarified injustices may occur. The question of clarity in the law may create uncertainty in the judicial arena, due creating injustices; therefore causing problems with the mirror principle of law.
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