Not too late to rectify proprietorship register where squatter also registered proprietor through fraud


In the case of Farakh Rashid v Mohammed Rashid [2017] UKUT 332 (TCC), the Upper Tribunal (Tax and Chancery Chamber) considered whether the Chief Land Registrar could alter the proprietorship register where a party had been registered as proprietor of land pursuant to an initial fraudulent transfer to his father but where the registered proprietor was then in adverse possession of that land.

Farakh Rashid's father (FH's father) had forged the signature of the original registered proprietor, namely Mohammed Rashid on a transfer to FH's father.  FH's father then became registered as proprietor of the property and in time executed a transfer of the property to Farakh Rashid as a gift.  Mohammed Rashid had travelled to Pakistan and FH's father had telephoned him to tell him not to return to the property which Mohammed Rashid did not dare do when he returned to the UK.  Sadly, he had to be rehoused by the local authority because he had no documents to prove his title.  However, in time, Mohammed Rashid did find evidence and this led to him applying for rectification of the proprietorship register.

Elizabeth Cooke, the tribunal judge neatly summarised paragraphs 5 and 6 of Schedule 4 to the Land Registration Act 2003 which are about rectification:

"1) The registrar can alter the register to correct a mistake, such as the registration of a transfer that was procured by fraud (paragraph 5) and indeed must do so if he has power to do so unless there are exceptional circumstances that justify not doing so (paragraph 6(3)). 

2) That said, by virtue of paragraph 6(2) the registrar may not alter the register to correct a mistake if that would prejudice a registered proprietor in possession (...) unless that proprietor has by fraud or lack of proper care contributed to the mistake (as is the case here). In that case the registrar may alter the register. 

3) Because in that case the registrar may alter the register, he must do so (paragraph 6(3)), but the proviso about exceptional circumstances still applies. So the registered proprietor in possession who has contributed to the fraud will suffer rectification (paragraph 6(2)) unless there are exceptional circumstances that justify not altering the register (paragraph 6(3)). In other words, in exceptional circumstances the registered proprietor in possession will remain registered even though he has contributed to the fraud."

Paragraph 6(3) was relevant in this case.  Farakh Rashid was the registered proprietor in possession and he was involved in his father's fraud which meant that he would suffer rectification to restore Mohammed Rashid as registered proprietor.  However, Farakh Rashid maintained that there were exceptional circumstances to justify not altering the register which were that he was in adverse possession of the property since 1990.

There are 2 main points which one can draw from this case.  The first is the emphasis of the point that adverse possession is not ruled out by the squatter's unlawful and even criminal behaviour.  This makes sense because adverse possession can be criminal trespass.  The second is that a registered proprietor cannot be in adverse possession.  The Upper Tribunal stated that Farakh Rashid could not be holding title conferred by the land registration legislation and alongside that, title derived from adverse possession.  In fact the Upper Tribunal described it as a nonsense to have a registered proprietor with an additional title by possession.  As Farakh Rashid did not have adverse possession there were no exceptional circumstances preventing the alteration of the proprietorship register to restore Mohammed Rashid as registered proprietor.

It is important to distinguish that this case concerned rectification.  It did not concern possession proceedings nor did it concern a registration as proprietor which had been based on adverse possession.  It was fraud which had been the background to Farakh Rashid's registration as proprietor.  This case is therefore a reminder that rectification can be made against a registered proprietor who has relied on fraud and that the registered proprietor cannot avoid this by claiming adverse possession because a registered proprietor cannot simultaneously hold title by virtue of registration and additionally by adverse possession.

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"The title conferred by statute upon the registered proprietor is in a sense morally blind, in that it puts the registered proprietor in a unique position whose weakness is defined, wholly, by the statutory provisions relating to alteration and rectification. That does not limit the courts’ powers to put right what has gone wrong, because the statute provides that the register can be rectified to correct a mistake (for example where a void transfer has been registered) or to bring the register up to date (where a voidable transfer is registered and later avoided). But until the register is altered, the registered proprietor is not a squatter, who just happens to be registered..."
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