HM Land Registry disproves fraud to win rectification battle

After a dramatic 5 day trial in the County Court at Central London, on Friday 30^th November 2018 HH Judge Dight CBE gave judgment in HM Land Registry’s favour in Gumbs v Popat & 4 ors, the most unusual of property fraud cases. The Claimant was seeking rectification of the register of title to a property in Stoke Newington, North London.  The Claimant alleged that the First Defendant – his brother-in-law and a person with a prior conviction for fraud – had fraudulently transferred the property to himself in 2003, by forging the Claimant’s signature on a deed of transfer.   The Claimant contended that the First Defendant had then charged the property to Barclays Bank, but that he had not noticed for a period of more than 12 years that his own mortgage had been paid-off in the process.  The First Defendant had subsequently transferred the property to his brother, the Second Defendant, in 2006, who had charged it to (then) Northern Rock to secure a loan.    At first the claim was issued only against three defendants, and, highly unusually, the First Defendant admitted the fraud in his Defence.    Upon learning of the claim the Chief Land Registrar applied to be joined, and the Court joined NRAM Ltd of its own volition. Neither the Registrar nor NRAM accepted the First Defendant’s admission, and both parties put the Claimant to proof as to the forgery.    The allegation of forgery was not supported by a handwriting expert, whose findings had been inconclusive.  Rather than drop-out of the proceedings due to his admission, the First Defendant was represented by counsel at trial and became rather like a second claimant; calling witnesses in support of his contention that he was indeed the fraudster he claimed to be in this particular case. However, the Claimant and the First Defendant’s position became unsustainable under cross-examination.   The Judge found that the First Defendant was not to be believed, unless there was independent evidence to corroborate his testimony.    Meanwhile, it was apparent that the Claimant had been well-aware of the 2003 Transfer, as he must have known that his mortgage had been paid-off.    It followed that the Claimant had failed to come-up to proof on the forgery, and the claim itself was found to be an arrangement between the Claimant and the First Defendant.  The Judge found that the proceedings were an attempt to settle a family score via the civil courts, in which the First Defendant would be “the fall guy”, and which had been foiled by the joinder of the Registrar.   This was especially so, given that the Claimant had only reported the alleged fraud to the Police once pressed to do so by a party to the litigation, and he was not excessively keen to persuade the Police to charge his brother-in-law. As a result, the Judge refused to rectify the Register and, obiter, said that even if the forgery had been proved, the Claimant must have been aware of it soon afterwards and had failed to take action to prevent further prejudice being caused.  As such, potentially there would have been exceptional circumstances in this case, which would have justified not rectifying the Register in any event.   In view of the arrangement between the Claimant and the First Defendant, the Judge made those two parties jointly and severally liable to pay the Registrar’s costs of the claim, on the higher indemnity basis.  His Honour remarked that, “Without the Land Registry’s assistance, I do not know what conclusion the Court would have reached”. Katrina Yates acted for the Chief Land Registrar.