Boundaries to registered leasehold property: the High Court reminds conveyancers why it is important to read the small print in HCP (Hendon) Ltd) v Chief Land Registrar

England 371163 1920

Following a substantive judicial review hearing held by Skype before Mr Justice Martin Spencer on 29 April 2020, the High Court has handed down judgment in R (on the application of HCP (Hendon) Ltd) v Chief Land Registrar (sued as HM Land Registry) [2020] EWHC 1278 (Admin).  Katrina Yates successfully acted for the Chief Land Registrar. Summary This case tested the extent to which information contained on the face of the property register to registered leasehold estates can be relied on.  It is the first time the High Court has specifically ruled on the question of whether the title plan and the floor level note on the property register are conclusive and can be relied on in isolation from the underlying lease, for the purpose of ascertaining the vertical general boundaries.   The judgment confirms that the Land Registration Act 2002 does not modify the long-established principle that the general boundaries are determined by construing the lease itself.   To that end, the lease is effectively incorporated into the register of title by reference and by HM Land Registry keeping a copy, so the description of the registered estate on the face of the property register does not stand in isolation and must be read in conjunction with the registered lease. Background HCP (Hendon) Ltd (“HCPH”) sought judicial review of the registrar’s decision to register a new lease of the roof and roof space of a building as a concurrent or reversionary lease, so as to take effect subject to and with the benefit of seven existing leases of maisonettes situated on the first floor. To finance necessary renovations of a block of 14 maisonettes/flats, HCPH obtained planning permission for the construction of an additional floor of flats and a new roof.    HCPH checked the registers of title and observed that the leasehold property registers all contained floor level notes, variously formulated, which included words along the following lines: “As to the parts tinted blue on the title plan only the first-floor maisonette is included in the title”.   HCPH interpreted such notes to mean that the existing demises were confined to the first floor “only” and did not include any part of the roof or roof space.   Having taken the view that the floor level notes were conclusive as to the vertical general boundaries of the first floor maisonettes, HCPH did not order official copies of the leases to check the parcels.   Once HCPH had taken a grant of the new lease and applied to HM Land Registry for registration, the registrar decided that on a proper construction of the first floor leases the roof/roof space had already been demised, so there was a physical overlap between this and the property demised by the new lease.     As such, the registrar’s position was that he could only register the new lease as a concurrent lease, in so far as there was a physical overlap with the property already demised. HCPH challenged this decision, since, absent a partial surrender of the first floor leases, the company would be unable to take possession of the roof/roof space to develop the building as intended.    HCPH’s primary contention was that the notes in the property register were conclusive as to the vertical boundaries of the first floor demises, irrespective of what the leases provided, due to s. 58 of the Land Registration Act 2002 (which makes provision for the conclusiveness of registration as to title).   HCPH also contended that, in any event, on a proper construction of the leases in the light of background known to the parties, there was no physical overlap between the demises; or, if there was an overlap, this was an error that ought to be corrected by construction. The Court’s Decision As to the main issue, the Learned Judge held that the Land Registration Act 2002 does not change the fundamental principle that the extent of the land demised by a lease is determined by construing the lease itself.   As the contrary would be a significant departure from established law, it was held that clear words would be required for the legislation to have such an effect.   However, whilst s. 58 gives legal effect to the disposition between the parties, it does not go so far as to limit the description of that estate on the register (applying the dictum of Mr Martin Rodger QC in Stevens v Ismail [2016] UKUT 43 (LC)).   On the contrary, the Court held that it was necessary to inspect both the register of title and the registered lease to understand the boundaries of the registered estate, which is a reason why the legislation requires a copy of a document mentioned in the register, such as a lease, to be kept and be made available for inspection (Land Registration Act 2002, section 66(1); Land Registration Rules 2003, rule 4(3)).  The Court also held that, in any event, the registrar has a discretion about what details are to be included on the face of the register and what details are left to be discovered by inspecting the lease.   In this regard, the floor level notes differentiated the first floor maisonettes from the ground floor flats, but they were not intended to exclude the roof and roof space from the scope of the registered estate. As to the construction arguments, the Learned Judge held that the Court was not entitled to construe or correct the first floor leases by reference to subjective material that was private to the parties (applying Cherry Tree Investments Ltd v Landmain Ltd [2013] Ch 305 (CA) and Arnold v Britton [2015] AC 1619 (UKSC)), but, in any event, it was clear that the roof and the roof space were already demised to the first floor lessees.    Three of the first floor leases explicitly demised the “roof” and the “roof space”, but the same construction applied even where the parcels of the first floor lease in question only specified the “roof”.   This was because, in the circumstances, it would not make any sense to demise the flat and the roof, but to retain the portion of roof space in between. It followed that the only lawful option open to the registrar was to register the new lease as a concurrent lease.  The claim was dismissed in full accordingly. Practical Implications While effectively confirming standard conveyancing practice, this case underlines the critical importance of scrutinising the relevant registered lease or leases before purchasing leasehold property.  It is not sufficient just to rely on the face of the register of title, or on the schedule of leases to the landlord’s title, for the purpose of checking the general boundaries of the registered estate. This is especially important where, as here, the purpose of HCPH acquiring a new lease of part of a building was to develop the roof and roof space to add a second floor of flats.   To proceed with the development, HCPH of course needed to take possession of these areas.   However, having not checked the first floor leases themselves, HCPH did not appreciate at the time of the acquisition that the roof and the roof space had already been demised to the first floor lessees.  It followed that the new lease of these areas could only be registered to take effect in reversion, rather than in possession.   This is a stark cautionary tale for such purchasers, which illustrates why it is essential to study the terms of any leases that appear to be adjacent to a development site. The case is also a useful reminder that although the vertical extent of the demise is a question of construction of the lease in question, the Courts tend to look for particularly clear words to displace the inclusion of airspace and roof voids (as the case may be), where in the circumstances it is logical for such areas to be included within the demise.

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