The Forgotten Question: Clarifying the Extent of the Protection Afforded by Actual Occupation under the Land Registration Act 2002
- Fred Halbhuber
- Nov 22, 2022
- 31 min read
Updated: Mar 12
I. Introduction
Issues of priority are at the centre of English land law. Where a plot of land in which a third party has an interest is transferred from one party to another, a conflict arises between this third party and the transferee: whose interest has priority? If push comes to shove, can the transferee prevent the third-party interest holder from exercising her right, or is the third-party interest-holder entitled to enjoy her interest in the face of the transferee’s objections?
The Land Registration Act (‘LRA’) 2002 does much to answer this question. Under section 29, pre-existing unregistered interests are postponed to the interests of a registered disponee taking for valuable consideration. As a result, any such unenforceable interests are rendered prima facie unenforceable against a purchaser. However, section 29 only has this effect where the priority of the interest in question is not ‘protected’. Interests falling under any of the paragraphs of schedule 3 LRA 2002 are within this special category of ‘protected’ interests.[1] This article is concerned with paragraph 2 of schedule 3, which serves the important function of safeguarding interests ‘belonging at the time of the disposition to a person in actual occupation’[2] and ‘whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition’.[3] Paragraph 1 is limited to leaseholds and paragraph 3 is limited to easements and profits à prendre. By contrast, paragraph 2 is not constrained in its application to any particular interests. This makes paragraph 2 potentially far-reaching in its effects and a powerful defence against the postponement mechanism in section 29.
However, the interpretation of schedule 3 paragraph 2 has proved a significant headache for the courts. First, disagreement has emerged regarding precisely when the disposed land must be occupied.[4] Second, there has been debate as to which factors might be relevant when deciding whether a person is in actual occupation. The relevance courts should accord to a person’s ‘intentions and wishes’ has remained particularly ambiguous in this regard.[5] Third, in the context of the rectification and alteration provisions in the LRA 2002, the question has arisen whether a ‘right to rectify’ the register might amount to an overriding interest under schedule 3 paragraph 2.[6]
Behind these controversies, however, the question whether the protection afforded by paragraph 2 is coextensive with actual occupation seems to have been largely forgotten. This question did receive some notable attention under the LRA 1925. Applying section 70(1)(g) LRA 1925—the precursor to schedule 3 paragraph 2 in the LRA 2002—the decisions in Ashburn Anstalt v Arnold[7] and Ferrishurst v Wallcite[8] came to opposite conclusions regarding whether occupation of part of the land could protect an interest in the whole. The LRA 2002 seems to preclude this possibility by providing that an interest is only overriding ‘so far as relating to land … in actual occupation’.[9] However, schedule 3 paragraph 2 is not free from ambiguity in this respect. In particular, the change in the wording from section 70(1)(g) LRA 1925 raises the question whether the words ‘relating to’ enable the protection afforded by paragraph 2(1) to extend beyond the land actually occupied.
