The over-expansion of ‘actual occupation’ under Schedule 3, paragraph 2 of the Land Registration Act 2002

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Schedule 3, paragraph 2 of the Land Registration Act (LRA) 2002 provides that an unregistered interest may override where ‘it belongs at the time of the disposition to a person in actual occupation’.[1] The provision, designed to protect certain unregistered rights, allows them to override other, unprotected rights. Although the LRA 1925[2] recognised a broad range of overriding interests, the LRA 2002 limits the circumstances under which they now arise. Nevertheless, the potential scope of paragraph 2 has instead been expanded by the courts’ interpretation of ‘actual occupation’. Notably, Link Lending saw a significant expansion of land law’s understanding of actual occupation.[3] This piece will argue in agreement with Bevan that the Link Lending is an ‘unstable foundation’ for the test of actual occupation,[4] for two reasons: (i) its expansion of the definition for actual occupation; (ii) its contradiction with the LRA 2002.

Part I: Expanded definition

The first concern with Link Lending is that it further expands land law’s definition of actual occupation. The law has experienced a significant change of actual occupation’s interpretation over time. Early authorities adopted a stricter and rigid interpretation of the term (in s.70(1)(g) LRA 1925) as referring to ‘physical presence’.[5] Lord Wilberforce expressed that actual occupation should be read as “ordinary words of plain English”.[6] Effectively, unless an owner was physically present, they were not classed as being in actual occupation. Unsurprisingly, courts soon recognised the potential hardship this created for landowners whose rights were found incapable of binding. Subsequently, in Abbey National v Cann and Thompson v Foy, the courts acknowledged a more comprehensive definition than in Boland.[7] In the former, Lord Oliver mentioned that a mere ‘fleeting presence’ could not constitute actual occupation for the purpose of overriding. Nevertheless, ‘some degree of permanence and continuity’ was capable of amounting to actual occupation. This interpretation allowed for more flexibility and thus, a greater prevalence of landowners found to be in actual occupation. Abbey National v Cann was not only upheld, but expanded, in Thompson v Foy. Here, Lewison LJ introduced the ‘continuing intention to occupy’ element. The court held that Mrs Thompson’s lacking intention to return home was the reason for there being no actual occupation. This paints a picture of the gradual expansion of the term.

In Link Lending, the court found that Mrs Bustard’s ongoing intention to return, and the fact that her absence was involuntary, enabled continued actual occupation. It is submitted that the broadened definition of actual occupation in prior cases played an integral role in the court’s decision in Link Lending v Bustard. The previous judgments resulted in a less structured application of paragraph 2 and facilitated a subjective basis for judges’ decisions. It seems the court sympathised with Mrs Bustard’s situation and so loosely interpreted actual occupation simply to judge in her favour. Bevan argues that this increasing expansion of the common law signifies a departure from the ‘fact-led, objective’ interpretation of which was apparent in Boland.[8] This is problematic as it entitles to judges excessive judicial discretion concerning whether or not someone is in actual occupation. Although Bogusz believes that a contextualised approach to such cases is appropriate and flexible,[9] this is an idealistic view of the significance of Link Lending on future case law. Without stricter guidelines, judges will find actual occupation whenever they see fit, causing an uncontrolled expansion of overriding interests.

Part II: Contradicts statutory intention

Link Lending is also an ‘unstable foundation’ to base the actual occupation test upon because it contradicts Parliamentary intention. The purpose of the LRA 2002 is to improve the discoverability of rights, through registration. However, the understanding of actual occupation in Link Lending does not promote the discoverability or obviousness of hidden rights.[10] The courts have seemingly favoured the curtain principle, given their willingness to manipulate authority to favour overriding interests. Since courts are required to interpret cases in line with statute and with regard to parliamentary intent, the pre-cited cases may even symbolise a wave of judicial activism in this area of the law.

Nevertheless, Parliament is more responsible for this unrestrained expansion. It is expected that legislation should be clear and precise. The legislator’s failure to provide a ‘working definition’ for actual occupation has contributed to its incoherent interpretation in court. Although the LRA 2002 seems to follow a mirror-principle approach through its curtailment of the circumstances in which overriding interests arise, it does not advise the courts as to what extent they should prioritise this objective.[11] Indeed, perhaps Parliament itself was unable to generate a definition for actual occupation which simultaneously promotes the principles of the LRA and avoids an overly rigid policy. On this basis, the courts have little choice but to formulate their own interpretations.

Further, Gardner highlights that the wording ‘reasonably careful inspection’ (Sch 3, para 2 (c)(i)) is ‘highly indeterminate’.[12] Since finding the existence of actual occupation is so unpredictable, such that even an agent can occupy on behalf of an actual occupier, it is difficult for potential disponees to identify when it exists.[13] The court’s interpretation in Link Lending means that prospective disponees are burdened with the onerous task of discovering overriding interests themselves. This tiresome process of questioning every person in actual occupation renders the entire purpose of the Act, which aims to make rights easily identifiable, meaningless.[14] Thus, Parliament must restrict the ever-expanding nature of paragraph 2 and establish certainty by introducing definitive language. Otherwise, the courts will continue building unstable foundations on which to construct the test.

Conclusion

The decision in Link Lending represents an over-extension of actual occupation’s meaning.[15] Although excessive objectivity and rigidity should be curtailed, current authority no longer complies with the relevant legislation as judges have been left to their own devices. It is argued that Parliament is at the root of the problem and must consider an amendment of its language in Schedule 3, paragraph 2 if it desires the purpose of the LRA 2002 to be upheld. This could mark the birth of a more coherent and structured body of case law in line with Parliamentary intention.


[1] Land Registration Act 2002, sch 3, para 2.

[2] Land Registration Act 1925.

[3] Link Lending Ltd v Bustard [2010] EWCA Civ 424.

[4] Christopher Bevan, ‘Overriding and over-extended? Actual occupation: a call to orthodoxy’ [2016] Conv 2, 115.

[5] LRA 2002 (n 1), s 70(1)(g).

[6] Williams & Glyn’s Bank v Boland [1981] AC 487 (HL).

[7] Abbey National Building Society v Cann [1991] AC 56; Thompson v Foy [2009] EWHC 1076.

[8] Bevan (n 4), 109.

[9] Barbara Bogusz, ‘Defining the scope of actual occupation under the LRA 2002: some recent judicial clarification’ [2011] 268 Conv.

[10] Simon Gardner, An Introduction to Land Law (4th edn, Hart Publishing 2015).

[11] Martin Dixon, Modern Land Law (11th edn, Taylor & Francis Ltd 2018).

[12] Gardner (n 10).

[13] Lloyds Bank plc v Rosset [1991] 1 AC 107.

[14] Hodgson v Marks [1971] 2 WLR 1263.

[15] Bevan (n 4).

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