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Can the Adjudicator determine a dispute as to beneficial interests? – The Curious Case of Jayansinghe v Liyanage [2010] EWHC 265 (CH)

The facts in this case are amongst the strangest I have come across.  The Applicant is the Respondent’s aunt and by all accounts the pair were like mother and son. Sadly litigation has put a stop to that.

In 1986 the Applicant decided to purchase an investment property in London. She did not wish this property to be registered in her own name so she began the search for a nominee to hold the legal title. Notwithstanding the close relationship between the parties, she decided to register the legal title in the name of a man she had never met before.  By strange coincidence this man had the same name as the Respondent.  The other Mr Liyanage was a shadowy figure who disappeared shortly after the purchase leaving no visible trace.

Twenty or so years later, with the other Mr Liyanage gone, the Applicant realised she had a problem in realising her investment.  She therefore alighted on a scheme to capitalise on the happy coincidence of her nephew having the same name as the elusive legal owner.  All she had to do was persuade the Respondent to provide her with a power of attorney pretending to be the other Mr Liyanage and she could sell the property herself.  Unfortunately, all did not go to plan.

The Respondent claimed he had been the true owner of the property all along and that there was no other Mr Liyanage.  He took exception to the Applicant forging his signature on a transfer of the property into her own name and when, the Applicant applied to register a restriction against the title protecting her beneficial interest, he objected. The case was referred to the Adjudicator to HM Land Registry and culminated in a two day full witness trial.

The Adjudicator found the Applicant’s story highly implausible and held that she had failed to establish any beneficial interest.  The restriction was therefore removed from the Register.

However, the Applicant appealed on the ground (amongst others) that the Adjudicator had no business determining her beneficial interest and had gone beyond his jurisdiction.  She argued that the Adjudicator should merely have required her to demonstrate that she had an arguable “claim” to an interest.  The Appellant relied on the so-called “threshold test” – she said she only had to show that her claim was “non-fanciful”, i.e, that she had sufficient potential to prove a claim for a beneficial interest in a “proper” court. 

Section 42 of the Land Registration Act 2002 allows the registrar to enter a restriction if it appears to him that it is “necessary or desirable to do so for the purpose of . . . . . protecting a right or claim in relation to a registered estate or charge”.  The Appellant said she had a “claim” to a beneficial interest and that was enough.

Where an objection to a restriction is raised the registrar must refer the matter to the Adjudicator – s. 73(7).  In proceedings referred under that section the adjudicator may “instead of deciding the matter himself” direct a party to issue proceedings in the court – s. 108.   The Appellant said the Adjudicator could not or should not have conducted a trial but should have handed the matter over to a court.

The implications of such an argument are significant.  Given the wide category of persons deemed by the Act to have a “sufficient interest” to apply to enter a restriction (s. 43 and Rule 93, Land Registration Rules 2003), it is hard to imagine any situation where an applicant could not argue that he had a “claim” to a right other than those which would be weeded out by the Registrar in any event as being “fanciful”.  If the Adjudicator is not able to go beyond determining that there is a “claim”, there seems little point in having an Adjudicator at all in relation to beneficial interest claims.

The Appellant relied primarily on the comments of Briggs J in the case of Croatia v Serbia [2009] EWHC 1559 (Ch) whereby he found that a person may have a “sufficient interest” in the making of an entry to enable him to apply for the entry of a restriction on the basis of a claim to an interest in the registered estate, even if the claim is not justiciable in the English Courts because it is made between foreign states.

Conveniently, the Appeal in this case also came before Briggs J who reviewed the relevant provisions of the Act and the The Adjudicator to Her Majesty’s Land Registry (Practice and Procedure Rules) 2003 and concluded that the procedural code was plainly designed to enable the Adjudicator to resolve disputes about substantive rights rather than merely to conduct a summary process designed to ascertain whether there exists an arguable claim. Moreover, s. 108 expressly gave the Adjudicator power to decide “a matter” himself.

Having established that the Adjudicator “could” determine a dispute, the next question is whether he “should” determine the claim.  In this case, Briggs J found that this was undoubtedly the correct course because the issue for the purposes of registration of a restriction was not the quantification of the Appellant’s beneficial interest but whether she had an interest at all.

However,  there may be other cases where the overriding objective will not be served by the Adjudicator dealing with a beneficial interest claim himself because it will lead to a multiplication of litigation.  For example, in most beneficial interest cases a party will be seeking an order for sale – a remedy which can only be granted by the Court.

Adjudicators are all experienced lawyers who have specialist knowledge in land law which is invaluable in determining these sorts of disputes.  At a recent Property Bar Association debate, it was agreed that the role has greatly added to the quality of decisions in land related claims.  This decision confirms that the role is intended to be a judicial and not merely an administrative one which is good news for property practitioners.

However, the Appellant has sought permission to appeal so this may not be the end of this curious tale.

Nicola Muir who was Counsel for the Respondent in this case.