Overriding Interests: Occupation of Part of the Land
In Ferrishurst Ltd v Wallcite Ltd' the Court of Appeal was confronted with what at first sight appears to be a narrow point concerning the interpretation of section 70(1)(g) of the Land Registration Act 1925. On further examination, however, the case raises more general questions concerning the 'exigibility'2 or 'durability'3 of property interests. In particular, the case invites consideration of the principles which underpin the rules for determining whether or not an encumbrance is binding on the purchaser of a superior interest in the property in question. The Court of Appeal's decision is given added interest by the fact that it takes a different approach from that provisionally recommended by the Law Commission in its most recent consultation document on land registration.4 The dispute between the parties related to a single storey building which comprised office premises, amounting to three-fifths of the site, and an adjoining lock-up garage. The offices were occupied by Ferrishurst under a subunderlease which had been granted by Wallcite's predecessor in title. Under the terms of the subunderlease Ferrishurst had an option to purchase the underlease of the whole site. Although freehold title to the building was registered as were the head lease and the underlease Ferrishurst failed to protect its option by an entry against the title of the underlessor. In due course, Wallcite acquired the freehold and the underlease and the question arose as to whether the option was binding on Wallcite as an overriding interest. At first instance, the judge dismissed Ferrishurst's claim to specific performance of the option on the ground that section 70(1)(g) assisted Ferrishurst only in respect of the occupied part and specific performance could not be granted in relation to part of the building. Ferrishurst appealed. In moral terms Wallcite's position was not very meritorious as, when it acquired the underlease, Wallcite was fully aware of the option. However, it is a truism that one of the purposes of the land registration system was to replace the doctrine of notice by a less capricious system for resolving disputes between parties with competing interests in land. As far as the legislative scheme is concerned, the issue was whether Ferrishurst could claim an overriding interest, not whether Wallcite had notice of Ferrishurst's rights. More specifically, the question was whether Ferrishurst's actual occupation of part of the building was sufficient to bring the option within the scope of section 70(1)(g) which provides protection for 'the rights of every person in actual occupation of the land'.