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Overreaching, Trustees' Powers and the Reform of the 1925 Legislation

Published online by Cambridge University Press:  16 January 2009

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Overreaching, as the doctrine is now understood, is the process whereby a purchaser of property takes it free from any interests or powers, which attach instead to the proceeds of sale. Dispositions of trust property and conveyances by mortgagees, by personal representatives and under an order of the court may all overreach equitable interests. A lease granted by a mortgagor may overreach the rights of the mortgagee. This article is concerned primarily with dispositions of trust property and in particular those by trustees for sale of land. It seeks to demonstrate that the concept of overreaching is wider than is supposed. Two principal arguments are advanced. The first is that overreaching is a necessary concomitant of a power of disposition. A transaction made by a person within the dispositive powers conferred upon him will overreach equitable interests in that property, but ultra vires dispositions will not, and the transferee with notice will take the property subject to those interests. The second argument is that the draftsman of the 1925 property legislation fully appreciated the true nature of overreaching, and attempted to employ it as an essential part of his scheme for the facilitation of conveyancing. His intentions have not been appreciated in practice, and his carefully constructed scheme has been misapplied. The article considers critically recent proposals for reform from the Law Commission, and in particular the emphasis which those proposals give to the protection of the rights of persons in actual occupation. It will be suggested that reform might be more effectively achieved by employing the essentials of the scheme constructed by the draftsman of the 1925 legislation.

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Copyright © Cambridge Law Journal and Contributors 1990

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References

page 278 note 1 Commenting on this section, Sir Benjamin Cherry stated that it “collects and states the various means by which, where a legal estate in land is affected by any one or more equitable interests or powers, that legal estate can be conveyed to a purchaser in such a way that the purchaser is not concerned with the title to the equitable estate or power, or to obtain the concurrence of the owner thereof. On the other hand, the equitable interest or power is not defeated or destroyed by the disposition, but is shifted so as to become a corresponding interest or power in or over the proceeds. The conveyance to the purchaser is then said to ‘overreach’ the equitable interest or power. The expression ‘overreach’ is not defined in the Act, but this is the sense in which it has been used since 1882”: Wolstenholme, and Cherry's, Conveyancing Statutes (12th ed., 1932)Google Scholar. The reference to 1882, is preumably to the provisions of the Settled Land Act of that year, though the word ‘overreach’ was not used in that Act.

page 278 note 2 See e.g., Re Brown (1886) 32 Ch.D. 597, 601, Kay, J.Google Scholar: “Beyond question everything which the trustees sold when converted into money would be impressed with the trusts which this will impresses as money received by the trustees under that trust for sale … This money, when received …, was money impressed with the trust of that power of sale under which this estate had been sold.” See too the text to n. 25 infra.

page 278 note 3 See e.g. Lightwood, J. M., “Trusts for Sale” (1929) 3 C.L.J. 59, 65CrossRefGoogle Scholar; Swadling, W. J., “Beneficial Co–Ownership Behind a Resulting Trust and the Problems of a Trust for Sale [1986] Conv. 379, 382Google Scholar.

page 279 note 4 Where is the beneficial interest in the land pending sale if it is not in the beneficiaries?: Pearson v. Lane (1809) 17 Ves. 101, 104, Grant, M.R.Google Scholar; Franks v. Bollans (1867) 37L.J.Ch. 148, 158, Stuart, V.-CGoogle Scholar. If the beneficiaries are regarded as having interests in the notional proceeds of sale, is not the trust void as lacking certainty of subject-matter?

page 279 note 5 For a thorough survey of the law, see Anderson, Stuart, “The Proper Narrow Scope of Equitable Conversion in Land Law” (1984) 100L.Q.R. 86Google Scholar. The modern authorities are charted by Warburton, Jean in “The Doctrine of Conversion—Fact or Fiction?” [1986] Conv. 415Google Scholar. There is also a penetrating critique by Prichard, Michael, [1979] C.L.J. 251, 253Google Scholar.

page 279 note 6 [1988] A.C. 54, 82–83.

page 279 note 7 Irani Finance Ltd. v. Singh [1971] Ch. 59, 80, Cross, L.J.Google Scholar The status of the passage from which this quotation is taken, and which is the most extreme statement of the doctrine of conversion in the modern law, is unclear. It was followed and provided the main plank of the reasoning of the Court of Appeal in Cedar Holdings Lid. v. Green [1981] Ch. 129, a decision on the effect of Law of Property Act 1925, s.63. That case was in turn disapproved by the House of Lords in Williams & Glyn's Bank Ltd. v. Boland [1981] A.C. 487, 507, Lord, WilberforceGoogle Scholar. In Ahmed v. Kendrick [1988] 2 F.L.R. 22, 27, the Court of Appeal treated Cedar Holdings as bad law, notwithstanding citation of Lord, Oliver'sGoogle Scholar judgment in Flegg.

page 279 note 8 See e.g. paras. 1.1. and 4.6, n. 10. The Working Paper is hereafter referred to as “LCWP 106”. See too Gray, K. J., Elements of Land Law (1987), pp. 860861Google Scholar, and Rudden, Bernard, (1963) 27 Conv. (N.S.)51, at p. 61Google Scholar.

page 279 note 9 [1988] A.C. 54.

page 280 note 10 See e.g. Clouette v. Storey [1911] 1 Ch. 18, 31, Farwell, L.J.Google Scholar

page 280 note 11 See Law of Property Act 1925, s.101.

page 280 note 12 There were two possibilities. The entire legal title might have been vested in trustees, or it might have been fragmented amongst those entitled in succession under the settlement.

page 280 note 13 Settled Land Act 1882, ss.3–20.

page 280 note 14 Settled Land Act 1882, s.51.

page 280 note 15 Professor Bailey, S. J., “Trusts and Titles” (1944) 8 C.L.J. 36, 3738CrossRefGoogle Scholar. This is probably the best way of explaining a line of cases concerning dispositions of land by railway companies which were outside the powers conferred upon them by the Land Clauses (Consolidation) Act 1845. Such dispositions were wholly void and passed no legal title to the purchaser: Rosenberg v. Cook, best reported at (1881) 51 L.J.Q.B. 170 (C.A., )Google Scholar; Re Metropolitan District Railway Company and Cosh (1880) 13 Ch.D. 607 (C.A., )Google Scholar Although the legal title to that land was vested in the railway company, the powers of disposition conferred by statute could be exercised only by the directors. Therefore an ultra vires disposition passed no estate.

page 280 note 16 Mogridge v. Clapp [1892] 3 Ch. 382, 398, Kay, L.J.Google Scholar

page 280 note 17 The draftsman seems to have thought it inconceivable that there could be a bona fide purchaser from a life tenant without notice of the settlement. The life tenant would derive the legal estate from the vesting deed, and that would appear on the face of the title. The inconceivable did happen, and an ultra vires mortgage by a life tenant who appeared to be absolute owner was held to be void against a bona fide purchaser: Weston v. Henshaw [1950] Ch. 510, Danckwerts, J.Google ScholarThe logic is faultless, the result unfortunate.

page 281 note 18 Professor Elliott, D. W., “Curing a Defective Lease Granted by a Tenant for Life” (1971) 87 L.Q.R. 338, 341Google Scholar. Writers have from time to time considered whether Settled Land Act 1925 s.l8(l)(a) has been incorporated by reference by Law of Property Act 1925, s.28(1) so as to apply to trusts for sale. It is hoped that the analysis offered in this article demonstrates why this is not the case.

page 281 note 19 Davies v. Hall [1954] 2 All E.R. 330, 334, Romer, L.J.Google Scholar The purchaser cannot for that reason (it is said) rely on Settled Land Act 1925, s. 110(1), which provides some protection for purchasers “dealing in good faith” with life tenants. Cf. Elliott, op. cit., pp. 343–347, for a more compelling analysis.

page 281 note 20 (1887)40Ch.D. 470, 472.

page 281 note 21 See too the similar statements of Lord, Eldon L.C. in Bowes v. East London Water Works Company (1821) Jacob 324, 330Google Scholar, in the context of a trustee's leasing power.

page 281 note 22 See Bailey, , (1944) 8 C.L.J. 36, 3839CrossRefGoogle Scholar.

page 281 note 23 See e.g. Bowes v. East London Water Works Company (1818) 3 Madd. 375, 383, Leach, V.-CGoogle Scholar; (1821) Jacob 324, 330331, Lord, Eldon L.CGoogle Scholar; Keating v. Keating (1835) L. & G. temp. Sugden 133, 136138, Sugden, L.CGoogle Scholar; Svenson v. Payne (1945) 71 C.L.R. 531, High Court of AustraliaGoogle Scholar. The term “ultra vires” is actually used in certain of the authorities: see e.g. Oceanic Steam Navigation Co. v. Sutherberry (1880) 16 Ch.D. 236, 240, Little, V.-C.Google Scholar

page 281 note 24 Sugden on Powers, 8th ed. (1861), p. 519. Thus a lease granted for forty years would take effect as a lease for 21 years if that was the extent of the leasing power. After the enactment of the Leases Acts of 1849 (12 & 13 Vict. c. 26) and 1850 (13 & 14 Vict. c. 17), there was statutory power to cure a lease that was invalid through non-compliance with a leasing power. The lease operated as a contract to grant a valid lease under the power. The provision is now found in Law of Property Act 1925, s.152. The section applies only to “forms and ceremonies” (Re Newell and Nevill's Contract [1900] 1 Ch. 90, 94, Kekewich, J.)Google Scholar and cannot be employed if the lease granted differs substantially from any lease that could be granted under the power. See generally Pawson v. Revell [1958] 2 Q.B. 360 (, C.A.)Google Scholar (where the authorities are discussed); and the survey by Professor Elliott, : (1971) 87 L.O.R. 338, 347ffGoogle Scholar.

page 282 note 25 Sugden on Powers at p. 482.

page 282 note 26 Ibid, at p. 483.

page 282 note 27 Pre-1926: Keech v. Hall (1778) 1 Doug. 21, 22, Mansfield, LordGoogle Scholar; Pope v. Biggs (1829) 9 B. & C. 245, 253, Littledale, J.Google Scholar; Trent v. Hunt (1853) 9 Ex. 14, 22, Alderson, B.Google Scholar; Cutherbertson v. Irving (1860) 6 H. & N. 135, 139, Wightman, J.Google Scholar; Lows v. Telford (1876) 1 App. Cas. 414, 425426, Selborne, LordGoogle Scholar. Post-1926: Rust v. Goodale [1957] Ch. 33, 4445, Harman, J.Google Scholar; Taylor v. Ellis [1960] Ch. 368, Cross, J.Google Scholar

page 282 note 28 Indeed the power is still treated as if it were a naked power. In Rust v. Goodale [1957 Ch. 33, 45, Harman, J.Google Scholar observed that “as between the mortgagee and the tenant under an unauthorized lease, no legal estate is created at all. The mortgagor must be taken to have been exercising his right to make a lease good only as between himself and the tenant.”

page 283 note 29 [1907] 1 Ch. 373, 380.

page 283 note 30 Perry on Trusts and Trustees (7th ed., 1929), para. 800.

page 283 note 31 See Farwell on Powers, 3rd ed. (1916), Ch. XVI, for a full analysis.

page 283 note 32 3rd ed., (1967, with updating volumes), para. 190.

page 283 note 33 Williams, T. Cyprian and Lightwood, J. M., Williams on Vendor and Purchaser (3rd ed., 1922 p. 241Google Scholar; Lee v. Soames (1886) 36 W.R. 884.

page 283 note 34 (1852) 1 De G.M. & G. 635, 643. See too Walker v. Southall (1887) 56 L.T. 882, North, J.Google Scholar For a case where the terms of the power were wide enough to authorise the mortgage of the property, see Re Bellinger [1898] 2 Ch. 534Google Scholar.

page 284 note 35 Op. cit, para. 800.

page 284 note 36 Devaynes v.Robinson (1856) 24 Beav. 86, Romilly, M.R.Google Scholar; Re Champion [1893] 1 Ch. 101, 115, Lindley, L.J.Google Scholar

page 284 note 37 The power to give a discharging receipt was confined to transactions authorised by the trust instrument: Walker v. Southall (1887) 56 L.T. 882, 883, North, J.Google Scholar

page 284 note 38 22 & 23 Vict. c. 35, s.23. There was a short lived attempt to confer such a power by statute in 1844 (7 & 8 Vict. c. 76, s.10), but this provision was repealed the following year (8 & 9 Vict, c. 106, s.l).

page 284 note 39 Bailey, S. J. (1944) 8 C.L.J. 36, 39 n. 20CrossRefGoogle Scholar.

page 285 note 40 Stroughill v. Anstey (1852) 22 L.J.Ch. 130, 135, Lord, St. Leonards L.C.Google Scholar (a fuller report on this point than 1 De G.M. & G. 635, 648); Watkins v. Cheek (1825) 2 Sim. & St. 199, 205, Leach, V.-C.Google Scholar

page 285 note 41 In Re Soden and Alexander's Contract [1918] 2 Ch. 258,264, Younger, J.Google Scholar expressed the sentiment that “unless in some way notice of trusts can be kept off the title of trustee vendors, sales of trust property in all but the simplest cases would be seriously, if not fatally prejudiced. Purchasers will not lay out their money in acquiring property the security of their title to which may depend upon an exhaustive investigation into the execution of trusts, which can rarely be complete and must always seem burdensome”.

page 285 note 42 See (1882) 27 Sol. J. 113; Williams on Vendor and Purchaser, 3rd ed., at p. 225; and Bailey, S. J. (1944) 8 C.L.J. 36, 4143CrossRefGoogle Scholar.

page 285 note 43 Re King's Settlement [1931] 2 Ch. 294, 297, argument of Vaisey, K.C.Google Scholar

page 285 note 44 For a case where a recital was too revealing, see Re Blaiberg and Abrahams [1899] 2 Ch. 340.

page 285 note 45 See Re Soden and Alexander's Contract [1918] 2 Ch. 258, 263ff., Younger, J.Google Scholar; Re Balen and Shepherd's Contract [1924] 2 Ch. 365, 377, Tomlin, J.Google Scholar; and Bailey, S. J. (1944) 8 C.L.J. 36, 42CrossRefGoogle Scholar. The device was used particularly where the trustees held the land as mortgagees, but it was not confined to such cases.

page 285 note 46 Re Chafer and Randall's Contract [1916] 2 Ch. 8 (C.A., )Google Scholar

page 285 note 47 Re Soden and Alexander's Contract [1918] 2 Ch. 258, 263, Younger, J.Google Scholar

page 285 note 48 Re Soden and Alexander's Contract [1918] 2 Ch. 258Google Scholar; Arthur Underhill, The Line of Least Resistance, published as an appendix to the Fourth Report of the Acquisition and Valuation of Land Committee (Cmd. 424, 1919) at p. 32. The legislature intervened in 1911 with a statutory provision which was both retrospective and prospective. By Conveyancing Act 1911, s.13 (now Law of Property Act 1925, s.112(1)), “where, on the transfer of a mortgage, the stamp duty, if payable according to the amount of the debt transferred, would exceed the sum of ten shillings, a purchaser shall not, by reason only of the transfer bearing a ten-shilling stamp … be deemed to have or have had notice of any trust, or that the transfer was made for effectuating the discharge of a trustee or the appointment of a new trustee”. See also Law of Property Act 1925, s.113.

page 286 note 49 (1882) 27 Sol. J. 113; SirMegarry, Robert and SirWade, William, The Law of Real Property, 5th ed. (1984), pp. 322323Google Scholar.

page 286 note 50 Settled Land Act 1882, s.56(2).

page 286 note 51 Taylor v. Poncia (1884) 25 Ch.D. 646 (described as a decision “recommended much more clearly by its convenience than by obsequious attention to the Act's language”. It was thought that it “could not safely be relied upon”: (1884) 28 Sol. J. 703).

page 286 note 52 The situation created by s.63 was described as “an intolerable nuisance, crying aloud for abatement”: (1884) 28 Sol. J. 703.

page 286 note 53 See Re Harding's Estate [1891] 1 Ch. 60, 64, North, J.Google Scholar for a concise summary of the effect of the provisions. The Settled Land Acts of 1882 and 1884 are still operative in Ireland: see Professor Wylie, J. C. W., Irish Land Law, 2nd ed. (1986), pp. 432437Google Scholar.

page 286 note 54 Re Soden and Alexander's Contract [1918] 2 Ch. 258, 264, Younger, J.Google Scholar

page 286 note 55 Ibid.

page 287 note 56 See in particular DrOffer, Avner, “The Origins of the Law of Property Acts 1910–1925” (1977)40 M.L.R. 505CrossRefGoogle Scholar, and Anderson, Stuart, “Land Law Texts and the Explanation of 1925” [1984] C.L.P. 63Google Scholar.

page 287 note 57 Offer, op. cit., p. 515.

page 287 note 58 The text of the Bill together with a commentary are to be found as an appendix to The Land Transfer Acts 1875 and 1897, by Cherry, B. L. and Marigold, H. W. (1899)Google Scholar.

page 287 note 59 Offer, op. cit., p. 518.

page 288 note 60 For an account of legislative reform of the law of property prior to 1900, see De Villiers, J. E. R., The History of the Legislation concerning Real and Personal Property during the Reign of Queen Victoria (1901)Google Scholar

page 288 note 61 49 H.L. Deb. 4th ser., May 13, 1897, cols. 325–327.

page 288 note 62 Cherry and Marigold, op. cit., Preface, p. vii.

page 288 note 63 Cherry and Marigold, op. cit. p. 417.

page 288 note 64 Conveyancing Bill cl. 6.

page 288 note 65 Cherry and Marigold, op. cit., pp. 419–420.

page 288 note 66 Conveyancing Bill cl. 7.

page 288 note 67 See Land Registration Act 1925, s.70.

page 288 note 68 Conveyancing Bill cl. 3(4). Commenting on this provision, Cherry and Marigold merely state that “the rights of occupiers must clearly be protected”: op. cit., p. 429. See now Land Registration Act 1925, s.70(l)(g). The rights of occupiers are considered in the fourth part of this article.

page 289 note 69 Conveyancing Bill cl. 7 and cl. 12(2) and (3); Cherry and Marigold, op. cit., p. 432 and p. 443.

page 289 note 70 Cherry and Marigold, op. cit., p. 443 and p. 466. Cl. 39 of the Conveyancing Bill stated that trustees were “bound to make rightful dispositions only” and would be liable for breach of trust “for any wrongful disposition”.

page 289 note 71 Conveyancing Bill, cl. 44.

page 289 note 72 For the background to the Bills, see Offer, op. cit., p. 511. The Bills were first introduced on 10 July 1913, not 18 July, as Offer states: 14 H.L.Deb., 5th ser., July 10, 1913, cols. 862–863.

page 289 note 73 Underhill's, Arthur disparagement of the Bill in (1914) 30 L.Q.R. 35Google Scholar was probably due to pique. His own scheme for reform (which was not well regarded) was not adopted: Offer, op. cit., p. 513.

page 289 note 74 The principal provisions are as follows. Trusts for sale and settlements were kept separate: Real Property and Conveyancing Bill 1914, cl. 145(4) and (5). In the case of settled land, the legal estate was to be vested where possible in the life tenant: cl. 81(1), (3) and (4). Trustees for sale were to have the same powers of disposition as absolute owners: cl. 78. Purchasers would obtain a title free of the trusts in the absence of any inhibition or caution: cl. 92(1). The trustees were bound to make only rightful dispositions: cl. 100.

page 290 note 75 Law of Property Act 1925, s.28(l), referring to the Settled Land Act 1925, Parts II–V and s.102.

page 290 note 76 (a)Personal representatives were given the same powers as trustees for sale in addition to the powers which they had enjoyed prior to 1925: Administration of Estates Act 1925, s.39.

(b)Land held by charity trustees was deemed to be settled land, and they were to have all the powers of the life tenant and trustees of the settlement: Settled Land Act 1925, s.29.

(c)Part III of the Law of Property Act 1925 conferred selling and leasing powers on mortgagees.

(d)For vesting orders by the court, see Law of Property Act 1925, s.9(l)(a), and commentary thereon in Wolstenholme, and Cherry's, Conveyancing Statutes (13th ed., 1972, Farrand, J. T.), 1, p. 65Google Scholar. There are a number of instances where a vesting order has to overreach equitable interests and powers. Obvious examples are the court's powers (i) to sanction a disposition of property held on trust for sale, where the trustees for sale refuse to carry out the transaction: Law of Property Act 1925, s.30; and(ii) to order a sale of mortgaged property in lieu of foreclosure: Law of Property Act 1925, s.91.

page 290 note 77 By the Law of Property (Amendment) Act 1924, Third Schedule, Part II, para. 1.

page 291 note 78 The draftsman added a corresponding provision to cover the conveyancing implications of this. By section 10(1) of the Act, it is neither necessary nor proper to include in the abstract of title an instrument relating to any interest or power which will be overreached on the conveyance of the estate.

page 291 note 79 The nearest equivalent was section 20(2) of the Act which stated the effect of a conveyance by a life tenant. The provision is now Settled Land Act 1925, s.72(2).

page 291 note 80 The equation between powers and overreaching was made explicit in the Real Property and Conveyancing Bill 1914. Thus cl. 80(5) stated that, “so long as the proprietor has power under the Settled Land Acts or any other statute, or under the conveyance or settlement of the proprietary estate, to overreach a subordinate interest …” See too cl. 74(5) and (6).

page 291 note 81 Law of Property Act 1925, s.27(2) (trusts for sale); Settled Land Act 1925, s.l8(l)(b) and (c) (settled land). There is no similar requirement in relation to dispositions by personal representatives or mortgagees.

page 291 note 82 Hulme v. Hulme (1833) 2 My. & K. 682, Leach, M.R.Google Scholar; Barnes v. Addy (1873) 28 L.T. 398, Wickens, V.-C.Google Scholar

page 292 note 83 See, e.g., Re Garnett Orme and Hargreaves' Contract (1883) 25 Ch.D. 595, Bacon, V.-CGoogle Scholar; Re Johnson's Settled Estates [1913] W.N. 222, Eve, J.Google Scholar

page 292 note 84 Section 3(3) made provision for the overreaching of interests having priority to the trust for sale or settlement.

page 293 note 85 Section 2(2) makes provision for the overreaching of interests having priority to the trust for sale.

page 293 note 86 This is the view of the Law Commission: LCWP 106, para. 2.1, and personal correspondence.

page 293 note 87 Law of Property Act 1925, s.42(l). Section 42 was given its present form by the Law of Property (Amendment) Act 1924, Third Schedule, Part 1, para. 4. The draftsman's first thoughts, found in the Law of Property Act 1922, s.7, are revealing, because they clearly demonstrate the connection between overreaching and powers. Section 7(1) provided:

Where title can be made to a legal estate under the powers conferred by the Settled Land Act (as extended by this Act) available to bind an equitable interest or power in or over the land without an application to the court, then a purchaser shall, notwithstanding any stipulation to the contrary, be entitled to require that title be made under such powers without the concurrence of the person entitled to an equitable interest or in whom the equitable power is vested.

page 293 note 88 No capital monies arise in this case, because the only leases which the mortgagor can grant are those which reserve a rent and are not granted at a premium: section 99(6).

page 294 note 89 See the definitions of “incumbrance” and “mortgage”: Law of Property Act 1925, s.205(l)(vii) and (xvi) respectively.

page 294 note 90 See, e.g., Lee v. Soames (1886) 36 W.R. 884.

page 294 note 91 12th ed., 1932, vol. I, p. 233; and to like effect, Hood, and Challis, , Property, Settled Land, Trustee and Administration Acts (8th ed., 1938, Boraston, J. H.), p. 77Google Scholar.

page 294 note 92 The same statement appears in the 13th and most recent edition (1972), edited by J. T. Farrand—who was a Law Commissioner when LCWP 106 was drafted.

page 295 note 93 Davies v. Hall [1954] 2 All E.R. 330, 334, Romer, L.J.Google Scholar; supra, text to n. 19.

page 295 note 94 On this very difficult subject see (1986) 102 L.Q.R. 267 and (1987) 50 M.L.R. 217 (Harpum).

page 295 note 95 LCWP 106, para. 4.6.

page 295 note 96 The Commission rely on City of London Building Society v. Flegg [1988] A.C. 54, considered infra, but it provides no support for their view.

page 296 note 97 Spalding v. Shalmer (1684) 1 Vern 301, 303, North, Lord KeeperGoogle Scholar.

page 296 note 98 Sugden on Powers, p. 521. See text to n. 24supra.

page 296 note 99 Settled Land Act 1925, s.95 (settled land); Law of Property Act 1925, s.27(l) (land held on trust for sale); and Trustee Act 1925, S.14(l) (all other forms of property).

page 296 note 1 Trustee Act 1925, S.14(2).

page 296 note 2 See Lightwood, J. M. (1929) 3 C.L.J. 59, 6768CrossRefGoogle Scholar, for the draftsman's first thoughts; Law of Property Act 1922, s.3(3); Law of Property Act 1925, s.2(2); and Law of Property (Amendment) Act 1926, s.7 and Schedule.

page 296 note 3 Law of Property Act 1925, s.2(3) and (5).

page 296 note 4 Obviously, in those cases where a purchaser cannot see the vendor's title, he may not know that he is dealing with trustees for sale. This will be the case on the grant or assignment of a lease of unregistered land: Law of Property Act 1925, s.44(2).

page 296 note 5 Where land is settled, the vesting deed places that fact on the face of the title: Settled Land Act 1925, ss.4 and 5.

page 297 note 6 Law of Property Act 1925, ss.34(3) and 36(1).

page 297 note 7 The most celebrated, but with hindsight, subversive analysis of the co-ownership provisions is to be found in (1944) 9 Conv. (N.S.) 37, 72 and 181 (unattributed, but could it be by Harold Potter?). For recent discussions, see Swadling, William J., “Beneficial co-ownership behind a resulting trust and the problems of a trust for sale” [1986]Google ScholarConv. 379; and Grant, Malcolm, “Co-ownership: what could be simpler” [1987]C.L.P. 159Google Scholar.

page 297 note 8 Law of Property Act 1925, ss.1(6), 34(4) and 36(2).

page 297 note 9 Law of Property Act 1925, s.205(1)(ix), defines “land” so as to exclude an undivided share in land; section 36(2) states that “[n]o severance of a joint tenancy of a legal estate, so as to create a tenancy in common in land, shall be permissible.”

page 297 note 10 This was spelt out twice in the Law of Property Act 1922: by section 10 (tenancies in common could only be created “under a settlement” or “behind a trust for sale”) and by the Third Schedule, para. 2(6), considered infra.

page 297 note 11 Settled Land Act 1925, s.36.

page 297 note 12 That is the proper way of providing that the beneficial interest in the land shall be divided between two or more persons”: Lightwood, J. M., (1932) 73 L.J. News 355Google Scholar.

page 297 note 13 Lightwood, J. M., (1932) 73 L.J. News 355Google Scholar. This point is developed infra.

page 298 note 14 Section 36. See text to n. 11 supra.

page 298 note 15 See too, Law of Property Act 1925, s.3(1)(b)(ii).

page 298 note 16 Even if by reason of death there is only one trustee for sale, it will be apparent from the face of the title that there is a trust for sale, and the purchaser will therefore know that a second trustee for sale must be appointed.

page 298 note 17 (1729) 1 Eq. Ca. Ab. 291, discussed in White, and Tudor's, Leading Cases in Equity (9th ed., 1928, by Hewitt, E. P. Q.C. and Richardson, J. B.), vol. II, p. 881ffGoogle Scholar.

page 298 note 18 This important point was first appreciated by Friend, Mark and Newton, John in “Undivided Shares and Trusts for Sale—A Draftsman's Error?” [1982] Conv. 213, 214215Google Scholar.

page 298 note 19 (1751) 2 Ves. Sen. 252, 258. For a very different report of the case, see 3 Atk. 735.

page 298 note 20 Harrison v. Barton (1860) 1 J. & H. 287, 292, Wood, V.-C PageGoogle Scholar; Sugden on Vendors and Purchasers (14th ed., 1862), p. 698.

page 298 note 21 Sugden on Vendors and Purchasers, p. 698.

page 299 note 22 The precursor of the Settled Land Act 1925, s.36(4), which was cast in its present form by the Law of Property (Amendment) Act 1924, Schedule 4, para. 17.

page 299 note 23 The purpose of the section is to make trusts binding on trustees. So far as relevant, it provides that “[a]ll equitable interests and powers in or over land shall be enforceable against the estate owner of the legal estate affected”, and that where the land is held on trust for sale, the trustees “shall stand possessed of the net proceeds of sale … upon such trusts and subject to such powers and provisions as may be requisite for giving effect to the equitable interests and powers affecting the same respectively, of which they have notice.” The proviso to section 3(1)(b)(ii) demonstrates that the draftsman was mindful of section 34(2).

page 299 note 24 It is clear from Rye v. Rye [1962] A.C. 496 that a conveyance requires an instrument. It cannot therefore be implied. If it is intended to vest a legal estate in two or more persons as joint tenants, there must be an instrument by which the land is conveyed to them, in compliance with the Law of Property Act 1925, s.36(1). This point was overlooked recently by the Court of Appeal in A. G. Securities v. Vaughan [1988] 2 W.L.R. 689, reversed [1988] 3 W.L.R. 1205 H.L., Google Scholar The Court of Appeal assumed that there could be an implied grant of a joint tenancy to a group of flat sharers: [1988] 2 W.L.R. 689, 700, Fox L.J. This was described by Oliver, Lord in the House of Lords as “a strange and unnatural theory”: [1988] 3 W.L.R. 1205, 1224Google Scholar. It is a nice point whether a lease for three years or less could be created orally (see Law of Property Act 1925, s.54(2)) if granted to several lessees as joint tenants or tenants in common.

page 300 note 25 Norton on Deeds (2nd ed., 1928, by Morrison, R. J. A. and Goolden, H. J.) p. 435Google Scholar; White and Tudor, op. cit., p. 881.

page 300 note 26 See e.g. K. J. Gray, Elements of Land Law, pp. 361ff.; Megarry and Wade, The Law of Real Property, 5th ed., pp. 437ff.

page 300 note 27 The first two “omissions” listed by Megarry & Wade, op. cit., p. 438 are cases in point:

(i) “A conveyance to A (an infant) and B (an adult) as tenants in common” is arguably covered by section 19(2), which imposes a trust for sale where “[a] conveyance of a legal estate in land to an infant, jointly with one or more persons of full age …” After 1926 the legal estate can only be conveyed to persons as joint tenants. Section 19(2) does not say “where a legal estate is expressed to be conveyed to an infant, jointly with one or more persons of full age …“ Therefore a statutory trust for sale is imposed under the sub-section, and the adult grantees hold on trust for themselves and the infant as equitable tenants in common.

(ii) “A conveyance to A and B as joint tenants, where equity requires [presumes?] them to take as beneficial tenants in common.” The draftsman was probably intending to address this very situation when he drafted section 34(2) of the Law of Property Act 1925, see text to notes 14–21 supra. A and B will not be able to adduce that they are tenants in common.

page 301 note 28 The draftsman could not have forseen tenancies in common arising from the imposition of constructive or statutory trusts on absolute legal owners: see Gissing v. Gissing [1971] A.C. 886Google Scholar and section 37 of the Matrimonial Proceedings and Property Act 1970 respectively.

page 301 note 29 [1955] 1 Q.B. 234 (C.A., )Google Scholar. Hodson and Parker L.JJ. concurred in the judgment of Denning L.J.

page 301 note 30 [1955] 1 Q.B. 234, 237.

page 301 note 31 The suggestion by W. J. Swadling, [1986] Conv. 379, 384, that the plaintiff Bull should have held the property on a bare trust for himself and his mother as tenants in common (not on a trust for sale), cannot be supported in view of the clear evidence that the draftsman intended that undivided shares should exist as interests in possession only behind a trust for sale.

page 301 note 32 On the facts, Mrs. Bull, the defendant, would almost certainly have been able to raise an equity by estoppel, which would of course have bound any purchaser with notice.

page 302 note 33 In Williams & Glyn's Bank Ltd. v. Boland [1981] A.C. 487, 507Google Scholar, admittedly more in the context of an analysis of the rights of occupation of tenants in common, Lord Wilberforce described Denning L.J.'s judgment, without apparent irony, as “most illuminating”.

page 302 note 34 [1988] A.C. 54. This case demonstrates that the draftsman's apparent assumption that persons would take and act on legal advice was too optimistic. The Fleggs spurned the legal advice they were given: it led to tears in the House of Lords.

page 302 note 35 [1988] A.C. 54, 77. Lord Templeman regarded the point as axiomatic: p. 70. The declaration of a beneficial joint tenancy in favour of A and B could not preclude C and D, who gave value and were not parties to the transfer, from asserting a beneficial interest: Robinson v. Robinson (1976) 241 E.G. 153, 155, Judge, ThomasGoogle Scholar. Cf. Pink v. Lawrence (1977) 36 P. & C.R. 98, 101, Buckley, L.J.Google Scholar In principle, the declaration of beneficial interest should be conclusive if the beneficiaries agree to it and/or are parties to the conveyance: Goodman v. Gallant [1986] Fam. 106 (C.A., )Google Scholar; Re Gorman (a bankrupt) [1990] 1 All E.R. 717.

page 302 note 36 For consideration of what constitutes a bare trust, see Christie v. Ovington (1875) 1 Ch.D. 279, 281, Hall, V.CGoogle Scholar; Re Cunningham and Frayling [1891] 2 Ch. 567, 571–2, Stirling, J.Google Scholar; I.R.C. v. Silverts Ltd. [1951] Ch. 521, 530, Evershed, M.R.Google Scholar; and the penetrating analysis by Gummow, J. in Herdegen v. Federal Commissioner of Taxation (1989) 84 A.L.R. 271, 281ffGoogle Scholar. (Federal Court of Australia).

page 302 note 37 [1969] 3 All E.R. 945.

page 302 note 38 [1969] 3 All E.R. 945, 949.

page 303 note 39 A bare trustee must of course act on the direction of the beneficiary. A trustee holding on a statutory trust for sale is under a duty to consult the beneficiaries and give effect to the wishes of those with a majority interest, so far as is consistent with the general interest of the trust: Law of Property Act 1925, s.26(3).

page 303 note 40 Re Pope's Contract [1911] 2 Ch. 442, Neville, J.Google Scholar

page 303 note 41 Hume v. Lopes [1892] A.C. 112H.L., Google Scholar (decided with reference to the Trust Investment Act 1889, s.3).

page 303 note 42 The section expressly stated that the trustee might “also from time to time vary any such investment”.

page 303 note 43 Re Pratt's Will Trusts [1943] Ch. 326, Morton, J.Google Scholar

page 304 note 44 Trustee Investments Act 1961, s,17(4) referring back to Trustee Act 1925, s.68(11).

page 304 note 45 This point has been noted by writers on trusts—such as Professor Pettit, P. H., Equity and the Law of Trusts (6th ed., 1989) p. 392Google Scholar, and Martin, Jill E. in Hanbury, and Maudsley, , Modern Equity, 13th ed. (1989), p. 527Google Scholar—but ignored in the standard texts on land law.

page 304 note 46 Part X and the Sixteenth Schedule.

page 304 note 47 Section 8 and the Eighth Schedule.

page 304 note 48 Land Transfer Act 1897, s.20(5) and (6).

page 304 note 49 A. Offer, (1977) 40 M.L.R. 505, 517.

page 304 note 50 Land Registration Act 1925, s. 120(1) and (2).

page 304 note 51 The provisions were ss.29 (freeholds) and 34 (leaseholds). For criticism, see Cherry and Marigold, The Land Transfer Acts 1875 and 1897, p. 12, together with commentary on the individual sections. For dispositions off the register, see s.50.

page 304 note 52 Second and Final Report, Cd. 5483, especially at p. 37, para. 69. Many of the ideas embodied in the Land Registration Act 1925 have their genesis in this Report. The first attempt to implement them was Viscount Haldane's Real Property and Conveyancing Bill 1914.

page 305 note 53 Land Registration Act 1925, s.18 (dispositions of freehold land); and s.21 (dispositions of leasehold land).

page 305 note 54 Commenting on the Conveyancing Bill, cl. 7, which had a similar effect to the Land Registration Act 1925, ss.18 and 21, Cherry and Marigold, op. cit., p. 432, said, “[t]his clause aims at rendering unnecessary the investigation by a purchaser of the power of disposition of his vendor; the purchaser is merely to see that he is deating with ‘the estate’ which is to be purchased”.

page 305 note 55 For Underhill's views, see his pamphlet, The Line of Least Resistance, published as an appendix to the Fourth Report of the Scott Committee on the Transfer of Land (1919, Cmd. 424).

page 305 note 56 Land Registration Act 1925, s.86(1).

page 305 note 57 Land Registration Act 1925, s.86(3); Land Registration Rules 1925, rr.56–58 and 104.

page 305 note 58 Land Registration Rules 1925, Schedule, Form 9.

page 305 note 59 Land Registration Act 1925, s.94(1).

page 305 note 60 Land Registration Act 1925, s.58(3), does make provision for the entry of a restriction in cases where there are joint proprietors of land, to ensure that no disposition can be made if the number of proprietors is reduced below a certain specified number. This is to deal with the situation where one of two joint proprietors dies, and the survivor is not absolutely entitled. The subsection is badly drafted, and has only been made to work by restricting and further defining its scope: Land Registration Rules 1925, r. 213; Ruoff, and Roper, , Registered Conveyancing, 5th ed. (1986), p. 437Google Scholar. For the text of the restriction in current use, see Professor Barnsley, D. G., Conveyancing Law and Practice, 3rd ed. (1988), pp. 315316Google Scholar. The Law Commission has cogently criticised the sub-section: Third Report on Land Registration, Law Commission No. 158, para. 4.55, and it will be repealed if the Land Registration Bill proposed in the Fourth Report on Land Registration (Law Commission No. 173) is enacted., Chs. 1 and 2.

page 306 note 61 Land Registration Act 1925, s.58(l); Land Registration Rules r. 235 and Schedule, Form 75; Ruoff and Roper, op. cit., p. 434.

page 306 note 62 Cf. Ruoff and Roper, op. cit., pp. 434 and 436. where the authors state—erroneously—that there is a duty to enter such a restriction only where the trust instrument limits the powers of the trustees, and not—by implication—when those powers are limited by the general law.

page 306 note 63 Land Registration Act 1925, s.54(l); Etias v. Mitchell [1972] Ch. 652. A notice may be entered on the register to ensure that there “shall be at least two trustees”: Land Registration Act 1925, s.49(1)(d).

page 306 note 64 It has been suggested by Professor Farrand, in Contract and Conveyance, 4th ed. (1983), p. 310Google Scholar, that unless the transfer to the trustees for sale grants them wider powers, they will be confined to those conferred upon them by the Law of Property Act 1925, s.28. Although in the absence of any restriction, a purchaser is entitled to assume that they have unlimited powers, if in fact they exceed those conferred by section 28, they will, as against the beneficiaries, commit a breach of trust. The present writer hopes that this argument is correct, but there is room for some doubt. The Land Registration Act 1925, s.18, confers the powers of an absolute owner upon a registered proprietor in the absence of any restriction to the contrary. Which is to prevail, the Law of Property Acl, s.28, or the Land Registration Act, s.18?

page 307 note 65 (1988) A.C. 54, Bridge, Lords, Templeman, , Mackay, , Oliver, and Goff, Google Scholar. There are only two speeches, from Lord Templeman and Lord Oliver, and it is the latter that must be regarded as the principal opinion. The publication of counsel's arguments has made an understanding of the decision much easier.

page 307 note 66 The Fleggs were clearly suspicious: they lodged a caution at exactly the time that the mortgage was under negotiation. See Peter Sparkes: [1988] Conv. 141.

page 307 note 67 [1986] Ch. 605.

page 307 note 68 See e.g.. Gardner, S., (1988) 51 M.L.R. 365Google Scholar; Smith, R.J., (1987) 103 L.Q.R. 520Google Scholar; W. J. Swadling, (1987) Conv. 451; M. P. Thompson [1988] Conv. 108; Harpum, C., [1987] C.L.J. 392Google Scholar.

page 308 note 69 “This Part of this Act shall not prejudicially affect the interest of any person in possession or in actual occupation of land to which he may be entitled in right of such possession or occupation.”

page 308 note 70 A purchaser of registered land takes subject to certain rights “subsisting in reference thereto” and listed in s.70(l). These overriding interests include (para, (g)) “The rights of every person in actual occupation of the land.…, save where enquiry is made of such person and the rights are not disclosed.”

page 308 note 71 [1988] A.C. 54, 60, Lindsay, JohnGoogle Scholar Q.C. The point does not appear to have been argued below.

page 308 note 72 Settled Land Act 1925, s.71(l)(i).

page 308 note 73 [1988] A.C. 54, 71.

page 308 note 74 [ 1988] A.C. 54, 90. See too his Lordship's, Google Scholar remarks at 78E–79A and 89B.

page 309 note 75 [ 1988] A.C. 54,71, Lord Templeman; 78, Lord, OliverGoogle Scholar.

page 309 note 76 Distinguishing the earlier decision of the House in Williams & Clyn's Bank Ltd. v. Roland [1981] A.C. 487 on this basis.

page 309 note 77 [1988] A.C. 54, 89.

page 309 note 78 LCWP 106 para. 4.6.

page 309 note 79 The Settled Land Act 1925, s.71(l)(i), confers a power to mortgage “[w]here money is required for … discharging an encumbrance on the … land or part thereof.” On the authorities, only mortgages which are reasonably necessary for the proper administration of the trust property can be said to be required”: Re Clifford [1902] 1 Ch. 87, 91, Buckley, J.Google Scholar; Re Bruce [1905] 2 Ch. 372, 376, Kekewich, J.Google Scholar In Flegg, the mortgage although intra vires —because there was a power to raise money to discharge encumbrances—was on any basis a breach of trust.

page 309 note 80 5th ed. (1986), p. 436.

page 310 note 81 Land Registration Act 1925, ss.20(l) and 23(1).

page 310 note 82 Hodgson v. Marks [1971] Ch. 892 (C.A.) (where a single trustee held on a bare trust for the beneficiary). The possibility that the beneficiary's interest might have been overreached so that it could not have been an overriding interest was neither argued nor considered in that case.

page 310 note 83 If the Law of Property Act, s.2, does not contain an exhaustive list of the occasions on which overreaching will take place when a legal estate is transferred to a purchaser, then the decision in Hodgson v. Marks [1971] Ch. 892 would appear to be incorrect. The trustee would have had a power of sale: Land Registration Act 1925, S.18(l). A single bare trustee can give a good discharging receipt: Trustee Act 1925, s.14. On that basis, the beneficiary's interest ought to have been overreached.

page 310 note 84 The Land Registration Act, s.74, provides that no person dealing with a registered estate shall be affected with notice of a trust.

page 311 note 85 The powers of mortgaging conferred by the Settled Land Act 1925, s.71(l) are very limited.

page 311 note 86 See Professor Farrand, J.T., Contract and Conveyance 4th ed. (1983), p. 307Google Scholar.

page 311 note 87 This seems to be a reasonable inference from both Robinson v. Robinson (1976) 241 E.G. 153 (doubted on its facts in Re Gorman (a bankrupt) [1990] 1 All E.R. 717) and City of London Building Society v. Flegg [1988] A.C. 54H.L., Google Scholar, but compare Pink v. Lawrence (1977) 36 P. & C.R. 98 (C.A., )Google Scholar

page 312 note 88 Cases in point are Hodgson v. Marks [1971] Ch. 892 (C.A., )Google Scholar, Chhokar v. Chhokar [1984] F.L.R. 313 (C.A., )Google Scholar and Ahmed v. Kendrick [1988] 2 F.L.R. 22 (C.A., )Google Scholar. In Ahmed, a husband who jointly owned registered land with his wife (who had ceased to live on the premises), forged his wife's signature on the transfer form. She obtained an inhibition, and the purchaser was held to have acquired only her husband's interest in the property and not hers. Why the purchaser was not protected under the Land Registration (Official Searches) Rules 1981 does not appear from the report.

page 312 note 89 For surveys of the modern law, see Cheshire, and Burn's, Modern Law of Real Property, 14th ed. (1988), pp. 223225Google Scholar; and K. J. Gray's Elements of Land Law, Chs. 24 and 26.

page 312 note 90 Bristol and West Building Society v. Henning [1985] 1 W.L.R. 778 (C.A., )Google Scholar; Paddington Building Society v. Mendelsohn (1985) 50 P. & C.R. 244C.A., Google ScholarAbbey National Building Society v. Cann (1989) 57 P. & C.R. 381 (C.A.)Google Scholar

page 313 note 91 Cf. Lloyds Bank Pic. v. Rosset [1989] Ch. 350 (C.A.) where a mortgage of the matrimonial home was obtained by the husband (a sole trustee for sale) without the wife's knowledge or consent, for the purpose of renovating the property. The wife's interest was held to take priority over the bank's first mortgage. On appeal, it was held that the wife had no beneficial interest in the property: [1990] 2 W.L.R. 867 H.L.

page 313 note 92 This was so in both the leading modern cases. In Williams & Glyn's Bank Ltd. v. Boland [1981] AC. 487H.L., Google Scholar, the husband-trustee mortgaged the matrimonial home to secure a loan made to him for the purposes of his building business. In City of London Building Society v. Flegg [1988] AC. 54, H.L.Google Scholar, the trustees, who were experiencing serious financial difficulties, mortgaged the house to refinance existing indebtedness.

page 313 note 93 Williams & Glyn's Bank Ltd. v. Boland ]1981 ] A.C. 487, H.L.Google Scholar and Kingsnorth Finance Co. Ltd. v. Tizard [1986] 1 W.L.R. 783, Finlay, JudgeGoogle Scholar, respectively.

page 313 note 94 First National Securities Ltd v. Hegarty [1985] Q.B. 850 (Bingham, J. and , C.A.)Google ScholarCf. Ahmed v. Kendrick [1988] 2 F.L.R. 22 (C.A., )Google Scholar

page 313 note 95 In cases of undue influence there must be “manifest disadvantage” to the party who acted under influence: e.g. Bank of Credit and Commerce International S.A. v. Aboody [1989] 2 W.L.R. 759, 774ff., J, Slade L.Google Scholar.

page 313 note 96 Constructive notice will suffice: Bank of Credit and Commerce International S.A. v. Aboody [1989] 2 W.L.R. 759, 787, J, Slade L.Google Scholar.

Some difficult questions might arise if the land were registered, the beneficiary coerced were in actual occupation, and the mortgage transferred: does Land Registration Act 1925, s.33(3), take precedence over section 70(l)(g) or vice versa?

page 314 note 97 Avon Finance Ltd. v. Bridger (1979) [1985] 2 All E.R. 281 (C.A., )Google Scholar; Kings North Trust Ltd. v. Bell [1986] 1 W.L.R. 119C.A., Google Scholar; Coldunell Ltd. v. Gallon [1986] Q.B. 1184 (C.A., )Google Scholar; Midland Bank P.l.c. v. Perry (1987) 56 P. & C.R. 202 (C.A., )Google Scholar; Midland Bank P.l.c. v. Shephard [1988] 3 All E.R. 17 (C.A., )Google Scholar; Bank of Baroda v. Shah [1988] 3 All E.R. 24 (C.A., )Google Scholar; Barclays Bank P.l.c. v. Kennedy (1988) 58 P. & C.R. 221 (C.A., )Google Scholar; Bank of Credit and Commerce S.A. v. Aboody [1989] 2 W.L.R. 759 (C.A., )Google Scholar.

page 314 note 98 [1988] A.C. 54 H.L.

page 314 note 99 [1986] Ch. 605. For criticisms of the decision see D. J. Hayton[1986] Conv. 131; Harpum [1986] C.L.J. 202.

page 314 note 1 See the Law Commission's Third Report on Land Registration (Law Commission No. 158) p. 10. The whole of England and Wales will become subject to compulsory registration from 1 December 1990: The Registration of Title Order 1989, S.I. 1989 No. 1347.

page 314 note 2 See Part II of the Administration of Justice Act 1985; the Green Paper, Conveyancing by Authorised Practitioners, (Cm 571, 1989)Google Scholar; and the Courts and Legal Services Bill.

page 315 note 3 Gardner, Simon, (1988) 104 L.Q.R. 367Google Scholar.

page 315 note 4 Taylor v. Stibbert (1794) 2 Ves. 437, 440, Lord, Loughborough L.C.Google Scholar, punctuation as reported.

page 315 note 5 Ibid. See too Daniels v. Davison (1809) 16 Ves. 249, 254, Lord, Eldon L.C.Google Scholar; Meux v. Maltby (1818) 2 Swans. 277, 281, Plumer, M.R.Google Scholar

page 315 note 6 Jones v. Smith (1841) 1 Hare 43, 60, Wigram, V.-CGoogle Scholar; Bailey v. Richardson (1852) 9 Hare 734, 736, Turner, V.-C.Google Scholar

page 315 note 7 Allen v. Anthony (1816) 1 Mer. 283, Lord, Eldon L.C.Google Scholar

page 315 note 8 Barnhart v. Greenshields (1853) 9 Moo.P.C. 18, 32, Rt. Hon.Leigh, T. PembertonGoogle Scholar.

page 315 note 9 Jones v. Smith (1841) 1 Hare 43, 60, Wigram, V.-C.Google Scholar

page 315 note 10 (1856) 8 De CM. & G. 572, especially at pp. 580–581.

page 315 note 11 [1901] 1 Ch. 45, 51, Farwell, J.Google Scholar; affirmed [1902] 1 Ch. 428 (, C.A.)Google Scholar

page 316 note 12 Schedule XVI, Part I, para. 2(2). The term “overriding interest” was first used in Viscount Haldane's Real Property and Conveyancing Bill 1914, Schedule X, para. 2(2).

page 316 note 13 Schedule XVI, Part I, para. 5(3). This was derived from one of the paramount interests” contained in Wolstenholme, and Cherry's, 1895 Conveyancing Bill, cl. 3(4)Google Scholar, considered in Part IIIA. of this Article, supra. See too the Real Property and Conveyancing Bill 1914, Schedule X, para. 5.

page 316 note 14 [1901] 1 Ch. 45; ]1902] 1 Ch. 428.

page 316 note 15 This distinction was noted in a case on the equivalent provision in the Land Registration Act 1925, s.70(1)(g): Strand Securities Ltd. v. Caswell [1965] Ch. 958, 980981, Lord, Denning M.R.Google Scholar (who considered the omission to be a legislative oversight); 984, Russell L.J.

page 316 note 16 City of London Building Society v. Flegg [1988] A.C. 54, 80, Oliver, LordGoogle Scholar, speaking of the Law of Property Act 1925, s.14, which re-enacted section 33.

page 317 note 17 Wolstenholme and Cherry's Conveyancing Statutes, 13th ed., vol. I, p. 69; City of London Building Society v. Flegg [1988] A.C. 54, 80, Oliver, LordGoogle Scholar.

page 317 note 18 Wolstenholme and Cherry, op. cit., p. 69.

page 317 note 19 (1856) 8 De G.M. & G. 572, 581.

page 318 note 20 A Concise Explanation of Lord Birkenhead's Act (the Law of Property Act 1922) (1922) pp. 91–92.

page 318 note 21 Section 14 and Schedule VII.

page 318 note 22 This point, now in common currency, was first noticed by Ibbetson, David, Fellow of Magdalen College, Oxford, who drew it to this writer's attention: see (1977) 41 Conv. 415, 419 n. 31Google Scholar. For a discussion of the point, see Friend, Mark and Newton, John, [1982] Conv. 213.Google ScholarCf. Gardner, Simon, (1988) 51 M.L.R. 365, 367Google Scholar.

page 318 note 23 See, e.g.. Midland Bank Trust Co. Ltd. v Green [1981] A.C. 513 (, H.L.)Google Scholar, and this writer's note on the case: [1981] C.L.J. 213.

page 319 note 24 See, e.g., Kling v. Keston Properties Ltd. (1983) 49 P. & C.R. 212, 221, Vinelott, J.Google Scholar

page 319 note 25 Lloyds Bank Pic. v. Rosset [1989] Ch. 350, 393399, Mustill, L.J.Google Scholar

page 319 note 26 Kling v. Keston Properties Ltd. (1983) 49 P. & C.R. 212, Vinelott, J.Google Scholar; Lloyds Bank Pic. v. Rosset [1989] Ch. 350 (, C.A.Google Scholar) (Nicholls and Purchas L.JJ.).

page 319 note 27 Re Chowood's Registered Land [1933] Ch. 574.

page 319 note 28 See the Law Commission's Third Report on Land Registration (No. 158), p. 11.

page 319 note 29 This was decided explicitly in relation to the Land Registration Act 1925, s.70(l)(g), by National Provincial Bank Ltd. v. Ainsworth [1965] A.C. 1175, H.L.Google Scholar It is implicit in City of London Building Society v. Flegg [1988] A.C. 54H.L., Google Scholar that it applies equally to the Law of Property Act 1925, s.14.

page 319 note 30 City of London Building Society v. Flegg [1988] A.C. 54H.L., Google Scholar

page 319 note 31 [1986] Ch. 605.

page 319 note 32 [1988] A.C. 54, 80.

page 319 note 33 [1988] A.C. 54, 74.

page 320 note 34 Law Commission Nos. 158 and 173 respectively. See Smith, R. J., “Land Registration Reform—the Law Commission's Proposals” [1987]Google Scholar Conv. 334; and “Land Registration: White Elephant or Way Forward” [1986] C.L.P. 111.

page 320 note 35 Registration Bill, cl. 35(3)(a), referring to cl. 33(5)(d) and (e). It is interesting that the draftsman visualises that an interest under a bare trust may be capable of being overreached.

page 320 note 36 Clauses 33(1) and 33(5).

page 320 note 37 Para. 4.52.

page 321 note 38 Registration Bill, cl. 7(2). Many interests which are presently overriding interests become “general burdens”: Registration Bill, cl. 5(3).

page 321 note 39 Thus, for example, the verbose and obscure Land Registration Act 1925, s.70(1)(a), is replaced by clauses 7(2)(a) (“a legal easement or profit”) and (e) (“customary rights”).

page 321 note 40 [1901] 1 Ch. 45; [1902] 1 Ch. 428 (C.A.)

page 321 note 41 Registration Bill, cl. 9(7).

page 321 note 42 Land Registration Act 1925, s.86(2). This extension is understandable in view of the Law Commission's proposals on trusts of land, considered infra.

page 321 note 43 Third Report, para. 2.63.

page 321 note 44 Third Report, para. 2.64.

page 321 note 45 “It is disappointing that the Law Commission has nothing to say about raising public awareness of registration requirements”: Smith, R. J., [1987]Google Scholar Conv. 334, 337. The absence of comment by the Commission may be due to the enormous backlog of applications for registration which the Land Registry face (1.147 million in February 1989: Coombs, Anthony M.P., Hansard (H.C.), 8 02 1989, vol. 146Google Scholar, col. 1003) due to the rapid extension of compulsory registration.

page 322 note 46 Third Report, para. 3.13.

page 322 note 47 Clauses 44(3) and (4).

page 322 note 48 Clauses 44(3) and 70(1).

page 322 note 49 “If an incumbrancer is in actual occupation his rights will be respected, whilst a proprietor in possession is generally protected against rectification”: Smith, R. J., [1986] C.L.P. 111, 121—122Google Scholar.

page 322 note 50 At present, rectification is discretionary: Land Registration Act 1925, s.82(1). Under the Registration Bill, it is mandatory where the grounds set out in clause 44(1) exist.

page 322 note 51 Clause 44(4)(b).

page 322 note 52 Clause 45(l)(c).

page 322 note 53 Third Report, paras. 3.23–3.25.

page 322 note 54 [1981] A.C. 487 (H.L.)

page 322 note 55 Para. 2.59.

page 323 note 56 For reasons of speed and economy, purchasers and lenders do not insist upon their rights under the Law of Property Act 1925, s.42.

page 323 note 57 Third Report, para. 3.29.

page 323 note 38 Third Report, para. 2.63.

page 323 note 59 Clause 45(6). The Law Commission intend that the provision should be analogous to those contained in the Law Reform (Contributory Negligence) Act 1945: Third Report, para. 3.27.

page 323 note 60 Clause 45(5).

page 323 note 61 Clause 46(4); Third Report, para. 3.29.

page 323 note 62 See Kingsnorth Finance Co. Ltd. v. Tizard [1986] 1 W.L.R. 783Judge, FinlayGoogle Scholar, a decision that is in line with the principles stated in Holmes v. Powell (1856) 8 De G.M. & G. 572 (, C.A.Google Scholar in Ch.)

page 323 note 63 ”[W]e should not forget that money is generally an inadequate substitute for land…”: R. J. Smith, [1986] C.L.P. 111, 121. Despite the fact that a purchaser will be worse off with registered title, the Law Commission proudly states in the Third Report, para. 3.25 that “enactment of our proposals might lead to an increase in popular support for compulsory or voluntary registration of title as actually constituing a valuable title insurance scheme.”

page 324 note 64 See e.g. Sharneyford Supplies Ltd. v. Edge [1987] Ch. 305, C.A.Google Scholar, and generally [1988] Conv. 324 and 400. For a case in which a purchaser's failure to insist on his contractual right to vacant possession may have led to his downfall, see Hodgson v. Marks [1971/ Ch. 892 (especially the statement of the facts by Ungoed-Thomas, J.Google Scholar at first instance).

page 324 note 65 A defect will be patent if there is something on the land which necessarily leads to the conclusion that there is an adverse right: Yandle v. Sutton [1922] 2 Ch. 199, 210, Sargant J. The rights of persons in occupation are not for these purposes regarded as patent: the fact that a purchaser may have constructive notice of a right, does not make it patent: Caballero v. Henry (1874) L.R. 9 Ch. App. 447. The position is otherwise in Ireland: Wylie, J. C. W., Irish Conveyancing Law (1978) pp. 435437Google Scholar. If the beneficial interests of occupiers will be overreached on sale, they need not be disclosed.

page 324 note 66 Hodgson v. Marks [1971] Ch. 892, 932, Russell, L.J.Google Scholar

page 324 note 67 R. J. Smith, [1987] Conv. 334, 343.

page 325 note 68 Third Report, para. 2.12.

page 325 note 69 The present writer would go further: why not make the availability of indemnity conterminous with the vendor's obligations of disclosure?

page 325 note 70 Law Commission Nos. 181 (1989: hereafter “L.C. 181”) and 188 (1989: hereafter “L.C. 188”) respectively. Each report was preceded by a Working Paper: LCWP 94 (1985) and LCW P 106 (1988) respectively. There is an admirable critique of L.C. 181, by Smith, Roger: “Trusts of Land Reform”, [1990] Conv. 12, to which reference should be madeGoogle Scholar.

page 325 note 71 The Trusts of Land Bill (hereafter the “Trusts Bill”) and the Law of Property (Overreaching) Bill (hereafter the “Overreaching Bill”) respectively.

page 325 note 72 Trusts Bill, cl. 1(1); LC 181, para. 8.1.

page 325 note 73 Land held on charitable trusts is deemed to be settled land, but only for the limited purpose of conferring on the trustees the Settled Land Act powers: Settled Land Act 1925, s.29(l); Re Booth and Southend-on-Sea Estate Company's Contract [1927] 1 Ch. 579, Astbury J.

page 325 note 74 Trusts Bill, cls. 1(1), 10, 13 and 14. The manner in which the draftsman has attempted to implement this proposal is less than happy, e.g., instead of stating that all land which is coowned shall be subject to the new trust of land, he simply amends the Law of Property Act 1925, ss.34 and 36, which on their face apply only to tenancies in common and joint tenancies expressly created: Trusts Bill, cl. 10.

page 325 note 75 Trusts Bill, cl. 1(1).

page 325 note 76 Roger Smith argues cogently that the trustees should be under a trust to retain the land, but have a power to sell it: [1990] Conv. 12, 15.

page 325 note 77 LC 181, para. 1.7. The idea is not a novel one; see e.g., Professor G. A. Grove, (1961) 24 M.L.R. 123, 125. Such a reform was proposed for Northern Ireland in The Survey of the Land Law of Northern Ireland (1971) (see ProfessorGarner, J. F.Google Scholar, (1971) 35 Conv. 92), but never introduced: Professor Wylie, J. C. W., Irish Land Law (2nd ed., 1986) p. 414Google Scholar.

page 326 note 78 Trusts Bill, cl. 19.

page 326 note 79 Trusts Bill, cl. 21.

page 326 note 80 Trusts Bill, cl. 7; L.C. 181, para. 13.3–13.4.

page 326 note 81 L.C. 181, paras. 4.10 and 8.1. In other words, the trust property must be vested in the trustees and the trusts evidenced in writing in accordance with Law of Property Act 1925, s.53(l)(b) (unless resulting or constructive).

page 326 note 82 L.C. 181, paras. 6.1–6.2. This proposal should be read with that in L.C. 188, paras. 3.10 and 4.27, and implemented by the Overreaching Bill, cl. 2, that bare trusts should be overreachable.

page 326 note 83 L.C. 181, paras. 10.4–10.10.; the Trusts Bill, cl. 4, introduces a new Law of Property Act 1925, s.28, to this effect. The section would be subject to contrary intention: s.28(10), and contains a saving in respect of “any restrictions imposed by any enactment on the exercise by trustees of land of any particular power”: s.28(l). This saving is important. Dispositions by charities of property which forms part of their permanent endowments requires the consent of the Charity Commissioners: Charities Act 1960, s.29. Furthermore, a handful of schools, colleges and universities have very limited dispositive powers by virtue of the Universities and College Estates Acts 1925 and 1964. The limitations imposed by those Acts, already anomalous, will become indefensible if the Trusts Bill is ever enacted.

page 326 note 84 L.C. 181, para. 10.9.

page 326 note 85 Ibid.; Law of Property Act 1925, s.28(2), as amended by the Trusts Bill, cl.4(l).

page 327 note 86 LCWP 94, para. 7.5.

page 327 note 87 L.C. 181, paras 3.6 and 10.3.

page 327 note 88 L.C. 181, para. 10.5.

page 327 note 89 See City of London Building Society v. Flegg [1988] A.C. 54, 71, Lord Templeman; 90, Lord, OliverGoogle Scholar.

page 328 note 90 The Model Trustee Code for Australian Territories, edited by Lee, W. A., University of Queensland, (1989)Google Scholar comprises “model clauses together constituting a virtually complete trustee statute, supported by a commentary explaining each clause in detail”. Obviously it is geared to the Australian legal position: under the system of Torrens title, overriding interests are unknown.

page 328 note 91 L.C. 188, paras. 4.15 and 4.16: “The only requirement…will be that the consent is real, i.e., that consent has truly been given.”

page 328 note 92 L.C. 188, para. 4.3; Overreaching Bill, cl. 1(2).

page 328 note 93 [1986] Ch. 605 (C.A.); [1988] A.C. 54 (H.L.)

page 329 note 94 By executing the conveyance, transfer or charge, the legal owners would necessarily signify their consent.

page 329 note 95 See the Law Commission's Third Report on Land Registration, L.C. 158, para. 2.6.

page 329 note 96 LCWP 106, para. 6.1; L.C. 188, paras 3.4–3.5.

page 329 note 97 See, e.g., LCWP 106, para. 6.4: “wherever possible, interests should be overriding where protection against purchasers is needed.”

page 329 note 98 E.g., the all too plausible situation where a beneficiary acquired an interest informally whilst in occupation, who then moves out of the property on the break-up of the relationship with his/her co-habitee.

page 330 note 99 LCWP 106, para. 6.5.

page 330 note 1 LCWP 106, para. 6.6; L.C. 188, paras 4.24 and 4.25.

page 330 note 2 L.C. 188, para. 4.24. Rather more truthful was the prediction in L.C. 181, para. 6.1, that “It may be that our work on overreaching will result in a recommendation that the balance between the interests of beneficiaries and purchasers be altered”.

page 330 note 3 Third Report on Land Registration, L.C. 158, para. 2.2

page 331 note 4 Cf. Settled Land Act 1925, s.110(l).

page 332 note 5 Cf. The Schedule to the Land Registration Rules 1925, Form 9.

page 332 note 6 The Law Commission has recommended that its regime for trusts of land embrace bare trusts, and that such trusts should be overreachable: Trusts Bill, cl. 1(1) and comment thereon (L.C. 181, p. 35); Overreaching Bill, cl. 2 and comment thereon (L.C. 188, p. 25).

page 332 note 7 By limiting the matter in this way, the rights between beneficiary and trustee—which are not the same under a bare trust as they are under a trust for sale—would not be affected.

page 332 note 8 Cf. Law of Property Act 1925, s.23.

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