Jones v Registrar of Lands

• Jurisdiction: Cayman Islands
• Judge: (Smellie, J.)
• Judgment Date: 03 February 1998
• Date: 03 February 1998
• Court: Grand Court (Cayman Islands)

Grand Court

(Smellie, J.)

JONES, BOUCHARD and BANK OF NOVA SCOTIA

and

REGISTRAR OF LANDS and FIRE AND CASUALTY INSURANCE COMPANY OF CONNECTICUT

J.R. McDonough for the applicants;

Mrs. J. Banks, Crown Counsel, for the respondent;

S.G. Hellman for the intervenor.

Cases cited:

(1) -Assaf v. Fuwa, [1955] A.C. 215; (1954), 98 Sol. Jo. 733, followed.

(2) -Assets Co. Ltd. v. Mere Roihi, [1905] A.C. 176, distinguished.

(3) -Cave v. CaveELR (1880), 15 Ch. D. 639; sub nom. Chaplin v. Cave, Cave v. Cave, 49 L.J. Ch. 505, followed.

(4) -Diplock, In re, Diplock v. WintleELRUNK, [1948] Ch. 465; [1948] 2 All E.R. 318; on appeal sub nom. Ministry of Health v. Simpson, [1951] A.C. 251; [1950] 2 All E.R. 1137.

(5) -Ebanks v. Clarke, 1992–93 CILR 33, applied.

(6) -Frazer v. Walker, [1967] 1 A.C. 569; [1967] 1 All E.R. 649.

(7) -Gibbs v. Messer, [1891] A.C. 248, followed.

(8) -Lipkin Gorman v. Karpnale Ltd., [1991] 2 A.C. 548; [1992] 4 All E.R. 512, applied.

(9) -Myles v. Prospect Properties Ltd., 1994–95 CILR 1.

(10) -Proprietors, Strata Plan No. 66 v. R.P. Devs. Ltd., 1988–89 CILR N–18, explained.

(11) -Sharpe v. Foy(1868), 4 L.R. Ch. App. 35; 17 W.R. 65.

(12) -Smith v. Morrison, In re Morrison”s ContractsWLR, [1974] 1 W.L.R. 659; sub nom. Smith v. Morrison, [1974] 1 All E.R. 957, dicta of Plowman J. applied.

(13) -Strand Secs. Ltd. v. Caswell, [1965] Ch. 958; [1965] 1 All E.R. 820, distinguished.

(14) -Taylor v. BlakelockELR(1886), 32 Ch. D. 560; 55 L.T. 8.

(15) -Tilling v. Whiteman, [1980] A.C. 1; [1979] 1 All E.R. 737.

(16) -Wigg v. WiggENR(1739), 1 Atk. 382; 26 E.R. 244, applied.

Legislation construed:

Registered Land Law (1995 Revision) (Law 21 of 1971, revised 1995), s.2: The relevant terms of this section are set out at page 85, lines 16–18.

s.3: The relevant terms of this section are set out at page 83, lines 11–14.

s.4(d): The relevant terms of this paragraph are set out at page 80, line 42 – page 81, line 4.

s.37(1): The relevant terms of this sub-section are set out at page 85, lines 20–25.

s.38(1): The relevant terms of this sub-section are set out at page 84, lines 28–36.

s.41(1): The relevant terms of this sub-section are set out at page 82, lines 19–23.

s.42: The relevant terms of this section are set out at page 77, line 43 – page 78, line 17.

s.83: The relevant terms of this section are set out at page 85, lines 27–32.

s.105(3): The relevant terms of this sub-section are set out at page 89, lines 5–7.

s.106(1): The relevant terms of this sub-section are set out at page 85, lines 33–35.

s.108: ‘No instrument required by law to be stamped shall be accepted for registration unless it is duly stamped.’

s.154: The relevant terms of this section are set out at page 80, lines 19–21.

s.164: The relevant terms of this section are set out at page 88, lines 24–27.

Land Law-registration-stay of registration-Registered Land Law (1995 Revision), s.42 precludes registration of inhibition during stay of registration-inhibition is ‘instrument’ within meaning of s.2 and effective only on registration

Land Law-registration-application book-Registry may not refuse to record application for registration of transfer of title under Registered Land Law (1995 Revision), s.4(d) on grounds of absence of certificate of good standing or error in stamp duty

Land Law-registration-fraudulent transfers-deed of transfer showing payment of non-existent consideration in breach of Registered Land Law (1995 Revision), s.105(3) is not registrable instrument and passes no legal or beneficial interest

Land Law-registration-equitable interests-bona fide purchaser for value without notice of earlier equitable interest takes priority only if has acquired legal title by compliance with Registered Land Law

The applicants applied for rectification of the Land Register.

The first and second applicants purchased a property from H with the assistance of a mortgage from the third applicant. The property had been transferred to H from L Co. by a deed of transfer showing non-existent consideration (in breach of s.105(3) of the Registered Land Law) and had been purchased by L Co., a company owned by B, using money allegedly embezzled from the intervenor, an American insurance company. L Co. had not yet been registered as owner of the property at the time of the transfer to H.

The first and second applicants obtained a 14-day stay of any proposed dealings with the property. During the stay, the intervenor, who had commenced proceedings against L Co., B and others to restrain dealings with the proceeds of the alleged fraud, obtained an inhibition which was entered on the Register notwithstanding the stay.

Meanwhile, the Land Registry failed to enter in its application book the first and second applicants” application for the registration of the deeds of transfer from L Co. to H and from H to themselves, together with the charge in favour of the third applicant, as required by s.4(d) of the Law. This omission was initially on the mistaken ground that stamp duty on the

transfers had been wrongly calculated, and later on the ground that the applicants had neither submitted a certificate of good standing in respect of L Co., as the registered proprietor, nor obtained the removal of the inhibition, in compliance with a requisition from the Registry.

The applicants applied for rectification to remove the inhibition and to register the property in their names.

They submitted that (a) the intervenor”s inhibition should be removed from the Register since it could not take effect unless it were registered and no such registration could take place during a stay imposed under s.42 of the Law; (b) since the documents submitted to obtain registration of their title were ‘properly executed documents effecting the proposed dealing’ within the meaning of s.42(2), they should, in any event, have been given priority over the inhibition; (c) according to the Manual of Registry Procedure, the absence of a certificate of good standing for L Co. was not a substantial defect in their application justifying a refusal to enter it in the application book under s.4(d); (d) furthermore, under s.3 of the Law any provision of the Manual which operated to deny their application the priority it would otherwise have obtained by entry in the book would be inoperative, even though actual registration might be delayed pending the completion of formalities; and (e) accordingly, since they were bona fide purchasers without notice of the intervenor”s claim at the time of their purchase, they were entitled to become the legal proprietors of the property.

The Registrar of Lands submitted in reply that even though the inhibition should not have been entered on the Register during the stay, the application for registration of title had been properly refused since (a) under s.154 of the Law, L Co. should not have been registered as proprietor unless it had been shown to be of good standing; (b) the provisions of the Manual were effective as directives of the Registrar under s.11(2) of the Law; (c) the fraudulent nature of the transfer from L Co. to H meant that it was incapable of passing any beneficial or legal interest in the property to H and so to the applicants.

The intervenor submitted that (a) since under ss. 37(1), 83 and 106(1) of the Law no disposition of land could take place except by the execution of a transfer by the registered proprietor and registration of title in the recipient”s name, no legal title had passed from H to the applicants; (b) consequently the applicants were not protected by s.38(1) of the Law; (c) furthermore, the transfer from L Co. to H was null and void, since notice of the conspiracy by B to defraud the intervenor of the purchase money was imputed to L Co. and to H; and (d) thus, L Co. was a constructive trustee of the property for the intervenor and any subsequently acquired beneficial interest which the applicants might hold as bona fide purchasers would be defeated.

Held, dismissing the application:

(1) Since the stay of dealings imposed under s.42 of the Registered Land Law (1995 Revision) gave priority to the registration of an

instrument effecting the transfer of title to the applicants over any other instrument, the inhibition, which was an ‘instrument’ within the meaning of s.2 and effective only upon registration, should not have been registered during the stay. The applicants therefore did not need to obtain its removal before their own application could be entered in the application book (page 77, lines 26–36; page 78, lines 19–26; page 80, lines 1–6; page 89, lines 28–31).

(2) Nor would the miscalculation of stamp duty, even if it had occurred, have been a valid reason for the Land Registry”s failure to comply with s.4(d), since under s.108 of the Law, stamp duty was payable prior to registration itself and not prior to the entry of an application for registration in the book, as was specified in the Manual of Registry Procedure. Moreover, under s.3, any directive in the Manual which conflicted with the Law and which might deprive an instrument of the priority it would otherwise enjoy under s.41(1) was ultra vires (page 82, lines 29–38; page 83, lines 8–14; page 84, lines 3–9).

(3) Furthermore, although the Registry was entitled to require the applicants to produce a certificate of good standing in respect of L Co. under s.154 of the Law, its absence was not an impediment to the entry of the application in the book, either under s.4(d) or under the Manual. Accordingly, the application should have been allocated a number when it was received, and the time between entry in the book and registration should have been used to require such formalities to be perfected (page 80, lines 24–39; page 81, lines 20–30; page 83, lines 33–36).

(4) However, the applicants were not entitled to rectification of the Register to allow for registration of their own title...