The Land Registration Act 2002 (LRA), section 65 and Schedule 4, provides a statutory scheme for correcting cer-tain types of mistake in the register. In fraud cases surely that should be uncontroversial? Not necessarily; it depends on what constitutes an operative mistake for the purposes of Schedule 4. There is no statutory definition and there is con-flicting dicta as to how the issue should be approached. For example, it is possible under the current state of the law to oppose an application for alteration on the basis that alt-hough consent to the disposition was forged the sub-lease and charge were validly executed.

Schedule 4 of the LRA (1) sets out the circumstances in which the register can be altered. Paragraph 5 provides that,

"5. The registrar may alter the register for the purpose of—

(a) correcting a mistake,

(b) bringing the register up to date,

(c) giving effect to any estate, right or interest excepted from the effect of registration, or

(d) removing a superfluous entry."

Rectification is a specific type of alteration and arises where the alteration involves the correction of a mistake and prejudi-cially affects the title of the registered proprietor: paragraph 1 Schedule 4 to the LRA. The distinction of this type of mistake is relevant because Schedule 8 to the LRA provides that if a per-son suffers loss as a result of the rectification of the register he is entitled to be indemnified.

According to Rouff & Roper on Registered Conveyancing, par-agraph 46.009, if a registered proprietor loses his land or a lender his secured charge due to a voidable disposition there is no mistake to correct and therefore no indemnity available. If the land or charge is lost through a void disposition there is a mistake to correct and an indemnity available. It is unclear why a transaction induced by fraud should be treated in this way; if the victim of the fraud has elected to treat the transaction as void surely the fraud should unravel everything, including alter-ing the register.

In Garwood v Bank of Scotland plc [2013] EWHC 415 the court had an opportunity to consider this issue but ultimately dodged it. The wrangle was between the unsecured creditors of the bankrupt fraudster and the duped but careless lender. The mistake was that of BOS. In 2003 the fraudster pur-chased 173 Portland Road with an advance from Mortgage Express. In June and July 2004 he obtained separate charges for the purchase of flat A and flat B in the building from BOS. The advances were partly used to redeem the Mortgage Ex-press charge. One advance was used to buy flat B but was registered against 173 Portland Road. The June 2004 charge was paid off. BOS mistakenly submitted an e-DS1 which con-firmed that 173 Portland Road was no longer charged as se-curity. BOS applied to enter a unilateral notice. The trustee challenged this. The Judge concluded that whatever the 2004 Charge was intended to achieve it in fact achieved a charge registered against the whole of the land in the title.

BOS argued that the discharge and alteration of the register had been a mistake. The trustee in response submitted that there was no mistake, which received short shrift from the Judge, or that it was a mistake of "no relevance". He relied in part on the analysis in Rouff & Roper and argued that the mis-take was a unilateral one on the part of BOS not the Registrar and "rectification" was not open on the facts. The Judge avoid-ed this by finding another route to alteration of the register. His analysis was that in order to set aside the voluntary disposition for mistake there must be a mistake of sufficient gravity either as to the legal effect of the disposition or as to an existing fact which is basic to the transaction, per Pitt v Holt [2011] EWCA Civ 132. He found that BOS did not intend to release the only security it held for the July 2004 loan and the legal effect was to turn BOS from a secured to an unsecured creditor. In part it was induced by the fraudster concealing the true position and not granting the agreed security over flat A. The e-DS1 was liable to be rescinded on the grounds of mistake.

The Registrar has power under paragraph 5(b) Schedule 4 to the LRA to bring the register up to date. There were no excep-tional circumstances justifying not exercising the power to alter the register. The fraudster, whose shoes the trustee stood in, could hardly complain since his fraud contributed to the mis-take. BOS was entitled to be re-registered as proprietor of the 2004 charge which secured the July 2004 loan.

An opportunity missed but a skilful solution produced the ‘right’ result on the facts.