A Unilateral Notice (UN) registered at the Land Registry should specify as accurately as possible the interest that is being protected. However, if the UN is inaccurate, it will still be effective so long as there is a genuine interest to be registered – Bank of Scotland plc v Joseph [2014] EWCA Civ 28.

Background

The case concerned protection of a charge taken over a leasehold flat. The bank’s advance was in 2005.The charge was not registered until 2011 but it was protected by a UN from 2006. This was because until that time, the lease had not been assigned to the borrower by the original owner. In 2010, the property was charged to another lender after the property was again assigned.

The dispute was over the effectiveness of the UN and hence the priority of interests of the bank and the subsequent lender. It was argued that whilst protected by a UN, the 2005 charge was only an equitable charge and that the 2010 charge took priority because it was registered as a legal charge. It was argued that the UN stated an equitable charge under a mortgage whereas the bank was now arguing the UN protected a different kind of interest based on an unpaid vendor’s lien and therefore the UN was not effective because it was protecting a different interest.

Held

The court held that a UN had to describe accurately the interest it was protecting but it did not mean the UN was ineffective.

Comment

UNs are registered at the Land Registry to gain some protection where it is not possible to register a legal charge. Often they are registered in haste and before the full facts emerge. Joseph is a welcome decision that provided a lender has an interest capable of protection by a UN, it will still be effective where the UN is inaccurate.