The facts

C was a secure tenant of a council flat. By 1999 she had acquired the right to buy her flat and made an application to the local authority; C never heard back in respect of the application. In 2002 the local authority executed a transfer of the property to a transferee identified as C for £167,000. Two weeks later a further transfer was executed purportedly by C transferring the property to a company (CEL) for £250,000. CEL obtained a loan from the first defendant bank and a charge was registered against the title.

It was C’s case that it was not her signature on either the first or the second transfer and that her husband had forged her signature. He had been convicted of these offences. C claimed that as a result, the transfer to CEL was void. She did not challenge the first transfer.

CEL was later dissolved. The Crown disclaimed the lease. C commenced proceedings for a vesting order which was duly made, transferring the property to C subject to the bank’s charge. C then made an application to Land Registry to removal of the charge on account of the fraud. The second defendant, the Registrar, refused her application.

The decision

Judge Pelling QC dismissed C’s claim. He held that there were exceptional circumstances to justify not altering the register under paragraph 3 of Schedule 4 of the Land Registration act 2002 applying the definition set out by Morgan J in Paton v Todd [2012] 2 EGLR 19 at [67] – that to be exceptional the fact or matter relied on has to be ” … out of the ordinary course, or unusual or special, or uncommon … it cannot be one that is regularly or routinely or normally encountered … which have a bearing on the ultimate question whether such circumstances justify not rectifying the register” .

Judge Pelling QC held that C could not rely upon the first transfer from the local authority to her to establish her title to the property, as this transfer was on her own case a forgery and therefore void. It followed that C had to rely upon the order vesting.

The Judge held that as a result, she was not entitled to be placed in a better position than CEL had been in, and that CEL’s interest had always been subject to the charge. Any alteration to the register which had the effect of placing C in better position than CEL would therefore be unjust and constituted exceptional circumstances so to justify not to alter the register.

By not ordering the alteration sought, C was left in much the same position she would have been in had she exercised of the right to buy. The Judge further noted that this outcome gave effect to the vesting order because it placed C in the shoes of CEL and CEL would have had no case for seeking alteration as long as it remained the registered proprietor of the property.

The outcome seems just when considering that C would otherwise have obtained the property without having ever had to pay for it.