The facts of this case are unusual, but it reinforces the principle that the courts will not necessarily order rectification of a title even where the person seeking rectification has clearly established title to the land concerned.
Ramzan v Agra Ltd concerned two adjoining terraced properties (number 123 and number 125). Number 125 was used as a restaurant. On the first floor of that property there was an office which led to a store room. The store room was in fact physically located above the ground floor of number 123, but could not be accessed from number 123 and was only accessible from the office in number 125.
Originally both properties were owned by Agra Ltd, but in 1992 Mr Ramzan acquired number 125. Title to number 125 was registered at the Land Registry. Unfortunately, neither the filed plan nor the title register contained reference to the flying freehold of the store room. In 1994, Agra transferred number 123 to Brookwide; another company in its group.
In 1999, Brookwide engaged workmen to convert number 123 into two flats. The workmen knocked through the dividing wall into the store room and blocked up the party wall which had connected the store room to the office in number 125, so that the store room was subsumed into number 123. The store room was eventually incorporated into one of the new flats, which were let to tenants.
In 1997, Mr Ramzan had become bankrupt and a trustee in bankruptcy was appointed. In 2001 the trustee in bankruptcy transferred number 125 to Mr Ramzan's son, who brought proceedings for rectification of the register to include the store room.
The court found that the store room was included in the transfer of number 125 to Mr Ramzan in 1992. Although this had not been reflected on the register when the transfer was registered at the Land Registry, Mr Ramzan remained the beneficial owner of the store room and had the right to seek rectification. This right survived the transfer of number 123 to Brookwide as it was an overriding interest (at that time Mr Ramzan was in occupation of the store room). The right to seek rectification had passed to Mr Ramzan's son via the trustee in bankruptcy.
However, on the facts, the court declined to order rectification. It gave two reasons for its decision. The first was the lengthy delay of the son in seeking rectification. Its second reason, which it said was the more significant factor, was that rectification would not restore the situation which had existed prior to the misappropriation of the store room by Brookwide. There was no realistic prospect of the store room ever being restored to number 125. The consequences of an order for rectification would be that Brookwide would remain liable to Mr Ramzan in damages unless and until title to the store room was transferred to Brookwide.
Instead, the court declared that Mr Ramzan's son was entitled to damages from Brookwide. The amount of damages was to be determined at a later hearing, but the court awarded damages on an exemplary basis. Such damages go beyond the usual tortious principles of compensating the claimant for its loss and are intended to act as a deterrent. Even if exemplary damages were not awarded, Brookwide would be liable to account for the profits it had made at Mr Ramzan's expense.
Things to consider
This is a County Court case, and as such does not have value as a precedent. However, the court was not alone in refusing rectification even where the true owner has established their claim to the land. In Derbyshire County Council v Fallon, the High Court declined to order rectification of the register to remove from the Fallons' title a piece of land which actually belonged to the Council. That case was brought under the general boundaries rule – that the boundaries of a title are general only unless an application is made under the Land Registration Act to formally determine them. In that case the court was of the view that rectification would not achieve anything since all it would do would be to replace one general boundary with another, and the paper title would not then accord with the physical boundary on the ground. The court took into account the fact that the Council would not necessarily succeed in an action to recover possession of the land, as the Fallons had built on it – much the same as the rationale in the present case.