The lodging of a unilateral notice against a registered title is usually, though not always, seen as a hostile act. It is to protect an interest in the property held by a third party where the landowner has not consented to an entry being made. However, a third party must have reasonable cause to apply for the entry. If an application is made without reasonable cause, the third party is liable in damages for any loss which the registered proprietor may suffer as a result.
In Anderson Antiques (UK) Limited v Anderson Wharf (Hull) Ltd and another, the defendant company claimed that it had an equitable interest in a parcel of registered land. The claim was argued on the basis of a proprietary estoppel arising from an alleged oral agreement to sell the land made between one of the directors of the defendant on its behalf and a representative of the claimant landowner. The defendant company registered a unilateral notice against the title to the site.
The judge found that the defendant had failed to prove the existence of an oral agreement for sale and ordered that the notice be cancelled. He also stated that the notices had been registered without reasonable cause for the purposes of section 77 Land Registration Act 2002. The result was that the defendant would be liable in damages if the landowner had suffered loss as a result (e.g. because a sale to a third party had been lost or delayed).
Damages under section 77 are payable on the grounds of breach of a statutory duty, which is an action in tort, and the person liable is the person who applied for the entry of the notice on the register. In this case that was the defendant company, which was a special purpose vehicle incorporated for the purpose of the acquisition. However, the director of the defendant company had instructed solicitors to lodge the unilateral notice and had made the statutory declaration in support of the application. As such, he had procured the commission of the tort and was jointly liable in damages.
Things to consider
The registration of a unilateral notice is sometimes used as a bargaining tool, because of the difficulty it can cause for a proprietor which is trying to deal with its land.
The liability of the director in this case seems to have been a device applied by the court to get around the fact that the defendant was a shell company with little or no assets.
However, Anderson Antiques (UK) Limited v Anderson Wharf (Hull) Ltd and another serves as a useful reminder that a person lodging a unilateral notice must have reasonable cause to do so. Those who fail to observe this could find themselves liable in damages.