In a recent article, I made note of the rise in cases concerning Slander of Title.
Hand in hand with an increase in ‘noise’ surrounding Slander on Title claims, there has also been a comparative increase in people advancing or citing reliance on a Section 77 claim, under the Land Registration Act 2002.
What is a claim under Section 77 of the Land Registration Act?
The purpose of the protection afforded under Section 77 of the Land Registration Act is aimed at introducing redress for misuse of the register, particularly wrongful or tactical use of unilateral notices, agreed notices, restrictions or objections that have no reasonable foundation.
Section 77 of the Land Registration Act creates a statutory duty for a party not to:
- apply for the entry of a notice or restriction on the Register of Title without reasonable cause; or
- object to an application (for registration, for cancellation of a notice/restriction, or for any alteration) without reasonable cause.
If unreasonable conduct is proven, then the breach gives rise to liability in damages to any person who suffers loss as a result. The remedy is compensatory.
There is no Land Registry indemnity for wrongful notices/restrictions.
Section 77 operates alongside, but separately from, the rectification/indemnity regime in Schedules 4 and 8 of the Land Registration Act 2002.
When to consider a Section 77 claim
Here are some scenarios of when you would consider bringing a Section 77 claim:
- When there is a wrongful registration of a third-party entry, such as when a unilateral notice has been entered with no reasonable basis for the claimed interest (for example, to secure a simple unsecured debt, or to gain leverage in an unrelated dispute) or when an agreed notice or restriction is procured without adequate evidential basis or beyond what the underlying right justifies.
The potential impact of a wrongful registration that could cause loss is a delay to a transaction, preventing funding or the value of the property is reduced.
- If a party advances an unreasonable objection to your application with the Land Registry. This would likely be apparent from an objection that does not articulate a legally tenable ground of objection, or the objection is maintained/persists after being given an opportunity to particularise their concern more fully.
If the objection causes referral to the Tribunal completion of a transaction could be prevented and as a result losses are suffered.
- When there is clear strategic abuse of the register. Unfortunately, abuse of the protections afforded by the Land Registry is becoming all too common. People are using entries or objections as pressure tactics in commercial disputes unconnected with proprietary rights. For example lodging entries with the intention of “freezing” a sale to force payment of a non-proprietary claim.
Application of a Section 77 claim
The key when seeking to advance such a claim is that it has to be proven that the Application or Objection was advanced “without reasonable cause”.
This is an objective standard and so the key question for the Court is whether there was a reasonable basis in fact and law for the action taken.
Someone accused of acting without reasonable cause would have to demonstrate in the case of:
- A unilateral notice – that there is a substantively arguable interest. Using a unilateral notice to secure an unsecured money claim, absent any proprietary basis or pending land action affecting title, is a common example of “no reasonable cause.”
- Agreed notices/restrictions – overreaching the scope of the underlying right can be deemed to be unreasonable.
- An objection – reasonable cause. Persisting with groundless objections can trigger s.77 exposure, particularly where the Land Registry has afforded the objector time to clarify grounds and none are forthcoming.
It is also essential, if advancing a claim, that the claimant can prove causation and loss.
The claimant must evidence loss caused by the wrongful entry/objection (e.g., abortive costs, delay costs, additional financing costs, loss on resale, professional fees).
The also need to demonstrate that no indemnity is otherwise payable and that Section 77 is the appropriate mechanism.
Defending a Section 77 claim
A claimant always needs to be aware that the conduct of the defendant is subject to an objective standard.
Defences to anticipate would be that the defendant tries to establish that there is an arguable basis for a proprietary interest or pending land action.
They could demonstrate that there was reasonable cause based on legal advice taken at the time. Lack of causation or mitigation is also another defence often run in such a claim.
A claimant also needs to keep in mind that a genuinely arguable proprietary claim, even if later unsuccessful, may amount to “reasonable cause,” defeating Section 77 liability.
There are mechanisms available to a landowner facing abuse of the Land Registration system. However, the success of such a claim is subject to the discretion and overriding view of the Court.
Our specialist team can guide you through Section 77 claims and help protect your property rights. Contact Catherine Gregson today for advice.