REF/2006/0984

The Adjudicator to Her majesty’s Land Registry
LAND Registration act 2002

IN the matter of a reference from hm land registry

BETWEEN

Peter John Norton Stevens

APPLICANT

and

Michael Reeves Fegredo and Geogia Johannis Fegredo

RESPONDENTS

Property Address: 200 and 202 Mellison Road, London SW17 9AU
Title Number: SGL416589; TGL175769 and TGL268708

Before: Mr Rhys sitting as Deputy Adjudicator to HM Land Registry

Sitting at: The Adjudicator to HM Land Registry
On: Monday 8 October 2007

Applicant Representation:	Mr Fadipe of Counsel instructed by Messrs Fosters Solicitors
Respondent Representation:	Mr Vanhegan of Counsel instructed by Messrs Cook & Partners Solicitors

DECISION

Cases referred to: Blacklocks v J B Developments [1982] Ch 183

1.	The Applicant, Peter John Norton Stevens, holds a lease of the ground floor flat at 200 Mellison Road, Tooting, London SW17 9AU which lease is registered under Title Number TGL175769 (“the Lower Flat”).  Mr and Mrs Fegredo, the Respondents, are the proprietors of the first floor flat at the same address, which is registered under Title Number TGL239967 (“the Upper Flat”).  They are also the proprietors of the freehold reversion to both leases, which is separately registered under Title Number SGL416589 (“the Freehold”).  There is a garden at the rear of 200 Mellison Road, which is not sub-divided in any way.  There is a side passage and small yard on the eastern side of number 200, which leads into the garden at the rear.  Access from the Upper Flat into this side passage is obtained by means of a staircase which is partitioned off from the remainder of the building, with a doorway at the top of the stairs leading into the Upper Flat, and a doorway on the ground floor leading into the side passage.  The lease of the Lower Flat, as originally granted, demised one half of the rear garden – the western half.  The lease of the Upper Flat does not include the eastern half of the rear garden which, together with the side passageway, is comprised within the Freehold.

2.	The Applicant has applied in Form AP1 to register a Surrender and Lease dated 8th November 2004 and made between Saint Ermins Property Company Limited (1) and the Applicant (2).  If the Surrender and Lease is registered it will have the effect of surrendering the Lease of the Lower Flat and replacing it with an identical lease, save that it is expressed to include “the remaining rear garden”.  This is the eastern half of the rear garden referred to above, which is currently comprised within the Freehold.  The Respondents acquired the Freehold on 2nd March 2005.  My understanding is that the contract for the acquisition of the Freehold was made in February 2005, and it is common ground between the parties that this is the relevant date from the point of view of notice, to which I refer in more detail below.  The circumstances in which the Deed of Surrender was made are as follows.  By letter dated 30th April 2004, the agents acting for the then freeholders of both flats wrote to the Applicant as follows:-

“Previously the tenants of the first floor flat have enjoyed access to the rear garden, benefiting from a small section of the garden.  However, the tenants have now vacated and our clients are considering an early sale.

We write to enquire whether you would be interested in acquiring the remaining section of garden along with the space currently occupied by the internal rear stairs, as our clients would consider selling the first floor unit on the basis that the access is floored over, giving you exclusive rights to the rear garden.

Our clients would be willing to convey the rear garden and space occupied by the stairs so that it is included in your lease, for a consideration of £5,000 plus costs, subject to contract, and on the basis that any transaction is concluded prior to any disposal of the first floor flat.”

3.	In the event, the Applicant did agree to acquire the rear garden and staircase from the freeholders – Saint Ermins – and he instructed solicitors, Fosters, to carry out the necessary conveyancing.  Some at least of the correspondence and conveyancing documents have been disclosed, and it is possible to piece together events from these.  It would appear that a draft Surrender and Lease was generated on a word processor on 15th June 2004.  On 27th August 2004 Saint Ermins’ solicitors wrote to the Applicant’s solicitors purporting to enclose their client’s signed part of the Surrender and Lease by way of completion, and confirming receipt of a sum of £411.25 by way of costs.  On 1st September 2004 Fosters wrote back to the solicitors stating that “you have not returned your client’s part of the Surrender and Lease duly signed.  We enclose the Surrender of Lease and should be grateful if you could arrange for your clients to sign the same and return it as soon as possible.”  On 15th September 2004 the freeholder’s solicitors wrote to Fosters enclosing “our client’s signed Surrender and Lease.  Please forward your client’s signed part by return.”  It appears that on 17th September 2004 Fosters returned the counterpart signed by the Applicant.  On the same date, Fosters sent the Deed of Surrender and Lease to the Chelsea Building Society – the Applicant’s mortgagee.  The document executed by the parties also contained provision for execution by the mortgagee, no doubt to confirm its agreement to the surrender and re-grant.  However, it appears from the mortgagee’s letter of 27th September 2004 that “the Society is unable to seal the above document as the deed refers to ourselves the lender as “Chelsea Building Society Direct Mortgage Services”.  In order to seal the deed please can you amend it to read “Chelsea Building Society” and upon receipt the deed will be sealed as requested.”  On 19th October 2004 Fosters returned the document to the Chelsea Building Society “having deleted and initialled the amendment on behalf of our client.  We understand from our telephone conversation with your office today that this is acceptable.  We look forward to hearing from you with the sealed document as soon as possible.”

4.	On 27th October 2004 Chelsea Building Society replied to Fosters in the following terms:-

“Thank you for your letter concerning the extension of Lease in regard to the above mortgage account.

I confirm receipt of the Deed of Substituted Security which has now been sealed as requested, and is returned to you herewith.”

5.	From the above contemporaneous correspondence, therefore, it would appear that by 27th October 2004 all relevant parties had executed the Deed of Surrender and Lease, and its Counterpart.  Although the Deed contains provision for signature by all three named parties, it is manifest from the above correspondence that the intention was to have two separate documents – as would be the case normally with a Lease and Counterpart – the freeholder and mortgagee executing one copy, and the Applicant executing the other.  No original documents have been supplied in these proceedings.  However a number of copy documents have been provided.  These copies include:-

(1)	An undated copy of the Deed executed only by the Applicant;
(2)	A document dated 8th November 2004 and executed by the freeholder and the mortgagee.  The front sheet to this document also bears the date 8th November 2004 although it seems that another date (possibly 29th August) has been crossed out;
(3)	A Deed, executed by the freeholder and the mortgagee, which also bears the date 8th November 2004, although, curiously, the “4” of the year has been written in manuscript over another number, possibly “5”;
(4)	A Deed which has no date on the first page save for “2005”, whose front sheet bears the date 8th November 2004, and is executed by the freeholder and the mortgagee.

6.	I have dwelt in some detail on the circumstances in which the Deed of Surrender and Lease came into being, and the various versions of that document which are disclosed.  This is because the Respondent has mounted a frontal assault on the validity of these documents.  He points out, quite correctly, that the burden is on the Applicant to establish that there is indeed a binding Deed of Surrender and Lease, even before it is necessary to consider questions of notice.  He has carefully analysed the documentation, and submits that no document was executed on 8th November 2004.  It is his contention that the documents were only executed after the question of title became disputed – that is in Spring 2005 – and that the documents have been backdated to show the November 2004 date.  He points to the fact that at least two of the versions of the document put forward appear to have the year 2005 typed in the draft, one of which has been overwritten by 2004.  The Respondents submit, therefore, that the Applicant has failed to discharge the burden of proof and is unable to satisfy me that the Deed was executed in or about November 2004.  This allegation is, of course, tantamount to an allegation of fraud involving the Applicant and his mortgagee, St Ermins, and their respective solicitors.

7.	Before I deal with this point, I should just draw attention to two further matters.  First, according to the Applicant’s evidence – and this has not been challenged – his solicitors, for unknown reasons, did not immediately submit the Deed of Surrender and Lease to the Land Registry for registration.  It seems that the application was only made on 15th April 2005.  This is no doubt explained by the fact that the ownership of the rear garden and staircase had by this stage become an issue.  However, the Land Registry rejected the application, essentially because the Deed had not been stamped or adjudicated for stamping.  Furthermore, the solicitors who acted for the freeholder were contacted by Fosters in October 2005.  They replied as follows:-

“The Surrender and Lease to your client completed in September 2004.  The ground rent completed in February 2005.”

I assume that the original Deed of Surrender is with the Land Registry for registration.  I must therefore decide, on the basis of the material before me, whether I am satisfied that a Deed of Surrender and Lease in the disclosed form was executed on or about 8th November 2004.  Having regard to the material which I have referred to above, I am satisfied that this document was executed on or around this date.  It is entirely clear from the contemporaneous correspondence that all parties regarded themselves as having completed the relevant document no later than 27th October 2004.  This correspondence is simply inexplicable (other than on the basis of an elaborate fraud) if the document was not completed at that time.  Furthermore, even in 2005 the freeholder’s solicitors confirmed that they had completed the Deed in September 2004 – which is correct, in the light of the correspondence recited above.  No satisfactory explanation has been given, it is true, for the existence of different versions of this document, some of which appear to have been created in 2005.  However, I am only concerned with deciding whether the Deed was completed in or around November 2004 and for the reasons I have given I am so satisfied.

8.	Accordingly, the issue that arises is whether the Respondents – who contracted to acquire the Freehold in February 2005 – are bound by the terms of the Deed notwithstanding that it was not registered against the title at that time.  Before turning to the relevant evidence, I must also deal with a preliminary point.  This concerns the internal staircase which I have referred to.  As far as the Applicant is concerned, there is an additional complication.  This is because the Deed of Surrender as actually executed was made by reference to a plan which excludes the space occupied by the staircase.  Accordingly, even if the Deed of Surrender and Lease is registered, as the Applicant wishes, that would not be sufficient to confer title to the staircase, which would remain comprised within the Freehold.  It seems it is very probable that the Deed, as executed, contains a mistake.  Certainly, the Applicant has given evidence to the effect that it was always intended that the staircase should fall within the terms of the Deed, and his subsequent conduct bears that out.  There is also a letter from St Ermins’ solicitors, confirming that it was the intention to include the staircase within the Deed.  In the circumstances, it may well be that there would have been a right to rectify the Deed in order to correct the mistake by including the staircase space.  That would be an equity on the Applicant’s part which is capable of binding successors in title to registered land by virtue of actual occupation – see the case of Blacklocks v J B Developments [1982] Ch 183.  However, in this case there is absolutely no evidence that the Applicant was in occupation of the staircase or the space occupied by the spare staircase at February 2005.  It seems to be accepted on his part that the Fegredos retained the keys to this staircase, which presumably must have been passed on by Saint Ermins at the date of completion.  Accordingly, I cannot see that the Applicant has any possibility of succeeding in his application in so far as it relates to the staircase.  It may be that there is some alternative claim open to him, and I shall refer to this below, but for the purposes of this Decision I must find that the Applicant fails in so far as his claim relates to the staircase.

9.	That brings me to the remaining land in dispute, being that part of the side passage and rear garden which are shown on the plan to the Deed of Surrender and Lease.  The relevant provisions under the Land Registration Act 2002 (“the 2002 Act”) are as follows.  The Basic Rule is that, in effect, an interest created in relation to registered land will not take priority over a subsequent purchaser of the registered title unless the prior interest is itself protected by registration.  There are exceptions set out at Section 29(2) of the 2002 Act: the material exception in this case being that contained in paragraph 2 of Schedule 3, which is in the following terms:

“Interests of persons in actual occupation
An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for:
	(a)	an interest under a settlement under the Settled Land Act 1925;
(b)	an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so;
(c)	an interest –
	(i)	which belongs to a person whose occupation would not have been obvious on a reasonable inspection of the land at the time of the disposition, and
	(ii)	of which the person to whom the disposition is made does not have actual knowledge at that time:”

10.	The Applicant’s case, in essence, is that he was in “actual occupation” of the disputed land at all times prior to the Respondent’s purchase of the Freehold. Furthermore, his occupation would have been obvious on a reasonably careful inspection of the land, alternatively the Respondents had actual knowledge of the Applicant’s interest.  Provided that on any inquiry of the Applicant by the Respondents prior to their acquisition of the freehold, he did not conceal his rights, the Respondents will have taken the title subject to such interest as the Applicant had in the property so protected by this actual occupation.  The Respondents, however, contend that as a matter of fact the Applicant was not in occupation of all or any part of the disputed land.  Even if he was, they say that his occupation would not have been obvious on a reasonably careful inspection of the land and furthermore they did not have actual knowledge of his interest.

11.	Physically, both halves of the garden were combined.  Although when the Applicant first acquired the Lower Flat there was apparently a fence dividing the garden into two halves, he removed this fence and treated the garden as a whole.  He says that he kept the grass and garden tidy across both halves, used both halves indiscriminately, and kept a large metal tool box outside just at the end of the side passage where it leads into the eastern part of the garden.  He was also in the habit of leaving a hose reel just in the end of the passage, and indeed running a garden hose from his bathroom window – which opens on to the side passage – along the passage and into the garden.  I heard evidence both from the Applicant himself, and from his flatmate, Mr Macdonald-Bell, to the effect that they both used the garden regularly, and they made no distinction between the eastern and western halves.

12.	The Respondents’ evidence was to the effect that the garden was unkempt and overgrown, and that there were no fixtures or fittings in the garden, such as childrens’ swings, which could indicate occupation by anybody.  The evidence of a Mr Malloy was called, to support the Respondents.  Mr Malloy was a plasterer who had worked on the Upper Flat in the autumn of 2004.  He said that he could see into the garden, which was overgrown, and he never saw anybody in it.  According to him, he used to go into the garden for a “breath of fresh air”.  It was put to him that it would be difficult to remember one job of many jobs which were carried out some three years ago, and in any event he would be unlikely to pay much attention to the rear garden, since his job was to plaster the interior of the Upper Flat.

13.	Before I make any findings as to whether or not the Applicant was in actual occupation of the disputed land, I shall draw attention to the Respondents’ state of knowledge as to the claim made by the Applicant to the rear garden.  The Respondents made a detailed Statement of Case on 26th September 2006.  In his witness statement dated 26th September 2006, Mr Fegredo confirmed that the facts stated in the Statement of Case were true, indeed, he confirmed the truth of the facts stated therein when he was sworn.  The Statement of Case contains the following statement:-

“Since both Mr Stevens and the Fegredos appear to have been in mutual ignorance of the looming dispute for some time, there would be no reason for either of them to make particularly pointed reference to ownership rights in conversation, and it is the Fegredos’ firm recollection that no conversation from which it could be inferred that Mr Stevens made claim to the entire garden took place until the spring of 2005, after their freehold purchase, when Mr Stevens first mentioned his alleged ownership of the entire garden.  The natural reaction of Mr Fegredo was to ask Mr Stevens to “prove it”, and this prompted the arrival of Foster’s letter of 28th June 2005, for the first time making clear what it was that was claimed.”

14.	The firm recollection of the Respondents, as stated here, was that the ownership of the garden was not even discussed until after their acquisition of the Freehold.  However, in his witness statement, Mr Stevens refers to a conversation which he had with Mr Fegredo, in a local pub, shortly after the Respondents purchased the Upper Flat – which took place in June 2004.  According to Mr Stevens, 

“I told him that prior to 202’s sale, the freeholders had offered to sell me the remainder of the garden and the access staircase, which I had subsequently bought.  Mr Fegredo was therefore always aware that I owned the entire garden and access staircase.  I also informed him that I planned to remove the rear access staircase as I wished to use the space to extend my lounge.”

15.	Mr Fegredo made a witness statement in response to this.  In this supplementary statement, he made the following comment:-

“Mr Stevens and I did go for a drink at a local pub and this was at my invitation.  To qualify, the invitation was made on the basis that he appeared somewhat aggrieved that I asked him to provide proof that he owned the additional segment of the rear garden, as I was led to believe by the agent’s representative, that the garden was shared.  Seeing no harm, I had conceded to a visit by his Surveyor but with strict stipulations regarding the time and date.  Given that I was intending to carry out a major refurbishment to the flat, I felt it prudent to try and maintain good relations with Mr Stevens and so invited him for a drink, which he reluctantly accepted.”

16.	In cross-examination, Mr Fegredo repeated this statement.  He gave no explanation as to how he could have given such diametrically opposed evidence on such a crucially important issue.  The Statement of Case contains a firm recollection that the ownership of the garden was not discussed until Spring 2005, after the critical date in February, whereas the conversation in the pub in the summer of 2004 occurred (according to him) directly as a result of a conversation about ownership of the garden, and Mr Fegredo’s alleged request that the Applicant should prove ownership.  It must be inferred from his alleged request to Mr Stevens that he should prove ownership of the whole garden, that Mr Stevens had made this claim at this time. This is entirely inconsistent with the statement that:
“Since both Mr Stevens and the Fegredos appear to have been in mutual ignorance of the looming dispute for some time, there would be no reason for either of them to make particularly pointed reference to ownership rights in conversation, and it is the Fegredos’ firm recollection that no conversation from which it could be inferred that Mr Stevens made claim to the entire garden took place until the spring of 2005, after their freehold purchase”

17.	Furthermore, the Applicant had instructed an engineer to advise him on removing the internal staircase, thereby removing any access from the Upper Flat to the garden.  Drawings were sent to the Applicant on 4th November 2004.  The engineer’s job sheet records their instructions that “client has bought over whole back garden from upper flat leaseholders”.  There were clearly discussions between the Applicant and Mr Fegredo with regard to the removal of the staircase, and indeed on 1st February 2005 both Mr and Mrs Fegredo signed a document.  This document recites:

“in the event we acquire the freehold interest of 200/202 Mellison Road, Tooting SW17, We confirm that we have no objection to the proposal made by Mr Peter Stevens, the current leaseholder of number 200 Mellison Road
to demolish the rear staircase”

	This document was required because both Mr Stevens and the Fegredos were interested in acquiring the Freehold.  Eventually, Mr Stevens agreed not to apply for the Freehold, but on terms that the Fegredos would not object to the demolition of the staircase by Mr Stevens, hence the document I have quoted.

18.	On 18th March 2005 Mr Stevens served a purported Party Walls Act 1996 notice.  This was followed on 27th March 2005 by a letter from Mr Fegredo, in which he states the following:- “it seems you are incorrect in your assumption that the rear garden is entirely within your ownership.”  This letter alerted the Applicant to the problems with title and clearly led to the application made in the middle of April 2005 to register the Deed of Surrender and Lease.

19.	The evidence of Mr Fegredo with regard to the pub conversation, and the actions of the parties that I have outlined immediately above, suggest to me one thing.  I am entirely satisfied that Mr Fegredo became aware in the summer of 2004 that Mr Stevens claimed ownership of the rear garden and staircase.  I accept Mr Stevens’ evidence as to what occurred in the meeting in the pub.  Mr Fegredo’s explanation as to what occurred in that conversation is not credible.  First, it is undermined by the evidence in his own Statement of Case, in which he claims that there was no conversation about the ownership of the garden until Spring 2005.  Nor is it credible that Mr Fegredo would have asked the Applicant to prove his ownership of the rear garden prior to the conversation in the pub, which is what he said in his witness statement and cross-examination.  If that issue had been raised at that stage, obviously the Applicant would have replied that he had not yet completed the transaction.  In any event, Mr Fegredo would not have allowed the matter to rest, since there was active discussion going into February and March of 2005 as to the redevelopment of the rear staircase.  Thirdly, the fact that the Fegredos were content to allow the Applicant to demolish the staircase – which represented their only access to the rear garden and side passage – can only be explained on the basis that they believed that Mr Stevens owned it.  Mr Fegredo does not strike me as the sort of person who would willingly give up an asset simply to maintain neighbourly relations.  It would appear from the correspondence that it was only at the end of March 2005, when the position as to title was checked with his solicitors, that Mr Fegredo became aware that the rear garden did not belong to Mr Stevens.  At that point, all good will appears to have evaporated and the matter has proceeded accordingly.  If he had been asking for the title deeds since the summer of 2004, the lack of any reference to this in the correspondence, and the willingness to proceed with the demolition of the staircase, would be entirely inexplicable.

20.	I therefore find, as a fact, that Mr Fegredo was aware of Mr Stevens’ claim to the rear garden and staircase from a time almost immediately after he and his wife acquired the Upper Flat, that is in the summer of 2004.  Mrs Fegredo herself was not, of course, party to the conversation in the pub, nor it seems to any discussions regarding the rear garden.  However, she was a signatory to the letter referred to in Paragraph 17 above, in which she specifically agrees to the demolition by the Applicant of the Respondents’ only means of access to the rear garden.  I think I am entitled to infer that she had been informed by her husband of the Applicant’s claim to the garden: her signature on the letter cannot otherwise be reasonably explained. 

21.	Furthermore, I find as a fact that the Applicant was in actual occupation of the rear garden and side passage.  First, because he and his flat mate and their friends used the garden and he maintained it albeit to a limited standard.  Secondly, because he left items belonging to him, and him alone, in the garden, namely the substantial tool box and the hose reel.  Thirdly, because he used the side passage as his own in connecting the hose to the tap in his bathroom and running the hose along the side passage into the rear garden.  Of course, these actions cannot be described as substantial.  However, one must have regard to the nature of the land in question.  The land in question is a small patch of garden at the rear of the ground floor flat and an access passage along the side of the building.  In the context, the actions and activities of the Applicant are quite sufficient in my view to constitute actual occupation. 

22.	Accordingly, in my judgment the Deed of Lease and Surrender binds the Respondents, since it was protected by the actual occupation of the Applicant at all material times, such occupation being obvious on a reasonably careful inspection of the land.  Furthermore, for the reasons explained above, Mr Fegredo and eventually his wife were actually aware prior to their acquisition of the freehold that Mr Stevens regarded the garden as entirely his because he had acquired it on a long lease.  Accordingly I shall direct the Chief Land Registrar to give effect to the Applicant’s application to register the Deed of Surrender and Lease.  For the reasons I have given, however, this will not extend to the staircase which, in any event, is not included in the plan attached to the Deed.

23.	There are two final points which can be made.  First, the solicitors who acted for Mr Stevens in connection with the Deed of Surrender and Lease have, through their failure to register the Deed expeditiously, placed him in this situation.  I therefore found it quite extraordinary that it was not possible for any member of the firm of Fosters to give evidence before me.  There was a short statement from the solicitor who had acted in the transaction, but this statement was laconic in the extreme, and was not supplemented by any oral evidence, notwithstanding that facilities had been made available for a video link.  No doubt that is a matter which Mr Stevens can take up on his own behalf.  Secondly, it is unfortunate that the Deed was itself incorrectly drawn, so as to exclude the staircase.  As I have said, there is sufficient evidence in my view to have given rise to a claim for rectification of the lease on the basis of mistake.  Notwithstanding that Mr Fegredo, in my judgment, knew of the claim to the staircase before he acquired the freehold, he is not bound by it, due to the absence of any actual occupation protecting the Applicant’s interest.  

24.	I see no reason why the Respondent should not pay the Applicant’s costs, and I direct the Applicant to serve a detailed costs breakdown by 5 pm on Friday 30th November.  I shall give the Respondent an opportunity to make submissions in writing as to the incidence of costs, and also commenting on the quantum, in the form points of objection.  These submissions should be served no later than 14th December 2007.  When these documents are to hand, a final order as to costs will be made.

Dated this 16th day of  November 2007

By Order of The Adjudicator to HM Land Registry