Malory Enterprises Ltd v Cheshire Homes (UK) Ltd [2002]

Malory Enterprises Ltd v Cheshire Homes (UK) Ltd [2002]

Malory Enterprises Ltd v Cheshire Homes (UK) Ltd [2002] EWCA Civ 151 is an English land law case concerning the interpretation of the Land Registration Act 1925 and the concept of actual occupation in the context of overriding interests. The central issue revolved around the interpretation of Section 70(1)(g) of the Land Registration Act 1925, which states that the interest of a person in occupation overrides any registered disposition of land.

A company dishonestly obtained a land certificate for a piece of land from the Land Registry and sold it to Cheshire Homes, the defendants, who were registered as the new proprietors. The land included a derelict block of flats that the original owner used for storage. The original owner of the land, Malory Enterprises, the claimants, had taken measures to secure the property, such as erecting fences, boarding up windows, and keeping the building locked. When Cheshire Homes partially demolished the property, Malory Enterprises sought rectification of the Register and damages for trespass.

The trial judge ruled in favour of Malory Enterprises. Cheshire Homes appealed, arguing that Malory Enterprises had no overriding interest under Section 82(3) of the 1925 Act. Cheshire Homes contended that the right to seek rectification was discretionary and not a legal or equitable interest, asserting that Malory Enterprises had no interest in the land but merely the hope of recovering something they had lost.

The Court of Appeal dismissed the appeal. It held that the discretionary nature of the right to seek rectification under Section 82(3) of the 1925 Act did not preclude Malory Enterprises from having an overriding interest. The key factor was that the claimants were in actual occupation of the property. The court clarified that in cases where a property was uninhabitable, residence was not required for actual occupation. However, some physical presence with a degree of permanence and continuity was necessary. In this case, the Malory Enterprises' actions in securing and using the property for storage constituted actual occupation, and their overriding interest bound the defendants.

This case underscores the significance of actual occupation as a factor in determining overriding interests, even when the right to seek rectification is discretionary under the Land Registration Act 1925.
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