When Couples Fall Out: The Role of the Land Registration Division in Dispute Resolution

The legal treatment of property rights between cohabiting couples remains one of the most contentious areas in modern English law. While marriage and civil partnerships are accompanied by a clear statutory framework governing financial remedies and property adjustment orders, unmarried couples are largely dependent on general property and trust law.

Many disputes between cohabitees, particularly those concerning beneficial interests in land, are resolved not in the Family Court or the county court but in the Land Registration Division (LRD) of the First-tier Tribunal, Property Chamber.

This article examines the functioning of the LRD, particularly in the context of disputes arising from informal cohabitation. It examines the legal foundation of cohabitees’ rights in land, the procedural avenues for protecting and asserting such rights, and how the LRD resolves disputes.

Cohabitation and beneficial interests

Unlike spouses or civil partners, cohabiting individuals have no automatic right to a share in property, regardless of the duration or intimacy of the relationship.[[1]] Accordingly, any proprietary claims must be grounded in principles of trust law, through the creation of express, or implied, resulting or constructive trusts.

An express trust of land must be created in writing – s 53(1)(b) Law of Property Act 1925 (LPA 1925). It is typically executed at the time of purchase to specify how the property is held, but it may be executed at a later time.

Since cohabitation usually begins informally, without any thought being given to obtaining legal advice about ownership of the home, the interests of cohabitees most frequently arise under a constructive trust. Since Stack v Dowden [2007] UKHL 17 it is the constructive trust and not the purchase-money resulting trust that has been the appropriate basis for claims in cohabitation cases.

A constructive trust will arise where both parties intended that the house should be shared beneficially and one party acted to their detriment in reliance on that intention. The existence of the common intention is usually to be found by implication from all the circumstances. That may require a detailed examination of complex evidence.

Where the relationship breaks down, the parties may disagree as to whether they ever had a common intention and/or whether one party acted to their detriment in reliance on it. It is frequently when cracks appear in the relationship that the party who is not the registered owner thinks of taking steps to assert and protect their interest in the house.

How can the interest be protected?

A person who acquires registered land or an interest in it by a registrable disposition (e.g. a lease or charge) for value will, by registering their interest, take in priority to any interest that is not: (a) protected by the entry of a notice in the register (s 29(1) Land Registration Act 2002 (LRA 2002)); or (b) an interest that overrides the disposition under s 29(2) LRA 2002.

A beneficial interest in registered land is an overriding interest but only if the beneficiary is in actual occupation of the property at the time of the disposition and they disclose their interest if inquiry is made of them (Sch 3, para 3 LRA 2002). This is subject to the principle of ‘overreaching’ whereby a conveyance of a legal estate to a purchaser for value will shift the beneficial interest to the proceeds of sale, provided that the conveyance is made by two trustees or a trust corporation (s 2(1)(ii) LPA 1925; s 27 LPA 1925).

A beneficial interest cannot be protected by entry of a notice in the register (s 33(a)(i) LRA 2002). The means of protecting a beneficial interest is by entry of a restriction on the register under s 40 LRA 2002.

Restrictions are entries made on the title that limit what dispositions (sale, lease, charge) can be registered against that title, either by imposing an absolute bar or by setting conditions for registration. A restriction, by preventing the registration of a subsequent registrable disposition for value, will prevent the priority of a third-party interest from being postponed.

Generally, a beneficiary under a trust of land may apply for a Form A restriction if one has not already been entered in the register. A Form A restriction will be in the following terms:

‘No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.’

A Form A restriction ensures that any capital money such as the proceeds of sale must be paid to two trustees or a trust corporation. If that happens then the interest of the beneficiary will become an interest in the capital money (by overreaching, as set out above).

A Form A restriction will not prevent a sole proprietor from disposing of the land without an order of the court. He may within the transfer in Form TR1 appoint a second trustee under s 36(6) Trustee Act 1925 to receive the proceeds of sale. The purchaser will then receive a good title and be registered as proprietor free from the beneficial interest protected by the Form A restriction. There is then a risk that the proceeds of sale will be disposed of and the beneficiary of the restriction is unable to recover the value of his interest. What can be done to avoid this risk? A beneficiary under a constructive trust claiming that the registered proprietors hold on a trust of land for the beneficiary and for themselves may apply for a restriction in Form II. That Form reads:

‘No disposition of the registered estate, other than a disposition by the proprietor of any registered charge registered before the entry of this restriction, is to be registered without a certificate signed by the applicant for registration or their conveyancer that written notice of the disposition was given to {name} at {address}.’

This restriction will give the beneficiary notice of the intended disposition and give him an opportunity to take steps to ensure that the house is not sold or that he receives his share of the proceeds, such as by bringing proceedings under the Trusts of Land and Appointment of Trustees Act 1996.

Applying for a restriction

An application for the entry of a restriction is made to HM Land Registry using Form RX1 and will be accompanied by supporting evidence in the form of a statement of truth using Form ST1. HM Land Registry will check the application to see if on its face a case for entry of a restriction is made out. If HM Land Registry is satisfied that is so, then it will give notice to the registered proprietor.

Reference to the LRD

Where notice of objection to the application is given, then HM Land Registry will first look to see if the objection is ‘groundless’. That is a low test. If the objection is not groundless then HM Land Registry must refer the matter to the LRD.

HM Land Registry prepares a ‘Case Summary’. This sets out the names of the parties, the address of the property and title number, the nature and date of the application and a brief summary of the grounds of the application and of the objection. The parties will usually be given an opportunity to comment on a draft of the Case Summary before it is sent to the LRD. The Case Summary will inform the LRD as to the nature of the matter that has been referred to it.

Tribunal structure and expertise

The LRD comprises five full-time salaried judges and 38 fee-paid judges, assisted by two lawyer-registrars and a dedicated administrative staff. The judges are very experienced Chancery barristers or solicitors. Many of them also sit as deputy District Judges, Recorders or deputy High Court Judges. Their experience in trusts, land law and equitable claims provides the Tribunal with a level of specialist expertise unmatched in many courts of first instance.

The lawyer-registrars have particular expertise in land registration and conveyancing matters. They assist the judges in primarily procedural matters and have some delegated judicial powers.

The dedicated administrative staff are located in the same building as the salaried judges, leading to quick communication and minimising delay.

There are no fees payable to LRD in a land registration case, whether on reference, for interim applications, on setting down for trial or at all. Proceeding before LRD may therefore offer a substantial cost benefit to proceeding in the courts.

Procedure

The Tribunal has power to direct a party to commence court proceedings for the purposes of obtaining the court’s decision on the matter (s 110(1) LRA 2002). Where the parties have chosen not to issue court proceedings themselves, the Tribunal will not readily force them to incur the costs of court proceedings but allow the matter to continue before it.

Following receipt of a reference, the Tribunal will give initial directions. These directions will include directions as to which party is to be the applicant and which the respondent for the purposes of the proceedings. The party named as ‘applicant’ by the Tribunal may not be the person who made the application. LRD will usually name as applicant the person who has the burden of proof. If the dispute between the parties is as to whether the applicant for the restriction has a beneficial interest, then the burden of proof will usually be on the person asserting that they have a beneficial interest and that person will be designated as applicant by LRD. If the application is to cancel a restriction on the grounds that the person entering the restriction does not have a beneficial interest, then LRD will usually name the person who entered the restriction as the applicant.

The parties will be directed to serve statements of case sequentially. The difference between the requirements for statements of case in LRD and statements of case in the courts is that the relevant Tribunal procedure rules require the statement of case: (a) to contain a list of the witnesses the party intends to call; and (b) to be accompanied by copies of any documents available to the party which are important to that party’s case or the Tribunal or that any other party will require in order properly to understand that party’s case.

Following services of statements of case, LRD will give directions for the preparation of the case for hearing. These will include directions for the disclosure of documents by list and the exchange of witness statements.

Parties and representatives should note that LRD has power to make a wide range of other interim directions, including directions for specific disclosure. It may summons any person to attend a hearing as a witness or order any person to answer questions or produce documents. It may order a party to answer certain questions. It may make orders for security for costs.

Interim procedural matters are usually dealt with ‘on paper’, without the need for parties or representatives to attend and thus saving costs. There are a number of forms that can be filled-in electronically and sent to LRD, covering the most usual forms of interim applications. These enable applications to be made swiftly and on clearly intelligible grounds.

Following compliance with the directions, a judge will give directions for the case to be set down for hearing. In doing so, he will take into consideration the replies of the parties to questions in the listing questionnaire about the length, form and location of the hearing. Hearings are held either face to face in formal courtrooms or, in appropriate cases, by video link. LRD has dedicated courtrooms at the Property Chamber hearing venue at Alfred Place in central London. It also sits in court venues around the country so that hearings can be held close to where the parties and their witnesses live.

Each hearing is conducted by a single judge, sitting without lay members. The procedure at the hearing is similar to that in a county court hearing.

Strict rules of evidence do not apply. It is not necessary for a hearsay notice to be served. The Tribunal may take account of what is said in a witness statement, even if the maker is not called to give oral evidence and be cross-examined. However, in weighing evidence, the Tribunal is unlikely to prefer evidence set out in an untested witness statement to evidence that has been tested by cross-examination of the witness.

The cases heard and determined by LRD are very often both legally and factually complex, involving large quantities of documentary and witness evidence. A recent trial listed for 5 days involved parties resident in different continents, allegations of forgery, evidence of overseas banking systems and the working of a cash economy and the inheritance laws of different countries. Notwithstanding the complexity of its workload, LRD offers a relatively speedy service – over 75% of cases are determined within 70 weeks of referral.

Costs

LRD has power to make orders for costs in land registration cases. In a land registration case, the power is not limited to cases where a person has acted unreasonably in bringing defending or conducting proceedings – see r 13(1)(c) Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (SI 2013/1169). Ordinarily, the unsuccessful party will be ordered to pay the costs of the successful party, but the Tribunal may make a different order – see Property Chamber, First-tier Tribunal, Land Registration Practice Direction 9. Detailed assessments of costs are carried out by specialist costs judges, recruited from the ranks of the judges of the Senior Courts Costs Office.

Limits on the Tribunal’s powers

LRD does not have power to give relief under the Trusts of Land and Appointment of Trustees Act 1996. It cannot make an order for sale or carry out the process of equitable accounting. However, once the principle of whether the person seeking a restriction has an equitable interest is established, the issue of whether there should be a sale and of equitable accounting on sale can often be resolved by agreement or a form of alternative dispute resolution. It is of course not infrequently the case that the party seeking to protect their beneficial interest does not want or expect that interest to be realised by sale immediately. There may be children of the relationship for whom the property is a home, and both parties may agree that the property should not be sold while the children are minors or in full-time education.

The issue has been raised as to whether LRD can determine the size of the beneficial interests. The issue has not been determined in either LRD or the Upper Tribunal (Lands Chamber) following full argument by legal representatives. In Hallman v Harkins [2019] UKUT 245 (LC) the parties had both asked the judge at first instance to determine the size of the applicant’s beneficial interest, and he did so. The appellant sought to appeal the finding that a beneficial interest existed and, in the alternative, to say that the size of the interest was different from that found by the judge. Neither party was represented at the appeal hearing. The judge, the Deputy President of the Lands Chamber, considered in some detail (albeit without the benefit of legal submissions) whether LRD had jurisdiction to determine the size of the beneficial interest, and expressed the view that it did not.

The Law Commission in its report Updating the Land Registration Act 2002 (Law Com 380) made a proposal that the law should be clarified to state that LRD has power to declare the extent of a beneficial interest. The previous government accepted this proposal but legislation to give effect to the Law Commission’s proposals is still awaited.

Mediation

LRD offers a free judicial mediation service in cases where it considers that mediation is desirable and has a reasonable chance of success. Limits on LRD’s resources mean that it cannot offer mediation in every case before it. A judge will usually consider after service of statements of case whether an offer of judicial mediation should be made. Judicial mediation is often effective in beneficial interest disputes between former cohabitees. The mediation session will last for up to a day and may be held in court or Tribunal premises or elsewhere, such as solicitors’ offices. The advantage of mediation is that the parties may be able to come to a wide-ranging agreement, covering not only the bare issues of whether a restriction should be entered, but also issues such as the size or value of the interest, whether, and if so, when and how, the property should be sold, and occupation and payment of the mortgage pending sale.

Rectifying or setting aside documents

In addition to its jurisdiction to determine matters referred to it by HM Land Registry, LRD has jurisdiction on an application made directly to it to rectify or set aside certain types of documents. The documents are those which effect dispositions requiring to be registered or are contracts for such dispositions or create or transfer interests which may be protected by notice on the register (s 108(2) LRA 2002). Examples of documents that LRD may rectify or set aside include contracts for the sale of land or grant of leases, transfers, leases and charges. In these cases, LRD has the same powers of rectification and setting aside as the High Court.

This may be of use to parties in cases where a transfer includes provision as to the trusts on which it is to be held and one party wishes to challenge the trust provisions on the grounds of misrepresentation or undue influence.

Conclusions

LRD serves as a vital, accessible specialist forum for the resolution of property disputes, including disputes as to beneficial interests. It is particularly useful in cases where cohabiting couples fall out. LRD’s expertise, procedural flexibility and cost-efficiency offer a compelling alternative to litigation in the civil courts.

[[1]]: Subject to the possibility of reform, following the government’s planned consultation on cohabitation rights anticipated to launch in 2025.