Can a party wall award be registered as a caution?

Citation

Murrells, P. (1998), "Can a party wall award be registered as a caution?", Structural Survey, Vol. 16 No. 1. https://doi.org/10.1108/ss.1998.11016aab.006

Can a party wall award be registered as a caution?

Can a party wall award be registered as a caution?

Paul Murrells

Much has been written in recent columns of this journal regarding implementation of the Party Wall Act 1996 (Structural Survey, 1996,1997). Since 1 September 1997, Party Wall legislation has been extended to the whole of England and Wales. So, why another article?

Recent case law arising out of a party wall award under the London Building Acts (Amendment)Act 1939 ("the 1939 Act") has come to the attention of the much renowned Pyramus and Thisbe Club. Hence, the request for this commentary has come from very high circles. The author hopes that once readers have considered the article they will not regard it simply as "sweet nothings", as may have been whispered through that famous hole in a party wall (Pyramus and Thisbe).

Observatory Hill Ltd v. Camtel Investments SA (1997)

Judgment was given by Judge Levy QC, sitting as a Judge of the Chancery Division of the High Court, on 15 July 1996. The "difficult" 1939 Act had been invoked by the plaintiff company in respect of property it owned in Observatory Gardens, Kensington, London W8. It will come as no surprise that there was a party wall shared in respect of premises owned by the defendant company.

It was agreed by the parties that substantial renovations to the plaintiff's premises had caused significant damage on the defendant's land. The damage was caused by excavation work.

The award

Before considering the point of law involved in the Observatory Hill case, it is important to consider details of the party wall award, made on 23 December 1992. This reads as follows:

(a) the plaintiff to carry out work on land which is partly the property of the plaintiff and partly the property of the defendant;

(b) the plaintiff is obliged to make good, at his own expense, all structural anddecorative damage that the defendant's building occasioned by the works; and

(c) in the event that the plaintiff fails to do so, the defendant is entitled to carry out such works at the plaintiff's expense and upon the plaintiff's property.

Does the award amount to a cautionable interest?

The Judgment does not give details of the sequence of events, but it would seem that frustration must have set in as to the time it was taking the plaintiff to carry out the works. Accordingly, in June 1996 the defendant entered a caution at HM Land Registry in the proprietorship register of the plaintiff's Title. Such caution was in respect of the interest, so the defendant contended, that it had on the plaintiff's land. Not surprisingly, the plaintiff applied to the Court for such caution to be vacated. The Judge was referred to various decided cases, but none fell within the facts of the Observatory Hill case. This may explain why the Judgment has attracted such attention within Estates Gazette Law Reports.

HM Land Registry

Before considering the Judge's reasoning in ordering that the caution should be vacated, a brief explanation of the Land Registry's function may be helpful. It is a Government Executive Agency, responsible to the Lord Chancellor. The Land Registry's main purpose is to register title to land in England and Wales and to record dealings once the land is registered. It was established in 1862. Registration is compulsory following any sale of land. It provides a safe, simple and economic system for the transfer and mortgage of land. Once a property or piece of land is registered:

• •

  legal title is guaranteed;

• •

  an accurate plan is provided;

• •

  there is an up to date and authoritative public record of ownership, rights, covenants and mortgages;

• •

  dealings can take place with confidence;

• •

  the risk of fraud is reduced;

• •

  simple forms replace complicated documents;

• •

  disputes can be resolved more easily; and

• •

  repeated and lengthy examination of the title deeds can be dispensed with.

Public inspection of Land Register

Since 1990, the Land Register has been open for inspection by the public. Anyone can inspect it for a fee and obtain a copy of a registered title, including the name and address of the current owner of any registered property. The price paid for a property will not be disclosed. However, views are being invited at present on whether the price paid should be reinstated to the register!

Contents of the register

Each land register has an individual title number. It is in three parts, containing the following information:

1. 1.

   The property register which identifies the geographical location and extent of a property by means of a filed plan. It will say whether the property is freehold or leasehold. Also, it will contain details of easements and covenants which benefit the land, such as rights of way over other people's land. This register is not concerned with ownership.

2. 2.

   The proprietorship register which specifies the class of title being Absolute, Possessory or Qualified in the case of freehold property. The same titles apply to leasehold property, but with the addition of Good Leasehold. Also, this register will contain the name, address and description of the registered proprietor as well as any entries which restrict dealings in the land. A caution, such as that entered by Camtel Investments, is an example of this. However, the most common caution is that registered by a mortgage lender, preventing any further disposition or dealing in the land without the lender's consent. It gives the cautioner a right to be given notice of any proposed dealings. Such registration will not entitle the cautioner to assert priority of his interest over a subsequently registered charge.

3. 3.

   The charges register which contains details of registered mortgages, but not the amount of such mortgages. Also, it will detail other encumbrances on the property, such as leases, rights of way and restrictive covenants.

The decision in the Observatory Hill case

Without any decided case law to assist him in reaching a decision, the Judge turned to the text books for guidance, most especially Emmet on Title. The effect of a caution against dealings has been considered already in looking at the proprietorship register of a property's title. Emmet continues at 10.008 by describing registration of a caution substantially as a hostile action. The procedure is designed accordingly. A person interested under an unregistered instrument or interested as a judgment creditor or otherwise in any land or charge registered in the name of another, may lodge a caution to the effect that no such dealing with such land or charges to be registered until notice has been served on him.

Camtel Investments could not be described as a judgment creditor nor anything approaching one. The best claim that the defendant had was a potential interest to enter onto Observatory Hill's land if the party wall award was not observed and put into effect by the plaintiff.

Judgment was clear. An adjoining owner with the benefit of an award under the 1939 Act had no right to become a person or body who could enter a caution on the proprietorship register as having an interest in land. The Judge acknowledged the defendant's future right to enter onto the plaintiff's land if the work was not carried out. However, this right was not capable of protection by registration of a caution. Accordingly, the Judge ordered that the caution should be removed upon the plaintiff undertaking to abide by any order regarding damages which the defendant might sustain as a result of the Judge's order. Clearly, whilst such caution remained on the register, this improved the defendant's bargaining position in its dispute with the plaintiff. However, there was no statutory, legal or equitable right entitling the defendant to maintain such caution.

Conclusion

The Observatory Hill case was decided very much upon its own facts. As Party Wall work gathers momentum around England and Wales, the decision will have little effect upon surveyors undertaking such appointments as Arbitrators, whatever their professional background might be. Pyramus and Thisbe can carry on with their sweet mutterings in blissful ignorance of the decision. HM Land Registry may take comfort from the fact that its registers are not open to improper use.

Structural Survey (1996),"View from the boundary", Vol.14 No. 3, pp. 40-3.

Structural Survey (1997), "View from the boundary", Vol. 15 No. 3, pp. 131-3.