Chief Land Registrar v Caffrey & Co [2016] EWHC 161 (Ch)
Introduction
Fraud is of increasing concern to conveyancers, so at first sight this case appears to add to those worries. However, on closer examination it will be seen that the circumstances of the case are so exceptional that they are unlikely to be replicated.
The Facts
Caffrey & Co was a firm of solicitors. In October 2009, it had been instructed by a William and Evelyn Turner who were joint proprietors of Walnut Tree Farm in connection with the discharge of a mortgage over the farm in favour of DB UK Bank Ltd. Unusually, however, instead of requiring Caffreys to deal directly with the bank, the Turners handed over Form DS1 purportedly signed on behalf of the bank. Caffreys instructions were simply to submit this to Land Registry and obtain the removal of the charge from the title.
Caffreys submitted the DS1 to Land Registry which raised a requisition requesting confirmation that the signatory of the form was authorised by the bank. The Turners then supplied Caffreys with a power of attorney allegedly from the bank authorising the signatory to sign the DS1 on its behalf. Land Registry consequently discharged the mortgage. At no stage had Caffreys contacted the bank directly or through the solicitors who the Turners alleged had acted for the bank in connection with the discharge.
Subsequently Mr Turner purchased Mrs Turner’s share of the property, raising finance to do so from Santander on the security of a charge on the property. In 2011 DB Bank discovered that its charge had been removed, and applied to alter the register to reinstate it. In 2012 an adjudicator ordered that the charge be reinstated, but ranking after that of Santander. DB Bank then sought and obtained an indemnity from Land Registry.
The Chief Land Registrar then brought proceedings against Caffreys to recover the monies paid out on the indemnity claim. The first ground of claim was that he was entitled to be subrogated to the claim that the bank would have had against Caffreyss for. (Under s 103 Land Registration Act 2002, the Registrar is entitled to bring any cause of action which the bank could have brought). However, Master Matthews held that as Caffreys were not acting for the bank, it owed no duty of care to it. So as the bank could not have sued Caffreys, neither could Land Registry.
The second ground of claim was based on negligent misrepresentation. By completing and submitting the application to Land Registry, Caffreys “expressly or impliedly represented to the Claimant that it had taken sufficient steps or measures and/or knew of sufficient facts to satisfy itself that” the discharge form had been properly executed, and that the power of attorney was valid.
Further, Caffreys “knew or ought to have known that the Claimant would rely upon” these representations in dealing with the application to discharge the bank’s charge, and that therefore “the Defendant owed to the Claimant a duty to take reasonable care to ensure that the [representations] were true.”
Caffreys took no part in the hearing – it had been closed down by the SRA in April 2012 – and so these claims went uncontested. The Master expressed doubts but eventually stated “I am narrowly persuaded that, on the peculiar facts of this case, which may not be replicated in other cases where the solicitors challenge the allegations of express or implied representations …, it is right to treat the Defendant as having assumed a duty to take care in the representations which it made to the Claimant”. Judgement was entered in favour of Land Registry.
Conclusion
So the case is authority for the proposition that when submitting applications to Land Registry conveyancers represent that they have taken sufficient steps to satisfy themselves that the documents are valid. But in the vast majority of cases this is not imposing further obligations on us. We already owe that duty to the buyer or lender clients for whom we are acting.
It is therefore most unlikely that the facts of this case will be replicated – if only because these days most charges are discharged electronically.
