[1987] ch. 287 (1)

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2871 Ch.

A [COURT OF APPEAL]

A.J. DUNNING & SONS (SHOPFITTERS) LTD. v. SYKES & SON(POOLE) LTD.

[1982 D. No. 9]

B 1986 Oct . 16, 17; 30 Sir John Donaldson M.R. ,

Dillon and Croom-Johnson L.JJ.

Land RegistrationRegisterImplied covenantTransferVendortransferring parcels of land to purchaserInaccurate plan attachedto transferLand not owned by vendor apparently included in

parcels transferredWhether parcels transferred included land toC which vendor had no titleWhether vendor in breach of covenants

of good title to be implied into transferWhether title of true

owner charge or interest on "register" subject to which covenantsof good title taking effectLand Registration Rules 1925(S.R. & O. 1925 No. 1093 (L.28)), rr.76, 77(l)(a)

The Land Registration Rules 1925 provided by rule 77:

p "(1) Any covenant implied by virtue of section 76 of theLaw of Property Act 1925, in a disposition of registered landshall take effect as though the disposition was expresslymade subject to(a) all charges and other interests appearingor protected on the register at the time of the execution ofthe disposition and affecting the title of the covenantor; . . . "

The defendants as beneficial owners transferred to theP plaintiffs land described in a clause in the transfer as "all that

freehold property edged with red on the plan annexed heretobeing . . . part of the freehold property registered at H.M.Land Registry under title number P7608." The annexed planappeared to include within the red edging a piece of land towhich the defendants, having previously sold it to someone else,no longer had title. The plaintiffs subsequently claimed damagesagainst the defendants for breach of the covenants for title to be

F implied into the transfer by virtue of section 76 of and Schedule

2 to the Law of Property Act 1925,1 section 38(2) of the Land

Registration Act 19252 and rules 763 and 77 of the LandRegistration Rules 1925. The judge found that the transfer had

purported to include land to which the defendants had no title,but held that by virtue of rule 77(l )( a) of the Rules of 1925, thedefendants' implied covenants for good title took effect subjectto the registered title of the true owners of that part of the land

G which was not the defendants', and that therefore they were not

liable.

1 Law of Property Act 1925, s.76: "(1) In a conveyance there shall . . . be implied, acovenant . . . by each person who conveys, as far as regards the subject-matter or share ofsubject-matter expressed to be conveyed by him, with the person . . . or with the persons. . . to whom the conveyance is made . . . that is to say: (A) In a conveyance for valuableconsideration . . . a covenant by a person who conveys and is expressed to convey as

J J beneficial owner in the terms set out in Part I of Schedule 2 to this Act; . . ."Sch. 2: see post,p. 297B.2Land Registration Act 1925, s. 38: "(2) Rules may be made for prescribing the effect

of covenants implied by virtue of the Law of Property Act 1925, in dispositions ofregistered land."

3Land Registration Rules 1925, r. 76: see post, p. 297E-F.

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288

A.J. Dunning Ltd. v. Sykes (C.A.) [1987]

On appeal by the plaintiffs: ^Held, (1) (Sir John Donaldson M.R. dissenting) that by

using as a primary description the coloured edging on theattached plan to differentiate parts of the land registered undertitle No. P7608, the transfer did purport to include in theparcels transferred land, within the red edging on the plan, towhich the defendants had no title; and that, accordingly, the

judge had been correct in his construction of the transfer (post,pp. 299B-G, 302G-H). B

(2) Allowing the appeal, that the purpose of rule 77 of theRules of 1925 was to limit the scope of covenants of title,implied into the transfer by the legislation, by making themsubject to, inter alia, existing interests appearing on "theregister"; that in the context of rule 77(l)(a) "the register"meant only the register of that land under the title numberconcerned in the transfer, not the global register of all land nor y~,even the property register of any adjoining land which, byvirtue of rule 288, contracting purchasers were empowered to

inspect; that, therefore, the title of the true owners of that landpurportedly included in the land edged red on the transfer wasnot an interest appearing on the register subject to which thedefendants' covenants for good title took effect; and that,accordingly, the defendants were liable for breach of covenantand the case would be remitted for an inquiry as to the damages Dpayable (post, pp. 299H300B, E-G, 301B-H, 302G-H, 303C, E).

Decision of Mr. Donald Rattee Q.C. sitting as a deputyjudge of the Chancery Division reversed.

No cases are referred to in the judgments.

The following cases were cited in argument: E

Bortnan v. Griffith[1930] 1 Ch. 493Pagev.Midland Railway Co.[1894] 1 Ch. 11, C.A.Strand Music Hall Co. Ltd., In re, Ex parte European and American

FinanceCo. Ltd. (1865) 35 Beav. 153Willsonv.Greene [1971] 1 W.L.R. 635; [1971] 1 All E.R. 1098

pAPPEAL from Mr. Donald Rattee Q . C , sitting as a deputy judge of

the Chancery Division.By writ and amended statement of claim of 22 January 1982, the

plaintiffs, A.J. Dunning & Sons (Shopfitters) Ltd. , claimed against thedefendants, Sykes & Son (Poole) Ltd., that by a transfer dated7 September 1978 and made in consideration of the sum of 80,000 paidby the plaintiffs to the defendants, the defendants as beneficial owners Gpurported to transfer to the plaintiff the freehold property edged in redon the plan annexed thereto; that by virtue of section 76 of the Law ofProperty Act 1925 there were implied into the transfer the covenants setout in Part I of Schedule 2 to the Act of 1925; that at the date of that

transfer the piece of land shown coloured yellow on the plan was notvested in the defendants and accordingly the defendants had no right toconvey and failed to convey it to the plaintiffs; that on the trueconstruction of the contract for the sale of the land edged in red on the

plan, the yellow land was included therein; but that if on the trueconstruction of the transfer the yellow land was not included, then that

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2891 Ch. A.J. Dunning Ltd. v. Sykes (C.A.)

A transfer failed to give effect to the contract and the transfer ought to berectified accordingly; that by reason of the fact that the yellow landappeared to have been included in the red land on which the plaintiffsintended to and did construct an industrial building, the plaintiffs hadsuffered loss and damage, namely the cost of purchasing the yellow landfrom its true owners; and the plaintiffs claimed the sum of 10,111-95,

damages for breach of contract, rectification of the transfer to includeB the yellow land, costs and interest.

By amended defence of 18 March 1982, the defendants deniedthat the transfer of 7 September 1978 purported to transfer the yellowland but averred that if the transfer did purport to transfer the yellowland then the implied covenants, which it was admitted applied to thedefendants' land, did not apply to the yellow land or if they did then

Q there had been no breach of them; and that if the plaintiffs had sufferedloss and damage the defendants were not liable. The defendantscounterclaimed rectification of the transfer by removal of the yellowland.

On 12 July 1985, Mr. Donald Rattee Q.C. found that the transfer of7 September 1978 did purport to include in the red land transferred theyellow land to which the defendants had no title but held that on the

D true construction of, inter alia, rule 77(l)(a) of the Land RegistrationRules 1925, the defendants were not in breacji of any implied covenantin relation to the yellow land. He therefore dismissed with costs boththe claim and the counterclaim.

By notice of appeal of 15 August 1985, the plaintiffs appealed on the

grounds that the judge was wrong in law in holding that by virtue of ruleg 77(1) of the Rules of 1925, the covenants implied into the transfer tookeffect as though the transfer was expressly made subject to theregistration of the yellow land, and that he ought to have held that onits true construction rule 77(l)(a) only applied to charges and otherinterests appearing or protected on the register of the title with whichthe parties to the transfer were dealing. Alternatively, the judge oughtto have held that the registration of the yellow land did not constitute it

F a charge or other interest for the purposes of rule 77(l)(a).By respondents' notice of 18 September 1985, the defendants gave

notice of their intention upon the hearing of the plaintiffs' appeal tocontend that the judge's decision should be confirmed on the additionalor alternative grounds that the transfer did not purport on its trueconstruction to transfer the yellow land; that the plaintiffs' claim for

^ rectification of the transfer to include the yellow land should bedismissed; but that if, contrary to the defendants' contentions, thetransfer did include the yellow land then the judge was wrong to rejectthe contention of the defendants that if any covenant for title was to beimplied in the transfer in relation to the yellow land then the same wasnot breached by the defendants because on its true construction the

transfer purported to transfer only such title as the defendants in factH had to the yellow land.

The facts are stated in the judgment of Dillon L.J.

Peter Rawson for the plaintiffs. On the appeal: the effect of rule77(l)(a) of the Land Registration Rules 1925. (a) The position in

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290A.J. Dunning Ltd. v. Sykes (C.A.) [1987]

relation to unregistered land is clear. If a vendor purports to sell a piece \of land, to which he has at one time had title but which he has sold off,he will be liable under the covenant for full right to convey. This is soeven if the purchaser is aware that the vendor has no title: Pagev.

Midland Railway Co. [1894] 1 Ch. 11. (b) Rule 77(l)(a) is concerned

with "charges and other interests." In the case of the "yellow land,"what was registered under the title of the proprietor was an estate in theland and not a charge or interest (see Land Registration Act 1925, "section 3(xi) which in the definition of "legal estates" refers to "estates,interests and charges"), (c) Where rule 77(l)(a) refers to "all chargesand other interests appearing or protected on the register," it is referringonly to charges and interests which appear on the register of the titlewith which the vendor is dealing and which the purchaser can check byinspection of the register. It was not the intention of the legislature that Qthe purchaser should, for the purposes of the covenants for title, take

subject to everything affecting the land which appears on the register ofother proprietors, but not on that of the vendor. The judge's conclusionon this point was wrong, (d) The scheme of land registration under theAct of 1925 provides for a register to be kept in three parts, the

property register, the. proprietorship register and the charges register.The title to each registered property is required to bear a distinguishing Dnumber (Land Registration Rules 1925 rule 2). (e) The property registeris required to show notes relating to "easements rights privilegesconditions and covenants for the benefit of the land" (see rule 3(2) ofthe Rules of 1925). The charges register is required to contain

incumbrances and notes relating to covenants conditions and other rightsadversely affecting the land (see rule 7). These are the "charges and other interests" with which rule 77(l)(a) is concerned, (f) Whereregistered land is to be sold, the procedure is for the vendor to give the

purchaser authority to inspect the register: see section 110. Section 112of the Land Registration Act 1925 provides that any person authorised

by a registered proprietor of any land or charge "may inspect . . . anyregister or document in the custody of the registrar relating to such landor charge"(counsel's emphasis). He cannot inspect the register relating Fto any other land, (g) The purpose of rule 77(1) is to negative the effectof Page v. Midland Railway [1894] 1 Ch. 11, in so far as it madecovenants for title extend to incumbrances of which the purchaser hadnotice. The rule does this by providing that a purchaser who has noticeof an interest or charge, which he can obtain either from an inspectionof the register or, in the case of an overriding interest, by having actual Qnotice, is to take subject to it. It does not extend to incumbrances ofwhich he has no notice and which cannot be found by inspection of theregister relating to land of the person authorising the inspection, (h)"Title" in rule 77(l)(a) means the registered title of the covenantor. The

registration of the yellow land under a different title number and in thename of a different proprietor did not for this purpose affect the title ofthe defendants. H

On the cross appeal: the construction of the transfer dated the 7September 1978. The judge was right to hold that on its true constructionthe transfer purported to include the yellow land. In particular he was

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A right (i) to say that he could derive no assistance from a consideration ofthe Sykes contract; and (ii) in finding that the land intended to becomprised in clause 2 was defined by reference to the plan and that thewords "being another part of the property registered at H.M. LandRegistry under Title No. P7608" were falsa demonstratio. The judge wasalso right to accept the submission that it was permissible for the

purposes of construction to have regard to the fact that at all materialB times the south west boundary of the property in question was marked

on the ground by a fence, which followed the line shown on the transferplan and thus included the yellow land with the land remaining in titleNo.P7608: seeWillson v. Greene[1971] 1 W.L.R. 635.

The judge was right to reject the defendants' contention that thecovenant was that the transferor had power to convey "the subject

Q matter expressed to be conveyed" and that all that was expressed to beconveyed by any transfer of registered land was such title as the

transferor in fact had. He was correct in concluding that section 60(1) ofthe Law of Property Act 1925 cannot apply to a transfer of registeredland because the transfer itself does not pass any interest. He was alsoright in relying upon the fact that the implied covenant is to the effectthat the grantor has "full power to convey the subject matter expressed

D to be conveyed" and that the defendants' argument ignores the words"expressed to be" in the implied covenant itself.

Nicholas Warren for the defendants. The judge held, inter alia, asfollows: (a) on its true construction the transfer included the yellowland; (b) rules 76 of the Land Registration Rules 1925 could not be

relied upon by the plaintiffs because the transfer, quoad the yellow land, was not a "registered disposition" (a finding from which the plaintiffs do

not appeal); (c) On the basis that the plaintiffs could rely on section 76of the Law of Property Act 1925, any implied covenant for title issubject to rule 77 of the Land Registration Rules 1925. Accordingly, anycovenant implied in the transfer in relation to the yellow land is subjectto rule 77(l)(a) and therefore takes effect subject to "all charges andother interests appearing or protected on the register." Since the yellow

F land was at all material times registered land, the purported transfer ofit by the defendants (who had no title at all to it) took effect subject tothe rights of the registered proprietor, which rights were within rule77(l)(fl). The defendants support this conclusion.

On rule 77(l)(a) of the Rules of 1925: assuming the judge wascorrect to proceed on the basis that section 76 of the Law of Property

Q Act 1925 applied to the transfer quoad the yellow land, his decision onrule 77 was correct. It is not specified by the plaintiffs what they meanby "the title with which the parties to the [transfer] were dealing." Itmust be remembered that the yellow land was registered land andaccordingly comprised in a registered title at all material times. Initially

it was comprised in the same title as the remainder of the landtransferred by the transfer, but following its sale off by the defendants,

" it was removed from that title and registered within another title. Theplaintiffs are in this dilemma: either the transfer, as a matter ofconstruction, included the yellow land or it did not. On one hand, if thetransfer did include the yellow land then the title with which the parties

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were dealing must have included the title within which the yellow land Awas comprised: the plaintiffs' argument on construction necessarilyinvolves the heading of the transfer (which refers only to title No.P7608) as not limiting the land comprised in the transfer. It must be thecase, on this construction of the transfer, that the parties were purporting

to deal with the title in which the yellow land was comprised. On theother hand, if the transfer did not include the yellow land, no questionof any covenant for title being given in relation to that land arises.

That the defendants should not be liable in the present case is whollyconsistent with the principles underlying the land registration system.One principle of the system is to give notice of all registered interests.And it is only consonant with this principle that a transferee of registeredland takes subject to all registered interests. The yellow land was notincluded in title No. P7608. The plaintiffs should have made a search of Cthe index map and parcels index in order to ascertain whether the

yellow land was registered and if so in what title number. Had theydone so they would have discovered that the yellow land was registeredin a separate title number and would, had they asked the defendants,have been informed by them that they, the defendants, were not theregistered proprietors of that separate title. If thereafter the plaintiffs phad nonetheless received a transfer to the yellow land from thedefendants, they could hardly complain that that transfer would takeeffect subject to the registered interest of the registered proprietor: theywould have notice that the transfer, which is simply an authority to the

Land Registrar to effect changes in the register, would not entitle them,the plaintiffs, to be registered.The title of a registered proprietor clearly appears on the register: it E

is in fact the most important entry on the register. The plaintiffs' casemust be that the rights (to use a neutral term) of that proprietor are nota "charge or other interest." The defendants say that, whilst in the

present case the rights of the registered proprietor of the yellow landmay not constitute a "charge," they do constitute an "interest": "interest"in the context of rule 77(l)(a) should be given as wide a meaning as p

possible; its meaning should not in any way be restricted by the word

"charge." It cannot be right to say that the registered proprietor of landdoes not have an interest in the land. Other examples of "interests"which are not charges or in the nature of charges are the interest of alessee who has a registered lease of registered land and the interest of asquatter who has acquired title to registered land by adverse possession.

The defendants say that, contrary to the basis on which the judgedealt with rule 77, section 76 of the Law of Property Act 1925 did notapply to the yellow land at all. The judge's rejection of the contentionthat section 76 cannot apply to any Land Registry transfer is not

challenged: but the defendants do contend that it is only where thetransfer in question is a "registered disposition" within rule 76 thatsection 76 of the Law of Property Act 1925 applies. The judge decided H(and this is not challenged by the plaintiffs) that rule 76 did not apply.Accordingly, section 76 does not apply and no covenant for title wasincorporated so far as concerns the yellow land.

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A On the question of the yellow land as the subject matter of animplied covenant: the judge held that the yellow land was "expressedto be conveyed" for the purposes of the implied covenant for title.The judge did not go on to consider (as was argued before him) thecontention that the interest in the yellow land in relation to which

the covenant was given was only such interest as the defendantsactually had in that land. In unregistered conveyancing, it is possibleB to convey "such title, if any, as" the conveyor has in the land

conveyed. Even if he has no title at all, e.g. because he has previouslyconveyed the land away or allowed a squatter to obtain adverse title,there is no breach of the covenants for title. Force is conventionallygiven to the covenants by the use of the words "in fee simple": thesewords of limitation delineate the estate which the conveyor is

C purporting to convey. In registered conveyancing, a transfer containsno words of limitation: it is therefore necessary to examine the

registered title to discover not only the physical site being transferredbut also the interest which is purported to be transferred: that interestcan at most be that title to the land with which the transferor isregistered. In the present case, therefore, the purported transfer ofthe yellow land should, as it contains no words of limitation, be

D regarded as transferring the title to the yellow land with which thedefendants were registered (i.e. none) and so that the propertyexpressed to be conveyed for the purposes of the covenants for titlewas such interest (if any) as the defendants had in that land. In theresult, there has been no breach of the covenant. [Reference was also

made to Borman v. Griffith [1930] 1 Ch. 493.] On construction: (1) the heading on the transfer refers only to title

No. P7608. The court should be reluctant to include any other land inthe transfer unless compelled to do so by other provisions of thetransfer, especially in a case where the transferor does not in fact ownthat other land. (2) The parcels clause reads "all that freehold propertyedged with red on the plan annexed hereto being another part of the

property registered at H.M. Land Registry under Title Number P7608."F Although the yellow land is included within the red edging, it is quite

possible to construe this description as excluding the yellow land: what istransferred is land which is both edged in red and within title No.P7608. On this construction, no part of the description needs to berejected: it is simply that the parcels do not include all of the land edgedred but only that part within the title number. The construction for

Q which the defendants contend (all the land edged red) involves rejectingthe description "being another part of . . . P7608" as incorrect. It is not(and was not before the judge) contended that the primary descriptionof the parcel was "another part of the property" comprised in the titlenumber in the sense that that description could stand by itself. Rather,

the answer to the inevitable question posed by the judge, "Yes, butwhat other part of the property registered under title No. P7608?" is:

" "That part of the title No. P7608 also comprised in the land edged redon the plan." [Reference was also made toIn re Strand Music Hall Co.

Ltd., ex parte European and AmericanFinanceCo. Ltd. (1865) 35 Beav.153.]

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Rawson in reply. Can section 76 of the Law of Property Act 1925 Aapply? The trial judge held that the plaintiffs could not rely on rule 76of the Land Registration Rules 1925, because the transfer was not aregistered disposition in relation to the yellow land, but he went on tofind that this did not matter because the plaintiffs could rely directly on

section 76 of the Law of Property Act 1925itself. It was not thereforenecessary to appeal against the judge's finding that rule 76 could not berelied upon. If that point is now to be raised by the defendants, the following points should be emphasised. (1) The judge was correct inholding that it is section 76 of the Law of Property Act 1925 whichoperates to cause the covenant to bite. There is no need to rely on rule76, which is merely concerned with the machinery of introducing thenecessary wording into a transfer. (2) Once the necessary words areintroduced into a registered disposition, there is no reason why the Qoperation of those words should be confined to what is actually carried

by the transfer. The transfer dated 7 September 1978 is a registereddisposition in that it carried all but the yellow land. The fact that it didnot operate as a registered disposition in relation to the yellow land isno reason for saying that it cannot have contained an implied covenantin relation to the yellow land. (3) To hold otherwise is to introduceanother discrepancy between registered and unregistered conveyancing. DThis should not be done and the two systems should so far as possibleoperate on similar lines.

Cur. adv. vult.

30 October. The following judgments were handed down. E

DILLON L.J. This is an appeal by the plaintiffs in the action againsta decision given on 12 July 1985 by Mr. Donald Rattee Q.C., sitting asa deputy High Court judge in the Chancery Division. There is also arespondents' notice given by the defendants, respondents to the plaintiffs'appeal, whereby they challenge the judge's conclusions on a number of _

points which he decided in favour of the plaintiffs. The case is concerned

with the implication of the traditional "beneficial owner" covenants fortitle in a transfer of registered land.

The defendants were registered in April 1933 as the proprietors atH.M. Land Registry with absolute title under title No. P7608 of an areaof land at Poole in Dorset. Over the years prior to 1978 the defendantsfrom time to time sold off parts of that land to various purchasers. GWhen each sale was completed, the relevant purchaser was registered asthe proprietor, under a fresh title number, of the land comprised in thetransfer to that purchaser, and the Land Registry removed that landfrom the title No. P7608. The defendants continued to be the proprietors,under that title number, merely of the remainder of the land which theyhad not sold off.

One of the pre-1978 sales, and the only one relevant to the issues in "these proceedings, was a sale in 1969 of an area of land to a companycalled Elkins & Larby Ltd. That was duly completed and at the LandRegistry the whole of the land comprised in the sale to Elkins & Larby

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2951 Ch. A.J. Dunning Ltd. v. Sykes (C.A.) Dillon L.J.

A was removed from the defendants' title No. P7608 and was registered inthe name of Elkins & Larby under a new title number. The filed plan oftitle No. P7608 which provides the only description on the register of theland comprised in that title was amended accordingly. Unfortunately,when the land sold to Elkins & Larby came to be fenced off, on the

ground, from the land still retained by the defendants, someone made amistake and the fence was put in the wrong place. A small area of land sold to Elkins & Larby was cut off, by the fence as actually erected,

from the rest of the land sold to Elkins & Larby, and was left apparentlypart of the defendants' retained land. That small area of land is showncoloured yellow on the plan annexed to the statement of claim, and hasbeen referred to throughout the proceedings as "the yellow land;" it isvery small, only about 10 ft. x 10 ft. in area, but unfortunately it has

Q been crucial for the plaintiffs' purposes.In early 1978 a company called F.W. Cook (Mechanical Services)

Ltd. ("Cooks") entered into negotiations with the defendants to buypart of the defendants' land, for development with industrial premises.The judge found that all concerned with those negotiations, includingthose acting for the defendants, proceeded on the footing that what thedefendants had to sell included the yellow land, as appeared to be the

D case from the line of the fence on the ground.The outcome of those negotiations was a contract for sale between

the defendants and Cooks dated 10 July 1978. Whatever the intention ofthe parties, it is common ground that the parcels in that contract asdrawn up do not include the yellow land. The solicitors who preparedthe contract did not use any fresh plan to describe the land which was to

be sold to Cooks. They described the land being sold as being the wholeof the property registered at H.M. Land Registry under the title No.P7608 other than that part of the property which was comprised in a

particular lease in favour of a named third party. That did not includethe yellow land because the yellow land was no longer by then registeredunder title No. P7608.

However, Cooks assigned the benefit of that contract to an associatedF company, Donron (Alberice Meters) Ltd. ("Donron"), and Donron sub-

sold part of what it thought it was acquiring to the plaintiffs. Accordingly,when the time came for completion of the sale and sub-sale, it wasnecessary to distinguish between the land sub-sold to the plaintiffs, theland to be sold to Donron as successors to Cooks and not sub-soldandbecause of covenants and exceptions and reservations not otherwise

Q material to these proceedingsthe land still retained by the defendants,being the land comprised in the lease in favour of a third partymentioned above.

The sale and sub-sale were accordingly completed by a transfer inLand Registry form dated 7 September 1978. This transfer is headed:

"H.M. Land Registry. Transfer of Part of land comprised in Title County and District Dorset-Poole Title Number P7608 Property

Industrial Site at Creekmoor, Poole, Dorset."

The transfer has attached to it a plan which shows an.area of land edgedin green, another area of land edged in red and another area of land

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296Dillon L.J. A.J. Dunning Ltd. v. Sykes (C.A.) [1987]

edged in blue. The area of land edged in red has been referred to Athroughout these proceedings as "the red land." On the plan on thetransfer, part of the red land is shown hatched blue and another part isshown coloured brown; those markings are irrelevant to these

proceedings. What is fundamental, however, is that the plan on the

transfer was prepared to show what all the parties thought they weredealing with, as it appeared on the ground, and therefore on the planthe red land included the yellow land, although in truth the defendants had no title to the yellow land. The solicitors concerned did not noticethe discrepancyadmittedly small in areabetween the plan of the redland on the transfer and the filed plan on the register of title No. P7608,and everyone supposed that the whole of the red land, including theyellow land, was comprised in that title.

By clause 1 of the operative part of the transfer the defendants as Qbeneficial owner transferred to Donron

"All that freehold property situate at Creekmoor in the County ofDorset and shown edged with green on the plan annexed hereto. . . and being part of the property registered at H.M. LandRegistry under title number P7608."

By clause 2, the operative clause for present purposes, the defendants as u

beneficial owner transferred to the plaintiffs

"All that freehold property edged with red on the plan annexedhereto being another part of the property registered at H.M. Land

Registry under title number P7608."

Clauses 3 and 4 contain exceptions and reservations and covenants for Ethe benefit of "the residue of the land comprised in such title andretained by the transferor shown edged blue on such plan." The threeareas are respectively referred to in the transfer as "the green land,""the red land" and "the blue land."

The plaintiffs bought with a view to putting up an industrial buildingon what they thought they were buying, and having obtained planning ppermission they proceeded to do that. But the building in question was

designed to have one corner built on the yellow land. When they cameto register their title under the transfer, they discovered that they hadno title to the yellow land because, whatever the transfer had purportedto achieve, the defendants had had no title to the yellow land. Theytherefore bought in the yellow land from a successor in title of Elkins &Larby and by these proceedings they claim damages against the Gdefendants for breach of the covenants for title which they say are to beimplied in the transfer because the defendants were expressed to transferto them "as beneficial owner."

With unregistered conveyancing, it is provided by section 76 of theLaw of Property Act 1925 that in a conveyance there are to be implied,from the use of certain conventional phrases such as "beneficial owner,"certain covenants for title which are set out in the various parts ofSchedule 2 to that Act. These replaced with amendments certain

provisions in the Conveyancing Act 1881. In effect the conventionalphrases were a form of statutory shorthand to avoid the need to set put

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B


at length in every conveyance the covenants for title which for over ahundred years before 1881 had traditionally been set out in everyconveyance.

The covenant to be implied, under section 76 and Schedule 2, in aconveyance for valuable consideration by a person who conveys and is

expressed to convey as beneficial owner is, so far as material, acovenant:

"That, notwithstanding anything by the person who so conveys orany one through whom he derives title otherwise than by purchasefor value, made, done, executed, or omitted . . . the person who soconveys, has . . . full power to convey the subject-matter expressedto be conveyed, subject as, if so expressed, and in the manner inwhich, it is expressed to be conveyed . . . "

The covenant is thus not an absolute covenant of good title. But since it

was by the defendants' own act in transferring the yellow land to Elkins& Larby that the defendants lost their title to the yellow land, it is notin doubt that, under the system of unregistered conveyancing, if thedefendants had on 7 September 1978 purported to convey the yellowland as beneficial owner to the plaintiffs in fee simple, the defendants

D would have been in breach of the implied covenant for title above setout and liable to the plaintiffs in damages.

So far as registered land is concerned, section 38(2) of the LandRegistration Act 1925 provided that rules might be made for prescribingthe effect of covenants implied by virtue of the Law of Property Act

1925 in dispositions of registered land. The relevant rules are the LandRegistration Rules 1925 (S.R. & O. 1925 No. 1093 (L.28)) and in

^ particular rules 76 and 77(1) which provide:

"76. For the purpose of introducing the covenants implied undersections 76 and 77 of the Law of Property Act 1925, a person may,in a registered disposition, be expressed to execute, transfer, orcharge as beneficial owner, as settlor, as trustee, as mortgagee, aspersonal representative of a deceased person, as committee of a

F lunatic, or as receiver of a defective, or under an order of the court:

and an instrument of transfer or charge, and any instrumentaffecting registered land, or a registered charge, may be expressedaccordingly, but no reference to covenants implied under section 76aforesaid shall be entered in the register.

"77. Pursuant to section 38(2) of the Act, it is hereby provided that(1) Any covenant implied by virtue of section 76 of the Law

of Property Act 1925, in a disposition of registered land shall takeeffect as though the disposition was expressly made subject to(a)all charges and other interests appearing or protected on the registerat the time of the execution of the disposition affecting the title of

the covenantor; (b) any overriding interests of which the purchaserhas notice and subject to which it would have taken effect, had the

H land been unregistered; . . . "

When this action came on for trial before the deputy judge, it wasagreed that he should only decide liability. If the plaintiffs succeeded inestablishing liability, damages should be referred to an inquiry.

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On liability, the first question he had to decide was whether the Asubject matter "expressed to be conveyed" (the wording in the covenantin Schedule 2 to the Law of Property Act 1925) by clause 2 of thetransfer of 7 September 1978 did or did not include the yellow land.This is a question of construction of the parcels in the transfer. On their

true construction, do those parcels purport to convey to the plaintiffs thewhole of the red land, or do they only purport to convey to them somuch of the red land as was actually then registered under title No. P7608? The judge decided this point in favour of the plaintiffs, but hisdecision on it is challenged in this court by the respondents' notice.

The next point which the judge had to consider at the trial was aclaim by the defendants that if on its true construction the transferpurported to convey the yellow land to the plaintiffs, the transfer oughtto be rectified to exclude the yellow land. This claim for rectification the Q

judge rejected, and his rejection of it is not challenged in this court. He

held that it was the common intention of all parties that the yellow landshould be included in the transfer and be thereby transferred to the

plaintiffs.There was, however, an alternative claim for rectification before the

judge. The plaintiffs claimed that if on their true construction theparcels in clause 2 of the transfer of 7 September 1978 did not Dpurportedly include the yellow land, the transfer ought to be rectified toinclude the yellow land, so as to give effect to the common intention ofall parties. The judge made no ruling on this claim for rectificationsince, on his construction that the parcels did include the yellow land,rectification did not arise. In this court it is agreed between the partiesthat if we hold, contrary to the judge's view, that on their true gconstruction the parcels in the transfer do not purport to include theyellow land, then, if the plaintiffs win on all other points argued on theappeal, we should remit the case for decision at first instance on thisoutstanding claim of the plaintiffs for rectification of the parcels inclause 2 of the transfer to include the yellow land.

Apart from the question of construction and the rival claims forrectification already mentioned, the judge had also to consider a range F

of other points taken by the defendants, particularly under rules 76 and77 of the Land Registration Rules 1925, as a result of all or any ofwhich the defendants urged that the plaintiffs could not recover damagesin respect of the yellow land under the implied covenant for title. On allbut one of these other points the judge was against the defendants;some have been argued in this court on the respondents' notice and to Qthese I will return. On one point, however, the judge was with thedefendants and against the plaintiffs; the result of that was that as the

plaintiffs had to win on all points to win the action, the action failed,and was by the judge's order dismissed with costs.

The one point on which the plaintiffs failed arises under rule 77(l)(a)of the Land Registration Rules 1925. Under that rule a covenant fortitle implied in "a disposition of registered land" is to take effect as **though "the disposition" was expressly made subject to "all charges andother interests appearing . . . on the register at the time of the executionof the disposition." The judge held that the interests there referred to

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A included the interest of the true proprietor of the yellow land appearingon the proprietorship register of the title numbernot P7608in whichthe yellow land was in truth comprised at 7 September 1978. If thecovenant is indeed so limited, it would follow that the fact that thedefendants have no title to the yellow land gives the plaintiffs no claimunder the covenant for title because the covenant is to be treated assubject to an express qualification as to the true proprietor's ownership.

But the plaintiffs say that the charges and other interests referred to inrule 77(l)(a) are only those which appear on the register of title No.P7608 itself since that is the only title to which the transfer refers andthe only title as to which the defendants had power to give the plaintiffsauthority to inspect the entries on the register.

Such being the scope and history of the proceedings, I turn first toQ the issue of the true construction of the parcels in the transfer of 7

September 1978. This is perhaps a question of first impression. For my

part, however, I agree entirely with the conclusion of the judge that theparcels do, as a matter of construction, include the yellow land, and theyellow land is therefore part of the subject matter "expressed to beconveyed" by clause 2 of the transfer. The factors which taken togetherlead me to this conclusion are briefly as follows. First, the transfer is

D concerned to differentiate between three parcels of land, that to betransferred to Donron, that to be transferred to the plaintiffs and thatretained by the defendants, and it does so exclusively by reference tothe plan on the transfer and the colouring on that planthe green land,the red land and the blue land. The colouring on the plan is thus the

dominant description of each parcel, including the red land. Secondly,g the other part of the description of the red land, "being another part of

the property registered . . . under title number P7608" in itself describesnothing, since it does not say what further part is meant. Thirdly, where

parcels in a conveyancing document are described by reference to a planattached to the documents, the natural inference is that it was theintention that anyone concerned should see from the document alone,which means from the plan on it, what land the document was purporting

F to pass. But if in the present case the defendants are right in theirargument that clause 2 of the transfer imposed two cumulative conditionsand only purported to pass land which (a) was within the red edging onthe plan and also (b) was part of title No. P7608, that would not be so,and the reader would have to look beyond the plan on the transfer tothe filed plan on the register to see what the parties were intending to

Q deal with. That would not, to my mind, be a natural approach. I preferthe judge's conclusion that the effective description of the subject matterexpressed to be conveyed by clause 2 of the transfer is the red edging onthe plan on the transfer; the reference to property comprised in the titlenumber is subordinate, believed to be accurate, but to be rejected as

falsa demonstratio in so far as it is, qua the yellow land, inaccurate.As for the defendants' arguments based on rules 76 and 77 of the" Land Registration Rules 1925, the function of those rules is, under

section 38(2) of the Land Registration Act 1925, to prescribe theeffect, in registered conveyances of the covenants implied by virtue ofthe Law of Property Act 1925. The first stage in this is that under rule

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76 a person may introduce the relevant implied covenants by being Aexpressed, in a registered disposition, to transfer as beneficial owner.There must, therefore, for the covenants to be introduced, be aregistered disposition. But in the present case there unquestionably wasa registered disposition, in that the transfer was a registered dispositionof at any rate so much of the red land as was still comprised in title No.P7608. The "beneficial owner" covenants are therefore to be implied inthe transfer, which means that the relevant wording in Schedule 2 to the ^Law of Property Act 1925 is to be read into the transfer.

One argument for the defendants, discussed on the respondents'notice, is that the transfer is only a registered disposition of so much ofthe red land as was comprised in the title number and it was not aregistered disposition of the yellow land, because the defendants had notitle to the yellow land; so it is said that the beneficial owner's covenants Qare only implied qua the land which was effectively transferred by the

transfer, and not qua the yellow land. That, however, does not follow.The registered disposition referred to in rule 76 is the equivalent inregistered conveyancing of the conveyance referred to in section 76 ofthe Law of Property Act 1925, which under section 205 has to be aconveyance of the property. But it is plain from the wording of section76, as of Schedule 2 to the Law of Property Act 1925, that the Dcovenants implied under section 76 apply not merely to the propertyconveyed by the conveyance referred to, but to the whole of the subjectmatter expressed to be conveyed by it. The same must apply to aregistered disposition. Therefore I find nothing in rule 76 that helps the

defendants.I find it unnecessary to explore the question argued by the defendants p

as to whether the covenants for title are implied by virtue of section 76of the Law of Property Act 1925 or by virtue of rule 76. It does notmatter. The wording to be applied is that the covenants implied bysection 76 are introduced by rule 76 into the registered disposition.

The scope of the covenants thus introduced is limited by rule 77(1).The primary object, at any rate, of this is to simplify the form oftransfers in registered conveyancing, by making it unnecessary to refer Fexpressly in every transfer to the matters covered by paragraphs (a)and

(b)of rule 77(1), viz. charges and other interests appearing or protectedon "the register" and overriding interests of which the purchaser hasnotice. The crucial question is what is meant by "the register." It is very

probable that the draftsman of the rule only had in mind the simple casewhere a registered proprietor transfers land of which he is the registered Q

proprietor; in that case the only relevant register would be the registerof the registered proprietor's own title. I find it hard to suppose that thedraftsman ever envisaged that solicitors would so arrange matters that aregistered proprietor would purport to include in one transfer land ofwhich he himself was the registered proprietor and also land to which hehad no title and of which someone else was the registered proprietorunder a different title number. These considerations, however, cannot ^answer the crucial question in the present case.

The scheme of the Land Registry is that, though there is a globalregister of all registered titles, there is also a separate register for each

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A individual title. This appears particularly from the form of office copyentries for the individual title which are regularly issued by the LandRegistry under rule 296 of the Land Registration Rules 1925 and whichunder section 113 of the Land Registration Act 1925 are themselvesadmissible in evidence to the same extent as the originals. The register

for the individual title itself comprises a property register, a proprietorshipregister and a charges register for that individual title. The way title is made to registered land on a sale is, under section 110 of the Land

Registration Act 1925, that the vendor furnishes the purchaser with anauthority to inspect "the register" and if required with a copy of thesubsisting entries in "the register" and of any filed plan. In that context"the register" must mean the register in respect of the relevant individualtitle of which the vendor is the registered proprietor, since under rule

Q 287 only the proprietor of land (or of any charge or incumbrancethereon) can authorise anyone to inspect any entry in the register

relating to that land. The plaintiffs, therefore, as purchasers under theircontract with Donron which preceded the transfer of 7 September 1978had no general right to inspect anything in the global register maintainedat the Land Registry in respect of all registered land; they could inspecttwo things only: first, with the defendants' authority which was given,

D the entries on the register of title No. P7608, and, secondly, under rule288, as contracting purchasers of adjoining land, the property registerand filed plan only of the title which included the yellow land and otheradjoining land.

The reference in rule 77(l)(a) to charges and other interests appearing

or protected on the register could not, in my judgment, extend tog matters the subject of entries which the plaintiffs as purchasers could not

have inspected. Therefore "the register" referred to cannot mean theglobal register of all registered land. Therefore I construe the referenceto "the register" in rule 77(l)(a) as referring only to the register of theindividual title, viz. in the context of the present case the title No. P7608of which the defendants were the registered proprietors. It was that

proprietorship alone which under the scheme of the Act empoweredF them to make the disposition referred to in rule 77(l)(a) which I take to

be the same as the registered disposition referred to in rule 76.I have considered whether in view of rule 288 the reference to "the

register" in rule 77(l)(a) ought to be construed to include also theproperty register of the adjoining title which in fact included the yellowland. But in my judgment though the special power to inspect the

Q property register and filed plan is given by rule 288, the emphasis of theAct and rules as between vendor and purchaser is so strongly oninspection merely of the register of the title of which the vendor is theregistered proprietor that the reference to "the register" in rule 77(l)(a)ought to be similarly so limited. I therefore, with all respect to the

judge, disagree with him on the point on which he decided this actionagainst the plaintiffs.

H There remains, however, one further point taken by the defendantsunder their respondents' notice. They point out that the transfer to the

plaintiffs in clause 2 of the transfer of 7 September 1978 does notcontain the words of limitation "in fee simple." They therefore submit

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302DiUonL.J. A.J.Dunning Ltd.v.Sykes (C.A.) [1987]

that, even if theparcels inclause2purport to include theyellow land, Athe defendants, who had no contract with the plaintiffs, have neverundertaken to theplaintiffs topassto the plaintiffs more than whatevertitle they might have in theland thesubject ofclause2. The title theyhad happened to be the feesimpleinrelationto the redlandin so far asit was comprised in title No. P7608 and happened to be nothing inrelation to the yellow land, but that, the defendants submit, doesnotgive the plaintiffs any claim to damages under the "beneficial owner" ^implied covenant, because the defendants never purported to transfermore than whatever they actuallyhad.

Section60 of the Law ofPropertyAct1925, whichhasbeen referredto inrelation to this argument, provides that aconveyance of freeholdland to any person without words of limitation or any equivalentexpression shall pass to thegrantee the fee simple or other thewhole Qinterest which the grantor had power to convey in such land, unlessa

contrary intention appears in the conveyance. Despite this, it hasremained the practice in unregistered conveyancing to include in thehabendum of the conveyance the words of limitation "in fee simple"where it is intended that the fee simple will pass,or,where that is notintended to state that the grantor conveys only such estate title orinterest (if any) as he mayhavein the land concerned. In thenotes in DWolstenholmeandCherry's Conveyancing Statutes,13th ed. (1972),vol.1,134, it isstated:

"Though words of limitation are no longer essential thewords 'infee simple' will generally be employed in deeds to show theintention of the parties and to facilitate the construction of theimplied covenantsfor title." E

The wordsof limitation "in fee simple" are,however, never usedinregistered conveyancing. The form of transfer commonly used is

prescribed by rule 98 of the Rules of 1925 in mandatory terms and itcontains no words of limitation. What is clear, however, from section18(1)of theLand Registration Act 1925 isthat theonly relevant powerwhich the defendants had asproprietors of the land comprised in title FNo.P7608 wastotransferthe feesimpleinpossession. That consequentlywas what they purported todoand didin relation to thepartof thered land actually comprised in that title. But clause 2 of the transfertreated thewholeof the red land alike. Therefore in my judgment theyequally purported totransfer the feesimplein theyellow land. Thatwasthe manner inwhichit wasexpressed to be conveyed. Consequently the Qimplied covenant fortitle bites.

Formypart, therefore, Iwould allow this appeal,setasidetheorderofthejudgeandorderaninquiryas todamages.

CROOM-JOHNSON L.J. I have read the judgment of DillonL.J. andagree with it. I wish to add only a few words on the question of the

proper constructionof theparcels clausein thetransfer. "The judge rejected the defendants' submission that thewords "being

another part of the property registered under title number P7608"should be taken to be the primary definition of the land transferred,

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3031Ch. A.J.DunningLtd. v.Sykes (C.A.) Croom-JohnsonL.J.

A becauseitwas quite impossiblebythose wordstoidentify anyboundariesof thepart of title No.P7608 intended to betransferred. He held thattherewasthennoanswerto theinevitable question:Yes, butwhatother

partof the property registered under titleNo.P7608?In the context of the document as described in the judgment of

DillonL.J.,with itsreferences to thegreen landand theblue land,theplanof the red landwas theprimary description ofwhatwasexpressed" to beconveyed. It wasclearandunambiguous, and was not referred to

as being"for identification only."Nor would it be permissible to read into the description any

additional wordsso as tomakeitread "Allthat freehold property whichis both edged withred on the plan annexed hereto and another partofthe property registered . . . " where the wording as it stands is

Q straightforward.I come to this conclusion simplyon thewordingof the transfer and

without stepping outside it in order to ascertain the intentions of theparties. In my view the judge arrived at the right answer to theinterpretationof the transfer. AccordinglyIalso would allowtheappealfor thereasons givenbyDillonL.J.

DSIR JOHN DONALDSON M.R. It is common ground that if, as is

contendedby thedefendants intheir cross-appeal, thejudge erred in hisconstructionof thetransfer, thematter would haveto beremittedto theChancery Division in order that the plaintiffs' claim to rectification

shouldbe considered. Nevertheless,it wasalso common ground thattheparties would be assisted if we gave judgment on the other matters

E which ariseif thejudge's constructionwascorrect.I agree with the judgment of DillonL.J. in all respects, saveas to

the constructionofthe transfer andtherefore confine myselftoexplainingwhyIdisagreeonthatonepoint.

Registration ofland titleshasonlyalimited utilityif it is notcleartowhat land the registered title andother particulars relate.On the other

F hand, it isobviously impossible todefine and register boundariesfor all

properties overnight or even, perhaps, "over-century." However, it ispossible to aim in that direction and rules 272 to 285 of the LandRegistration Rules 1925point the way.There is to be a parcels index

based upon the Ordnance Surveymapwith provisionfor theboundariestobefixed (rule 276), although ifthis procedureis notadopted the filed

plan shallbedeemed to indicate general boundaries only (rule278).G Imention thisby way ofpreamble, becauseI think thatit is notonly

permissible, but is the natural and desirable course to adopt whentransferring registered land, to treat the primary unit as being theregistered parcel and, if this is not being transferred as a whole, to

indicate what partorpartsisbeing transferred.This seems to me to be precisely what happened on this occasion.

The defendantsas thebeneficial ownersofthe registered land constitutingregistered parcel Dorset-Poole title No.P7608 were minded to disposeof twopartsofthis parcel andthere isabsolutely nothingon thefaceofthe transfer to suggest that they intended to transfer any part of anyother parcel. (In fact, although this is not a permissible aid to

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304

Sir John A.J. Dunning Ltd. v. Sykes (C.A.) [1987]Donaldson M.R.

construction, we know that they did not so intend. Their error lay in Abelieving that the "yellow landa 10-foot squarewas part of theparcel). In each case the land to be transferred is described in thetransfer as "being part" or "being another part of the property registeredat the Land Registry under title number P7608." The transferor had

then to identify each such part of the land comprised in the title and forthat purpose used a plan and edged the parts in green and redrespectively. ^

On the judge's construction of the transfer, the references to theparcel number are largely unnecessary and are certainly subordinate tothe colourings on the plan. Furthermore, in relation to the land edged inred, the words "being part of . . . P7608" are simply not correct, sincethe 10-foot square "yellow land" included in the land edged in red is notwithin the parcel. On my construction the whole of the land transferred Qis, as the transfer states, part of the registered parcel and full effect isgiven to the coloured edging as indicating the boundary between (a) the

part of the parcel transferred to Donron (Alberice Meters) Ltd., (b) thattransferred to the plaintiffs and (c) that (if any) retained by thedefendants. The unfortunate deviation of the red line across theboundary of parcel P7608 and into another parcel is immaterial, since atthis point the boundary is defined by the registered particulars of parcel DP7608 as a whole and not by the red line.

In the light of my view of the construction of the transfer, I wouldhave remitted the matter to the Chancery Division for consideration of

the plaintiffs' claim to rectification.

Appeal allowed withcosts. Cross-appealdismissed.

Leave to appealrefused.

Solicitors: Barker Son & Isherwood, Andover; Trethowans, Salisbury.

P.M.F

[1987] ch. 287 (1)

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