Swift 1st Ltd v Chief Land Registrar [2015] Ch 602

Facts

• The dispute arose from a series of transactions involving a London property acquired by Swift 1st Ltd, a property investment company, through a mortgage lender.
• The property was registered in Swift 1st Ltd's name, but the registration was later found to be based on a forged transfer.
• The Chief Land Registrar applied to rectify the land register by removing Swift 1st Ltd’s title and reinstating the original owner.
• As a result of rectification, Swift 1st Ltd lost legal ownership of the property and suffered significant financial loss.
• Swift 1st Ltd sought indemnity under Section 103 of the Land Registration Act 2002, contending that the rectification caused its loss.
• The Chief Land Registrar resisted the claim, alleging Swift 1st Ltd’s own negligence contributed to its loss.

Issues

1. Whether Swift 1st Ltd was entitled to indemnity for losses suffered as a result of rectification under Section 103 of the Land Registration Act 2002.
2. Whether Swift 1st Ltd’s conduct—particularly its reliance on the mortgage lender’s assurances and absence of suspicion regarding the forgery—constituted a lack of proper care that would preclude indemnity.
3. Whether the Chief Land Registrar met the burden of proving that Swift 1st Ltd's actions amounted to lack of proper care.

Decision

• The Court of Appeal held that Swift 1st Ltd was entitled to indemnity for losses resulting from rectification of the register.
• The court found that Swift 1st Ltd had acted reasonably, relying on assurances provided by the mortgage lender and having no cause to suspect forgery.
• It was determined that the Chief Land Registrar failed to prove Swift 1st Ltd’s conduct amounted to a lack of proper care as required by Section 103(2) of the Land Registration Act 2002.
• The court rejected the argument that contributory negligence, in the form of reliance on third-party assurances, defeated the indemnity claim.

Legal Principles

• Indemnity for loss caused by rectification errors is governed by Section 103 of the Land Registration Act 2002.
• Section 103(1) provides for indemnity if a person suffers loss by reason of rectification; Section 103(2) excludes indemnity if the claimant’s fraud or lack of proper care caused or substantially contributed to the loss.
• The burden of proving lack of proper care falls on the Chief Land Registrar.
• Indemnity claims under the Act are not governed by common law contributory negligence principles, but rather by statutory requirements focused on the standard of care in the context of land registration.
• Reliance on third-party assurances does not automatically amount to lack of proper care.

Conclusion

The Court of Appeal clarified that indemnity under the Land Registration Act 2002 is awarded unless the Chief Land Registrar proves the claimant’s lack of proper care or fraud; mere reliance on third-party assurances is insufficient to defeat an indemnity claim, reinforcing the Act’s statutory protection for good faith acquirers.