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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bhullar & Anor v McArdle [2001] EWCA Civ 510 (10 April 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/510.html Cite as: [2001] NPC 75, [2001] EWCA Civ 510, (2001) 82 P & CR 38

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL ( CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL Tuesday 10th April, 2001

LORD JUSTICE MUMMERY :

Introduction

1. This is an appeal from the order of Mr Peter Whiteman QC, sitting as a Deputy High Court Judge of the Chancery Division, in proceedings under the Land Registration Acts 1925-1986. On 22 June 1999 he ordered rectification of the Land Register at HM Land Registry-

i) under title No BM 83895 (of which the claimants are the registered proprietors) by removing from it and from the filed plan a small area of scrub land (called the Red Land), pursuant to an oral agreement made on 2 April 1987; and

ii) under title No BM 62081 (of which the defendant, Mr McArdle, is the registered proprietor) by including the Red Land therein and in the filed plan.

2. The claimants initiated the proceedings by Originating Summons on 20 January 1997 pursuant to the directions of HM Land Registry for the determination by the court of 10 questions, which are set out later in this judgment, concerning the Red Land and for an order cancelling a caution registered by Mr McArdle against Title No BM 83895 on 24 January 1994 to protect his interest in the Red Land and an adjoining area called the Blue Land.
3. Mr McArdle was granted an order for rectification, coupled with an order for the cancellation of the caution upon rectification being effected. The claimants appeal with the permission of this court.

The Case in Outline

4. The parties are neighbours in Grays Park Road, Stoke Poges, Buckinghamshire. Mr McArdle has been the owner and occupier of Snitterfield House and adjoining land (the House) since 1979.
5. Nearby is Snitterfield Farm (the Farm). The registered title of the Farm includes the Red Land situated at its western edge close to the House.
6. The Farm was acquired in 1985 by Mr Michael Tivnan, the claimants' predecessor in title. The dispute centres on the legal consequences of an oral agreement made on about 2 April 1987 (the 1987 Agreement) by Mr Tivnan with two of his neighbours, Mr McArdle and Mr McGovern. The purpose of the 1987 Agreement was to re-arrange the boundaries of their respective properties and to effect consequent exchanges of small areas of adjacent land, including the transfer of the Red Land by Mr Tivnan to Mr McArdle.
7. Although the parties had solicitors nothing was ever put into proper legal form and nothing was ever registered at the Land Registry prior to the disposition of the Farm to the claimants. This occurred after possession of the Farm was obtained by Mr Tivnan's mortgagees, Kreditforenigen Danmark, in 1991 in exercise of their powers under a charge registered on 15 March 1988. They sold the Farm to the claimants. Contracts were exchanged on 29 October 1991. The transfer to the claimants is dated 10 December 1991. The claimants were registered as proprietors of the Farm on 18 February 1992.
8. Mr McArdle asserts, and the claimants deny, that the 1987 Agreement is binding on them . The claimants were not parties to it. It was not recorded in any deed executed by them or by their predecessors in title. Mr McArdle's interest under it was not protected by any entry on the register at the date when the claimants acquired the Farm in 1992. They knew nothing about it until later.
9. Mr McArdle's contentions, broadly stated, are that-

i) the claimants acquired the Farm subject to his overriding interest in the Red Land within the meaning of the Land Registration Acts and the Rules made thereunder; alternatively

ii) the claimants are estopped from denying that the terms of the 1987 Agreement are enforceable against them, as long as they continue to enjoy and assert entitlement to benefits conferred by the agreement on their predecessor in title, Mr Tivnan; and, as long as that state of affairs exists, they are precluded by application of the principle of mutual benefit and burden from avoiding the indivisible obligations created by the 1987 Agreement, including, in particular, the obligation on Mr Tivnan to transfer the Red Land to Mr McArdle.

10. The deputy judge found against Mr McArdle on the overriding interest point (which has been more elaborately argued in this court), but in his favour on the estoppel point. It was on that basis that he made the orders for rectification of the Register.

The Relevant Facts

11. The deputy judge's findings may be summarised as follows:-
12. On about 2 April 1987 Mr Tivnan made a final and binding concluded oral agreement with Mr McArdle and Mr McGovern for the exchange of small neighbouring parcels of land described in the proceedings as the Red Land and the Blue Land, which were owned by Mr Tivnan, the Green Land, which was owned by Mr McArdle, and the Brown Land, which was owned by Mr McGovern, who negotiated the agreement on behalf of his wife and later transferred his interest to her.
13. Although the parties had solicitors (Kidd Rapinet for Mr Tivnan, Cannons for Mr McArdle and Grant Argent & Co for the McGoverns) no formal transfers by deed were ever executed. The agreement was not even evidenced in writing. The deputy judge held that the relevant obligations under the agreement were integral, interdependent and indivisible. He rejected the claimants' contention that the obligations created as between the three parties were independent and discrete mutual promises.
14. The following terms were agreed.

Tivnan/McArdle.

15. Mr Tivnan was to transfer his interest in the Red Land to Mr McArdle; this was in return for the transfer of the Green Land by Mr McArdle to Mr Tivnan who would grant a right of way over it to Mrs McGovern ;

Tivnan/McGovern.

16. Mr Tivnan was to transfer his interest in the Blue Land to Mrs McGovern for use as part of a re-routed driveway to her property ; this was in return for the transfer of the Brown Land by Mrs McGovern to Mr Tivnan for new garages to be built on it.
17. The agreed terms were held to be "integral and interdependent parts of a tripartite agreement."
18. In accordance with the agreement

i) Mr Tivnan built garages on the Brown Land; he erected a new entrance gateway to his property; he arranged to have fencing erected on both sides of the McGoverns' new driveway on the Blue Land; he also contributed £3,000 to the cost of paving the new driveway;

ii) The McGoverns re-laid the driveway on the Blue Land, which was to be transferred by Mr Tivnan, and Mrs McGovern is in "actual occupation" of it, having used it as part of her driveway almost every day since 1987.

19. It was accepted that there were acts of part performance by Mr Tivnan sufficient to take the agreement outside the operation of section 40 of the Law of Property Act 1925 (which was then in force) and to confer on Mr McArdle an equitable interest in the Red Land. There is no appeal against this conclusion.
20. Mr McArdle was not in actual occupation of the Red Land either at the time of the registration of the charge to Mr Tivnan's mortgagee or at the time when the claimants acquired the Farm from the mortgagee.
21. The claimants acquired title to the Red Land as part of the registered title of the Farm. They also occupy and assert rights to the Brown Land on which Mr Tivnan built the garages and over the way constructed to them.

The Land Registration Legislation

22. The title to all the relevant properties is registered. The proceedings are brought by the claimants under the Land Registration Acts. The basic principles of the land registration system are of fundamental importance to the proper determination of the issues arising in these proceedings.
23. There is no better starting point than the speech of Lord Wilberforce in Williams & Glyn's Bank Ltd v. Boland [1981] AC 487 at 503F-504C-

"The system of land registration, as it exists in England, which long antedates the Land Registration Act 1925, is designed to simplify and cheapen conveyancing. It is intended to replace the often complicated and voluminous title deeds of property by a single land certificate, on the strength of which land can be dealt with. In place of the lengthy and often technical investigation of title to which a purchaser was committed, all he has to do is to consult the register; from any burden not entered on the register, with one exception, he takes free. Above all, the system is designed to free the purchaser from the hazards of notice-real or constructive-which, in the case of unregistered land, involved him in enquiries, often quite elaborate, failing which he might be bound by equities. The Law of Property Act 1925 contains provisions limiting the effect of the doctrine of notice, but it still remains a potential source of danger to purchasers. By contrast, the only provisions of the Land Registration Act 1925 with regard to notice are provisions which enable a purchaser to take the estate free from equitable interests or equities whether he has notice or not. (See, for example, section 3 (xv) "minor interests"). The only kind of notice recognised is by entry on the register.

The exception just mentioned consists of "overriding interests" listed in section 70. As to these, all registered land is stated to be deemed to be subject to such of them as may be subsisting in reference to the land, unless the contrary is expressed on the register. The land is so subject regardless of notice actual or constructive. In my opinion therefore, the law as to notice as it may affect purchasers of unregistered land,whether contained in the decided cases, or in a statute (the Conveyancing Act 1882, section 3, Law of Property Act, section 199) has no application even by analogy to registered land. Whether a particular right is an overriding interest, and whether it affects a purchaser, is to be decided upon the terms of section 70, and other relevant provisions of the Land Registration Act 1925, and upon nothing else."

24. The relevant provisions of the Land Registration Act are these.

Section 20.

25. This governs the effect of the registration of dispositions for valuable consideration of freehold estates registered with an absolute title. When registered, the disposition is "subject-

(a) to the incumbrances and other entries , if any, appearing on the register....; and

(b)unless the contrary is expressed on the register, to the overriding interests, if any, affecting the estate transferred or created,

but free from all other estates and interests whatsoever......."

Section 69

26. This governs the effect of registration on the legal estate. The proprietor of land is deemed to have vested in him, "where the registered land is freehold, the legal estate in fee simple in possession......but subject to the overriding interests , if any...."

Section 70

27. This governs the liability of registered land to overriding interests by providing that

"(1) All registered land shall, unless under the provisions of this Act the contrary is expressed on the register,be deemed to be subject to such of the following overriding interests as may be for the time being subsisting in reference thereto, and such interests shall not be treated as incumbrances within the meaning of this Act (that is to say):-

(g) The rights of every person in actual occupation of the land or in receipt of the rents and profits thereof, save where enquiry is made of such person and the rights are not disclosed;"

Section 82

28. This section confers on the court a discretion to order rectification of the register

"(a) Subject to any express provisions of this Act to the contrary, where a court of competent jurisdiction has decided that any person is entitled to any estate right or interest in or to any registered land or charge, and as a consequence of such decision such court is of opinion that a rectification of the register is required, and makes an order to that effect;....

(h) In any other case where, by reason of any error or omission in the register, or by reason of any entry made under a mistake, it may be deemed just to rectify the register.

(3) The register shall not be rectified, except for the purpose of giving effect to an overriding interest, so as to affect the title of the proprietor who is in possession-

(a) unless such proprietor is a party or privy or has caused or substantially contributed, by his act, neglect or default, to the fraud, mistake or omission in consequence of which such rectification is sought; or

(b)......; or

(c) unless for any other reason, in any particular case, it is considered that it would be unjust not to rectify the register against him."

29. In short, the fundamental doctrine of registered land is as stated in Megarry & Wade Law of Real Property (6th Ed Charles Harpum) at p 747-

" A purchaser of registered land takes it free of all rights and interests except those which are protected by an entry on the register or which exist as overriding interests."

The Questions

30. The 10 questions posed in the Originating Summons all concern the impact of the Land Registration Act or the determination of facts relevant to its application. The following questions were set out in the summons. I have noted the determination of the deputy judge along side each question.

"(1) Whether, in or about 1987, Michael Tivnan, the then registered proprietor of title number BM83895 agreed to transfer his interest in that part of the land registered under title number BM83895 coloured red on the plan annexed to this summons ("the red land"); [Yes]

(2) Whether there was a memorandum or note of any such agreement in writing and signed in accordance with section 40 of the Law of Property Act 1925; [No decision necessary-see answer to (3)]

(3) Alternatively whether there has been a sufficient part performance of any such agreement to take the agreement out of the operation of section 40; [Yes]

(4) Accordingly whether James McArdle thereby acquired a beneficial interest in the red land; [Yes]

(5) Whether James McArdle was in actual occupation of the red land on 15th March 1988 within the meaning of section 70 (1) (g) of the Land Registration Act 1925; [No]

(6) Accordingly whether any beneficial interest in the red land vested in James McArdle prior to 15th March 1988 constituted an overriding interest within the meaning of section 70 (1)(g) and whether the registration of a charge in favour of Mortgage Credit Association Denmark on 15th March 1988 took effect subject to that beneficial interest; [No decision necessary]

(7) Whether James McArdle was in actual occupation of the red land on 10th December 1991 within the meaning of section 70 (1) (g) of the Land Registration Act 1925; [No]

(8) Accordingly whether any beneficial interest in the red land vested in James McArdle prior to 18th December 1991 constituted an overriding interest within the meaning of section 70(1)(g) and whether the registration of title in favour of the Plaintiffs on 18th February 1992 took effect subject to that beneficial interest; [No]

(9) Therefore whether James McArdle is a person interested in the red land comprising part of title number BM83895 within the meaning of section 54 of the Land Registration Act 1925; [No]

(10) Accordingly whether the caution in favour of James McArdle shall continue to have effect or shall cease to have effect and the entry thereof be cancelled on the register of title number BM83895. [Cancellation only after rectification.] "

31. Two points should be noted:-

i) Notwithstanding the answers to the questions, the overall effect of which was that Mr McArdle's equitable interest in the Red Land was neither protected by entry on the register nor as an overriding interest, the deputy judge ordered rectification of the register against the claimants by excluding from their title the Red Land of which they were the registered proprietors. He did so on the basis of his conclusions on the application of the principle of mutual benefit and burden, which was not expressly raised in the summons as a question for his determination.

ii) The estoppel issue alleged to arise out of the 1987 Agreement was determined by the judge only in relation to part of the agreement (i.e. the Red Land); without the other party affected by the 1987 Agreement, Mrs McGovern, being joined as a party to the proceedings; and without any pleadings on the issues arising between the parties potentially affected.

The Issues

32. Two main issues were debated on the appeal.
33. Does Mr McArdle have an overriding interest in the Red Land? If, as the judge held, he does not have an overriding interest, then, as far as the Land Registration Acts are concerned, the claimants are entitled to remain the registered proprietors of the Red Land and the judge was wrong to rectify the register by excluding the Red Land from their title and filed plan.
34. Are the claimants estopped from denying that Mr McArdle is entitled to the Red Land under the 1987 Agreement as long as they assert and enjoy the benefit of the Brown Land in respect of which they are not the registered proprietor? If, as the judge held, the principle of mutual benefit and burden is applicable to this case, should that question have been determined in these proceedings and was it a proper exercise of discretion under section 82 of the Land Registration Act to give effect to it by the rectification of the register?

The Overriding Interest Point

35. The only point taken on overriding interests before the judge was that Mr McArdle had an equitable interest in the Red Land and that he was in actual occupation of it on 10 December 1991, as well as on 15 March 1988. The deputy judge rejected Mr McArdle's evidence as to his use of the Red Land for depositing garden debris and maintaining a compost heap and other alleged purposes and concluded

"...it follows that the defendant was not in "actual occupation" of the red land on 10 December 1991 within the meaning of section 70 (1)(g) of the 1925 Act."

36. There is no appeal against the findings of fact, but Mr Young, on behalf of Mr McArdle, seeks to argue the overriding interest point in two other respects which had not apparently occurred to him before preparing this appeal. There is no substance in either of the new aspects of the overriding interest point.

"Transferred" Actual Occupation

Mr Young submitted that, even though Mr McArdle had failed in his primary contention that he was in "actual occupation " of the Red Land by his claimed user of it, he was able to achieve the same result by relying on the "actual occupation" of the Blue Land by Mrs McGovern under the 1987 Agreement. The argument was that the claimants took the Blue Land subject to Mrs McGovern's overriding interest in it; that her right of way over the Blue Land under the 1987 Agreement was part of an indivisible tripartite agreement, which necessarily included an integral and interdependent right to performance of the obligation of the claimants under the same agreement to transfer the Red Land to Mr McArdle.

I am prepared to assume in Mr McArdle's favour that the obligations under the 1987 Agreement are indivisible. Even so, I do not understand how Mrs McGovern's actual occupation of the Blue Land can be relied on by Mr McArdle to establish that he was in actual occupation of the Red Land, when it was found as a fact that he was not in actual occupation of it. The argument, if accepted, would bring into the law of overriding interests a species of constructive or "transferred" actual occupation, which is not warranted by the provisions of section 70(1)(g) or the decisions on its interpretation.

Rule 258 Land Registration Rules

37. Mr Young also relied for the first time on the appeal on the provisions of the Land Registration Rules. Rule 258 provides-

"Rights, privileges, and appurtenances appertaining or reputed to appertain to land or demised, occupied, or enjoyed therewith or reputed or known as part or parcel of or appurtenant thereto, which adversely affect registered land, are overriding interests within section 70 of the Act, and shall not be deemed incumbrances for the purposes of the Act."

It was correctly submitted that Rule 258 adds to the overriding interests referred to in section 70; that the added interests do not depend on "actual occupation" of the land in question; and that by virtue of the 1987 Agreement Mr McArdle had acquired an equitable interest in the Red Land.

It was then contended that that equitable interest was a right which, along with the other rights created by the 1987 Agreement, was intended to enure for the benefit of and bind their successors in title ; that the rights thereby acquired by each of the parties were such as represented rights appertaining or reputed to appertain to the land in respect of which each was the registered proprietor; or, alternatively, that they were rights reputed or known as part or parcel of or appurtenant to the land owned by each party; and that they were therefore overriding interests pursuant to rule 258.

In my judgment Rule 258 does not apply to this case. Mr McArdle's "right" under the 1987 Agreement was to an equitable interest in the Red Land, as it was contracted to be transferred to him by Mr Tivnan, the then registered proprietor of it. It is not an incorporeal right, such as, for example, an easement, which appertains to Mr McArdle's land and adversely affects the registered Red Land. It is a claim to the beneficial ownership of the Red Land itself.

38. The two cases cited by Mr Young on the application of Rule 258 do not support him on this point. They both relate to equitable easements taking effect as overriding interests. In Celsteel Ltd v. Alton House Holdings Ltd [1985] 1 WLR 204 at 220-221 Scott J held that an equitable easement (a right of way), which was not protected by any entry on the register, was a right openly exercised and enjoyed as appurtenant to a garage and it adversely affected registered land. Under Rule 258 it ranked as an overriding interest, which did not need to be protected by a notice of entry on the register under section 70 (1)(a) of the 1925 Act. In Douglas v. Thatcher (unreported 19 December 1995) the Court of Appeal rejected the contention that Celsteel was wrongly decided and that the Rule only applied to legal easements. The court followed Celsteel and applied it to equitable easements, holding them to be overriding interests by virtue of Rule 258.
39. I would therefore reject the additional points on overriding interests raised by Mr McArdle in his amended respondent's notice. I would uphold the judge's ruling that Mr McArdle did not have an overriding interest in the Red Land.

The Mutual Benefit and Burden Point

40. I would allow the appeal against the order for the rectification of the register.
41. The order was made solely on the ground of estoppel. No question of an estoppel was raised in the Originating Summons. Despite this the deputy judge proceeded to hold that (a) the 1987 Agreement was indivisible ; (b) the principle of Halsall v. Brizell [1957] Ch 169 applied to prevent the claimants from taking the benefit of the agreement without accepting the burdens imposed by it; and (c) the benefit and burden principle did not depend on section 20 or any other provision of the Land Registration Act 1925. He concluded as follows:-

"....the plaintiffs are estopped from denying that the 1987 agreement is enforceable against them.They are so estopped because they are seeking to take advantage of the very agreement to which they say they are not subject. They have taken the benefit of the 1987 agreement by asserting title to the brown land by the occupation of the brown land and by the use of the garages constructed thereon,all pursuant to the 1987 agreement. It follows that, on the basis of estoppel, the defendant succeeds in this action. In my judgment, for the reasons set out above, the court is empowered to rectify the register by virtue of the provisions of section 82(1)(a) and (h) of the 1925 Act. In particular, in relation to section 82 (1) (h), in all the circumstances of this case it is "just" to rectify the register"

42. This approach, which may appear to have much to commend it as a just and reasonable resolution of this unfortunate dispute, is open to criticism on a number of grounds.

Parties

43. There were more than two people in this estoppel. Only the claimants and Mr McArdle were before the court. Mrs McGovern was not a party, though Mr McGovern gave evidence for Mr McArdle. The deputy judge expressly noted this point when he correctly observed parenthetically (p 34 of the transcript) that he was

"(...not concerned in these proceedings to decide any issue relating to the position of Mrs McGovern as the owner of a neighbouring property or any issue relating to her interest, if any, in the blue land.)"

44. This immediately raises the question whether it was right to decide the estoppel issue in proceedings brought under the Land Registration Act, to which only the claimants and Mr McArdle were parties. This is not a mere technical procedural point. If the deputy judge was right (and I think that he probably was) in construing the 1987 Agreement as creating indivisible obligations, it was all the more important that, in deciding whether it gave rise to an estoppel and , if so, what effect it had and how it should be satisfied, all the parties potentially affected should be joined in the proceedings.
45. It is apparent from the passage already quoted from the judgment that the deputy judge based the estoppel, as between the claimants and Mr McArdle, on the claimants' assertion of entitlement to occupation of the garages on the Brown Land and to use of the entrance gate and driveway. Those matters were based not on rights acquired as registered proprietor, since they had no registered title to the Brown Land, but pursuant to the terms of the 1987 Agreement under which Mr Tivnan was permitted to enter the Brown Land, construct garages on it and to enjoy continuing use of it. But, as Mrs McGovern was not a party to the proceedings, there was no consideration by the court of the effect of any estoppel as between her and the claimants. Was she estopped by the same principle (or, possibly, by another principle of, for example, proprietary estoppel) from preventing the claimants from using the Brown Land? If not, an injustice might be suffered by the claimants, if, on the one hand, they were obliged by the rectification order to give up the Red Land, but, on the other hand, remained exposed to a potential claim by the registered proprietor of the Brown Land, which the judge's reasoning appears to assume they would continue to enjoy.

Procedure

46. Related difficulties arise from the fact that the procedure for an application under the Land Registration Act was not best suited to the determination of the estoppel point. It was a matter which needed to be clarified as between the relevant parties by pleading the material facts, by spelling out the alleged consequences of those acts and by framing the appropriate form of relief. As already noted, the proceedings were by way of summons under the Land Registration Act. The supporting affidavits from the first claimant and Mr McGovern naturally concentrate on the facts relating to the overriding interest point arising from alleged actual occupation. The affidavit evidence from Mr McArdle's side exhibits relevant documents and gives an account of the facts of the 1987 Agreement and the subsequent acts of the parties to it. As affidavits are properly confined to evidence and should not normally include submissions and legal argument , it is not surprising that nothing at all is said in the affidavits about a possible estoppel or a mutual benefit and burden argument. The position would have been more clearly spelt out if there had been pleadings exchanged between the parties. That procedure would have been more likely to alert the parties to the issues for decision, as well as to the desirability of joining all parties interested before the estoppel issue was finally determined.

Discretion

47. It is clear from the passage already quoted that the deputy judge considered that, once it had been decided that the claimants'conduct in respect of the Brown Land estopped them from denying that the 1987 Agreement was binding on them, then the register should be rectified to remove the Red Land from the claimants' title and to include it in Mr McArdle's title. But that would not give full effect to the 1987 Agreement, since no order was made for rectification in respect of what were held to be indivisible rights and obligations in reference to the Brown land, the Green Land and the Blue Land. No such orders could be made in the proceedings as constituted. The only issue raised by the summons was whether the caution entered against the Red Land by Mr McArdle should be vacated. No issues were raised about the other parcels of land nor could they have been until Mrs McGovern was joined as a party. If the judge could not give full effect to the estoppel by rectification of the register then, in my view, he should, for that reason alone, have declined to make the order for rectification.
48. In my judgment it was not a correct exercise of discretion for the deputy judge to order rectification of the register in the manner that he did in order to give effect to the species of estoppel which he held operated in this case.

Principle of Mutual Benefit and Burden

49. The deputy judge invoked the principle of mutual benefit and burden derived from Halsall v. Brizell (supra). As the decision in that case was concerned with positive covenants in a deed affecting unregistered land, its value in this case is less as a precedent than as an illustration of a wider principle of mutual benefit and burden which was examined in depth and at length by Sir Robert Megarry V-C in Tito v. Wadell (No 2) [1977] Ch 106 at 289C-311A.
50. For present purposes I shall assume in Mr McArdle's favour that the principle is capable of applying to this case in some form. It is, however, clear that the principle cannot apply as against the claimants simply by reason of what was done before the claimants acquired the Farm including the Red Land i.e. the making of the 1987 Agreement and the acts of Mr Tivnan and the other parties. Any estoppel arising or operating before the claimants acquired the Farm could not bind them as proprietors of registered land, as it was not entered on the register and it was not an overriding interest. As explained in Megarry & Wade (6th Edition) at p.747 an equity arising by estoppel may be protected by a notice or caution or more commonly as an overriding interest, such as a right of a person in actual occupation of the registered land. For reasons explained earlier neither protection was available here: there was no entry on the register and Mr McArdle was not in actual occupation of the Red Land. Rectification of the register could not properly be ordered by the court so as to give effect to a pre-existing estoppel affecting registered land, if the claimants took free of it under the statutory system of land registration.
51. The application of the principle of mutual benefit and burden may, however, have an impact on the claimants in so far as it arises out of their own conduct after the acquisition of the Farm. That impact would not at this stage justify the order for rectification made by the deputy judge and I would allow the appeal to that extent. But the application of the benefit and burden principle could justify the entry of a notice or caution on the register until it had been determined by the court whether an equity arises by reason of the continuing conduct of the claimants and, if so, what its effect was and how it should be satisfied.
52. The special feature of Mr McArdle's case is that, although the claimants can successfully rely on the Land Registration Act to defeat any equity which arose solely prior to their acquisition of the Farm, the Act would not necessarily defeat an equity arising from their own conduct in respect of land of which they are not the registered proprietor. I refer, of course, to the Brown Land and the benefits enjoyed in relation to it. It is not their land. Mrs McGovern is the registered proprietor of it. The claimants assert that they are entitled to it. Their entitlement can only derive from the 1987 Agreement which created indivisible obligations. So, it can be argued, the claimants should be given a choice: they can give up the benefits under the 1987 Agreement and thereby free themselves of the obligations attached to it, including the transfer of the Red Land to Mr McArdle; but, if they continue to insist on taking the benefits derived from the 1987 Agreement (the use of the Brown Land and the garages on it), the right to enjoyment of those benefits is subject to attached conditions. One such condition is the obligation to transfer the Red Land to Mr McArdle.

Conclusion

53. It seems to me, for the reasons already explained, that the mutual benefit and burden issue can only be tried properly in other proceedings with pleadings and joinder of all interested parties. The judgment in these proceedings should not be treated as giving rise to any issue estoppel beyond the answers to the specific questions raised in the Originating Summons and the application of the Land Registration Act to them.
54. It would obviously be preferable for the parties to attempt to settle this litigation, as the pieces of land involved are small and of no great value. It is certainly unsatisfactory for all concerned to leave the situation as it is. There are obvious problems in attempting to undo what has already been done ; the garages have been built and the driveway has been constructed and used. Perhaps the only realistic way forward is for the parties, possibly with the help of a mediator, to explore the possibility of completing the legal formalities of the agreement which the judge held had been made on 2 April 1987.
55. I would allow the appeal and request the parties to prepare, for the consideration of the court on handing down, a form of draft order reflecting the terms of this judgment.

LORD JUSTICE RIX

- I agree

THE PRESIDENT

• I also agree.

ORDER:
56. Appeal allowed, order of Mr. Peter Whiteman QC dated 22^nd June 1999 be discharged; rectification pursuant to that order be cancelled; appellants be registered as proprietors of the red land.
57. That the caution registered on 24^th January 1994 in favour of the Respondent in respect of the land registered at H.M Land Registry under title number BM83895 cease to have effect that the entry thereof on the register of the above-mentioned title be cancelled.
58. That the Respondent do pay the Appellants' costs as to ¾ of this action to be the subject of a detailed assessment if not agreed.
59. That the Respondent do repay to the Appellants the sum of £19,354.85 plus interest at 8% by the Appellants to the Respondent on 4^th January 2000 pursuant to that part of the order of the Deputy Judge which provided for the Appellants to pay the Respondent his costs of the action.
60. That the Respondent do pay the costs of this appeal to be the subject of a detailed assessment if not agreed.
61. That the Respondent do make an interim payment in respect of the Appellants's costs of the action and of this appeal, such interim payment assessed in the sum of £12,000.
(Order does not form part of approved Judgment_