Property

Does the FTT have jurisdiction to decide the extent of a party’s beneficial interest? Hallman v Harkins [2019] UKUT 0245 (LC)

The Upper Tribunal (Lands Chambers) has answered a very important practical question about beneficial interests – despite being able to determine whether a party has a beneficial interest in land, the First-tier Tribunal has no jurisdiction to quantify it.

The First-tier Tribunal (Property Chamber) Land Registry (formerly the Adjudicator to Her Majesty’s
Land Registry until 2013) is conferred a number of powers to decide disputes referred to it by the
Registrar arising from objections to applications for registration by statute (Land Registration Act 2002,
sections 73(7) and 108(1)(a); the First-tier Tribunal also has the power to rectify certain documents
under section 108(1)(b): see Megarry and Wade: The Law of Real Property (9th edition) at 6-130). Where a
dispute is referred to the First-tier Tribunal, it may direct the registrar either to cancel the application,
or to give effect to it in whole or in part as if the objection had not been made. In Hallman v Harkins,
the First-tier Tribunal was asked to decide whether a party had a beneficial interest that justified the
registration of a restriction.

The question of whether the First-tier Tribunal has the power to determine the quantification of the
applicant’s alleged beneficial interest has led to debate. In Jayasinghe v Liyanage [2010] EWHC 265 (Ch),
[2010] 1 WLR 2106 at [29], Briggs J assumed without deciding that separate court proceedings would
have to be commenced to determine the quantification of the applicant’s alleged beneficial interest.
The authors of the latest edition of Megarry and Wade noted this issue was “not clear” (6-130, fn.897).
Notwithstanding these doubts, the Tribunal in this case went on to give an indication as to the extent
of the applicant’s interest.

What this has meant in practice is that if there is a dispute as to the extent, as well as to the existence,
of a beneficial interest in a property, either the First-tier Tribunal has had to direct a party to commence
proceedings in the court to obtain the court’s decision on that matter (section 110(1) of the 2002 Act),
or the parties will have to commence separate proceedings in court following the determination of
whether there is a beneficial interest at all. These kinds of disputes do not only arise in the context of
separating couples who have cohabited, when one party contests the registration of a restriction to
protect their beneficial interest (as in Hallmark v Harkins); they can arise as well, for example, in
applications relating to the registration of charging orders where there is a dispute as to the interest
that is the subject of the charge.

In Hallman v Harkins, Martin Rodger QC closed down the debate as to jurisdiction. Following a close
analysis of the 2002 Act and the case law, he held that the First-tier Tribunal had no jurisdiction to
decide the parties’ beneficial interests, and that in this case the first instance Tribunal was “wrong to
embark on that exercise even subject to the disclaimer that the decision would not be binding” (para 73).

The Law Commission has previously recommended that the First-tier Tribunal’s jurisdiction be
extended so that disputes about the quantum of beneficial interests can be determined without the
need for an application to the court in its report, Updating the Land Registration Act 2002 ((2018) Law
Com. No. 380, paras 21.45 to 21.90), noting that this would reduce the need for extended litigation
and the expertise of the First-tier Tribunal in these matters. It remains to be seen if this
recommendation will be implemented.

David Sawtell (2005) has a significant property practice. He is regularly instructed in respect of disputes
arising out of land registration and equitable interests, and appears frequently in the First-tier Tribunal
(Property Chamber). In Pinisetty v Manikonda [2017] EWHC 838 (QB), [2017] All ER (D) 98 (Apr), he
successfully resisted an appeal on the question of level of certainty required for the imposition of a
constructive trust to complete a defective property transaction. For more details on his property
practice, please see his profile.

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