The Gazette 1985

GAZETTE

APRIL 1985

Beneficial Interests, Conveyancers and the Occupational Hazard

by Julian Conlon, B.C.L.(N.U.L), LL.M.(Lond.), Solicitor (Professional Books Law Prize, 1984)

I T is axiomatic that any development giving to individuals a beneficial interest in property as a result of contributions towards its acquisition, without requiring written evidence or other formalities, will cause problems for conveyancers in the investigation of title. It is not surprising, therefore, that many view with disquiet the cases in which the High Court has applied the concept of the constructive/resulting trust 1 in the resolution of marital and quasi-marital property disputes. 2 The objection, of course, is that under this developing jurisprudence the beneficial interest arises unaccom- panied by written evidence (indeed, in many cases without any agreement, express or implied, between the parties) with the result that a property vested in one person may be subject to a claim in equity by another to a share in its ownership. Such claim will usually arise from facts or matters not discoverable by a perusal of the documentary title. As with equitable interests generally, a person establishing a beneficial interest by virtue of contribu- tions is vulnerable to dealings with the legal estate. Recent cases however have shown that the contributor may be protected if in occupation of the property. In this paper it is proposed to consider briefly the repercussions for registered and unregistered conveyancing, to analyse the extent of the protection which occupation may afford, and to suggest some precautions against the "occupational hazard". Registered Land The registration system set up by the Registration of Title Act, 1964 provides for the registration of ownership of land, the intention being thereby to ensure security of titles and to accomplish facility and cheapness of transfer by eliminating much of the traditional process of title investigation. One can identify three principles underpinning the system which are calculated to secure these advantages 3 : (1) the "mirror" principle: the Act provides for the maintenance of registers covering freehold land, leasehold land, and incorporeal hereditaments held in gross. In s.31( 1) it provides that these registers are conclusive evidence of the title of the owner to the land as appearing thereon. In the absence of fraud, his title is unaffected by his having notice of any deed, document or matter relating to the land. The purpose and effect of this is to prevent the application of the doctrine of notice to registered land, so that a purchaser for value who becomes registered as owner is not affected by notice of anything not appearing on the register, unless it is a burden which affects the land without registration.

Subject to this 4a , the register mirrors conclusively the details of the title as appearing on its face; (2) the general "curtain" principle that trusts — whether express, implied or constructive — may not be entered on the register 4 , and (3) the principle of a state-guaranteed title: s. 120 provides for compensation, payable by the State, for any person sustaining loss by reasons of official errors in registration or entries obtained by forgery or fraud. The register is not, however, conclusive as to the whole title to the land: section 72 sets out a miscellaneous list of burdens which do not appear on the register and which affect land without registration. A disposition of registered land, when registered, vests in the transferee the legal estate and appurtenant rights subject to any s.72 burdens affecting the land. The burden of particular relevance to persons establishing beneficial interests by virtue of contributions is s.72(1)0: "the rights of every person in actual occupation of the land or in receipt of the rents and profits thereof, save where, upon inquiry made of such persons, the rights are not disclosed." This corresponds almost verbatim with the wording of s.70(l)(g) of the English Land Registration Act 1925 (in that legislation such burdens are termed "overriding interests"). Recent decisions on s.70(l)(g) have highlighted its potential as a source of protection for occupiers with rights under undisclosed trusts, and as a source of difficulty for prospective purchasers and mortgagees. As s.72(l)(j) of the Irish Act is almost identical, the relevance of these decisions is obvious. Section 72(1)0) In National Provincial Bank -v- Ainsworth s the House of Lords held that the rights protected by s.70(l)(g) of the 1925 Act were "rights in reference to land which have the quality of enduring through different ownerships of the land, according to normal conceptions of title to real property." 6 In Guckian -v- Brennan Gannon J. held that this construction was "equally appropriate" to s.72(l)(j). Since the interest of a beneficiary under a trust possesses the requisite proprietary quality, it follows that such interest will constitute a s.72 burden if the beneficiary is in actual occupation. The difficulty is to determine what constitutes "actual occupation" for the purposes of the legislation. Before 1980, judges in England took different approaches to the question. Mindful of the conveyancing difficulties of a literal interpretation, some took the view that the phrase was to be construed subject to the gloss that the occupation must be reasonably apparent to intending 59