The Gazette 1985

GAZETTE

APRIL 1985

Beneficial Interests, Conveyancers

and the Occupational Hazard

Julian Conlon, B.C.L.(N.U.L), LL.M.(Lond.), Solicitor

(Professional Books Law Prize, 1984)

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

in the resolution of

marital and quasi-marital property disputes.

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

(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

, 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

, 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)

National Provincial Bank

-v-

Ainsworth

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."

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