Summary

Where a claimant had suffered loss by reason of an error on the land register and was entitled to an indemnity by virtue of s.83(2) Land Registration Act 1925 it was not appropriate to apply a "but for" test in considering whether the claimant's loss had been caused "wholly" as a result of his own lack of proper care thereby disentitling him to an indemnity by virtue of s.83(5).

Facts

Claimant's appeal from the order of Jacob J made 17 November 1999 striking out his claim as against the fifth defendant for an indemnity under s.83 Land Registration Act 1925. The issue on appeal was whether a person claiming an indemnity for a loss sustained by virtue of an error on the register was disentitled to the indemnity by virtue of s.83(5) of the Act (as amended) which provided that, "no indemnity shall be payable... (a) on account of any loss suffered by a claimant wholly or partly as a result of his own fraud or wholly as a result of his own lack of proper care". As the judge noted, if the loss was suffered "partly" as a result of the claimant's own lack of proper care then that was a matter for trial and the court had power under s.83(6) to reduce the indemnity to such extent as was just and equitable. In reaching his conclusion that the claimant had no real prospect of success at trial the judge had concluded that "but for" the claimant's failure to take proper care to see that ownership and control of the property was properly managed, none of this would have happened. The claimant appealed on the ground, inter alia, that in applying a "but for" test the judge had only addressed the question of whether the claimant's loss had been "wholly" attributable to his own lack of proper care and had failed to consider whether it was only partly attributable.

Held

(1) The difficulties of applying the "but for" test in negligence cases was well known (see Clerk & Lindsell "On Torts" 17th Edition at paragraph 2-10). The "but for" test was useful only in identifying whether a defendant's negligence had been the "sole" cause of loss and similarly could only be of assistance in the present case in establishing whether the defendants' actions had been the "sole" cause. (2) Applying the test to a case of fraud as here it was difficult to escape from the conclusion that but for the fraud the loss would not have been sustained. Yet it was plainly arguable that the fraud had been part of the cause of the loss. (3) Accordingly the judge had erred in treating the "but for" test as the applicable test for the purposes of s.83(5) of the Act as even if satisfied, it did not necessarily exclude the possibility of other causes. In any event it was not necessary to look beyond the language of the statute which was in plain words. (4) Cases in negligence, such as Stansbie v Troman (1948) 2 KB 48, where there were two causes of the loss, were of no assistance to the defendant. The claimant in such a case could pursue either of the tortfeasors for 100 per cent of the loss. However that did not mean that the tortfeasor against whom the claimant had not proceeded was not an effective cause of the loss. Likewise, in the present case it might be said that the loss was in part the result of the fraudsters and not wholly a result of the claimant's own lack of proper care. (5) Various factual findings of the judge were also open to criticism. The claimant had not failed to run his company effectively as he had appointed officers whom he could expect to competently perform the necessary duties. He had not handed the land certificate to his wife but to his wife's mother for safe-keeping and in any event at the material times the certificate had been lodged with the bank as security for a small loan and had been obtained from there by the wife as a result of fraud. The claimant had been happily married when he handed the certificate to his wife's mother and there was no reason why he should have been suspicious at that stage. The claimant had not failed to be involved in the management of his property as he had instructed a management agent in this regard. In any event the management of the property had nothing to do with title. All these points, relied upon by the judge to show a lack of proper care, did not singularly or cumulatively justify the conclusion reached. (6) The argument that the action should be struck out on the grounds of delay, on the basis that had the claimant acted more quickly the property would not have been sold to a third party, could also not prevail. That case had not been pleaded and there was no respondent's notice in respect thereof. Had the point been taken, the claimant might have wanted to have relied upon further evidence. Neither could any point be taken that the action should be struck out on the basis of the overriding objective in CPR Part 1.

Appeal allowed.