Land Law case notes - week 2 PDF

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land law case notes - introduction to land law...

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Chhokar v Chhokar [1984] Parties o Mr Chhokar – D o Mrs Chhokar – P Case Temporary absence can still amount to actual occupation Facts Both lived in a house, bought in the husband’s name. Both contributed to purchase and upkeep. Marriage fell apart and the husband arranged to sell the house without telling his wife. Wife left home to stay in hospital when she fell pregnant. When she returned, she was excluded from property, so she was not physically in occupation when the purchaser was registered as new owner. The wife claimed an overriding interest in the property. Issue Under Sch. 3, paragraph 2 of the Land Registration act 2002 a registered disposition of property can be overridden by the interest of a person who was in actual occupation at the time of disposition, unless enquiry was made of the person with the interest and they failed to disclose the right when they could reasonably be expected to or the interest would not have been obvious upon a reasonably careful inspection of the land at the time of the disposition and the purchaser had no actual knowledge of the interest at that time. The wife contended that she had been in occupation the whole time despite her temporary absence. Held Mrs Chhokar was in actual occupation. Her furniture was still at the property, not lost by her temporary absence. Purchaser was given credit for having paid the mortgage, and the court declared the wife and the purchaser to be tenants in common in equity in equal shares subject to this credit. National Provincial Bank Ltd v Ainsworth [1965] Parties o National Provincial Bank Ltd o Ainsworth Facts A man, his wife and children were occupants of a piece of property, though the defendant was the sole registered proprietor. The property was later used to secure an overdraft for the his company, and the bank which granted the overdraft registered a charge against the house accordingly.

However, prior to arrangement with the bank, the man had abandoned the property, along with his family, and the wife was permitted to continue living there rent free as part of the separation agreement. The bank sought possession of the property, which the wife resisted. Issue Under the Land Registration Act 2002, Schedule 3 (and its predecessors), certain interests are ‘overriding’, meaning that even if they are not registered they can be asserted against those with registered interests in the property. One of these overriding interests is any interest belonging to a person in actual occupation of the property (para. 2). The issue in this case was whether the bank could claim possession of the house despite the continued occupation there of the defendant’s family. In particular, the court was asked to determine what sort of interest needed to be coupled with the actual occupation. Held The House of Lords held the wife had no overriding interest, and so the bank could take possession of the property. The House of Lords held that the necessary interest had to be proprietary. They held that the separation agreement permitting the wife to remain in the house was a mere license, and licenses are a personal, nonproprietary right. As the wife did not have a proprietary interest in the house, she had no interest which could amount to an overriding interest. She could not, therefore, resist possession. Scott v Southern Pacific Mortgages [2014] Link Lending v Bustard [2010] Parties o Link Lending o Bustard Facts Mrs Bustard was sectioned under section 3 of the Mental Health Act 1983, therefore could not live continuously at her house, of which she was the registered proprietor Mrs Bustard visited her house weekly, under supervision A third party fraudulently had Mrs Bustard’s house transferred to him, mortgaged it and default on payments The bank sought repossession of the house

Issue Was Mrs Bustard entitled to override the bank’s interest by virtue of her actual occupation as defined by paragraph 2, Schedule 3 of the Land Registration Act 2002? Held Banks claim failed The Court of Appeal refused to reverse the trial judge’s finding that Mrs Bustard was in actual occupation under the 2002 Act, as he had not incorrectly interpreted the legislation The trial judge (Judge Walton in the County Court) found actual occupation was a justified finding as a result of several factors including Mrs Bustard’s regular visits; the third party’s knowledge of her mental incapacity and her intention of remain in occupation of her house

Stockholm Finance Ltd v Garden Holdings Ltd [1995] Parties o Stockholm finance Ltd o Garden Holdings Ltd Facts Princess Madawi, a Saudi princess, owned Garden Holdings, which owned a property in London. When Garden Holdings defaulted on the mortgage repayments, the mortgagee claimed possession. The Princess and her mother claimed that the mortgage had been obtained without their consent. The Princess also claimed that she occupied the premises. The property was furnished, contained clothing, and there were caretaking arrangements in place. However, she had never lived in the property for any length of time and used it only when visiting London. Issues It was argued that the Princess had an equitable interest in the property and as she was in actual occupation she also had an overriding interest. Under s.70(1)(g) Land Registration Act 1925 registered land was held subject to overriding interests, such as that of a person in actual occupation. If the Princess had an overriding interest as an actual occupier, her interest would bind the mortgage company and they would be unable to claim possession of the property. Held The Princess’s continued absence from the house (for over a year) could not constitute occupation. Robert Walker LJ said at (para 18):

there must come a point at which a person’s absence from his house is so prolonged that the notion of his continuing to be in actual occupation of it becomes insupportable. Therefore, neither the Princess not her mother had an overriding interest and the mortgage company were entitled to possession. Strand securities v Caswell [1965] Parties o Strand securities o Caswell Facts The tenant of a property granted an underlease to the respondent. The subtenant applied to have the underlease registered at the land registry. However, this was not done. At the time that the head tenant transferred the headlease to the plaintiff, the subtenant’s stepdaughter had been living in the property, having been let in and allowed to stay there rent free by the subtenant, who was not living there at the time, to satisfy a moral obligation. On obtaining the headlease the plaintiff sought possession of the property against the subtenant. Issues The subtenant claimed he had an overriding interest under s.70(1) (g) Land Registration Act 1925 which bound the plaintiff. Under the 1925 Act the interest of a person who is in actual occupation of the land overrides a registered disposition. If the subtenant had an overriding interest the plaintiff could not possess the property. Held To have an overriding interest it was necessary to have an interest in the land and be in actual occupation. Because the stepdaughter had no interest in the land, she could not be in actual occupation. Having her belongings there was not sufficient to establish an interest in the land. A person could occupy land on behalf of another person, but not if they were occupying the land on their own account. The stepdaughter was not occupying the land as the subtenant’s agent. Therefore, the subtenant did not have an overriding interest either. However, the underlease should have been registered on application and the court held the register should be rectified to reflect this. Abbey National BS v Cann [1991] Parties o Abbey National BS o Cann

Facts The first defendant, George Cann, applied for a mortgage from a building society to buy a house. However, unknown to the building society, his mother (the second defendant) had contributed to the purchase price. The building society advanced the mortgage loan money before the property was transferred to the defendant. Some 25 minutes before completion the defendant’s mother moved into the address. When the defendant defaulted on his mortgage, his mother claimed an overriding interest. The defendants appealed against the granting of a possession order in the building society’s favour, and the appeal reached the House of Lords. Issues The Land Registration Act 1925, s.70(1)(g) provides that an interest of a person in actual occupation may override registered dispositions. The mother claimed she had such an interest due to having contributed to the purchase price. Consequently, if she was also in actual occupation before the legal charge took effect she would have an overriding interest that would take priority over the mortgage. If so, she could not be evicted. Held Appeal dismissed. The occupier’s interest also had to arise before the creation of the legal charge if it was to override it. Their Lordships held that when a buyer buys a property with a mortgage, the entire process is one indivisible transaction. Therefore, moving furniture in 25 minutes before the legal transfer of the property was not enough for actual occupation as this required some degree of permanence. Consequently, her interest did not override the legal mortgage. Lloyds Bank v Rosset [1990] 2 W.L.R. 867 (Lord Bridge’s judgment). Parties o Lloyds Bank o Rosset

Facts The defendant, Mrs Rosset, was married to Mr Rosset, who was the sole registered owner of the property in question. Mr Rosset had bought this house with his family trust money, which had insisted on his sole ownership as a condition for using that money. Mr Rosset had secured a loan against the property from the complainant’s, Lloyds Bank. The defendant had helped in the building work and decorating of the property. However, Mr Rosset defaulted on his payments and the complainants sought repossession of the property.

Issues The appeal concerned whether the defendant had a beneficial interest in the house and if she was entitled to stay in the property under section 70(1)(g) of the Land Registration Act 1925. The complainants argued that Mrs Rosset did not have rights in the property and her renovations did not allow equitable rights in the property to arise.

Decision/Outcome It was held that the defendant did not have a beneficial interest in the property. Mrs Rosset did not make any financial contributions in buying the property nor for the renovations; she had only helped with the physical building and redecorating of the house. There was no discussion or agreement between Mr Rosset and Mrs Rosset regarding the ownership of the property and without express agreement, there could be no beneficial interest for the common intention needed to form a constructive trust. Mrs Rosset’s work on the house was not enough to form an equitable interest. Thus, the complainants were successful.

Williams & Glynn's Bank Ltd v Boland [1981] AC 487 (para 504-508 inclusive) Facts The appeal concerned two consolidated cases. In a matrimonial home, each wife contributed to home’s purchase monies and mortgage instalments, rendering each tenant in common in equity to the extent of their financial contribution. Both homes were conveyed in the legal names of their husbands. Each husband legally mortgaged the homes to a bank. When they defaulted, the bank started proceedings for possession of the homes. The wives were in continuing occupation of the home. Issues The question arose as to whether the beneficial interest of a wife in actual occupation of the property is capable of taking an overriding interest under the Land Registration Act 1925 over the effect of a legal and registered mortgage. Decision/Outcome The House of Lords held that the beneficial interest of a spouse in actual occupation of property legally owned by another spouse possesses an overriding interest in the property, that takes priority over a legal charge. Firstly, on the facts, the Court held that each wife is treated as a person in actual occupation,

as a spouse physically living in the house, affording her protection accordingly. Secondly, the Court held that the Land Registration Act 1925 recognises the rights of occupiers, in light of widespread developments in shared ownership, and that the equitable interests of a spouse in actual occupation of a matrimonial home under a trust for sale are capable of being recognised as overriding interests protected by section 70(1)(g) of the Act, overriding that of a legal charge by a legal owner. The Court noted that, in lieu of the way that the Act confers protection to occupants, banks ought to make more careful enquiries into occupation. Accordingly, the Court held that the wives’ interests overrode the bank’s legal charge.

Thompson v Foy [2009] EWHC 1076 (Ch) (particularly the facts of the case and paras 127-133 inclusive) Facts Thompson permitted her daughter, Foy, to build an extension to Thompson’s home. According to their informal agreement, the extension and its base land would belong Foy. At a later stage, Foy moved to Spain and planned to take her mother, Thompson, with her. She needed money to buy a house in Spain. Foy decided to mortgage the property and then rent it out to cover the mortgage payments. It was agreed that Thompson would be bought out from the mortgage money. Thompson signed a family arrangement deed as well as a gift deed. Eventually, Thompson decided to stay in England and buy another house there. Foy received the mortgage but falsely claimed that the agreed £200,000 should not be paid due to inheritance tax concerns. Instead, Foy offered to pay Thompson £60,000 then and the balance over several years. Foy and Thompson feuded, the property was not let, which led to arrears in the mortgage payment. The bank repossessed the property. Issue Thompson argued that the family arrangement and gift deeds should be set aside, and Foy should cease to be registered as proprietor based on her undue influence over Thompson. Thompson also claimed to have an overriding interest that was to be prioritised over the bank charge. Held The Court held that Foy had a beneficial interest in the extension (as per a proprietary estoppel) as a result of an informal agreement that she would own the extension. Foy relied on this agreement to her detriment. Secondly, as undue influence could not be presumed, Thompson had to prove it. However, Thompson was aware of the transaction’s nature and substance, and she intended to enter into it – even though she was influenced by the buy-out promise. The buy-out was a sincere promise, however, and not undue influence. Events occurring after the signing of the transaction could not aid in the establishment of undue influence. Also, Thompson received independent legal advice before the transaction and was aware of the risks it involved. Thirdly, even if Thompson established undue influence, the bank would not be affected by it as her equity arose only after the misappropriation of funds by Foy.

Stockholm Finance Ltd v Garden Holdings Ltd [1995] N.P.C. 162

Whether owning a property that is furnished but not inhabited can still be actual occupation. Facts: Princess Madawi, a Saudi princess, owned Garden Holdings, which owned a property in London. When Garden Holdings defaulted on the mortgage repayments, the mortgagee claimed possession. The Princess and her mother claimed that the mortgage had been obtained without their consent. The Princess also claimed that she occupied the premises. The property was furnished, contained clothing, and there were caretaking arrangements in place. However, she had never lived in the property for any length of time and used it only when visiting London. Issues: It was argued that the Princess had an equitable interest in the property and as she was in actual occupation she also had an overriding interest. Under s.70(1)(g) Land Registration Act 1925 registered land was held subject to overriding interests, such as that of a person in actual occupation. If the Princess had an overriding interest as an actual occupier, her interest would bind the mortgage company and they would be unable to claim possession of the property. Held: The Princess’s continued absence from the house (for over a year) could not constitute occupation. Robert Walker LJ said at (para 18): there must come a point at which a person’s absence from his house is so prolonged that the notion of his continuing to be in actual occupation of it becomes insupportable. Therefore, neither the Princess not her mother had an overriding interest and the mortgage company were entitled to possession....