COURT OF APPEAL.
ON APPEAL FROM AN ORDER OF
MR JUSTICE UNGOED-THOMAS
B e f o r e :
LORD JUSTICE BUCKLEY
LORD JUSTICE CAIRNS.
| BEATRICE ANNIE HODGSON
|DENNIS DAVID MARKS
||Respondent (First Defendant)
|CHELTENHAM & GLOUCESTER BUILDING SOCIETY
||Respondents (Second Defendants)
Room 392, Royal Courts of Justice, and 2, New Square, Lincoln's Inn, London, W.C.2)
MR MERVYN DAVIES, Q.C.. and MR PATRICK SINCLAIR (instructed by Messrs Delton & Co.) appeared on behalf of the .
MR NATHANIEL MICKLEM (instructed by Messrs Curwen, Carter & Evans) appeared on behalf of the .
Crown Copyright ©
LORD JUSTICE RUSSELL: The facts in this case are fully deployed in the judgment of the learned judge (reported in 1970 3 Weekly Law Reports at page 956) and, accordingly, I do not propose to restate them save to the extent necessary to explain my conclusions.
The judge found, on the evidence, that despite the reference to love and affection as consideration in the transfer of her house to Evans, the Plaintiff did not intend to make any gift to him, and that it was well understood, and indeed orally arranged between them, that the beneficial ownership was to remain in the Plaintiff. This finding of fact was not challenged.
At the outset, to get the point out of the way, let me say that such a finding disposes of any question of undue influence: any such case assumes a transfer of the beneficial interest, but in circumstances which entitle the transferor to recall it.
The points that arise for consideration in the appeal and on the Respondents' notices are the following: some were not, or not adequately, ventilated before the Judge, but, having regard to the fact that they were points of law which (if sound) could not have been answered by any further evidence, we thought it right to allow them to be taken.
(1) Was the Plaintiff a person in actual occupation of the house for the purpose of section ?0(l)(g) of the Land Registration Act, 1925 ?
(2) If yes - does section 53 of the Law of Property Act, 1925, prevent her from asserting her beneficial interest as an overriding interest ? Hereunder it was argued for her:
(a) that for Marks (though ignorant when he bought from Evans of the Plaintiff's rights) to plead the statute would be contrary to the general principle that the statute should not be used as an instrument of fraud;
(b) alternatively, that the transaction involved nothing more than a transfer of the legal estate to Evans and the fact that the beneficial interest never left the Plaintiff and simply remained where it had previously been was not within the language of any paragraph of sub-section (l) of section 53, but was rather a constructive trust within sub-section (2).
(c) Alternatively, that if there was an attempt to create an express oral trust which failed for lack of writing there was, in the light of the accepted evidence that a gift to Evans was not intended, a resulting trust for the Plaintiff which was excepted from section 53 by virtue of sub-section (2) hereof.
(3) Was the Plaintiff estopped from asserting against Marks and the building society that she had a beneficial interest in the property ? Or, as it was also put, had her conduct been such as to require the Court to postpone her interest to the interests of the Defendants ?
I turn first to the question whether at the relevant time the Plaintiff was in "actual occupation" of the house. For years it had been her property and her home. Mr Evans was taken in by her as a lodger. I now quote from the findings of the learned Judge: "So I will now come to the facts which bear on whether Mrs Hodgson was, independently of the context of section 70(1) (g) of the Land Registration Act, 1925, in actual occupation in this case. Before Mrs Hodgson's transfer of the house to Mr Evans and its registration in his name, it is undisputed and indisputable that Mrs Hodgson was in actual occupation of it.
After the registration, she continued to live there to all appearances and as a physical fact in exactly the same way as before; and so did Mr Evans. They lived and ate and slept in the house exactly as before. The financial arrangements of payment by Mr Evans to Mrs Hodgson for board and lodging and by Mrs Hodgson to 3r Evans for investment for her and for the payment of bills continued unchanged. Mrs Hodgson continued too as the rateable occupier. There was no change in the physical appearance of occupation nor was there any other change at all except that Mrs Hodgson transferred the house to Mr Evans upon oral trust for herself and that Mr Evans was registered as proprietor. Except that Mr Evans held the legal estate on trust for Mrs Hodgson, the transfer and registration made no difference as between Mrs Hodgson and Mr Evans. She was absolutely beneficially entitled and could at any time call for a transfer of the legal estate and then be registered as proprietor. Mr Evans as bare trustee of the legal estate for Mrs Hodgson was not entitled to occupy the house, but she as absolute beneficial owner was so entitled. After, as before Mr Evans' registration, Mr Evans' presence in the house was exclusively as lodger and Mrs Hodgson's presence was in virtue of being absolute owner, legally and beneficially before the registration, and beneficially afterwards. She could terminate Mr Evans' presence in the house after the registration just as she could before. As between Mrs Hodgson and Mr Evans, her occupation and her dominion over the house was the same after the registration as before.
"So at all material times, Mrs Hodgson was in fact in Physical occupation of the premises and, more, had the right to occupy them. It seems to me that in general (if this matter can be considered at all independently of context) such physical occupation, even apart from such right to occupy, would constitute what would be meant by actual occupation generally".
But the learned Judge then proceeded to attach a different and special meaning to the words "in actual occupation" in section 70(l)(g). He took as a starting point to justify departure from the ordinary meaning of the words first the fact that every person in actual occupation could not include the vendor himself; but that only puts a gloss on the words "every person" and, indeed, assumes the ordinary meaning of "actual occupation": moreover, it is not in the context a special construction of "every person" to exclude the vendor who ex hypothesi has transferred his rights to the purchaser. Secondly, the Judge relied upon the correct conclusion that "the land" included part of the land: I cannot myself see that this can properly be used as a justification for departure from the ordinary meaning of the words "in actual occupation". Having by this means freed himself from the fetters of the golden rule, he then, after considering the circumstances in which in the case of unregistered land a purchaser would be fixed with constructive notice of the rights of persons in occupation of the land sold, concluded that "actual" should be construed in the sense of "actual and apparent". I do not myself see that this adds to or detracts from the words in the section. In connection with the word "apparent" I remark on the phrase of the learned Judge that, after the registration of the transfer to Evans, "to all appearances" the Plaintiff continued in actual occupation. I am prepared, for the purposes of this case, to assume (without necessarily accepting) that section 70(l)(g) of the Land Registration Act, 1925, is designed only to apply to a case in which the occupation is such, in point of fact, as would in the case of unregistered land affect a purchaser with constructive notice of the rights of the occupier. And it is to be observed that the words "actual occupation" are used in section 14 of the Law of Property Act, 1925, and were used in Barnhart v. Greenshields (9 Moore's P.C at page 34). But, nevertheless, how can it be said that the Plaintiff was not in actual occupation of the house ? The learned Judge said that in all fairness a purchaser of this house (if unregistered) should not be fixed with notice of the Plaintiff's rights. But why not ? It is a principle of law (and of the Land Registration Act, 1925) that a person in occupation is protected in his rights by that occupation, unless, of course, the rights are such that they require registration if they are to be protected. A purchaser must pay heed to anyone in occupation if he is to be sure of getting a good title. It was argued, on the basis of a quotation from the judgment of Lord Justice Vaughan-Williams in Hunt v. Luck (1902 1 Chancery, page 428), that this does not apply when the vendor is in occupation, and that (as is the fact) there is no reported case of unregistered land where a purchaser was fixed with constructive notice of the rights of any other occupier when the vendor was in occupation, and that any other view would lead to an impossible burden of enquiry on a purchaser and more particularly on a lender of money on mortgage such as the building society. (As to the Defendant building society it is plain that it made no enquiries on the spot save as to repairs: it relied on Narks, who lied to it: and I waste no tears on it). I do not think this is a real problem. Conveyancing is conducted generally upon a basis of good faith, with something of a long stop in the shape of covenants for title. Moreover, I do not consider that it is correct in law to say that any rights of a person who is in occupation will be overridden whenever the vendor is, or appears to be, also in occupation.
I do not think it desirable to attempt to lay down a code or catalogue of situations in which a person other than the vendor should be held to be in occupation of unregistered land for the purpose of constructive notice of his rights, or in actual occupation of registered land for the purposes of section 70(l)(g). It must depend on the circumstances, and a wise purchaser or lender will take no risks. Indeed, however wise he may be he may have no ready opportunity of finding out: but, nevertheless, the law will protect the occupier. Reliance upon the untrue ipse dixit of the vendor will not suffice. Take the present case - though the test of occupation must be objective. Evans was only a lodger, and whether in law he was in occupation at all is at least doubtful. But the Plaintiff was there for Mr Marks to see and he saw her on two occasions. He did not introduce himself to her as an intending purchaser. He made no enquiry of her. He assumed her to be Evans' wife who knew all about the proposed purchase. This assumption may well have stemmed from a lie told by Evans, though neither Marks nor Mrs Marks actually said so. Nonetheless, there was the Plaintiff de facto living in the house as her house, and, if the Judge's gloss were to be accepted, I should say just as much in apparent actual occupation of it as before the transfer to Evans: and, indeed, if Evans had stopped lodging there before the registration in Marks' name she would unquestionably have been in actual occupation. In short, unless it can be established in law that a person is not to be regarded as in actual occupation for the purposes of section 70(l)(g) merely because the vendor appears also to be occupying the property, it seems to me that the Judge's decision on this point cannot be supported, (I observe that it was necessary for the Respondent's argument on actual occupation to contend that if the Plaintiff had said in conversation to Marks that it was her house and Evans her lodger, and Marks had believed Evans when Evans said "The old lady has a bee in her bonnet and is talking rubbish", her interest would not have been enforceable against Marks because she was not in actual occupation and accordingly without an overriding interest). I do not accept that proposition of law. Accordingly, I would hold that the Plaintiff was at all material times a person in actual occupation of the property.
I turn next to the question whether section 53(1) of the Law of Property Act, 1925, prevents the assertion by the Plaintiff of her entitlement in equity to the house. Let me first assume that, contrary to the view expressed by the Judge, Marks is not debarred from relying upon the section, and the express oral arrangement or declaration of trust between the Plaintiff and Evans found by the Judge was not effective as such. Nevertheless, the evidence is clear that the transfer was not intended to operate as a gift, and, in those circumstances, I do not see why there was not a resulting trust of the beneficial interest to the Plaintiff, which would not, of course, be affected by section 53(1). It was argued that a resulting trust is based upon implied intention, and that where there is an express trust for the transferor intended and declared - albeit ineffectively -there is no room for such an implication. I do not accept that. If an attempted express trust fails, that seems to me just the occasion for implication of a resulting trust, whether the failure be due to uncertainty, or perpetuity, or lack of form. It would be a strange outcome if the Plaintiff were to lose her beneficial interest because her evidence had not been confined to negativing a gift but had additionally moved into a field forbidden by section 53(1) for lack of writing. I remark in this connection that we are not concerned with the debatable question whether on a voluntary transfer of land by A to stranger B there is a presumption of a resulting trust. The accepted evidence is that this was not intended as a gift, notwithstanding the reference to love and affection in the transfer, and section 53(l) does not exclude that evidence.
It may be that the same conclusion can be arrived at by the course referred to in No.2(b) of the points that I have listed as being for consideration in this appeal: namely, that the beneficial interest never left the Plaintiff with the result that there was no "creation" or "disposition" of that interest in the land, nor any "declaration of trust respecting land or any interest therein", and consequently nothing within section 53(1). But it is not necessary to consider that approach further.
On the above footing it matters not whether Marks was or was not debarred from relying upon section 53(1) by the principle that the section is not to be used as an instrument for fraud. Marks was in fact ignorant of her interest and it is forcefully argued that there is nothing fraudulent in his taking advantage of the section. I do not propose to canvas the general point further, more particularly in the light of the nature of the subject-matter with which we are dealing - an overriding interest. Quite plainly Evans could not have placed any reliance on section 53, for that would have been to use the section as an instrument of fraud. Accordingly, at the moment before registration of Marks as registered proprietor there was in existence an overriding interest in the Plaintiff, and by force of the statute the registration could only take effect subject thereto.
Finally, I come to the question whether some principle operates to prevent the Plaintiff asserting her beneficial interest against Marks and the building society, whether under the heading of estoppel or of postponement of her beneficial interest to theirs. It is, of course, to be borne in mind that the form of the transfer to Evans with the implication of gift involved in the words "love and affection" could have had no operation on the minds of Marks or the building society, because it never came to their notice: it was off the title, which was confined to registration of Evans with absolute title in the proprietorship register. On this last point, it was argued that the evidence showed that in January, I960, the Plaintiff was warned by a solicitor Mr Semken against what he then thought was envisaged by the Plaintiff - a gift of the house to Evans: and that after a showdown in the presence of another solicitor Mr Moeran in January, 1964, when Evans admitted his trusteeship of both her money and the house, she declined to instruct Mr Moeran to take any steps against Evans though Evans had failed to comply with his stated intention to retransfer the house (which,unknown to the Plaintiff and Mr Moeran, Evans had charged with money raised by him from his bank). It was argued that if the transfer had not contained the reference to love and affection but a nominal consideration of 10/- the Registrar would not have registered Evans with absolute title without further enquiry which would, or might, have resulted in registration with a restriction upon dealings without reference to the Plaintiff: but as to this there was no evidence, and the particular form of the transfer is under this head not relevant. It was further argued that the Plaintiff was at fault vis-a-vis the Respondents in executing a transfer which did not in terms show that Evans was trustee for her, a form which would have led to such a restriction being noted on the register: and, moreover, she failed to register a caveat. The argument proceeded thus -that in the light of the defaults by the Plaintiff her equitable interest should be postponed to the equitable interest obtained by Marks on the execution of the transfer by Evans, reliance being placed on the case of Abigail v. Lapin (1934 Appeal Cases, page 491 P.C). Now that case was not concerned in any way with a system in which there were overriding interests. Moreover, the whole argument admittedly depended upon (a) a theory of priority between equities and (b) the fact that because mechanical difficulties involve a time lag between execution of transfer and registration a transferee of registered land has until registration no more than an equitable interest. It was accepted that if the transfer had operated to vest the legal estate in Marks immediately the argument would have been invalid. This seems to me to blow the argument sky-high, and to leave an overriding interest in the situation which its title implies.
To the whole of this, I venture to think somewhat amorphous approach to the problem, the answer seems to me to be that an overriding interest is just that. A registered proprietor cannot transfer free from an overriding interest.
Registration itself is subject to overriding interests. Moreover, a person who remains in actual occupation does not do anything to abandon the rights which her actual occupation protects, unless on enquiry she does not reveal them: that is what section 70(l)(g) enacts. The Plaintiff did not arm Evans with the apparent ability or power to deal with the property free from any overriding interest.
I would only add that I do not consider it necessary to this decision to pronounce on the decision in Caunce v. Caunce (1969 1 Weekly Law Reports, page 286). In that case the occupation of the wife may have been rightly taken to be not her occupation but that of her husband. In so far, however, as some phrases in the judgment might appear to lay down a general proposition that enquiry need not be made of any person on the premises if the proposed vendor himself appears to be in occupation, I would not accept them.
Summary of Order
(Order for rectification of Register by substituting the Plaintiff for Mr Marks and cancelling the entry of the building society's charge; building society to deliver up forthwith their charge certificate to the Plaintiff's solicitors. Costs: Order that the Appellant should recover her costs here and below against both Defendants except for her costs of an amendment dealt with by the Master's Order, Mr Mervyn Davies conceding that there should be an Order in favour of the Second Defendants under which the burden of the Second Defendants' own costs and any costs they may have to pay the Plaintiff should fall upon the First Defendant; legal aid taxation. Leave to appeal to the House of Lords refused).