England and Wales Court of Appeal (Civil Division) Decisions

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URL: http://www.bailii.org/ew/cases/EWCA/Civ/1985/17.html
Cite as: (1985) 50 P & CR 244, [1985] EWCA Civ 17

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JISCBAILII_CASE_PROPERTY

		BAILII Citation Number: [1985] EWCA Civ 17
		Case No.. 8220208

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BRISTOL COUNTY COURT
(HIS HONOUR JUDGE MCCARRAHER)

Royal Courts of Justice

2nd April 1985

B e f o r e :

THE MASTER OF THE ROLLS (Sir John Donaldson)
and
LORD JUSTICE BROWSE-WILKINSON
____________________

	THE PADDINGTON BUILDING SOCIETY	(Plaintiff) Respondent
	v.
	MALCOLM LESLIE MENDLESOHN	(First Defendant)
	and
	JENNIFER PRICE MENDLESOHN	(Second Defendant)Appellant

____________________

(Transcript of the Shorthand Notes of the Association of Official Shorthandwriters Ltd., Room 392, Royal Courts of Justice, and 2 New Square, Lincoln's Inn, London, W.C.2)

____________________

MR. DONALD HAWKINS (instructed by Messrs. Burroughs, Day & Blackmore of Bristol) appeared on behalf of the (Second Defendant) Appellant.
MR. JAMES WIGMORE (instructed by Messrs. Clutton, Moore & Lavington of Bristol) appeared on behalf of the (Plaintiff) Respondent.
____________________

HTML VERSION OF JUDGMENT
____________________

REVISED

LORD JUSTICE BROWNE-WILKINSON: In this case the Paddington Building Society ("the Society")as mortgagee is claiming possession of the Garden Flat, Sambourne House, Sea Walls Road, Bristol. The first defendant is a Mr. Mendlesohn ("the son") who is the mortgagor and does not resist the claim. The second defendant is his mother, Mrs. Mendlesohn, who is in possession of the flat. She is elderly and not in good health.

In 1979 the mother and the son agreed that they would purchase the flat for £32,500. The purchase price was to be provided as to £15,500 by the mother and as to the balance by a mortgage from the Society for £17,000. As the mother was too old to get a mortgage in her own name, it was agreed that the property should be bought in the name of the son and that he would mortgage it to the Society. The son agreed to pay the mortgage instalments.

That project was carried through. The flat was a long leasehold registered at H.M. Land Registry. The purchase was carried through by a transfer to the son dated the 20th July, 1979. On the same day, the son executed a legal charge in favour of the Society as security for the advance of £17,000 made on that day. On the 20th July, 1979 the Society had no actual or constructive notice of the mother's interest in the property.

Immediately after the execution of the transfer, the son and his girl friend moved in to the flat. The mother moved in on the 20th August, 1979. For some reason which has not been explained, no application to register the legal charge at the Land Registry was made until the 1st October, 1979, i.e. until after the mother moved in.

Thereafter the mother expended considerable sums on improving the flat. The son (and presumably his girl friend) moved out of the flat after approximately one year. In 1982 the mother agreed to the son raising a second mortgage on the flat and on the 23rd November, 1982 for the first time a trust deed was executed setting out the beneficial interests of the parties. Shortly stated, the trust deed recited the mortgage to the Society and that the son was the trustee of the flat for the mother. It further recited that the mother had agreed to the son raising £6,000 on second mortgage. The deed declared that it was the parties' intention to sell the flat and that the proceeds of sale should be held in trust (a) to pay the sum due under the mortgage to the Society, (b) to pay the sum due under the second mortgage, (c) to pay the balance to the mother.

The son failed to pay the mortgage instalments and the Society, as it was entitled to do, claimed possession as mortgagee. The mother resisted the claim on the basis that she is entitled to an "overriding interest" under section 70(1)(g) of The Land Registration Act 1925, which provides as follows:

"All registered land shall, unless under the provisions of this Act the contrary is expressed on the register, be deemed to be subject to such of the following overriding interests as may be for the time being subsisting in reference thereto, and such interests shall not be treated as incumbrances within the meaning of this Act, (that is to say):-

(g) The rights of every person in actual occupation of the land or in receipt of the rents and property thereof, save where enquiry is made of such person and the rights are not disclosed".

The mother claims that the relevant time at which to ascertain whether she was in "actual occupation" of the flat is not the date of the legal charge to the Society (when the flat was vacant) but the date on which application was made to register the legal charge at the Land Registry, by which date she was in occupation of the flat.

In his very careful judgment, His Honour Judge McCarraher rejected the mother's contentions holding that the mother would have to have been in actual occupation at the date of the mortgage in order to have an overriding interest.

The mother appeals against that decision. The Society has put in a respondent's notice raising, as an additional ground for upholding the judge's decision, the contention that the rights of the mother as a consenting party to the grant of the mortgage are subject to the rights of the Society.

Both parties were anxious that we should decide the appeal on the point determined by the judge, viz. what is the relevant date as at which to determine whether the mother was in actual occupation for the purposes of section 70(1)(g)? However, although I am far from saying that the judge's decision on that point was wrong, it is a point of great importance in the law of registered conveyancing generally and I do not think it is desirable for a Court of Appeal of only two judges to adjudicate on such a point if the appeal can be disposed of on some other ground.

Although the facts of this case are very different from those in Bristol & West Building Society v. Henning (in which we have just given judgment), the legal point raised is the same, save as to any difference flowing from the fact that in this case the land is registered land. There being no express declaration of trust or agreement as to the beneficial interests of the mother and the son at the time of the acquisition of the flat, the nature of the mother's equitable interest must depend on the intention to be imputed to the son and the mother at the time of the acquisition. Since the mother knew and intended that the mortgage was to be granted to the Society and that without the mortgage the flat in which she claims a beneficial interest could not have been acquired, the only possible intention to impute to the parties is an intention that the mother's rights were to be subject to the rights of the Society. Therefore, if the land were unregistered land, in my judgment the mother's equitable interest in the flat would have been subject to the Society's rights and would provide no defence to the Society's claim to possession.

Does it make any difference that the land is registered land? For the purposes of this judgment only I will assume that the mother was in actual occupation at the relevant time and that accordingly her interest is an "overriding interest" for the purposes of the Land Registration Act. Mr. Hawkins, for the mother, submitted that once it was shown that the mother had an equitable interest and that, by virtue of section 70(1)(g), her equitable interest was an "overriding interest" that is the end of the matter. By operation of the statute, her interest overrides that of the Society. He relied on Williams and Glyn's Bank v. Boland [1981] AC 487 to support this contention.

Looking at the matter first as a matter of statutory construction I would have no hesitation in rejecting Mr. Hawkins' submissions. Section 70(1) deems the registered land to be subject to certain rights which "override" the rights appearing on the register. The rights referred to in paragraph (g) are "the rights of every person in occupation". There is no doubt therefore that the registered land is subject to the rights of such person. But the essential question remains to be answered, "what are the rights of the person in actual occupation?" If the rights of the person in actual occupation are not under the general law such as to give any priority over the holder of the registered estate, there is nothing in section 70 which changes such rights into different and bigger rights. Say, in the present case, before the acquisition of the flat a trust deed had been executed declaring that the flat was held in trust for the mother but expressly subject to all the rights of the Society under the proposed legal charge. The effect of section70(1)(g) could not in my judgment have been to enlarge the mother's rights so as to give her rights in priority to the Society when, under the trust deed, her rights were expressly subject to those of the Society. Her rights would be "overriding interests" in that the Society would have to give effect to them, but the inherent quality of the mother's rights would not have been such as to give them priority over the Society's rights. So in the present case,once it is established that the imputed intention must be that the mother's rights were to be subject to the mortgage, there is nothing in section 70 which enlarges those rights into any greater rights.

I can see nothing in the Boland case- which conflicts with this view. In the two cases under consideration by the House of Lords, the mortgages had been granted after the purchase of the matrimonial homes and without the knowledge or consent of the wives. Under the general law, the wives had equitable interests in the houses at the date of the mortgages. The House of Lords held that, since the wives were in actual occupation, the bank took subject to their rights. There was no question in that case that as between the husbands and the wives, the wives' interests were to be subject to any further mortgage. Therefore the point which arises for decision in the present case did not arise in Boland and was not considered.

For these reasons I would dismiss the appeal.

THE MASTER OF THE ROLLS: I agree.

(Order: Appeal dismissed. No order for costs save legal and taxation. Possession order to take effect in three months.)