Husband obtaining loan secured by way of charge – Bank obtaining possession order against husband – Wife successfully claiming overriding interest – Whether bank entitled to apply for order for sale under section 30 of Law of Property Act 1925 – Whether section 70(1)(g) of Land Registration Act 1925 precluded application – Bank entitled to order for sale
In 1973 the first defendant, D, registered 63 Palgrave Avenue, Southall, Middlesex, in his sole name and a charge was registered in favour of the Abbey National Building Society. In 1978 D obtained a loan secured by way of second charge on the property. The charge was subsequently assigned to the plaintiff bank. D fell into arrears and a money judgment and a possession order were obtained against him. Subsequently D was adjudged bankrupt. The second defendant, Mrs D, was then joined in the proceedings. She claimed an equitable interest in the property overriding the bank’s interest under its legal charge. The plaintiff bank accepted that at the time it had taken the legal charge, it had made no inquiry as to the occupants of the property. Mrs D conceded that the bank was entitled to apply under section 30 of the Law of Property Act for an order for sale of the property. The county court judge found that it could be imputed there had been an agreement between the defendants that D was to hold the property in trust for them in equal shares and Mrs D’s share amounted to an overriding interest under section 70(1)(g) of the Land Registration Act 1925 to which the bank’s legal charge was subject. The judge held that the bank was in the same position as a trustee in bankruptcy and since there were no exceptional circumstances there was to be an order for sale. Mrs D appealed contending that the judge had failed to consider the nature and extent of her equitable interest in the house, including a right to occupy, which amounted to an overriding interest to which the judge should have given effect. She contended that the judge had enabled the bank to do indirectly under section 30 the Law of the Property Act 1925 what it could not do directly because of section 70(1)(g) of the Land Registration Act 1925. It was further contended that the effect of the judge’s decision would be to destroy the safeguards contained in section 36 of the Administration of Justice Act 1970.
Held The second defendant’s appeal was dismissed.
Section 30 of the Law of Property Act 1925 gave the court a discretionary power to order sale, even where the interest of a person opposing the application for an order for sale ranked before that of the applicant. The discretionary power under section 30 of the 1925 Act allowed matters mentioned in section 36(1) of the Administration of Justice Act 1970 to be taken into account. Therefore the concession made before the county court judge that the bank was entitled to apply for an order for sale under section 30 was a concession which had been properly made: see Abbey National plc v Moss and others [1994] 1 FLR 307.
Anthony Mann QC (instructed by Lawrence Jones) appeared for the plaintiff bank; John Robson (instructed by Bhardwaj & Co) appeared for the appellant second defendant.
