Priorities — Overriding interest — Building society mortgage — Occupier with equitable interest — Contemporaneous purchase and mortgage — Whether scintilla of time between transactions — Whether legal charge impliedly authorised — Building society entitled to possession
The plaintiffs lent to the first defendant, George Cann, the sum of £25,000 on the security of a first legal charge of 7 Hill View, Mitcham, Surrey. George Cann acquired a long lease of this property, of which he was the sole registered proprietor, on August 13 1984 as a home for his mother, Mrs Cann, and her husband, Albert, the third and second defendants respectively. Mrs Cann had previously been the sitting tenant of another property which was offered to her at a reduced price. George Cann took out a mortgage for the whole price, and that property was conveyed into their joint names. It was later sold and a further property was acquired; that second property, of which George Cann was the sole proprietor, was then sold and 7 Hill View purchased. In the Croydon County Court (January 10 1989) His Honour Judge Thomas held that Mrs Cann had an equitable interest in each property.
Following the failure of George Cann to pay the loan instalments, the plaintiffs claimed possession of 7 Hill View. It was contended on behalf of Mrs Cann that by reason of her prior equitable interest in the property, and because she had been in “actual occupation” for the purposes of section 70(1)(g) of the Land Registration Act 1925, the plaintiffs were bound by her overriding interest under section 21(1) of the 1925 Act; accordingly her interest took priority over the legal charge. That contention was not accepted by Judge Thomas, and he granted an order of possession.
Held The appeal was dismissed.
Mrs Cann’s claim, that she went into occupation of 7 Hill View at an earlier moment on August 13 1984 than the actual completion of the sale to George Cann, and therefore before the mortgage to the plaintiffs took effect as a legal rather than merely an equitable charge, was rejected. There is a scintilla or punctum temporis between the moment when a conveyance of a property takes effect and the moment when a “contemporaneous” legal charge by the purchaser in favour of a mortgagee who has provided the money takes effect. On the evidence, Mrs Cann was in “actual occupation” from 11.45 am on August 13 when her furniture was moved in, and completion took place at or after 12.20 pm. However, Mrs Cann’s rights were subject to the legal charge, as she must have realised that some mortgage was necessary, and George Cann would have had her authority to charge the property (although not for the large amount borrowed), as the price received from the earlier sale would not have sufficed.
Perry-Herrick v Attwood (1857) 2 De G & J 21 and
Brocklesby v Temperance Building Society
[1895] AC 173 considered.
Graham Clark (instructed by Malthouse Chevalier) appeared for the plaintiffs; and Marc Beaumont (instructed by Porter & Co, of Cheam, Surrey) appeared for the defendants.
