Mortgage – Possession – Overriding interest – Appellant holding mortgage over property owned by H – Respondent transferring property to H while suffering from mental illness – Respondent residing in institution at time of mortgage – Whether transfer to H voidable – County court holding respondent in actual occupation with right to set aside transfer having priority over charge – Whether judge erring in law – Appeal dismissed
The respondent suffered from a mental illness. In 2004, she was persuaded to transfer property of which she owned the freehold to H. In 2008, the appellant granted a bridging loan of £107,250 to H secured against the property. H defaulted on the loan and the appellant brought proceedings for possession. The respondent was joined as a party to the action; she contended that she had a right to set aside the transfer to H and that she held an overriding interest that entitled her to take back the property free of the appellant’s charge.
The respondent argued that at the time of the transfer to H she had been mentally ill. Her symptoms included difficulties with attention and orientation and involve short-term memory loss; on several occasions, she had been admitted to hospital under the Mental Health Act 1983. H’s solicitor had arranged the transfer; the respondent had not been separately advised nor had she received any of the notional purchase price of £100,000. Owing to her mental condition, the respondent could not recall the transaction. She submitted that the transfer was voidable on the grounds of her incapacity or undue influence, and that her right to set it aside took precedence over the appellant’s charge as an overriding interest held by a person in actual occupation at the time the charge was executed by virtue of section 29 of the Land Registration Act 2002.
The county court held that the respondent had been in “actual occupation” in February 2008 because, although she was at that time in a residential care institution, she: (i) had none the less continued to pay the outgoings and kept her furniture at the property; and (ii) wanted to return home and had been allowed supervised home visits: [2009] PLSCS 271.
The appellant appealed, contending that the judge had misapplied the statutory provisions to the facts and arrived at a legally insupportable conclusion in the respondent’s favour.
Held: The appeal was dismissed.
Whether the respondent was in actual occupation of the property at the relevant date was an issue on which the trial judge had to make an evaluation based on his findings of primary fact. The judge had considered the relevant authorities on the concept of a “person in actual occupation” of land in the earlier land registration legislation and now found in the 2002 Act. Previous decisions showed that the courts were reluctant to lay down, or even suggest, a single legal test for determining whether a person was in actual occupation.
The decisions on statutory construction identified the factors that had to be weighed by the judge on that issue. The relevant factors included: (i) the degree of permanence and the continuity of presence of the person concerned; (ii) the intentions and wishes of that person; (iii) the length of absence from the property and the reasons for it; and (iv) the nature of the property and the person’s personal circumstances: Thompson v Foy [2009] EWHC 1076 (Ch); [2010] 1 P&CR 16 applied.
The Court of Appeal could interfere with the judge’s decision on that issue only if it were satisfied that it was wrong as a matter of statutory construction or as a judgment of fact and degree. In the circumstances of the instant case, the court should not disturb the decision that the respondent was a person in actual occupation of the property at the relevant date. The judge had not misconstrued the 2002 Act or the authorities. Nor had he misapplied the law by making an insupportable evaluation of the respondent’s situation with regard to the property. The decisions of the court on the different facts of other cases had been cited against his conclusion, but they did not demonstrate that he was wrong: Hoggett v Hoggett (1980) 39 P&CR 121, Williams & Glyn’s Bank Ltd v Boland [1981] 1 AC 487 and Strand Securities v Caswell [1965] Ch 958 considered.
The judge was justified in ruling that the respondent was a person in actual occupation of the property. His conclusion was supported by evidence of: (i) a sufficient degree of continuity and permanence of occupation; (ii) involuntary residence elsewhere, which was satisfactorily explained by objective reasons; and (iii) a persistent intention to return home when possible, as manifested by her regular visits to the property: Abbey National Building Society v Cann [1991] 1 AC 56 considered; Stockholm Finance Ltd v Garden Holdings Inc [1995] NPC 162 distinguished.
Antoine Tinnion (instructed by Lightfoots LLP) appeared for the appellant; Iris Ferber (instructed by Punch Robson, of Middlesborough) appeared for the respondent.
Eileen O’Grady, barrister
