In determining whether there was sufficient actual occupation to bind a mortgagee, the court undertakes an evaluative exercise, weighing such factors as the degree of permanence and continuity of presence, the intentions, wishes and personal circumstances of the person, the length of and reason for the absence and the nature of the property.
In MTF (NH) Ltd v Hevedi & Anor [2025] EWHC 1013 (Ch), the claimant mortgagee sought possession of 3 Endcliffe Grove Avenue, Sheffield. The substantive issue was section 29 of the Land Registration Act 2002 and whether the second defendant was able to establish that he was a person in actual occupation sufficient that his interest took priority over that of the claimant.
Section 29 LRA provides that if there is a registrable disposition of land for value, it will take precedence over pre-existing unregistered interests. However, under Schedule 3 one of the unregistered interests which override registered dispositions, is the interest of a person in actual occupation (if that occupation would have been obvious on a reasonably careful inspection of the land). Whether a person was in actual occupation is an evaluative decision for the court, the burden of proof being on the person asserting they were in actual occupation.
D1 and D2 had been a couple and had children together. They never married. D2 purchased the property in December 2014 in the sole name of D1, as he wished to disguise his interest from HMRC. The property was their family home from some point in 2015 until 2021, when D1 went to London with the children. D2 said he was absent from the property for various periods through 2022 as he had to leave the UK as he feared for his life. On 23 September 2022 (the relevant date), D1 charged the property by legal mortgage to the claimant to secure a loan to her. On 4 November 2023, the claimant commenced possession proceedings, which D2 was permitted to join to advance his counterclaim that he had an overriding interest in the property. D2 contended that on the relevant date, it was occupied by D2’s brother, his brother’s wife and their children and that they were, in effect, looking after the property for D2 such that D2 was in actual occupation.
D2’s counterclaim was rejected by the court. There was no convincing documentary evidence establishing actual occupation of the property. The absence of documents of a periodic nature (bank statements, utility bills, mobile phone bills) from January 2022 until after the relevant date led the court to conclude that such documentation had not been disclosed because it did not support D2’s case).
Although a person might rely on threats of violence to explain short periods abroad, the longer the period of absence the less plausible it was to assert that the absence remained consistent with actual occupation. The occasions when D2 returned to the property manifested D2’s desire to thwart D1’s attempts to secure possession and sell the property, rather than of his desire to resume occupation.
D2’s brother and family were occupying the property on their own behalf as licensees rather than in the capacity of caretaker occupying on behalf of D2. In any event, even if there had been actual occupation, it would not have been obvious on a reasonably careful inspection of the property at the relevant date – all that such inspection would have revealed was occupation by D2’s brother and his brother’s family.
Still further, following Wishart v Credit and Mercantil Plc [2015] EGLR 57, as the equitable owner, D2 had the property registered in the name of D1 and did not bring any limit on her authority to the attention of the claimant and it would be fair as between D2 and the claimant that he bears the risk of D1’s fraud. The claimant was entitled to possession of the property.
Elizabeth Haggerty is a barrister
