Williams v Hensman

Facts

Money was bequeathed to be invested in stock, and to pay an annuity to A, with the ‘principal to go to her children at death.’ All eight children consented to money being invested in a mortgage fund. However, three were minors. The trustee advanced a sum to one of the children, and the other children covenanted to not to call upon the trustee to make up any deficiency in case the share should fall short of the advance, and also to indemnify the trustee against all claim, damage and expenses by reason of the advance.
The question was whether the trust was co-owned as a joint tenancy.

Judgment

The Chancery Court held it was a joint tenancy. And the act of the five severed their interest from the other three. Page-Wood VC gave the following decision.

“

A joint-tenancy may be severed in three ways: in the first place, an act of any one of the persons interested operating upon his own share may create a severance as to that share. The right of each joint-tenant is a right by survivorship only in the event of no severance having taken place of the share which is claimed under the jus accrescendi. Each one is at liberty to dispose of his own interest in such manner as to sever it from the joint fund—losing, of course, at the same time, his own right of survivorship. Secondly, a joint-tenancy may be severed by mutual agreement. And, in the third place, there may be a severance by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common. When the severance depends on an inference of this kind without any express act of severance, it will not suffice to rely on an intention, with respect to the particular share, declared only behind the backs of the other persons interested. You must find in this class of cases a course of dealing by which the shares of all the parties to the contest have been effected, as happened in the cases of Wilson v Bell and Jackson v Jackson.

City of london building society v Flegg

Facts

In 1977, Mr and Mrs Flegg sold their home of 28 years and used the £18,000 they made to help buy a property named "Bleak House", at 256 Grange Road, Gillingham, Kent, registered at HM Land Registry title number K467866. Their daughter and her husband, Mrs and Mr Maxwell-Brown had asked them to, and they put in the remaining £16,000 by taking out a mortgage. It was meant for them all to live in, but the daughter and husband registered as the owners, despite their solicitor advising all four of them be registered. Thus, Mr and Mrs Flegg had an equitable property right from their contributions to the purchase price, the Maxwell-Browns holding on trust for them. The Maxwell-Browns had money trouble and remortgaged with the City of London Building Society to raise £37,500 without the Fleggs' consent. The Fleggs were suspicious and entered a caution against dealings at the Land Registry. They defaulted and the building society sought possession.

Judgment

Court of Appeal

Dillon LJ held that, reversing the decision of the High Court, the Fleggs' interest in their home was not overreached through the building society's contract with the children.^[3]

“

Mr. Wakefield for the plaintiffs relied, in one of his arguments to the contrary, on the wording of section 20(1)(b) of the Land Registration Act 1925 under which, as quoted above, a disposition of registered land by the registered proprietor is subject "unless the contrary is expressed on the register, to the overriding interests, if any, affecting the estate transferred or created." He submits that, because it was overreached by the plaintiffs' mortgage under the overreaching provisions of the Law of Property Act 1925, the parents' interest never affected the estate transferred to or created in the plaintiffs by their mortgage. But this argument is inconsistent with the whole scheme of the Land Registration Act 1925 as interpreted in Boland's case. Moreover, if, as Lord Wilberforce held, the interest of the equitable tenant in common in actual occupation of the land "subsisted in reference to the land" within the meaning of section 70, it must equally, in my judgment, (being an interest by way of undivided share in the whole of the land and carrying a right to occupy the whole of the land) have affected the derivative estate, by way of term of years or deemed terms of years - cf. Grand Junction Co Ltd v Bates [1954] 2 QB 160 - which is the estate in the land which the plaintiffs have by virtue of their mortgage. This was the conclusion of Lord Denning MR in Boland's case [1979] Ch 312 , where he said, at p. 331: "Being an equitable interest in the land, it is clearly an interest 'subsisting in reference' to the land. It also affects 'the estate transferred' within section 20(1)(b)." Mr. Wakefield also relied on the words "for the time being" in the phrase in the opening words of section 70(1): "All registered land shall,... be deemed to be subject to such of the following overriding interests as may be for the time being subsisting in reference thereto..." He submitted that, because the parents' interest was overreached under the Law of Property Act 1925 on the creation of the plaintiffs' mortgage, it was thereafter not an overriding interest "for the time being" subsisting in reference to the land. But, again, this argument is inconsistent with the scheme of the Land Registration Act 1925 as explained in the passages in Lord Wilberforce's speech in Boland's case which I have quoted above. The argument is unreal in that the parents continued in actual occupation of the land despite the execution by the registered proprietors of the plaintiffs' mortgage of which the parents knew nothing.

”

Kerr LJ and Sir George Waller concurred.

House of Lords

The House of Lords held that the building society’s charge took priority, and could use the overreaching defence against the Fleggs’ pre-existing trust right. Although under the Land Registration Act 1925 section 70, people with actual occupation may have an overriding interest that would take priority over a third party, like the building society, this does not happen if the purchase money is paid to two or more trustees or a trust corporation. If that happens, under LPA 1925 section 2(ii) the interests of the beneficiaries will be overreached and will attach to the purchase price, not the property.
Lord Templeman said the following.^[4]

“

One of the main objects of the legislation of 1925 was to effect a compromise between on the one hand the interests of the public in securing that land held in trust is freely marketable and, on the other hand, the interests of the beneficiaries in preserving their rights under the trusts. By the Settled Land Act 1925 a tenant for life may convey the settled land discharged from all the trusts powers and provisions of the settlement. By the Law of Property Act 1925 trustees for sale may convey land held on trust for sale discharged from the trusts affecting the proceeds of sale and rents and profits until sale. Under both forms of trust the protection and the only protection of the beneficiaries is that capital money must be paid to at least two trustees or a trust corporation.

”

Lord Oliver gave a concurring judgment.

Kingsnorth Finance v Tizard [1986]

Kingsnorth Finance v Tizard [1986] 1 WLR 783

Mr Tizard was the sole registered proprietor of the matrimonial home in which his wife had a beneficial interest. The marriage broke down and Mrs Tizard moved out but returned each day to look after their twin children and would stay the night if her husband was away. Mr Tizard mortgaged the property. On his application for the loan he stated that he was single. He arranged for the inspection to take place on a Sunday when he knew his wife and children would be out. The agent inspecting the property noted that there was occupation by the children but he found no signs of occupation by the wife. Mr Tizard had said that she had moved out many months ago and was living with someone else close by.

Held:

Kingsnorth Finance took the property subject to the wife’s interest. The discrepancy between what Mr Tizard had stated on his application form and what the agent found when he inspected the property put the lenders on notice. The lender had failed to take reasonable steps to avoid being fixed with constructive notice. The inspection was inadequate since it was at a pre-arranged time. 

Street v Mountford(1985)

Facts

On 7 March 1983, Roger Street, a Bournemouth solicitor, gave rooms 5 and 6 in No 5 St Clement’s Gardens, Boscombe to Mrs Wendy Mountford for a ‘licence fee’ of £37 a week, terminable on fourteen days’ notice. Mrs Mountford also signed a form saying she understood the Rent Act 1977 did not apply to regulate her rental payments. The Rent Act 1977 at the time applied to leases only, not licences, and required landlords accept a rent which was deemed fair by an independent officer or tribunal, and also required more than fourteen days’ notice would be given. Mrs Mountford argued that she had a lease.
The judge held Mrs Mountford did have a lease, and Mr Street appealed.

Judgment

Court of Appeal, [1985] 49 P&CR 324 held the written agreement was clear that Mr Street did not intend that. Slade LJ, 322, ‘there is manifested the clear intention of both parties that the rights granted are to be merely those of a personal right of occupation and not those of a tenant.’

House of Lords

The House of Lords held that despite a contrary intention expressed by the contract, Mrs Mountford did have a lease. Lord Templeman gave the leading judgment. He started by saying that a tenancy is a term of years absolute by common law and LPA 1925 s 205(1)(xxvii).^[1] Originally they were not property rights, but a legal estate in leaseholds was created by the Statute of Gloucester 1278 and an Act of 1529.^[2] He also noted that it was conceded that Mrs Mountford was given exclusive possession, and then landlords will only have limited rights to enter, view and repair.^[3]

“

In the case of residential accommodation there is no difficulty in deciding whether the grant confers exclusive possession. An occupier of residential accommodation at a rent for a term is either a lodger or a tenant. The occupier is a lodger if the landlord provides attendance or services which require the landlord or his servants to exercise unrestricted access to and use of the premises. A lodger is entitled to live in the premises but cannot call the place his own. In Allan v Liverpool Overseers (1874) LR 9 QB 180, 191-2, Blackburn J said: ‘the landlord is there for the purpose of being able, as landlords commonly do in the case of lodings, to have his own servants to look after the house and the furniture, and has retained to himself the occupation, though he has agreed to give the exclusive enjoyment of the occupation to the lodger.’ He may be owner in fee simple, a trespasser, a mortgagee in possession, an object of a charity or a service occupier. It was submitted on behalf of Mr. Street that the court cannot in these circumstances decide that the agreement created a tenancy without interfering with the freedom of contract enjoyed by both parties. My Lords, Mr Street enjoyed freedom to offer Mrs Mountford the right to occupy the rooms comprised in the agreement on such lawful terms as Mr Street pleased. Mrs Mountford enjoyed freedom to negotiate with Mr Street to obtain different terms. Both parties enjoyed freedom to contract or not to contract and both parties exercised that freedom by contracting on the terms set forth in the written agreement and on no other terms. But the consequences in law of the agreement, once concluded, can only be determined by consideration of the effect of the agreement. If the agreement satisfied all the requirements of a tenancy, then the agreement produced a tenancy and the parties cannot alter the effect of the agreement by insisting that they only created a licence. The manufacture of a five pronged implement for manual digging results in a fork even if the manufacturer, unfamiliar with the English language, insists that he intended to make and has made a spade. I accept that the Rent Acts are irrelevant to the problem of determining the legal effect of the rights granted by the agreement. Like the professed intention of the parties, the Rent Acts cannot alter the effect of the agreement. My Lords, the only intention which is relevant is the intention demonstrated by the agreement to grant exclusive possession for a term at a rent. Sometimes it may be difficult to discover whether, on the true construction of an agreement, exclusive possession is conferred.

”

Lord Templeman went on to refer to and adopt Windeyer J in Radaich v Smith^[4] saying the fundamental feature of a lease is exclusive possession. Lord Scarman, Keith, Bridge and Brightman concurred.

Significance

In relation to residential properties, a line of cases have attempted to resolve the related issues of what amounts to exclusive possession (i.e. exclusive occupation) and what amounts to a 'dwelling', as the legal effect of Street v Mountford, taken together with the Rent Act 1977 (as amended by the Housing Act 1988), is that a tenancy or lease exists only if exclusive possession is granted of 'a dwelling'.
In all these cases the Courts have repeatedly stressed the need to look at the reality of the arrangement, and to disregard the artificial labels which are typically employed in the documents (which, being invariably drafted by the landowner, represent only the landowner's view of the rights being created) - labels such as 'licensor' and 'licensee' - on the principle that it is necessary to call a spade a spade.
In AG Securities v Vaughan (1988) the House of Lords decided that exclusive possession had not been granted, where up to four agreements existed simultaneously for the sharing of a single flat by unrelated occupiers, as there was an actual sharing of occupation. Also, in a joined appeal called Antoniades v Villiers,^[5] a case concerning a self-contained flat, the agreement expressly denied that the occupier had exclusive possession, and expressly provided for the owner to allow others to share the premises. The House of Lords decided that as the flat was in reality too small to accommodate others, so that it was incapable of actually being shared, the wording was merely a pretence intended to evade the Rent Act, and that in law the arrangement accordingly amounted to a grant of exclusive possession.
In Family Housing Association v Jones (1990), where a Housing Association housed homeless persons temporarily, the Court of Appeal decided that a tenancy was nevertheless created, because in reality it was intended that Mrs Jones and her child were to be the only occupiers, paying weekly, and in practice they did not actually share the accommodation; notwithstanding an express provision in the agreement that she did not have exclusive possession, and despite the Association holding a key.

By way of contrast, in Westminster CC v Clarke (1992) a resident of one room in a Hostel had an agreement permitting the Hostel's owner unrestricted access to the room, and containing a provision enabling the occupier to be compelled to share the room. There was no actual sharing; but the arrangement was nevertheless held to be a licence not a tenancy, as the room did not amount to a separate dwelling.

Wheeldon v Burrows

Facts

Mr Allen owned a piece of land and a workshop in Derby, which had windows overlooking and receiving light from the first piece of land. He sold the workshop to Mr Burrows, and the piece of land to Mr Wheeldon. Mr Wheeldon's widow (Mrs Wheeldon, the plaintiff) built on the piece of land, and it obstructed the windows of Mr Burrows' workshop. In response, Mr Burrows dismantled Mrs Wheeldon's construction, asserting an easement over the light passing through Wheeldon's lot. Mrs Wheeldon brought an action in trespass.

Judgment

Thesiger LJ held that because the seller had not reserved the right of access of light to the windows, no such right passed to the purchaser of the workshop. So the buyer of the land could obstruct the workshop windows with building. He said the following.

“

We have had a considerable number of cases cited to us, and out of them I think that two propositions may be stated as what I may call the general rule governing cases of this kind. The first of these rules is that, on the grant by the owner of a tenement of part of that tenement as it is then used and enjoyed, there will pass to the grantee all those continuous and apparent easements (by which of course I mean quasi easements), or, in other words, all those easements which are necessary to the reasonable enjoyment of the property granted, and which have been and are at the time of the grant used by the owners of the entirety for the benefit of the part granted. The second proposition is that, if the grantor intends to reserve any right over the tenement granted it is his duty to reserve it expressly in the grant.... Both of the general rules which I have mentioned are founded upon a maxim which is as well established by authority as it is consistent with common sense, viz., that a grantor shall not derogate from his grant...

Boland case

Mr Michael Boland and Mrs Julia Sheila Boland lived on Ridge Park, Beddington,Surrey. Mr Boland, registered owner of the house, borrowed money from the bank for his building company, Epsom Contractors Ltd. Mr Boland failed to repay, and the bank sought possession. Mrs Boland argued that because she made substantial financial contributions to acquiring the home, she should be able to stay. The bank argued it did not qualify as a property right, basing its argument on the doctrine of conversion, and she should only get a share of any money made by her husband from the land, not a right enabling her to use it. Second, even if there was a property right, the bank’s defence was it registered its charge, and Mrs Boland’s right was not registered. The lack of registration defence does not work if the party claiming the unregistered right is in actual occupation. Then, that person has an overriding interest. But the bank argued that if she cohabited with her husband, she should not count as being in actual occupation because a bank’s investigation would not alert it to her having a property right in the land. It would be no surprise to find a shared occupancy.

High Court

Templeman J at first instance, said that Mrs Boland was not in ‘actual occupation’ within the Act's meaning, because her occupation was merely an accompaniment to her husband's. Therefore her claim failed. Mrs Boland appealed.

Court of Appeal

The Court of Appeal held that Mrs Boland succeeded in her claim. She was in actual occupation under section 70(1)(g) of the Land Registration Act 1925 and that therefore she had an overriding interest in the property.^[1]The bank appealed contending that the wife's interest could only be considered a minor interest and that she could not be considered to be "in actual occupation". Lord Denning MR, giving the leading judgment, remarked that spouses had been ‘stripped bare’ by the House of Lord's in National Provincial Bank Ltd v Ainsworth.^[2] Then in Gissing v Gissing^[3]it was decided that contributions to the purchase price mean a trust arises. He went on to refute the view of Stamp J in Caunce v Caunce^[4] and Templeman J at first instance, that a wife could certainly be in ‘actual occupation’ even though her husband owned an occupied the property. The key parts of his judgment were as follows.^[5]

“

Actual occupation The wife clearly has rights. The only question is whether she is herself a person "in actual occupation of the land." In construing those words, "actual occupation", it is no use looking at the meaning of occupation in other branches of the law, such as "rateable occupation" or occupation for the purposes of occupier's liability. I would only say that occupation need not be in one single person. Two persons can be in actual occupation, by themselves jointly or each of them severally.