Hodgson v Marks

A person who physically occupies registered land in the exercise of a right to occupy may have an overriding interest despite the vendor’s apparent concurrent occupation. A purchaser or lender must heed the presence of any occupier and cannot rely solely on the vendor’s assertions.

Where land is transferred without any intention to make a gift, the failure of an intended oral express trust for want of writing may give rise to a resulting trust. Such a trust falls outside the statutory writing requirements. Registration and intermediate equitable interests remain subject to an occupier’s overriding interest.

The plaintiff transferred her house to her lodger, Evans. Although the transfer referred to love and affection, the judge found that she intended no gift and that Evans had orally agreed to hold the beneficial ownership for her. She continued living in and exercising dominion over the house as before.

Evans transferred the registered title to Marks, who charged the property to a building society. Ungoed-Thomas J, whose decision was reported at [1970] 3 WLR 956, rejected the plaintiff’s claim against the subsequent interests.

The appeal concerned whether the plaintiff was in actual occupation under section 70(1)(g) of the Land Registration Act 1925, whether section 53 of the Law of Property Act 1925 defeated her beneficial interest, and whether estoppel or equitable priority postponed that interest.

1. Appeal allowed unanimously. Russell LJ delivered the judgment, with which Buckley and Cairns LJJ agreed entirely. The plaintiff had an overriding beneficial interest in the house. The register was ordered to be rectified by substituting her for Marks and cancelling the building society’s charge.
2. The plaintiff was in actual occupation for section 70(1)(g) of the Land Registration Act 1925. She remained physically present, occupied in her capacity as beneficial owner and retained dominion over the house. A person does not cease to be in actual occupation merely because the vendor is, or appears to be, occupying the property as well. The question is objective and depends on all the circumstances. A prudent purchaser or lender must heed every apparent occupier and cannot safely rely on an untrue assertion by the vendor.
3. Section 53(1) of the Law of Property Act 1925 did not destroy the plaintiff’s beneficial ownership. Even assuming that the intended express oral trust was ineffective for lack of writing, the accepted evidence established that no gift was intended. A resulting trust therefore arose in favour of the plaintiff and was preserved by section 53(2). The failure of an attempted express trust through uncertainty, perpetuity or want of form may provide the occasion for such a resulting trust.
4. It was unnecessary to decide whether the beneficial interest had simply remained with the plaintiff without any creation or disposition within section 53(1), or whether Marks was personally barred from invoking that subsection under the principle against using a statute as an instrument of fraud. Evans could not have relied on the subsection in that way. Immediately before Marks was registered, the plaintiff therefore possessed an overriding interest to which his registration was necessarily subject.
5. Neither estoppel nor equitable priority postponed the plaintiff’s interest. Registration itself is subject to overriding interests, and a registered proprietor cannot transfer free of one. An occupier does not abandon the rights protected by occupation unless, upon enquiry, the occupier fails to disclose them. The plaintiff had not armed Evans with an apparent power to deal free from her overriding interest.

• Court of Appeal: The plaintiff’s appeal was allowed unanimously. The register was ordered to be rectified by substituting the plaintiff for Marks and cancelling the building society’s charge. Leave to appeal to the House of Lords was refused.
• High Court: Ungoed-Thomas J’s decision, reported at [1970] 3 WLR 956, was reversed insofar as it denied the plaintiff’s overriding beneficial entitlement.