Building Societies and the Unsuspected Hazard
| Author | Costas Douzinas,Ronnie Warrington |
| Date | 01 January 1991 |
| DOI | http://doi.org/10.1111/j.1468-2230.1991.tb02644.x |
| Published date | 01 January 1991 |
7lie
Modem
Law
Review
[Vol.
54
Building Societies and the Unsuspected Hazard
Costas
Douzinas
and
Ronnie Warringtori
*
In
the welter of case law over the last ten years or
so
concerning mortgages, trusts,
beneficial interests, overriding claims and registered titles there are not many
certainties that ingenious counsel have not tried to
turn
into questionable claims.
And
in
many cases, quite rightly too. In
a
world of cardboard cities, homeless young,
rapidly rising requests for possession orders by Building Societies, Banks and
Insurance Companies, the stark realisation that the first of
the
centuries great and
world wide calamitics
will
not produce the homes fit for heroes that had been
promised, even by
the
end of the century, is chillingly apt. In such circumstances,
courts are bound to be pressed
with
the claim
that
they ought to do everything possible
to prevent evictions.
It
was, of course, this type of claim that found favour
with
Lord Scarman in his robust judgment
in
Williams
&
Glyns
Bank
v
Boland.’
But there is another argument; finance capital can only be raised where
a
certain
amount of ‘security’
is
available. In particular, the lendcrs to the lenders of would
be house-purchasers need to know that their stake is secure
in
land and buildings.
Otherwise, they might not lend.
So
that the equally robust judgment of Lord Oliver
in
City
of
London Building Society
v
Flegg2
is, to an extent, only stating the
obvious when
it
remarks:
This appeal
is
.
. .
of very considerable importance
not
only
to
conveyanccrs but
to
anyone
proposing
to
lend
on
thc security
of
property in respect
of
which there
is
any possibility
of
the cxistence
of
bcnefitical interests which have not been disclosed by the apparent absolute
owncr
.
. .
[If
the Court
of
Appeal’s judgment had been correct] financial institutions advancing
money
on
the security
of
land will face hitherto unsuspected hazards, whether they are dcaling
with registered
or
unregistered land.3
Financial institutions,
like
everyone else, would rather not face hazards, hitherto
unsuspected or otherwise, and
they
generally have the power, foresight and for the
purposes of this note, legal ability to do so. Even
Boland
itself, about which no
doubt more than enough has already been said, was never quite that slap
in
the face
for the Bank that
it
appeared to be
in
the
first flush of liberal and feminist triumph,
when the decision was hailed
as
a
victory for occupiers. By
s
30
of the Law of
Property Act
the
bank almost certainly could have forced
a
sale of the property
(probably having madc the male defendants bankrupt first) and recovered at least
a
good deal of its principal and interest
in
any event, even after its unsuccessful
claim
in
the House of Lords.
Many of the important decisions that came after
Boland
and
Flegg
in
the
1980s
can be read
in
the light of the deference shown by the House of Lords to the needs
of finance capital
in
the housing market. It is therefore no surprise to find the Court
of Appeal
in
Britannia Building Society
v
Earl4
confirming that
a
letting by
a
mortgagor, without the knowledge or consent of the mortgagee,
in
breach of the
standard express prohibition against letting
in
a
mortgage deed
will
not bind the
mortgagee, even
if
the
tenant becomes
a
statutory tenancy (in this case under
sl
*Lecturers
in
Law,
Lancastcr University.
I
2
[I9881
1
AC
54.
3
ibid
76-11.
4
1
42
(19801
2
All
ER
408,
p
416.
119901
2
All
ER
469.
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