Lloyds Bank Plc v Rosset

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
Judgment Date13 May 1988
Judgment citation (vLex)[1988] EWCA Civ J0513-7
Date13 May 1988
Docket Number88/0450

[1988] EWCA Civ J0513-7





Royal Courts of Justice


Lord Justice Furchas

Lord Justice Mustill

Lord Justice Nicholls


Lloyds Bank Plc
Gerald Marcel Rosset


Diana Irene Rosset (Sued as Diana Rosset)

MR. LEOLIN PRICE Q.C. and MR. T. J. BOWLES (instructed by Messrs. Daniel & Edwards, Ramsgate, Kent) appeared for the Appellant (Second Defendant).

MR. MICHAEL CRYSTAL Q.C., MR. A. WALTON and MR. S. BROWNE—WILKINSON (instructed by Messrs. Walmsley & Barnes, Margate, Kent) appeared for the Respondents (Plaintiffs).


This is another case concerned with the operation of section 70(1)(g) of the Land Registration Act 1925 in the context of a claim by a wife that she has a beneficial interest in a house registered in the sole name of her husband and that her interest has priority over the rights of a bank under a legal charge executed without her knowledge. The case raises a point of importance in the law of registered conveyancing. Shortly stated, the point is whether, to have the protection afforded to overriding interests in respect of registered land, the wife needs to be in actual occupation of the house when the legal charge is executed as distinct from being in actual occupation by the later date on which the bank's charge is registered in the land registry.


The case also raises the question of what is meant by actual occupation within section 70(1)(g) in the case of a semi-derelict house which is in the course of being renovated, and a further question as to the order of priority between a wife who has a beneficial interest in a house and a bank which takes a legal charge simultaneously with completion of the purchase of the house. A point also arises on the necessary ingredients of a common intention before a constructive trust can arise.



With that brief introduction I must outline the facts. The defendants, Mr. Gerard Rosset and Mrs. Diana Rosset, to whom I shall refer as "the husband" and "the wife", were married on 15th August 1972. After living in temporary accommodation, in 1976 they moved into an extension built on to a bungalow, 61 Salisbury Avenue, Broadstairs, Kent, owned by the wife's parents, Mr. and Mrs. Gardner. The written agreement between the four of them provided that the Rossets could leave on giving notice, in which event they were to be entitled to be paid £3,850 by Mr. and Mrs. Gardner. It was the common intention of the husband and the wife that the wife should have an interest in the extension, although the funds for the construction of the extension were provided by the husband from his family in Switzerland (he is Swiss).


In 1981 and 1982 the husband and the wife looked for a more permanent home for themselves and their children, of whom there were two: Natasha, who was nine years old, and a baby boy, Simeon, who was born in August 1981. They decided to buy the property with which this action is concerned: Vincent Farmhouse, Manston Road, Manston, Kent. This was a few miles away from their home in Broadstairs. Vincent Farmhouse was semi-derelict. It had not been lived in for several years and was not in a fit state for living in. On 23rd November 1982 the husband exchanged contracts with the vendors for the purchase of the property for £57,500.


Meanwhile, on 2nd November the husband paid £59,200 into an account which he had recently opened at the Broadstairs branch of the plaintiff, Lloyds Bank. That money had been sent to him from a family trust in Switzerland. The trustees insisted that the property should be purchased in his name alone, otherwise the money would not be forthcoming. For this reason the purchase proceeded in the sole name of the husband. Nevertheless, as the judge found, it was the common intention of the husband and the wife that the renovation of the house should be a joint venture after which it was to become a family home to be shared by them and their children. The judge was satisfied that there was a common intention that the wife should have a beneficial interest in the property under a constructive trust and that, before completion of the purchase on 17th December, she acted to her detriment on the faith of that common intention.


What happened was this. A surveyor's report, prepared in September 1982, estimated the cost of the necessary works of refurbishment, modernisation and so forth at £25,000. On 14th December the husband sought a short term loan of £15,000 from the bank to help to meet the cost of these works. He signed a standard form legal charge. The branch manager asked the husband whether the property was to be purchased in joint names and was told by him and his solicitors that it would be in the husband's name alone. The reason given by the husband was that the wife and the children were away, living with her parents. The manager accepted this and did not pursue the matter further. Three days later, on 17th December, the purchase was completed, and the charge to the bank was dated accordingly. Of the purchase price, the sum of £2,267 was provided by the bank by way of overdraft on the husband's bank account. The wife provided no part of the purchase price. The property is registered land. The transfer and the charge were not lodged at the land registry for registration until 7th February 1983.


Meanwhile, in advance of completion, renovation work had been going ahead at the property. The vendors had given permission for this. Indeed, work had begun even before contracts were exchanged. The Rossets had hoped to move in before Christmas. A builder, Mr. Griffin, and his men started work on 7th November. He or his men stayed there until 17th January 1983. Throughout this period one of the men, a carpenter, slept in the farmhouse on most nights. The wife, for her part, spent almost every day at the property from the beginning of November. She arrived there at about 10.00 a.m., after taking Natasha to school. She stayed there until shortly after 4 p.m., when she left to take Natasha home from school. Simeon was looked after by his grandmother, Mrs. Gardner. The wife did her best to urge on the builders, get necessary materials and generally assist and keep things moving. She was an enthusiastic and skilful decorator and she wallpapered some of the rooms. In November electricity and calor gas supplies were connected and provided and a telephone was installed. Before Christmas she slept in the property on two nights.


After completion the wife was responsible for the design and installation of some special pens for horses in the outbuildings, and for coping with choosing and ordering the furnishings needed for their home: carpets, linoleum, beds and so on.


The husband was not able to spend so much time at the property. He was a courier, accompanying coach parties abroad. He was away in Switzerland for ten days in November and December, and he was away again over Christmas and also for some days from 28th January 1983. It was while he was away in February that the children moved in. That was by the middle of the month. The precise date was not established by the evidence. After Christmas, and before the children had moved in, the wife herself slept at the property to a far greater extent than before completion on 17th December.


Unhappily, in the following year there were matrimonial problems. The husband left the property in May 1984 and matrimonial proceedings are now pending. The wife is still living in the property with the children.



On 22nd February 1984 the bank formally demanded repayment. By then the amount outstanding, including interest, had grown to nearly £23,000. Payment was not made, and so the bank started this action, claiming possession and an order for sale. The husband was not in a position to resist the bank's claims. The wife counterclaimed that she had a beneficial interest in the property, that this was an overriding interest, and that, accordingly, the bank's charge took effect subject to her interest. So the bank was not entitled to evict her from the farmhouse. The husband denied that the wife was entitled to any beneficial interest in the property.


The action was tried by His Honour Judge Scarlett sitting at Canterbury. In a thorough and careful judgment, given on 22nd May 1987, he held, first, that the relevant date at which the wife needed to be in actual occupation for any interest she had in the farmhouse to gain the protection afforded to overriding interests was the date of the charge (17th December 1982) and, secondly, that at that date the wife was not in actual occupation of the property. Accordingly, the bank's claim for possession succeeded.


The judge made two further findings. He held that the wife was in actual occupation when the charge was registered on 7th February 1983. And he held that she did have a beneficial interest in the property. The exact quantum of that interest was not an issue which had been raised in the proceedings. Accordingly, the judge made a declaration to the effect that the husband held the property upon trust for himself and the wife as beneficial tenants in common in such proportions as the court might thereafter determine. He adjourned the question of what directions should be given for the determination of that issue.


From that decision the wife appealed. There was no appeal by the husband in respect of the declaration, and he did not appear and was not represented on the hearing of the wife's appeal.


The property is now worth about £150,000. The bank's debt has now risen to about £47,000, and interest continues to accrue.



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