Never Trust a Man…
| DOI | http://doi.org/10.1111/j.1468-2230.1993.tb02856.x |
| Date | 01 January 1993 |
| Author | Mark Lunney |
| Published date | 01 January 1993 |
January
19931
Never Trust
a
Man
. .
.
Mark
Lunney*
Never
Trust a Man
. . .
The recent decision of the Court of Appeal in
Equity
&
Law
Loans
v
Prestidge
I
has yet again demonstrated the precarious position of the unmarried partner who
relies on the goodwill and honesty of his or her companion.
Here, the first and second defendants had been living together. In
1987,
they
decided to purchase ‘Fairview,’ a house at Pendeen in Penzance. It is not stated
whether the title was registered or unregistered but, from the authorities used to
support the decision, it seems the land was unregistered.* The house was financed
by a contribution of just under
&10,000
by the woman, the second defendant, with
the balance of approximately
230,000
provided by a loan from the Britannia Building
Society. The loan was secured by a charge by way of a legal mortgage in favour
of the Society. The second defendant’s contribution had come from the sale of a
property in Coventry. However, because she was a judgment debtor in the county
court, the legal title to the property was only transferred into the name of her male
partner, the first defendant. This was to avoid any risk that the building society
would refuse to make the loan if it was discovered she was jointly interested in
the transaction. It was clear, and it was not disputed in the case, that on these facts
the first defendant held his entire legal interest in the property on trust for the second
defendant.
Inside twelve months, however, the first defendant began negotiations with the
plaintiffs for a new mortgage over the premises. The plaintiffs made enquiries to
establish if anyone else was in occupation of the premises and were told that the
second defendant was also residing there; the first defendant, however, suggested
in his replies that the other occupier would consent to the new mortgage.
No
consent
was ever obtained. In due course, the plaintiffs advanced just over
242,000,
part
of which was used to release the charge to the Britannia Building Society, whilst
the remainder was pocketed by the first defendant. This advance was secured by
a charge by way of a legal mortgage in favour of the plaintiffs. The second defendant
had no knowledge of this new mortgage. Subsequently, the relationship broke down
and the first defendant moved out and stopped paying the mortgage repayments.
The plaintiffs sought to recover possession of the premises as against the second
defendant.
The judgment in the Court of Appeal was delivered by Mustill LJ. In his view,
the only question to be decided was whether the principle in
Bristol
and
West Building
Society
v
Henning3
could be extended to these facts. In
Henning,
the facts were
similar but there had been no release and remortgage of the premises; rather, it
was a question of whether the interest
of
the original.mortgagee took priority over
the beneficial interest of Mrs Henr~ing.~ In
Henning,
it was held that it did, as Mrs
Henning’s interest was founded on the imputed, not the actual, intention of the parties
and such intention was that her interest should have been subordinated to that of
*Lecturer in Law, King’s College London.
1
[1992] 1
WLR
137.
2
The main authority used is
Bristol and
West
Building Society
v
Henning
[1985] 1
WLR
778
which
dealt with unregistered land. In any case, the same principles would apply
to
registered land
-
Paddington Building Society
v
Mendelsohn
(1985)
50
P
&
CR
244.
Although the patties in
Henning
were not married, the court referred
to
the female defendant as
‘Mrs
Henning.’
87
3 [1985] 1
WLR
778.
4
0
The
Modern
Law
Review
Limited
1993
To continue reading
Request your trial