A property was held in the joint names of a former husband and wife. To obtain a loan for the husband, a legal charge over the property was executed by the husband, but he had another woman execute for the wife, pretending to be her. The chargee sought a declaration that by executing the charge, the husband charged his beneficial interest in the property under the statutory trusts for sale, arguing that section 63 of the 1925 Act – which states that every conveyance is effective to pass all the interest to be conveyed and which he has power to convey – had that effect. Alternatively, the plaintiff argued that where a vendor contracts to grant a greater interest than he is competent to grant, the purchaser can elect to affirm the contract and compel the guarantor to grant such lesser interest as he could grant.
Held: Under section 63 a beneficial interest in the proceeds of sale of land held upon the statutory trusts for sale is not an interest in land within the meaning of section 63. On the alternative argument the purchaser cannot demand a grant of some different subject matter in lieu of that contracted for.
The court found a further ground for defeating the plaintiff under Thomas v Dering and found that specific performance would prejudice the wife in two ways, one of which was that whether or not the court would ultimately order a sale under s.30 of the Law of Property Act 1925 such specific performance would be prejudicial to her position in proceedings under s.30.
Buckley LJ saw no judicial authority on the meaning and effect of the expression ‘interest in the property conveyed’ in Section 63, and said: ‘That section replaced Section 63 of the Conveyancing Act 1881 which was in identical terms. The purpose of that section was clearly to ensure that a conveyance should operate to convey all that the grantor could convey in relation to the subject matter, notwithstanding that the language of the conveyance might not be in every respect apt to produce that result, and to eliminate the need for an ‘all estate’ clause of the kind which conveyancers had previously been accustomed to include in conveyances.’
and: ‘In Section 63 we are concerned with the expression ‘interest in the property conveyed or expressed or intended so to be’. This, as it seems to me, focuses attention upon the particular subject matter conveyed or expressed or intended to be conveyed. If, as in the present case, that subject matter is land it would seem to me a strong thing to construe the word ‘interest’ in such a way as to make a conveyance effectual to pass property which is not land in any sense.
The device of the statutory trust for sale in respect of property vested in co-owners must have been very prominent in the minds of those who framed the 1925 property legislation. Had they intended the Law of Property Act 1925 Section 63 to have a different kind of operation from that which the Conveyancing Act 1881, Section 63, had been designed to achieve, I would certainly have expected some indication of this fact in Section 63. Instead, Section 63 of the Act of 1881 was left intact by the amending Act (The Law of Property Act 1922) and was consolidated without any change in its language into the Act of 1925. In my judgment, upon the true construction of Section 63 the beneficial interest in the proceeds of sale of land held upon the statutory trusts is not an interest in that land within the meaning of the section and a conveyance of that land is not effectual to pass a beneficial interest in the proceeds of sale.
It is not surprising that we have not been referred to any pre-1926 decision in which Section 63 of the Act of 1881 was held to operate in relation to an interest in the proceeds of sale of land held on trusts to sale.
The Plaintiffs say that it would be strange if the effect of Section 63, in conjunction with the 1925 reform of real property law, was that, whereas a conveyance executed on December 31st 1925, of the whole interest in land of which the sole grantor was one of two or more co-owners would be effectual to pass his undivided share of the property, a similar conveyance executed on January the 1st 1926, would not be effectual to pass that which on that date became substituted for his previous undivided share in the land, viz., his undivided share in the proceeds of sale. The second defendant, on the other hand, contends that the historic function of Section 63 and of its predecessor, Section 63 of the Conveyancing Act 1881, is and was connected with the normal operations of conveyancing and that the section is not, and never has been designed to deal with matters which have no relation to the title in the subject matter of a conveyance which the grantee acquires under the conveyance, and in particular with matters which since 1925 are for conveyancing purposes behind a curtain for a trust for sale.’
Goff LJ, Buckley LJ
[1981] Ch 129
Law of Property Act 1925 63
England and Wales
Citing:
Cited – Thomas v Dering 1837
The court put forward: ‘the general principle that the court will not execute a contract, the performance of which is unreasonable or will be prejudicial to persons interested in the property, but not parties to the contract’ . .
Cited by:
Overruled – Williams and Glyn’s Bank Ltd v Boland HL 19-Jun-1980
Wife in Occupation had Overriding Interest
The wife had made a substantial financial contribution to the purchase price of the house which was registered only in her husband’s name, and charged to the bank. The bank sought possession. The wife resisted saying that she had an overriding . .
Cited – Harbour Estates Limited v HSBC Bank Plc ChD 15-Jul-2004
The lease contained a break clause. The parties disputed whether the benefit of the clause was personal to the orginal lessee, or whether it touched and concerned the land, and therefore the benefit of it passed with the land.
Held: The . .
Lists of cited by and citing cases may be incomplete.
Updated: 12 September 2021; Ref: scu.238939
