City of London Building Society v Flegg And Another: HL 14 May 1987

A couple bought a property and registered it in their own names with substantial financial assistance from the parents of one of them. The parents occupied the house with them. Without telling the parents, the owners borrowed again, executing further charges.
Held: The fact of occupation did not add to the parents’ rights as equitable chargees, or as tenants in common. A balance was to be found between making property available to be traded, and protecting the rights of equitable owners. The parents’ rights were overreached by the charges.
The provisions of the Land Registration Acts were designed to operate in parallel and consistently with the property legislation governing unregistered land.
Lord Oliver of Aylmerton: ‘ . . the philosophy behind both the Land Registration Act 1925 and the Law of Property Act 1925 was that they should operate in parallel, and it would, therefore, be surprising if it were found that the two systems were not constructed so as to dovetail into one another.’ and
‘If then, one asks what were the subsisting rights of the respondents [the occupying beneficiaries] referable to their occupation, the answer must, in my judgment, be that they were rights which, vis-a-vis the appellants [the mortgagee], were, eo instante with the creation of the charge overreached and therefore subsisted in relation to the equity of redemption.’
Lord Bridge of Harwich, Lord Templeman, Lord Mackay of Clashfern, Lord Oliver of Aylmerton and Lord Goff of Chieveley
[1988] AC 54, [1987] 3 All ER 435, [1987] 2 WLR 1266, [1987] UKHL 6
lip, Bailii
Law of Property Act 1925 14, Land Registration Act 1925 70(1)(g)
England and Wales
DistinguishedWilliams 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 . .
Appeal fromCity of London Building Society v Flegg And Another CA 1986
Where money was raised on mortgage of registered land to discharge an existing incumbrance (and so in exercise of the power conferred by s.28(1) Law of Property Act 1925 by reference to s.71(1)(i) Settled Land Act 1925) and paid to two trustees for . .

Cited by:
CitedParagon Finance Plc v Pender and Another CA 27-Jun-2005
The defendants had purchased their property from the local authority with the support of a loan from the claimants. The defendants fell into arrears but now sought to resist possession on the basis that the claimant, in securitising their portfolio . .
CitedAbbey National Building Society v Cann HL 29-Mar-1990
Registered land was bought with an advance from the plaintiff. The transfer and charge were registered one month later, but in the meantime, the buyer’s parents moved in. When the buyer defaulted, his mother resisted possession proceedings, saying . .
CitedHSBC Bank Plc v Dyche and Another ChD 18-Nov-2009
The parties disputed the claimed beneficial interest of the second defendant. The second defendant (C) said that it had been purchased for him by the first defendant (D) from C’s trustee in bankruptcy, and was thereafter held in trust for him on the . .
CitedCook v The Mortgage Business Plc CA 24-Jan-2012
The land owners sought relief from possession orders made under mortgages given in equity release schemes: ‘If the purchaser raises all or part of the purchase price on mortgage, and then defaults, the issue arises whether the mortgagee’s right to . .

These lists may be incomplete.
Updated: 09 January 2021; Ref: scu.178245