Two brothers had acquired land as joint tenants with the aid of a mortgage. Distinct orders were made against each of them charging their respective interests in the land. The mortgagee assigned the mortgage. The brothers held under a trust for sale. The judgment creditor sought to redeem the mortgage which was opposed by the party to whom the mortgage had been assigned, presumably to give effect to the charges upon the proceeds of sale of the land. There was a power to make a charging order over land or an interest in land. The Court was now asked whether a charging order could be made on the debtor’s interest in the proceeds of sale of land.
Held: The purpose of the trust for sale was to make sure, by shifting the equitable interests away from land and into the proceeds of sale, that a purchase of land is free from equitable interests. Joint owners holding the property or trust for sale and for themselves beneficially did not hold sufficient interests in land as required by the legislation to support a charging order.
Cross LJ said: ‘The words ‘interest in land’ are no doubt capable in an appropriate context of including interests under trusts for sale of land, and though there is no need for us to express a concluded opinion on the point we certainly do not wish to be taken to be casting any doubt on the correctness of the dicta in Cooper v. Critchley [1955] Ch. 431, but for 100 years before 1956 the words, or equivalent words, have been held in this field not to include interests arising under trusts for sale . . To turn finally to Bull v. Bull and Barclay v. Barclay; in the judgments in Bull v. Bull and Cook v. Cook [1962] P. 235, in which the principle laid down in Bull v. Bull was applied, the beneficiaries are in places described as ‘equitable tenants in common’ of the house in question. But the use of these words – which are apt enough to describe the physical situation – does not, we think, necessarily imply that the court considered that the interests of the beneficiaries were interests in realty and not interests in personalty. It is true that in his judgment in Barclay v. Barclay [1970] 2 Q.B. 677, Lord Denning M.R., at p. 684, does refer to the interests that the beneficiaries in Bull v. Bull as equitable interests in land, but that expression of opinion was not necessary to the decision in any of the cases and, with respect, we cannot agree with it. No doubt such tenants in common are interested in the land in a general sense as was remarked by Russell L.J. in In re Kempthorne [1930] 1 Ch. 268, 292. But that is not the same thing as their being owners of equitable interests in the realty. The whole purpose of the trust for sale is to make sure, by shifting the equitable interest away from the land and into the proceeds of sale, that a purchaser of the land takes free from the equitable interests. To hold these to be equitable interests in the land itself would be to frustrate this purpose. Even to hold that they had equitable interests in the land for a limited period, namely, until the land is sold, would, we think, be inconsistent with the trust for sale being an ‘immediate’ trust for sale working an immediate conversion, which is what the Law of Property Act, 1925, envisages (see section 205(l)(xxix)), though, of course it is not in fact only such a limited interest that the plaintiffs are seeking to charge.’
Judges:
Russell, Cross, Widgery LJJ
Citations:
[1971] Ch 59, [1970] 3 All ER 199
Statutes:
Administration of Justice Act 1956 35
Jurisdiction:
England and Wales
Cited by:
Cited – Clark and Another v Chief Land Registrar and Another ChD 2-Dec-1992
The defendant had made a mistake resulting in an equitable chargee not being given proper opportunity to object to the registration of a further charge with priority. The chargee sought compensation from the defendant registrar.
Held: The . .
Distinguished – National Westminster Bank Ltd v Allen ChD 1971
The defendants, a husband and wife, were jointly and severally liable on two joint accounts which were overdrawn. The defendants were joint owners of a house property as joint tenants holding on trust for sale. The plaintiff was seeking a charging . .
Lists of cited by and citing cases may be incomplete.
Land
Updated: 18 May 2022; Ref: scu.536057