Abbey National Building Society v Cann [1990]
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Abbey National Building Society v Cann [1990] UKHL 3 is a notable English land law case that dealt with the priority of a bank's charge over an equitable interest in a home when repossession is sought. The decision, seen as controversial, emphasised the need for actual occupation to have some degree of permanence and ruled in favour of the bank's charge even when an equitable interest arose before the bank's involvement.
George Cann and his mother, Daisy, lived together in a house in Island Road, Mitcham. Daisy contributed to the purchase price, and George held the house on trust for both of them, even though it was registered solely in his name. They later moved to a smaller house in South Lodge Avenue, funded by the proceeds from selling the Island Road home and a mortgage from Abbey National. Unbeknownst to Daisy, George also took another mortgage for £25,000. When George could not repay, Abbey National sought repossession. Daisy, now with a new partner, argued that her equitable right, arising before Abbey National's charge, coupled with actual occupation, gave her an overriding interest under Section 70(1)(g) of the Land Registration Act 1925. Daisy began moving in carpets 35 minutes before the charge was completed.
The House of Lords held that Daisy was not in actual occupation and, even if she were, her proprietary interest could not realistically be seen as arising before Abbey National's charge. Lord Oliver introduced the scintillia temporis rule, stating that when a buyer purchases a property relying on a mortgage, there is no moment between the transfer of the property and the execution of the mortgage in which the legal estate vests in the buyer free of the charge. According to this rule, the buyer never acquires anything but the equity of redemption, and the buyer's rights are always subject to the rights of the lender.
Regarding actual occupation, Lord Oliver clarified that acts done by Daisy on the day of completion were preparatory steps and did not amount to actual residential occupation. He emphasised that while actual occupation might not necessarily require the physical presence of the person claiming to occupy, it did involve some degree of permanence and continuity, more than a mere fleeting presence.
In summary, Mrs Cann's claim for an overriding interest based on her contribution and actual occupation was rejected. The House of Lords emphasised the need for a certain degree of permanence and continuity for an occupation to be considered actual under the law. Acts of a preparatory nature, even with the intention of future occupation, were not sufficient for the purpose of establishing an overriding interest.
George Cann and his mother, Daisy, lived together in a house in Island Road, Mitcham. Daisy contributed to the purchase price, and George held the house on trust for both of them, even though it was registered solely in his name. They later moved to a smaller house in South Lodge Avenue, funded by the proceeds from selling the Island Road home and a mortgage from Abbey National. Unbeknownst to Daisy, George also took another mortgage for £25,000. When George could not repay, Abbey National sought repossession. Daisy, now with a new partner, argued that her equitable right, arising before Abbey National's charge, coupled with actual occupation, gave her an overriding interest under Section 70(1)(g) of the Land Registration Act 1925. Daisy began moving in carpets 35 minutes before the charge was completed.
The House of Lords held that Daisy was not in actual occupation and, even if she were, her proprietary interest could not realistically be seen as arising before Abbey National's charge. Lord Oliver introduced the scintillia temporis rule, stating that when a buyer purchases a property relying on a mortgage, there is no moment between the transfer of the property and the execution of the mortgage in which the legal estate vests in the buyer free of the charge. According to this rule, the buyer never acquires anything but the equity of redemption, and the buyer's rights are always subject to the rights of the lender.
Regarding actual occupation, Lord Oliver clarified that acts done by Daisy on the day of completion were preparatory steps and did not amount to actual residential occupation. He emphasised that while actual occupation might not necessarily require the physical presence of the person claiming to occupy, it did involve some degree of permanence and continuity, more than a mere fleeting presence.
In summary, Mrs Cann's claim for an overriding interest based on her contribution and actual occupation was rejected. The House of Lords emphasised the need for a certain degree of permanence and continuity for an occupation to be considered actual under the law. Acts of a preparatory nature, even with the intention of future occupation, were not sufficient for the purpose of establishing an overriding interest.
