Thomas v Clydesdale Bank [2010]

Thomas v Clydesdale Bank [2010]

Thomas v Clydesdale Bank [2010] EWHC 2755 (QB) delves into a recurring conveyancing question: the competing interests of a bank and a spouse in the context of a residential property. The case revolves around Mr Burtenshaw, the sole legal owner of a home, and his partner Ms Thomas, who intended to move into the property with their children after necessary renovations. The couple planned to finance the renovations through a bridging loan from Clydesdale Bank.

Despite the initial plans, Mr Burtenshaw's business failure led to mortgage payment difficulties, resulting in the bank seeking possession. Ms Thomas, who was actively involved in supervising the renovation work, did not attend the hearing. The judge, considering her health-related adjournment request, refused and ruled in favour of the bank. Ms Thomas appealed, treating the appeal as an application to set aside the judge's decision.

The central issue before the High Court was whether Ms Thomas had a reasonable prospect of success in her claim that she had an interest in the property, even though Mr Burtenshaw was the registered proprietor. The bank conceded that Ms Thomas had an interest, described as a common intention constructive trust.

The court examined Section 29 of the Land Registration Act 2002, which gives priority to a registered mortgage over an unregistered interest. However, certain circumstances, outlined in Schedule 3 of the Act, can override this priority. Ms. Thomas relied on Paragraph 2 of Schedule 3, asserting her actual occupation as an overriding interest.

The court, in line with established principles articulated in Lloyds Bank Plc v Rosset [1989], recognised that Ms Thomas's supervisory visits constituted actual occupation. The famous dictum in Rosset emphasised that physical presence involving renovation work aligns with the concept of actual occupation.

Regarding actual knowledge, the court rejected the bank's argument that it needed knowledge of the interest itself rather than the factual basis for that interest. The court held that the bank must have actual knowledge of the circumstances underlying Ms Thomas's interest.

In interpreting Paragraph 2(c)(i), the court determined that a reasonable inspection should reveal the occupation, without the necessity of discovering the extent or degree of occupation. The decision clarified that a reasonable inquiry is not mandated.

The case raises interesting implications for situations similar to Kingsnorth Finance v Tizard [1986], indicating that the current approach may differ. The decision underscores the importance of recognising actual occupation in cases where a partner's interest may be overshadowed by a registered mortgage, providing clarity on the factors that influence the priority of competing claims in residential property disputes.
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