appear on the register, yet a purchaser is bound by overriding interests affecting the title purchased whether he knew about them or not.
- Chhokar v Chhokar and another  FLR 313
In this case, a husband, who was seeking to deprive his wife of her equitable interest in the matrimonial home, completed the sale of his property to his accomplice while his wife was in hospital. The husband than absconded with the proceeds of sale, and on her return from hospital the wife was excluded from the house by the purchaser, so that she was not present on the property when he was register as proprietor. Noting that the wife’s furniture was in the house on the date of registration, Court of Appeal said that it had no difficulty in holding that she was in occupation at that date, and went on to describe her right in the property as an overriding interest which bound the purchaser.
It is very important to understand that to constitute an overriding interest there should be an actual occupation along with an interest in the property, which is claimed to be occupied.
As it is clear from the facts of the case that the wife had contributed substantially to the cost of acquisition of property the legal title to which was registered in husband’s name, so the wife had an equitable interest in the property by way of constructive trust. This has been explained by the House of Lords in Williams and Glyn’s Bank Ltd v Boland, where the wife had contributed to the purchase price of the property and so had acquired a beneficial interest in it. The husband mortgaged it to the bank, which sought possession when he did not keep up the repayments. House of Lords unanimously held that W’s constructive trust interest was an overriding interest by virtue of s. 70(1)(g) of the Land Registration Act 1925 and was therefore binding on the bank. Their Lordships, in a judgment given by Lord Wilberforce, clarified a number of points about s. 70(1)(g) and related matters:
The word ‘rights’ in s. 70(1)(g) should be construed to cover every proprietary interest in land. Every type of property right in land can be an overriding interest provided there is actual occupation at the relevant time by its owner. The only exception was rights of occupation under the Matrimonial Homes Acts, which were expressly excluded from the scope of s. 70(1)(g) by s. 2(8)(b) of the Matrimonial Homes Act 1983. (Similarly, s. 31(10)(b) of the Family Law Act 1996 excluded ‘matrimonial home rights’ from the scope of s. 70(1)(g).)
As ‘rights’ in s. 70(1)(g) includes all proprietary rights (except matrimonial home rights), the word ‘rights’ includes an equitable interest arising by way of constructive trust where Y has contributed substantially to the cost of acquisition of property the legal title to which is registered in X’s name. Thus, although Mrs Boland’s rights of occupation (matrimonial home rights) under the Matrimonial Homes Act 1983 could not be overriding, her entirely separate constructive trust interest could be overriding within s. 70(1)(g).
Therefore by applying the principle of Boland it is clear that although Mrs. Chhokar’s rights of occupation (matrimonial home rights) under the Matrimonial Homes Act 1983 could not be overriding, but the equitable interest that Mrs. Chhokar had acquired by way of a constructive trust can be an overriding interest depending upon actual occupation of Mrs. Chhokar.
In Abbey National Building Society v Cann, House of Lords clarified about what amounts to ‘actual occupation’ and on what date a person must be in ‘actual occupation’ to have an overriding interest under s. 70(1)(g) binding upon a purchaser/ mortgagee. Was it the date of completion of the sale or mortgage, or was it the (inevitably later) date of registration? Their Lordships held in favour of the ‘date of completion’ of the sale or mortgage.
Lord Oliver, who delivered the only reasoned speech in Abbey National v Cann, elaborated on the issue of what constitutes ‘actual occupation’:
It is, perhaps, dangerous to suggest any test for what is essentially a question of fact; occupation is a concept which may have different connotations according to the nature and purpose of the property which is claimed to be occupied. It does not necessarily, I think, involve the personal presence of the person claiming to occupy. A caretaker or the representative of a company can occupy, I should have thought, on behalf of his employer. On the other hand, it does in my judgment, involve some degree of permanence and continuity which would rule out mere fleeting presence.
In cases of temporary absence it seems that the presence of the occupier’s belongings on the premises and the continuing intention to return may help to establish actual occupation, and in such cases the courts take into account whether the occupier had a continuing intention to return, and whether his or her belongings remained in the property. As the Court of appeal put it in Hoggett v Hoggett:
Going to hospital for a few days could not be regarded as going out of occupation, any more than if the [occupier] had gone on a weekend visit to a friend, or, indeed, gone out shopping for a few hours.
Thus inter alia as Mrs. Chhokar was in hospital for a short period with a continuing intention to return and her belongings were also present in the house, which shows that she was in actual occupation and hence an overriding interest.
- Strand Securities v Caswell  Ch 958
This relatively old case highlights how quirkish s. 70(1)(g) could become. Caswell took a 39- year lease of a London flat. As the lease was for over 21 years, it should have been registered. Caswell did not register the lease. The practical effect of this failure to register the lease was that it took effect only as an equitable lease. The reversion was sold to Strand, who would be bound by Caswell’s lease only if it was an overriding interest within s. 70(1)(g). Caswell kept some furniture and clothing at the flat but did not personally live there. The permanent occupant of the flat was his step-daughter. He let her live there rent-free, as her marriage had broken down. She occupied the flat as a licensee (that is, as someone with permission – a license – to do so). The protection given by law to licensees can vary considerably according to the individual’s circumstance, but the general principle, which applied in this case, is that this type of agreement can be terminated at any time and give the licensee no right in the land.
The Court of Appeal rejected the tenant’s claim that he had an overriding interest under s 70 (1)(g), because although he had rights in the property (the lease) he was not in occupation. The presence of his belongings at the property did not amount to occupation for the purpose of the Act.
The stepdaughter was of course in occupation of the property, but unfortunately she did not have any recognized property interest in the flat and so had no rights which were capable of being overriding.
It is very important to understand that it is not the actual occupation that constitutes the overriding interest. There must be a recognized interest in the land of some kind and this interest is than protected as an overriding interest by the fact of actual occupation.
The court did suggest that, had she occupied the flat at the request of her stepfather and in order to look after it for him, he might have been regarded as being in the occupation through an agent. However, on the facts as they stood, she was clearly there because of her own needs and not as Mr. Caswell’s Agent. The House of Lords has since confirmed, in obiter dicta in Abbey National Building society V Cann, that occupation through an agent is possible; and Kingsnorth Finance Co. Ltd v Tizard, a decision on unregistered land, suggests that in some circumstances keeping one’s possession in the property may help to establish occupation.
S 70(1)(g) LPA 1925 also provide that a person in receipt of the rents and profits can also have an overriding interest. So if Caswell had charged his step-daughter a rent (even a nominal rent) he would have been ‘in receipt of rents’ and therefore would have had an overriding interest under s. 70(1)(g). However, on the facts as she was living in the flat rent free, therefore Caswell was not a person in receipt of rents and profit to claim an overriding interest.
- Rights of persons in actual occupation—the new law—Schedule 3, paragraph 2
It should first be stressed that this new rule will be applicable to all cases where the land transfer is executed after the 12 October 2003. The important parts of para. 2 read as follows:
An interest belonging at the time of the disposition to a person in actual occupation, so far as relating to land of which he is in actual occupation, except for—
(a) an interest under a settlement under the Settled Land Act 1925;
(b) an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so;
(c) an interest—(i) which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and (ii) of which the person to whom the disposition is made does not have actual knowledge at that time; . . .
The new law preserves the basic principle underlying the old s. 70(1)(g)—
Every type of property right in land can be an overriding interest provided there is actual occupation at the relevant time by its owner. Matrimonial Home Rights remain an exception to this rule—see LRA 2002, Sch. 11, para. 34(2)(b). A further (unimportant) exception is created by para. 2(a). An interest under a strict settlement (very few of these exist today) cannot be an overriding interest.
Three features of Schedule 3, paragraph 2
Three other features of para. 2 should be immediately noted. Firstly, the new law (as enacted) contains no definition of ‘actual occupation’. We can only assume that existing case law on the meaning of this phrase (in particular the decisions in Boland and in Cann) will apply to the new provision. Secondly, the decision in Webb v Pollmount remains good law. Thirdly, under the old law an interest lost its overriding status—‘where enquiry is made of such person [in actual occupation] and the rights are not disclosed’. Contrast this very blunt old wording with the new sub-para. (b), which excludes from being overriding—an interest of a person of whom inquiry was made before the disposition and who failed to disclose the right when he could reasonably have been expected to do so;
When is it reasonable to expect that an interest will be revealed?
Under the old law, if:
(a) X occupied Blackacre in which he had a property interest; and
(b) enquiry was made of X about his interest; and
(c) X did not reveal his interest;
the non-revelation automatically meant that X’s property right forfeited its overriding status.
Under the new law X’s property right will only forfeit overriding status if X could reasonably have been expected to reveal his (or her) right. The new law envisages that there will be situations where it is not reasonable to expect someone to respond to an inquiry by revealing their right.
Sub-paragraph (b) is likely to generate litigation.
Does the new law effect the decision of Chhoakr v Chhokar?
It is clear from the facts of the case that when Mr. Parmer was looking round the house he had seen the wife and child in the house. No enquiry had been taken place about the interest of the wife and the wife was under the impression from what the husband said that Mr Parmar was looking round with a view to renting a room, thus para 2(b) is not applicable here. Para 2 (c)(i) and 2(c)(ii) are also not applicable due to the fact that the occupation of the wife was very much obvious at the time Pamer was looking round the house and it was also in his knowlede as husband and third party (Pamer) were acting fraudulently to defeat wife’s beneficial interest. Hence the new law will not effect the decision.