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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bristol and West Building Society v Henning [1985] EWCA Civ 6 (02 April 1985) URL: http://www.bailii.org/ew/cases/EWCA/Civ/1985/6.html Cite as: [1985] 1 WLR 778, [1985] EWCA Civ 6

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IN THE SUPREME COURT OF JUDICATURE
court of appeal (civil division)
on appeal from the exeter county court
(his honour judge clarke)

		Royal Courts of Justice
		2nd April 1985

LORD JUSTICE BROWNE-WILKINSON: In this case the Bristol and West Building Society ("the Society") as mortgagees claim possession of a house "The Villa", East Knowstone, Devonshire. The first defendant is the mortgagor Mr. Henning in whom alone the legal estate is vested: he does not resist the claim. The second defendant is Mary Ingram who is living in the house with her two children. Although not married to Mr. Henning, she lived with him for many years as man and wife and described herself as Mrs. Henning. Although she has now reverted to her original name, on the hearing of the appeal she was called Mrs. Henning throughout and I will continue so to call her. Mrs. Henning claims that by reason of the arrangements made between her and Mr. Henning she has a right to stay in the house, which right is enforceable against the Society and precludes the Society from getting possession.

On the view I take of this case, it is not necessary to state the facts in any great detail. Mr. and Mrs. Henning started to live together in 1974. In 1975, they agreed that Mr. Henning, who was a surveyor, would buy a house in London with the assistance of a mortgage. The conveyance and mortgage of this first house was in Mr. Henning's name alone. Mrs. Henning did not directly provide any part of the purchase price but made various contributions to the furnishings and did certain work which, she claims, gave her an equitable interest in that first house. They lived there together until 1977 and their first child was born there.

In 1978 they agreed to buy "The Villa". The intention was that Mr. Henning would continue to work as a surveyor and that Mrs. Henning, in addition to ordinary domestic duties, would start a "self-sufficiency" project using the large garden and common rights attached to "The Villa" which to them were a major attraction of buying the house.

"The Villa" was conveyed to Mr. Henning alone by a conveyance dated the 17th February, 1978 at a price of £12,900. Of the total purchase price, no less than £11,000 was borrowed from the Society on security of a legal charge of the same date: I will assume that the balance of the purchase price came from the proceeds of sale of the London house. Neither the conveyance nor the legal charge to the Society contained anything to suggest that Mr. Henning was anything other than the sole beneficial owner of "The Villa". However, in the application for an advance made by Mr. Henning to the Society, he described Mrs. Henning as his wife and stated that the property was intended to be used for the occupation of Mr. Henning and his family.

Mrs. Henning obviously did a great deal of work towards making the self-sufficiency project work. In addition she did building and decorative work at "The Villa". She did small jobs earning a small amount of money which went towards the family budget. When Mr. Henning set up business on his own account at Tiverton, she did all the typing for him without pay. A second child was born to them on the 19th July, 1978.

In February 1981 their relationship broke down and Mr. Henning left "The Villa". In December 1981 Mr. Henning started proceedings for possession against Mrs. Henning. Those proceedings were defended and were eventually disposed of by a consent order made on the 15th March, 1983. That order recited that it had at all times been Mr. Henning's intention that Mrs. Henning should have a one-half beneficial interest in the houses, made declarations to that effect, postponed any sale until the death of Mrs. Henning or the date on which the youngest child attained the age of 18 (whichever shall be the later) and provided that on any sale the proceeds were to be divided equally subject to paying off all moneys outstanding to the Society and certain other debts.

In the meantime, Mr. Henning had ceased to pay the instalments due under the mortgage to the Society and they had fallen much in arrear. The Society, as it was entitled to do, started proceedings for possession in Exeter County Court. Mrs. Henning put in a defence.

The case came before His Honour Judge Clarke who dismissed the Society's claim for possession. The defence put forward by Mrs. Henning was, first, that she had a beneficial interest both in the London house and in "The Villa". Alternatively, she argued that she had an irrevocable licence to remain in "The Villa". In either event, she argued that the Society had notice of her rights which prevailed over those of the Society. The Society on the other hand argued that she had no beneficial interest in "The Villa". However, the Society, by their counsel, accepted that as against Mr. Henning Mrs. Henning had an irrevocable licence to stay in "The Villa". The Society contended that such licence was not binding on the Society, first, because it was purely contractual; second, (if it was a property interest) because it was not registered under the Land Charges Act 1972; thirdly, because Mrs. Henning was estopped from alleging a prior equity because she knew that the property was to be mortgaged; and, fourthly, because the Society was a purchaser for value without notice.

The learned judge, in his admirable judgment, rejected the claim that Mrs. Henning had an equitable interest in "The Villa". However, he held that the irrevocable licence (which the Society had conceded) conferred on her some property interest in "The Villa", applying the line of decisions exemplified by re Sharpe [1980] 1 W.L.R. 219. He held that such interest was not registerable under the Land Charges Act, that Mrs. Henning was not estopped from setting up her equity and that the Society had constructive notice of her rights. On those grounds he refused an order for possession.

The Society appeals against that decision and Mrs. Henning cross-appeals against the decision that she had no beneficial interest in the equity.

There is a risk that the common sense answer in this case may get lost in the many different technicalities which can arise. The basic fact is that the mortgage was granted to the Society with the full knowledge and approval of Mrs. Henning. There was a joint project between her and Mr. Henning to buy "The Villa" with the assistance of such mortgage. Without it, "The Villa" could never have been bought. Yet Mrs. Henning is alleging that she has the right to stay in "The Villa" in priority to the rights of the Society which provided the bulk of the purchase money for it. Although she has unsuccessfully tried to find some way of paying the instalments under the mortgage, the logical result of her argument (if right) is that she is entitled to stay in possession indefinitely without making any payment. That would be a strange result which I would be reluctant to reach.

Mr. Lindsay (who did not appear below) has in my judgment provided a short but complete solution to the technical problems . raised by the case. I will assume (without deciding) that Mrs. Henning was entitled either to a beneficial interest in "The Villa" or to some lesser property right of the kind exemplified in Re Sharpe. (supra). Since Mr. and Mrs. Henning did not declare any trust of "The Villa" in writing or reach any express agreement between themselves as to the beneficial interests, the only way in which Mrs. Henning can establish either right in "The Villa" would be to show, inter alia, that as between her and Mr. Henning there was an express or imputed intention or assumption that she should have such a right. The decision of the House of Lords in Gissing v Gissing [1971] AC 886 establishes that, in the absence of express agreement or express trust, a right to a beneficial interest under a constructive trust can only be established by proving an express or imputed intention that a party other than the legal owner should have a beneficial interest in the property, which intention renders it inequitable for the legal owner to claim the sole beneficial interest: see especially per Lord Diplock at pages 905-6. Similarly, in the absence of express agreement, such an intention or assumption must be proved in order to found the lesser property right of an irrevocable licence conferring a property interest: see Re Sharpe. Therefore, in order to determine what, on the assumption made, is the nature of Mrs. Henning's right in "The Villa", it is necessary first to determine from the parties' actions what were their express or imputed intentions as to her beneficial interest.

Once that is identified as the relevant question, in my judgment the answer becomes obvious. Mr. and Mrs. Henning did not contemporaneously express any intention as to the beneficial interests in the property. Therefore such intention if it exists has to be imputed to them from their actions. Mrs. Henning knew of and supported the proposal to raise the purchase price of "The Villa" on mortgage. In those circumstances, it is in my judgment impossible to impute to them any common intention other than that she authorised Mr. Henning to raise the money by mortgage to the Society. In more technical terms, it was the common intention that Mr. Henning as trustee should have power to grant the mortgage to the Society. Such power to mortgage must have extended to granting to the Society a mortgage having priority to any beneficial interests in the property. I would not impute to the parties an intention to mislead the Society by purporting to offer the unencumbered fee simple of the property as security when in fact there was to be an equitable interest which would take priority to the Society. Indeed in evidence Mrs. Henning said:

"I would have realised that the Building Society were expecting to be able to rely on the full value of the house as security of loan - but I never really thought about it - if somebody had explained it to me as you have now I would have appreciated it."

This evidence shows that, although she had no actual relevant intention at the time, it would be wrong to impute to the parties any intention other than that the Society was to have a charge in priority to the parties' beneficial interests.

Mr. Whitaker, for Mrs. Henning, sought to avoid this conclusion by pointing out that such an intention left Mrs. Henning at the mercy of Mr. Henning and failed to provide the security which the house was designed to give her and her children. He points out that Mr. Henning could at any time cease to pay the mortgage instalments and the Society would then be able to take possession from Mrs. Henning. That is true. But the fact that the arrangements made did not, because of the rights of a third party, provide full security cannot alter the only intention it is possible to impute to the parties. There was no way in which "The Villa" could have been bought at all without the assistance of the mortgage to the Society and the mortgage to the Society could not be properly granted without giving the Society a charge over the whole legal and equitable interest.

Since the nature of Mrs. Henning's interest has to be found in the imputed intention of the parties and the imputed intention of the parties must have been that her interest was to be subject to that of the Society, it is impossible for Mrs. Henning to establish that she is entitled to some form of equitable interest which gives her rights in priority to the rights of the Society. I would therefore hold that, even on the assumption that Mrs. Henning has some equitable interest or right in "The Villa", such interest or right is subject to the Society's charge and provides no defence to the Society's claim for possession.

Mr. Whitaker submitted that the point on which I would decide the case is a new point not argued below. He submitted that this court accordingly had no jurisdiction to decide the case on that point. He accepts that no further evidence could have been adduced had the point been taken below. It is true that the precise point was not put below. But in my judgment it is simply a different formulation of the point that was argued below, namely that Mrs. Henning's rights, whatever they were, were not binding on the Society. In my judgment the point is open in this court.

Therefore, although I have considerable sympathy for Mrs. Henning, in my judgment the only correct answer in law is that her rights are subject to the rights of the Society and the appeal must be allowed. I should emphasise that I have decided the case on various assumptions. Nothing in this judgment should be taken as expressing any view on the questions whether Mrs. Henning in fact had an irrevocable licence in "The Villa", whether the decision in Re Sharpe was correct or whether Mrs. Henning's licence (if any) conferred any property, as opposed to contractual, right.

LORD JUSTICE LLOYD: I agree.

MASTER OF THE ROLLS: I also agree.

(Order: Appeal allowed. No order for costs save legal and taxation. Application for leave to appeal to the House of Lords refused. Possession order to take effect in two months.)