Before: Master Ellison
 
 

B E T W E E N

JUDGMENT
 
DATED: 26 June 1995

Master Ellison:

This is an application brought by the plaintiff bank ("the Bank") by an originating summons for possession of the dwelling-house 25 Dorchester Park, Portadown pursuant to a charge dated 18 May 1992 made by the first defendant in favour of the Bank. The deed of charge secures all existing and future indebtedness of the first defendant to the Bank and the charge was registered as a burden on the land comprised in Folio 306L County Armagh -- in which it is the second charge -- on 1 June 1992. The second defendant is the first defendant's wife and the third and fourth defendants are his parents. Mr and Mrs Doyle Senior are the persons in occupation of the house and were added as defendants consequent on an order made on 23 February 1995.

The first defendant, Mr Doyle Junior, is the sole registered owner of the house, which is held under a lease for a term of 999 years, the leasehold estate being registered in the Land Registry folio I have mentioned. He was registered as owner on 12 June 1987, the consideration stated in the folio being £22,000.

Halifax Building Society has a first charge which was registered immediately after the transfer on 12 June 1987. That charge secures an advance of some £20,500 repayable by instalments over a period of 25 years.

The following affidavits were read at the hearing of the originating summons:-

1. Affidavit of J1 Anthony Johnston, Bank Manager, sworn 20 December 1994 in support of the Bank's application for possession;

2. Affidavit of Marjorie Doyle (the fourth defendant) sworn 2 May 1995.

As the fourth defendant's affidavit contained a conflict of evidence it was necessary to resolve, oral evidence was also given by her.

The state of account between Mr Doyle Junior and the Bank is set out in Mr Johnston's affidavit and has not been disputed in these proceedings. As at the date of the affidavit, 20 September 1994, Mr Doyle Junior was indebted to the Bank in the sum of £47,953.89 made up as follows:-

At the hearing on 4 May 1995, Mr Stephen Gowdy of King & Gowdy, solicitors for the Bank stated that there had been no payment to any of the 3 accounts after the swearing of Mr Johnston's affidavit. With accruing interest, the total indebtedness secured by the Bank's charge would clearly well exceed £48,000. The last payment credited to the loan account had been made on 31 January 1994, some 15 months before the hearing on 4 May 1995. That payment was for £414.64 and represented one monthly instalment payable under the loan agreement, pursuant to which £20.000 had been advanced and was to have been repayable over a 5 year period that began on 30 July 1993 -- more than a year after the charge transaction.

Mr McEwen of Counsel on behalf of the defendants, instructed by John P Hagan, solicitor, put forward two broad lines of argument:-

(1) that the third and fourth defendants had acquired an equitable estate in the property by reason of a resulting or constructive trust and that equitable estate was binding on the Bank because it ranked in priority before the Bank's charge;

(2) that the third and fourth defendants need not rely on an equitable estate as the Bank was estopped from enforcing its charge, or at least could only do so if it compensated the third and fourth defendants to the extent to which it would otherwise be unjustly enriched by reason of their expenditure on the house.

Mr Gowdy submitted that if any rights had indeed been acquired under a constructive or resulting trust against the first defendant (who as sole registered owner had the legal estate) and the second defendant (on whose behalf no proprietary interest was claimed), such rights do not bind the Bank as the Bank's charge was registered on 1 June 1992 and the third and fourth defendants were not in actual occupation of the house until after that date. Mr Gowdy also submitted that principles of estoppel and unjust enrichment are not applicable on the facts.

In paragraph 2 of her affidavit Mrs Doyle Senior states that since in or about April 1990 she had paid the mortgage instalments due to the Halifax Building Society in respect of the house. She made these payments because her son the first defendant "could not afford to keep up repayments, and (she) offered to help him out". Mrs Doyle Senior believes "that the premises might fetch £30,000 on the open market".

Her husband, the third defendant, was sexton of a church and until they moved to 25 Dorchester Park, Mr and Mrs Doyle Senior lived in a tied house. According to paragraph 3 of Mrs Doyle's affidavit (the emphasis being mine):-

Mr Doyle Senior "retired on 30 June 1992 and thereafter was required to give up occupation of the tied house, and we had no house to live in. The First-Named defendant offered us the premises to live in because he was not residing there. We have resided in the premises openly since July 1992 and continue to do so, paying all the outgoings in respect of the premises.".

(The first statement in this last sentence is in sharp conflict with some of the facts averred to by the same deponent in paragraph 5 of her affidavit as set out below.)

In paragraph 4 Mrs Doyle Senior says:-

"Before we moved into the premises, we expended a substantial amount of money in improving the comfort of the house. We installed central heating, new windows, and a new kitchen, and partially re-wired the house and since we moved in we have expended further monies in decorating and tiling, and in purchasing soft furnishing such as curtains and blinds to suit the premises. I estimate that we have spent somewhere over £11,000 in respect of the various matters set out above ..."

Paragraph 5 reads:-

"By reason of the payment of the mortgage in respect of the premises since April 1990 and by virtue of the occupation of the premises by my husband and I on a date prior to the execution of the purported Second Mortgage in favour of the plaintiff, my husband and I claim an equitable interest in the said premises. Such occupation would have been readily apparent to any person carrying out even a cursory inspection of the premises, and the occupation commenced prior to the plaintiff obtaining any security in the premises. My son Paul had not been living in the house for some years prior to the execution of the Bank's mortgage."

In paragraph 6 the fourth defendant asks the court "to determine the extent of our equitable interest in the premises, and to determine the priority of the conflicting claims between the plaintiff and the defendants".

It is appropriate at this point to ask, assuming for the purpose that there is an equitable estate in the house pursuant to either a constructive or a resulting trust, whether such an estate binds the Bank. Mrs Doyle Senior has asked that the extent of the equitable interest she claims for herself and her husband be determined, but that is really outside the purview of these proceedings if any such interest cannot bind the Bank. (Also, as the total indebtedness secured by the 2 charges registered on the land is more than double the fourth Defendant's estimate of the value of the property, if any equitable estate in favour of the third and fourth defendants were found to be inferior to the Bank's second charge that estate would presumably be of negligible or no value.)

In the absence of a protective registration, eg an inhibition entered in the title register, or of "actual fraud" such as would by virtue of section 11(1) of the Land Registration Act (Northern Ireland) 1970 ("the 1970 Act") limit the conclusiveness of the title register, the only way in which an equitable interest of the kind claimed by the third and fourth defendants could defeat the Bank's charge would be if any such interest constituted a burden which affects the land without registration and in priority to the Bank's registered charge.

Paragraph 15 of Part I of Schedule 5 to the Land Registration Act (NI) 1970, in describing one of the categories of burdens which affect registered land without registration, reads (so far as is relevant):

"The right of every person in actual occupation of the land or in receipt of the rents and profits thereof, save where --

(a) upon inquiry made of such person, the right is not disclosed ...".

The appropriate test is whether, at the relevant time, the third and fourth defendants were in actual occupation of the house. Mr Gowdy, in line with a view of the matter which appears to have become established, argued that the relevant time for determining whether or not the third and fourth defendants were in occupation was the date of registration of his client's charge.

Whether or not a person is in actual occupation for the purposes of the statute is a question of fact: Williams & Glyn's Bank Ltd v. Boland [1980] 3 WLR 138.

As to the relevant time for such purposes, in Land Registry Practice (2nd Edition, 1987, at page 18) Professor Wallace states:-

"It is generally accepted that for a right to be protected by paragraph 15 the person entitled to it must be in 'actual occupation ... or in receipt of ... rents and profits' at the time when the disposition over which priority is claimed is registered.".

In a footnote the Professor adds:-

"But cf Paddington Building Society v. Mendelssohn (1985) 50 P & CR 244, 247 where the Court of Appeal refused to say whether the critical date was the date of registration or the date of execution.".

Moreover, in Abbey National Building Society v. Cann [1991] 1 AC 56, the House of Lords held that for the purposes of the equivalent provision in England and Wales, section 70(1)(g) of the Land Registration Act 1925, the relevant time for determining the existence or otherwise of "actual occupation" was the time of completion of the purchase or mortgage transaction over which priority is claimed. Their Lordships also held that the relevant date for determining the existence of the rights constituting the "overriding interests" for the purpose was the date of registration of the estate over which priority is claimed. I quote from Lord Oliver of Aymerton's judgment [1991] 1 AC at 88:-

"The case which does give rise to difficulty if the date of registration is the relevant date for determining whether there is a claimant in actual occupation is one in which the sequence of events is that the right, unaccompanied by occupation, is created before completion and before the chargee has advanced his money and then subsequently the claimant enters into actual occupation after completion and remains in occupation up to the date when the registration of the charge is effected. The chargee in that event would have no possibility of discovering the existence of the claimant's interest before advancing his money and taking his charge, but would nevertheless be subject, on registration, to the claimant's prior equitable interest which, ex hypothesi, would not have been subject to the charge at its creation.

This does indeed produce a conveyancing absurdity and there is, as Nicholls LJ observed [1989] Ch 350, 374B-C, an internal context for supposing that the legislature, in enacting paragraph (g), must have been contemplating an occupation which preceded and existed at completion of a transfer or disposition. Not only was the paragraph clearly intended to reflect the rule discussed in Hunt v. Luck with regard to unregistered conveyancing, but the reference to inquiry and failure to disclose cannot make any sense unless it is related to a period in which such inquiry could be other than otiose. That absurdity can, I think, be avoided only by the route which the Court of Appeal adopted and by referring the "actual occupation" in paragraph (g) to the date of completion of the transaction by transfer and payment of the purchase money. Section 70(1) refers to such interests "as may be for the time being subsisting" and in order to affect "the estate transferred or created" on registration such interests would no doubt require to be subsisting on that date. But I see no insuperable difficulty in holding that the actual occupation required to support such an interest must exist at the date of completion of the transaction giving rise to the right to be registered, for that is the only date at which the inquiry referred to in paragraph (g) could, in practice, be made and be relevant. I agree, therefore, with the conclusion of the Court of Appeal in Rossett [1989] Ch 350 that it is at that moment that it falls to be determined whether there is an actual occupation for the purposes of paragraph (g). I do not think that I can improve upon Nicholls LJ's analysis when he said, in the course of his judgment in Rossett, at p 374:

'If this is right, the pieces of the jigsaw fit together reasonably well. A purchaser or mortgagee inspects and inquires before completion, in the established fashion. Or he fails to do so, at his own risk. He then completes the transaction, taking an executed transfer or mortgage. Whether or not an overriding interest under paragraph (g) subsists so far as his freehold or mortgage is concerned falls to be determined at that moment. If an overriding interest does subsist, then his estate when registered takes subject to that interest. If it does not, then subsequent entry of a person into occupation before the transfer or mortgage has been registered, and 'completed' for the purposes of section 19, does not have the consequence of creating an overriding interest under paragraph (g) in relation to that freehold or mortgage'."

The equivalent provisions in Northern Ireland to those mentioned by Lord Oliver are not identical, but are so similar that, for example, the authorities cited by Professor Wallace for the previous view in this jurisdiction were both English cases dealing with section 70(1)(g). During cross-examination Mrs Doyle Senior conceded it was "extremely unlikely" that she and her husband were living in the property before 1 June 1992 (when the Bank's charge was registered). She also said that her husband gave a month's notice to his previous employers at the end of May 1992, and that they began arranging for the renovation works "just after" the resignation letter was dispatched. I am satisfied from this, and from the dates on copy invoices and other documents exhibited to her affidavit and also covered by her oral evidence, that it is not likely that any significant works were being carried out to 25 Dorchester Park on or before 1 June 1992. Mrs Doyle impressed me as an honest witness who had no wish to mislead the Court. I am satisfied that the conflict in her affidavit evidence as to the time when she and her husband took up "actual occupation" was entirely due to an error in its preparation.

I do not think it likely that Mr and Mrs Doyle Senior were in occupation as at 1 June 1992, but any doubt as to whether they might have been in actual occupation for the purposes of the statute appears to be dispelled by the decision of the House of Lords in Abbey National Building Society v. Cann [1991] 1 AC 56. In the instant case, therefore, the relevant time for the purpose would appear to be completion of the charge transaction, viz (assuming that the dates of the charge deed and completion were one and the same) 18 May 1992.

Accordingly, on the evidence before me any equitable estate Mr and Mrs Doyle Senior may have acquired in the house under a resulting or constructive trust cannot affect the Bank's claim for possession. The Bank's charge ranks in priority to any such estate, which would be inferior to it.

As I have made that finding, it is (as already indicated) unnecessary for me to decide whether the third and fourth defendants acquired such an equitable estate. Although their claim to such an estate would appear to be contrary to the interests of the first defendant, that claim does not appear to have been raised as an issue between co-defendants. Indeed, Mr Doyle Junior shared the same legal representatives as his parents and no evidence was submitted specifically on his behalf.

Mr McEwen also submitted that the principles of estoppel and the "doctrine" of unjust enrichment prevent the Bank from recovering possession from Mr and Mrs Doyle Senior or at least from doing so unconditionally. There is no established equitable doctrine of unjust enrichment of which I am aware in this jurisdiction. There is some learned authority to the contrary, as perhaps exemplified by the following quotation from Hanbury & Maudsley's Modern Equity (12 Edition, 1985, at pages 333 and 334):-

"Unjust enrichment has often been regarded in England as a principle too vague to be of any practical value. This is no longer so. The law of unjust enrichment lays down with reasonable clarity when an action will lie."

It seems clear from the following extract from Goff and Jones, The Law of Restitution 4 Edition, 1993, at page 12 that unjust enrichment in this jurisdiction is not so much a "law" as a principle underlying more established doctrines:-

"Most mature systems of law have found it necessary to provide, outside the fields of contract and civil wrongs, for the restoration of benefits on grounds of unjust enrichment. There are many circumstances in which a defendant may find himself in possession of a benefit which, in justice, he should restore to the plaintiff. Obvious examples are where the plaintiff has himself conferred the benefit on the defendant through mistake or compulsion. To allow the defendant to retain such a benefit would result in his being unjustly enriched at the plaintiff's expense, and this, subject to certain defined limits, the law will not allow. 'Unjust enrichment' is, simply, the name which is commonly given to the principle of justice which the law recognises and gives effect to in a wide variety of claims of this kind.

It has been said that the principle of unjust enrichment is too vague to be of any practical value. Nevertheless, most rubrics of the law disclose, on examination, an underlying principle which is almost invariably so general as to be incapable of any precise definition. Moreover, in a search for unifying principle at this level we should not expect to find any precise 'common formula', but rather an abstract proposition of justice which is 'both an aspiration and a standard for judgment'. Unjust enrichment is no more vague than the tortious principle that a man must pay for harm which he negligently causes another, or the contractual principle that pacta sunt servanda. The search for principle should not be confused with the definition of concepts."

At page 12 of Goff and Jones the following statement appears and is consistent with my understanding of the relevance of unjust enrichment to the law of real property:-

"Land is a very special case ... A plaintiff may have improved another's property in circumstances where title to that property has not passed to him. Whether he will then obtain restitution will depend on whether the defendant has requested or freely accepted the services or acquiesced in what he did. As the law now stands, it is generally not enough that he has incontrovertibly benefited the defendant by improving the defendant's land.".

The general principle of English law which appears to apply most conspicuously to facts such as those in the instant case is as stated by Lord Justice Bowen in Falcke v. Scottish Imperial Insurance Co [1886] 34 Ch D 234, at 248 -- and quoted with approval in Snell's Equity (29th Edition, 1990, at page 467):-

"The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will ...".

There are a number of exceptions to this rule as listed in Snell, supra. The only exception relevant to the facts and submissions in the instant case is a situation of proprietary estoppel.

As a starting point in ascertaining whether or not proprietary estoppel applies, I quote from the judgment of Mr Justice Carswell (as he then was) in Department of the Environment for Northern Ireland v. Leeburn [1990] NJB No 1, 85, at 95:-

"Equitable estoppel is commonly divided for purposes of exposition into 'promissory estoppel' and 'proprietary estoppel' ... In the first form the representor is precluded from resiling from his representation or promise, whereas in the second form he is precluded from denying the other party's supposed rights in the representor's property ... It might be said that proprietary estoppel is based upon misleading by acquiescence, whereas promissory estoppel is based upon misleading by representation. The usual example of proprietary estoppel is where a plaintiff expends money on land, in the expectation that he shall have rights over it. In such a case equity will not permit the defendant to enforce his legal rights and deprive the plaintiff of his expectation, where it would be unconscionable for him to do so."

At first sight the facts of the instant case resemble this model of proprietary estoppel -- which is however subject to the critical qualification that it must be unconscionable for the possessor of the legal rights to insist on those legal rights.

The Court of Appeal, in its majority judgment in Matharu v. Matharu, [1994] 2 FLR No 4 597 at 606, recently re-stated as follows -- albeit with caution -- the elements which have to be established by a person claiming proprietary estoppel (in accordance with Wilmott v. Barber [1880] 15 Ch D 96):-

"1. That that person has made a mistake as to his or her legal rights;

2. That that person has expended some money or done some act on the faith of that mistaken belief;

3. The possessor of the legal right must know of the existence of his legal right which is inconsistent with the equity, if it exists;

4. The possessor of the legal right must know of the other person's mistaken belief;

5. That the possessor of the legal right must have encouraged the other person in his or her expenditure of money or in doing other acts on which the other person relies, either directly or by abstaining from asserting his legal right."

There has been much judicial consideration of whether and to what extent proprietary estoppel may exist if one or more of the 5 elements (or "probanda") set out in Willmott v. Barber [1880] 15 Ch D 96 do not in fact apply. In that case, after setting out the 5 elements, Mr Justice Fry observed:-

"Where all these elements exist, there is fraud of such a nature as will entitle the court to restrain the possessor of the legal right from exercising it, but, in my judgment, nothing short of this will do."

In Shaw v. Applegate [1977] 1 WLR 970 at 977, 978, Lord Justice Buckley, having quoted the above, tentatively presaged the (now, I believe, prevalent) more flexible judicial view of the 5 elements described by Mr Justice Fry in Willmott v. Barber:-

"As I understand that passage, what the judge is there saying is that where a man has got a legal right ... acquiescence on (his) part will not deprive (him) of that legal right unless it is of such a nature and in such circumstances that it would really be dishonest or unconscionable of the plaintiff to set up that right after what has occurred. Whether in order to reach that stage of affairs it is really necessary to comply strictly with all five tests there set out by Fry J may, I think, still be open to doubt, although no doubt if all those five tests were satisfied there would be shown to be a state of affairs in which it would be dishonest or unconscionable for the owner of the right to insist upon it."

The rejection of "rigid categorisation" in considering principles of equitable estoppel generally was taken further in 2 later decisions: Taylors Fashions Ltd v. Liverpool Trustees Co Ltd [1982] QB 133 at 151, 152, 155; and Amalgamated Investment & Property Co Ltd v. Texas Commerce International Bank Ltd [1982] QB 84 at 104. Indeed, in the latter case Robert Goff J stated that recent authorities "have supported a much wider jurisdiction to interfere in cases where the assertion of strict legal rights is found by the court to be unconscionable."

Snell's Equity (29 Edition, 1990, at page 571), having quoted those words, observes that "the doctrine (of equitable estoppel) is, indeed, very flexible".

However, it seems to me that the recent re-statement, in Matharu v. Matharu [1974] 2 FLR 597 of the 5 elements in Willmott v. Barber [1880] 15 ChD indicates that they still retain a considerable relevance when considering proprietary estoppel. (I am mindful also of Lord Justice Carswell's reservations about the proposition that the equities of promissory estoppel and proprietary estoppel have become fused into a single equity, in Department of the Environment for Northern Ireland v. Leeburn [1990] NIJB No 1, 85 at 100 and 101 in particular.)

It seems equally clear from the authorities that in many circumstances not all of the 5 elements may be present but, if the facts are such that it would be unconscionable for the legal right to be enforced, it would be appropriate to recognise proprietary estoppel. Indeed, in his decision in William A Lees (Concrete) Ltd v. Lees and Others [1992] NIJB No 11, 44 at 66, His Honour Judge Pringle QC (as he then was, but sitting as a High Court Judge) found that element 1 -- a mistaken belief as to a person's legal rights -- was missing entirely but that proprietary estoppel existed, the circumstances being "even stronger than mere encouragement" (a director of the company claiming the equity having knowingly allowed or directed that company to build on land belonging to him at the time).

For other examples, arguably more directly relevant to the facts of the instant case, Snell's Equity (29 Edition 1990 at pages 575 and 576 and citing a number of authorities), in dealing with "encouragement" (covered by element 5 of the Willmott v. Barber formulation), states:-

"The equity will also arise where O merely encourages A's belief passively, as where a mortgagee stood silently by while a purchaser in ignorance of the mortgage built on the land. 'The circumstance of looking on is in many cases as strong as using terms of encouragement.' Before the equity can arise in such circumstances, O must have known of A's expenditure. Further, normally he must also have known that the property was his, or that his property was being improved, or that he was entitled to interfere, for such knowledge makes it dishonest for him to remain wilfully passive and thereby afterwards profit by a mistake which he might have prevented. But this knowledge is not essential, for even without it, O's encouraging conduct considered in conjunction with A's actions and belief, may be such that it would be dishonest and unconscionable for O to seek to stand on his legal rights ..."

In the instant case, considered in light of the Willmott v. Barber [1880] 15 ChD 96 elements, the evidence before me:-

1. is consistent with -- but does not establish unequivocally -- a mistaken belief on the part of the third and fourth defendants ("the claimants") as to their legal rights, viz to live in a house, whether by virtue of a licence from their son or actual or expected rights of ownership, which was subject only to a building society charge securing an advance of £20,500 and interest repayable by instalments which they could afford; while the tenor of Mrs Doyle Senior's evidence was such that one could be forgiven for assuming that she and her husband had made a mistake as to their legal rights, there is actually no specific evidence that they were unaware of the Bank's charge at the time they renovated 25 Dorchester Park;

2. establishes considerable expenditure by the claimants on the house consistent with reliance on such a mistaken belief;

3. establishes that the Bank knew of its rights under its charge;

4. does not establish that the Bank knew of the claimants' mistaken belief;

5. does not establish that the Bank actively encouraged the claimants to spend money on the house -- though (as appears from the last quoted extract from Snell) provided he knows of the expenditure it may be enough encouragement or acquiescence for the possessor of the legal right merely to abstain from asserting it: eg Steed v. Whitaker (1740) Barn Ch 220 and cited in Snell, supra), in which a mortgagee was held to be estopped for having stood idly by while a purchaser in ignorance of the mortgage built on the land.

Assuming the existence of a mistaken belief in the instant case, what in my view is fatal to the proprietary estoppel claim is that the Bank has not been shown to have known, at the relevant time for this purpose (viz before or while the renovation works were carried out), of either:-

(a) the mistaken belief; or

(b) the consequent acts of expenditure.

Equally there is insufficient evidence to support any argument that the Bank was wilfully ignorant in respect of these matters: eg that the Bank had actual knowledge of facts from which the possibility that the third and fourth defendants were at special disadvantage might reasonably be inferred: see Commercial Bank of Australia v. Amadio (1983) 151 CLR 447, at 467 and 479. "In some cases wilful ignorance is not to be distinguished in its equitable consequences from knowledge": Owen and Gutch v. Homan (1853) 4 HLC 997, at 1035 per Lord Cranworth LC. Thus if this could be said to be such a case and the Bank had known of one but not both of (a) the mistaken belief and (b) the acts of expenditure by the third and fourth defendants, it might have been at least arguable that it was wilfully ignorant of the other matter -- and should therefore be treated in equity as though it had actually known of both matters. However, as I have stated, there is simply no evidence that it knew of either.

Nor do I believe the Bank can be taken for the purpose of these proceedings as put on inquiry or fixed with notice or knowledge by the fact that the renovation works were being carried out ostensibly. (That might conceivably have been a relevant factor had there been some evidence to suggest the Bank actually knew of the acts of expenditure -- or indeed that it knew of the mistaken belief and was therefore wilfully ignorant of the acts of expenditure.) In her affidavit Mrs Doyle Senior states that the occupation represented by these works "would have been readily apparent to any person carrying out even a cursory inspection of the premises." However the Bank, having completed the mortgage transaction and registered the charge in its favour, should no longer be expected to act with the same vigilance as to persons acquiring rights or occupying the premises contrary to its own interests.

It may be felt that, notwithstanding (i) that there is no evidence that the Bank has conducted itself other than reasonably, and (ii) that the established doctrines of equity do not appear to assist the third and fourth defendants, there is something disquieting, if not unconscionable, about the prospect of the Bank realising its security without in some way compensating them in respect of their substantial expenditure on what they believed to be their retirement home.

However, this is far from being a situation in which a person mistakenly paid money to another, who now wants to take unfair advantage of the mistake but who should be prevented by equity from doing so. My view is that the intervention of equity to assist the third and fourth defendants would be inappropriate because it cannot be justified by reference to established equitable principles (even, I believe, if taken to the limits of their flexibility).

I consider the intervention of equity to be additionally inappropriate because:-

(a) one of the following applies --

(i) if Mr and Mrs Doyle Senior acted to their detriment on the strength of a mistaken belief, that belief would presumably be attributable to the fact (if such it be) that their son, the first defendant, misled them either actively or by failing to disclose the Bank's charge or his indebtedness -- in which case it would not be proper to expect a mortgagee to compensate a third party for a loss attributable to the mortgagor's misconduct;

or

(ii) their son did not mislead them, but they proceeded anyway -- in which case their expenditure on the house might be considered reckless;

or

(iii) a muddle of ingredients (i) and (ii) has occurred in which case culpability for the mistake, recklessness or lack of prudence is in some degree shared between the third and fourth defendants and their son -- but not with the Bank;

and

(b) for the Court to (say) require the Bank to compensate the third and fourth defendants for the enhancement of value would be entirely contrary to the law about fixtures on mortgaged property (as indicated below).

According to Mrs Doyle Senior she and her husband have expended some £11,000 on 25 Dorchester Park. I have no doubt that in doing so they have increased the value of the Bank's security. Unfortunately for Mr and Mrs Doyle Senior, that does not mean that they are entitled to the Court's assistance on the basis that the Bank would otherwise find itself enriched at their expense. There is nothing to suggest that the Bank has acted in such a way as to make it dishonest or unconscionable for it to enforce its rights and I am not of the view that in the instant case the "enrichment" relied on by Counsel can properly be described as unjust.

At one stage Counsel suggested the third and fourth defendants might have a right to remove the central heating radiators and the doors and windows they had had installed in the premises. Those are fixtures. Fisher & Lightwood's Law of Mortgage (10th Edition, 1988 at page 89) states:-

"A mortgage of land comprises, without express mention, and subject to any contrary intention, all fixtures which at the date of the mortgage are, or at any time afterwards during its continuance may be, annexed to the land, whether or not they are removable as between landlord and tenant."

The rule is stated to be "subject to any contrary intention", but I would be very surprised -- and I think lending institutions would be disturbed -- if that were a reference to a unilateral intention on the part of the person installing the fixture. Any shift in the legal position about this could have adverse implications for future mortgage lending practices.

The third and fourth defendants, Mr and Mrs Doyle Senior, appear to have been very unfortunate in this matter. There is nothing to persuade me that they acted at any time otherwise than in good faith and indeed with the best of intentions. In particular, Mrs Doyle helped her son out over a number of years by paying mortgage instalments to a building society on his behalf.

However, the Bank would not be bound by any equitable estate in 25 Dorchester Park which Mr and Mrs Doyle Senior might have acquired. Equally there is no evidence that the Bank has acted otherwise than in good faith or in such a way that it should be prevented from enforcing its legal rights.

My view therefore is that it is proper to make an order for possession -- subject only to any submissions that may be made as to the appropriateness of an extended stay or other deferment.