- This has been the trial of a counterclaim by Mrs Turner-Hankinson ("Maxine Turner") for a declaration that Mr and Mrs Turner hold "The Cottage", 80 Main Street, Etwall, Derbyshire DE65 6LP on trust for her absolutely and free from a charge in favour of AIB Group (UK) plc ("the Bank"). The Cottage forms a part of the grounds of Etwall Lawn, a Listed Regency building. Mr and Mrs Turner were registered as proprietors of Etwall Lawn on 11 February 1974 under Title Number DY349659. Mr and Mrs Turner granted the Bank a First Charge over the property in that title on 11 October 2005.
- In this claim the Bank obtained on 12 December 2013, by consent, an order for possession of Etwall Lawn and the property in the registered title. The Order was against Mr and Mrs Turner as mortgagors. They were then the only Defendants to the claim. The Order also included a money judgment against them for £1,500,339.14 and provided for the Bank's costs to be added to its security under the Charge.
- The Order on 12 December 2013 provided for possession to be delivered up on or before 19 February 2014. Sadly, Mr Turner suffered strokes over that Christmas period and became disabled and further became and remains cared for in a nursing home.
- Maxine Turner was added as a Defendant by Order dated 20 October 2014 and her Defence to the Counterclaim was served on 8 December 2014.
- Maxine Turner has been represented at the trial of her counterclaim by Mr Price. The Bank has been the active Defendant to the counterclaim. It has been represented by Mr Cousins QC. Mrs Turner has appeared in person at the trial. She supports the counterclaim but has not added to Maxine Turner's arguments. Mr Turner has by interim order been excused attendance at trial because of his want of capacity.
- Mr Price and Mr Cousins QC have helpfully identified these principal questions for trial:
(a) Does Maxine Turner have an actual interest in The Cottage ("the Equitable Interest Issue");
(b) If so, was it an overriding interest binding on the Bank ("the Occupation Issue");
(c) Is the Bank subrogated to the rights of Coutts Finance, a previous mortgagee ("the Subrogation Issue");
(d) Is the Defence and Counterclaim of Maxine Turner an abuse of the process of the Court ("the Abuse Issue").
Background
- Mr Turner was the majority shareholder in Plasplugs Limited ("the Company"). He was its Chairman and Managing Director. Mrs Turner was also a shareholder and officer. The Company began business in about 1970. It sold by wholesale from its factory premises in Burton-upon-Trent, wall fixings and DIY goods. It was to be successful for many years and Mr and Mrs Turner were able to draw substantial salaries from it and were well off.
- The Turners acquired Etwall Lawn as their home in 1974 and it became the home of their sons, Neale and Alex. Neale and Alex also were to have minority shareholdings in the Company.
- Alex married Maxine Turner in 1987. They acquired and lived at 21 Paskin Close, Fradley, Lichfield. Their son, Alistair, was born on 22 July 1988.
- Alex Turner died in May 1991. His untimely death was a result of a brain tumour.
- Following his death Maxine Turner and Alistair came to live with the Turners at Etwall Lawn. She was paid an income by the Company.
- Maxine Turner was entitled to death in service benefits in relation to Alex. The benefit totalled £140,000. It was to be paid into the Turners' joint bank account then with RBS in Burton-on-Trent.
- The Turners arranged for the restoration of The Cottage as a three-bedroomed home for Maxine Turner and Alistair. The latter were to move into it in 1993.
- Following completion of the sale of 21 Paskin Close, the net proceeds totalling £127,000 were paid into a joint account of the Turners, this time with Midland Bank plc, on 16 February 1996.
- In 1996 Maxine Turner married Mr Hankinson. They were to have a daughter, Megan, born in February 1997. They were to be divorced in 1998. Maxine filed with her divorce petition a statement of arrangements for her children which noted their home was the Cottage and that it was owned by the Turners. The latter were also recorded by Maxine as paying Alistair's school fees.
- In December 2001 the Turners agreed to take a mortgage advance from Coutts Finance Limited to be secured on Etwall Lawn. The Turners instructed Mr Malcolm Kesterton to act as their solicitor. He was an old friend and Senior Partner in the firm of Samble Burton & Worth of Burton-on-Trent. On 19 December 2001 Coutts Finance also instructed Mr Kesterton to act in relation to obtaining a first legal mortgage. Coutts Finance supplied copies of the "Lender's Handbook" and "our separate instructions". The mortgage advance was in two parts. £550,000 was to redeem a charge with Halifax plc; £260,000 was equity release. The loans were for five years and interest only during that time.
- The "separate instructions" required a written consent from Maxine Turner as an adult occupier of Etwall Lawn. She signed the Consent to Mortgage Deed on 1 May 2002 in the presence of Mr Kesterton. Mrs Turner had faxed him on that day to arrange an appointment for Maxine Turner. Mrs Turner asked Mr Kesterton for a copy of the Deeds before they were handed over to Coutts Finance. The mortgage was completed on 3 May 2002 and the advances then made.
- In 2002 or 2003 Maxine Turner rented a home in Barbados into which she was to move with Megan. At some point she appears to have purchased a home at Gunsite Townhouse, Gunside Road, St Michael's, Barbados. Megan went to school (St Gabriel's) in Barbados. Alistair stayed in this country and continued to be educated here successively in prep and boarding schools in Repton. The Turners paid the school fees. Alistair went to Barbados when on holiday from school. Maxine Turner continued to receive payments from the Company.
- In June 2003 the Turners arranged to borrow £179,000 from Coutts subject to a second charge on Etwall Lawn. Mr Kesterton was again instructed by the Turners and also by Coutts. Coutts sent out, as Coutts Finance had previously, the "Lender's Handbook" and "our separate instructions". On 3rd June 2003 Mr Kesterton wrote to the Turners saying that the Mortgage Deed was ready for signature by them and that Maxine Turner would need to sign an Occupier's Consent Form. He was given a fax number for Maxine Turner's use when in Barbados. The second mortgage was completed on 5 June 2003 without such Consent Form. Mr Kesterton reported to Coutts that:
"The third party mentioned in the instructions, namely Mrs Maxine Turner, is not actually resident at the property (Etwall Lawn(s))
We do not consider that it is necessary to have a third party consent form in the circumstances as they now exist."
- In January 2005, the Company was introduced to the Bank as the Company through the Turners wished to move its banking arrangements from National Westminster Bank plc to the Bank. The Bank through employees, Mr Hunt and Miss Osborne, were to be involved in discussions with the Turners and were, subject to authority within the Bank, to arrange the relevant banking facilities. An application was made on 21 February 2005 and approved. A facility letter was issued on 22 March 2005 and signed by Mr Turner and Neale Turner. On 21 April 2005 the Company and its relevant subsidiaries or associated companies resolved to grant the Bank a mortgage debenture and a legal mortgage on the Burton-on-Trent factory and cross-guarantees. On 27 April 2005 the transfer of banking arrangements was completed as the Company moved from National Westminster Bank plc and repaid a separate facility it had with RBS.
- The Company had substantial borrowings from and overdraft facilities with the Bank. There were soon Bank concerns that it was in breach of the facility letter covenants and losing money. Further, whilst the Company (or an associated company) was negotiating a sale of 2.3 acres for residential development next to its Burton-on-Trent factory which appeared to promise monies to improve its "gearing", there were delays the result of planning applications or potential purchaser uncertainties.
- In September 2005 Mr Turner sought a re-mortgage facility from the Bank in relation to Etwall Lawn. The background was a perceived need of the Company to raise nearly £300,000 for a promotion of Company goods through B&Q and to bridge further investment of monies by Mr Turner in the Company (I infer from pension policies). A mortgage application was prepared for the Turners and as I infer, a temporary overdraft given to them as they were then on holiday in Spain.
- On 22 September 2005 the Bank issued a letter of mortgage facilities for the Turners and instructed Mr Kesterton who was then also instructed by the Turners. Miss Osborne of the Bank went with the Turners to see Mr Kesterton on 28 September 2005. The mortgage was to be for the sum of £1.4 million plus £2,800 in fees. The Turners were happy with the mortgage and its terms and Mr Kesterton was happy to act. The Turners signed the mortgage offer and overdraft facility letter and a legal mortgage over Etwall Lawn. The Turners signed a declaration that no-one but them had a beneficial or equitable interest in the property and that they were the sole occupiers of the property together with Maxine Turner. The Bank required a Deed of Consent from Maxine Turner.
- On 5 October 2005 Mr Kesterton spoke to Miss Osborne and was to write to the Bank for her attention, that he would have difficulty in complying immediately with the Bank's requirement relating to a Deed of Consent from Maxine Turner signed in the presence of a solicitor, given that she was in Barbados and not expected to return to this country in the short-term. However, he explained that he was going for a two week holiday to Barbados on 18 November 2005 and would try to arrange for the execution of the Deed.
- On 11 October 2005 the mortgage to the Bank was completed. The Coutts charges were then redeemed.
- In the event, Mr Kesterton was not able to meet up with Maxine Turner when he was in Barbados in November 2005.
- An issue of fact arises before me as to whether the Deed of Consent to the Bank mortgage was ever signed by Maxine Turner.
- The Company's finances were to remain under strain in 2006 and the Bank required the appointment of Baker Tilley to advise the Company. Baker Tilley recommended the appointment of an interim manager and one was appointed in 2006.
- By October 2006 Maxine Turner determined to sell Gunsite Townhouse, her home in Barbados. She had resumed her relationship with Mr Hankinson. On 30 October 2006 they applied to a Caribbean International Bank in Barbados for a loan of $1,318,000 to assist in the purchase of a property for $2,350,000. That facility was to be granted on 8 March 2007 to enable the purchase of Turtle Watch, Atlantic Shores, Christchurch for $2,350,000 by a company called Turtle Watch Property Limited with Maxine Turner and Mr Hankinson being guarantors. Maxine Turner disclosed in her application her ownership of Gunsite Townhouse and a property in England which she had inherited with her brother. She did not assert an interest in the Cottage.
- In the meantime and in January 2007 the Turners sought to borrow a further £56,000 from the Bank. On 22 January 2007 the Bank and Mr Kesterton were supplied with a letter copied to Mr Kesterton from Maxine Turner under the letterhead of Gunsite, Britain's Hill, St Michael's, Barbados address stating:
"To whom it may concern
I am writing to confirm that I no longer live in The Cottage at Etwall, the full postal address being: 18 Main Street, Etwall, Derbyshire DE65 6LP."
Maxine Turner does not recall signing that letter, although she acknowledges the signature appears to be hers.
- On 4 December 2008, the Company wrote a 'to whom it may concern letter' through its interim manager (then 'finance director') confirming that Maxine turner had an investment of £126,000 in the Company, a monthly income of £2325 and a small pension.
- In 2009 the Company went into administration and it was to be dissolved on 5 June 2010. The administration led to the loss by the Turners of their substantial salaries. Maxine Turner also lost her payments from the Company. In July 2009 she returned with Megan to this country to live at The Cottage. Megan was put into school at the Abbots Bromley School for Girls. Maxine turner was responsible for the fees but the Turners paid them.
- As I have noted, the Bank was to issue this claim in 2012, solely against the Turners.
- On 5 April 2012 Mr Turner made a statement in this claim, the terms of which were confirmed by a statement of Mrs Turner. They had a firm of solicitors acting for them at the time. Mr Turner referred to the Turners having continued to make interest payments to the Bank and to their hopes to develop part of Etwall Lawn or the 2.3 acres adjacent to the Burton-on-Trent factory. He referred to his having set up a new company to manufacture a new product and his hopes in that regard. In that statement he referred to the Turners having converted The Cottage for Maxine Turner and Alistair in 1993 and to the latter having lived there since early in 1994. They had been joined there by Megan after her birth in 1997. He referred to Maxine Turner having rented a property in Barbados and spending much of her time there from about 2002 and to her now owning a property in Barbados and renting it out. "However, she never held a residential visa or permit for Barbados and continued to spend long periods of time at Etwall Lawn throughout this period during which Alistair remained at the property from which he attended Repton School." He referred to Megan then attending "the local school" and Alistair Turner working in Burton-on-Trent and still living at home. At Paragraph 14 he stated:
"Maxine and our grandchildren are and have always been financially dependent upon us to some degree since they have lived with us. Maxine has never paid any rent for her accommodation (and we have not asked her to) and we have usually paid utility bills for The Cottage as part of the whole property. We always paid our grandson's school and university fees and continue to pay our granddaughter's school fees."
At Paragraph 17 he commented:
"
it would appear that Maxine Turner has a preceding interest to the [Bank]. The [Bank's] mortgage offer appears to acknowledge that Maxine was resident at the property at the time, and as a matter of fact it has been her permanent residence ever since."
At the Turners' request, Maxine Turner also made a statement. She also refers to having moved into The Cottage in 1993 with Alistair and to living there thereafter including with Megan when she was born. At Paragraph 4 she refers to having rented a residential property in Barbados and spending much of her time there from about 2002. She also refers to her later purchase of a property in Barbados and still owning that and renting it out:
"However, I have never assumed the status of resident in Barbados, and although I have spent much time there, I only ever stayed in Barbados on a visitor's visa. I always regarded Etwall Lawn as my permanent residence. When I was in Barbados my son Alistair remained there in my absence under the care of his grandparents and lived in The Cottage until he went to school at Repton near Derby. Alistair and my daughter Megan who is 15 continue to live with me at The Cottage at Etwall Lawn."
- As I have noted, the Bank obtained (by consent) a Consent Order against the Turners on 12 December 2013, including for possession of Etwall Lawn (including The Cottage).
- On 16 December 2013, a bankruptcy order was made against Maxine Turner on the petition of Abbots Bromley School for Girls because of unpaid fees. She was to complete a Preliminary Information Questionnaire as requested in January 2014. The request was by the Official Receiver. She signed a confirmation that she had had read over to her Section 5 of the Perjury Act 1911 and a warning under that Act should she deliberately give the Official Receiver false information in her answers to the Questionnaire. She described The Cottage as her home and that she was renting it from Mrs Turner. She also referred to the First Caribbean Bank having on 1 May 2013 repossessed the Barbados property at 1 Turtle Watch.
- On 11 November 2014 the then Joint Trustees of Maxine Turner in her bankruptcy assigned, on terms, their rights to a claim for a constructive trust in the registered title to Etwall Lawn as against the Bank and the Turners. That assignment was to be annexed to the Defence and Counterclaim which was dated 8 December 2014.
- By her Defence, Maxine Turner pleads that in or around November 1991 she orally agreed with the Turners to purchase The Cottage from them with a view to renovating it and making it her family home. She says that by that agreement the Turners agreed that she would pay two sums to them, thus the death in service benefit and the net proceeds of sale of 21 Paskin Close after that property was sold. She asserts that under the 1991 agreement she and the Turners "agreed, arranged and/or reached the mutual understanding" that she would become the sole beneficial owner of The Cottage. She alleges in the alternative that there were oral representations by the Turners to the effect that should she pay those sums, she would become the sole beneficial owner of The Cottage.
- As argued at trial, Maxine Turner counterclaims to seek to establish a beneficial interest in The Cottage on the basis of common intention constructive trust ("CICT") or proprietary estoppel.
The equitable interest issue
- A contract for the disposition of land or an interest in it needs to be in writing (s.2, Law of Property (Miscellaneous Provisions) Act 1989). An express trust similarly needs to be in writing (s.53, Law of Property Act 1925), but s.2 and s.53 do not apply to constructive trusts (s.2(7) and s.53(2)).
- A CICT involves the establishment, in the absence of any declaration of trust, of an agreement, arrangement or understanding that the property should be held on trust and then the quantification of that interest. In an appropriate case the agreement can be inferred from relevant conduct. In Lloyds Bank plc v. Rossett [1991] AC 107 the House of Lords was concerned with a wife's claim to a beneficial interest in the matrimonial home which was vested in the husband's name. Lord Bridge in giving the sole speech set out at 132E-133A these observations:
"The first and fundamental question which must always be resolved is whether, independently of any inference to be drawn from the conduct of the parties in the course of sharing their house as their home and managing their joint affairs, there has at any time prior to the acquisition, or exceptionally at some later date, been an agreement, arrangement or understanding reached between them that the property is to be shared beneficially. The finding of an agreement or arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. Once a finding to this effect is made, it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel.
In sharp contrast with this situation is the very different when there is no evidence to support a finding of an agreement or arrangement to share, however reasonable it might have been for the parties to reach such an agreement if they had applied their minds to the question, and where the Court must rely entirely on the conduct of the parties both as to the basis upon which to infer a common intention to share the property beneficially and thus the conduct relied on to give rise to a constructive trust. In this situation direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by the payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust. But as I read the authorities, it is at least extremely doubtful whether anything less will do."
- In Stack v. Dowden [2007] 2 AC 432 Baroness Hale at paragraph 63 observed that Lord Bridge's comments were strictly obiter dicta and that there was an argument for saying he put the first hurdle too high. That hurdle related to the agreement, arrangement or understanding that the property should be held on trust, or the inference from relevant conduct of such an agreement. The observations of Lord Walker of Gestingthorpe at paragraphs 17,19, 24, 25, 26, 35 and 37 of his speech in Stack, suggest that the reservation about Lord Bridge's comments in Rossett which I have cited, may relate to the last sentence of the paragraph dealing with a CICT inferred from conduct.
- Stack v. Dowden and Jones v. Kernott [2012] 1 AC 776 involved a consideration by the House of Lords and the Supreme Court respectively of the issue of quantification of the beneficial interest in domestic cases in which properties were held in joint names. They involved consideration in effect of the second hurdle that Lord Bridge had identified, the quantification of the interest.
- A CICT in relation to real property can arise after acquisition by the legal owner (see Lloyds Bank v. Rossett at 132; Gissing v. Gissing [1971] AC at 901; Grant v. Edwards [1986] Ch 638 at 651-2).
- A proprietary estoppel can give rise to an equity in land:
"If A is under an expectation created or encouraged by B that A shall have a certain interest in land, thereafter, on the faith of such expectation and with the knowledge of B and without correction by him, acts to his detriment in connection with such land, a court of equity will compel B to give effect to such expectation (see Cobbe v. Yeoman's Row [2008] 1 WLR 1752 at para.18 where Lord Scott cited dicta from Oliver J (as he then was) in Taylor Fashions Ltd v. Liverpool Victoria Trustee Co Ltd [1982] QB 132 at 144).
A key issue in a given case for the court of equity is whether it
would be unconscionable for B to deny that which he was allowed
or encouraged by A to assume to his detriment.
- In Yaxley v. Gotts [2000] Ch 162 Robert Walker LJ (as he then was) said in the Court of Appeal at 176D-E:
"
within the area of the joint enterprise for the acquisition of land (which may be, but is not necessarily, the matrimonial home) the two concepts of [CICT and proprietary estoppel] coincide."
He went on to conclude:
"As in this case, the judge did not make any finding as to the existence of a constructive trust. He was not asked to do so, because it was not then seen as an issue in the case, but on the findings of fact which the Judge did make it was not disputed that if a proprietary estoppel arose the appropriate remedy was to grant Mr Yaxley in satisfaction of his entitlement, of a long leasehold interest, rent-free, on the ground floor of the property. Those findings do in my judgment equally provide the basis for the conclusion that Mr Yaxley was entitled to such an interest under a constructive trust. The oral bargain which the judge found to have been made between Mr Yaxley and Mr Browney-Gotts and had been adopted by Mr Browney-Gotts was definite enough to meet the test stated by Lord Bridge in Lloyds Bank plc v. Rossett [1991] 1 AC 107, 132."
- Lord Walker as he had then become, commented at paragraph 37 of Stack that he was less enthusiastic about the assimilation of proprietary estoppel and CICT. He noted that A typically asserts an equity against the conscience of the true owner, the claim being a mere equity to be satisfied by the minimum satisfaction of it, which might involve the payment of money. Snell's Equity 33rd edition, distinguishes at 12-036 between representation, acquiescence and promise based estoppels. In Thorner v Major [2009] 1 WLR 776, Lord Neuberger did at paragraph 84 refer to the classic estoppel case based on silence and inaction. In my view such silence may in a given case amount to a representation. Such cases may amount to a representation that A has now an interest in the property. But there are 'promise' cases as to the future, for example as to inheritance of given property, that may give rise to estoppel, as in Thorner. In such cases satisfaction of the equity can involve consideration of changed circumstances. In that context Lord Scott at paragraph 19 in Thorner posited the example of the owner having to sell to fund his own nursing care. In my view, Lord Walker's comments in Stack to which I have referred may have particular relevance in a 'promise estoppel' case.
- Mr and Mrs Turner and Maxine Turner did not in their 2012 statements suggest that The Cottage which was the residence of Maxine Turner and her children, was the subject of an agreement in 1991 or otherwise that she had a beneficial interest in it. Maxine Turner was not at that time advised by a solicitor or independently.
- By a second statement made on 06 October 2014 when she was applying to be joined as a Defendant and to make her counterclaim, Maxine Turner did at Paragraph 8 assert an oral agreement with Mr and Mrs Turner in or around November 1991 that she would purchase The Cottage from them and do it up so that she could make it her home and have a degree of independence from them. She refers to an express agreement to pay them for The Cottage with the death in service benefit and the net proceeds of sale of 21 Paskin Close when that home was sold. She refers to Mr and Mrs Turner in the meantime having agreed to finance the rebuild at The Cottage and to project manage the exercise for her. She then refers to the payment to the Turners of the death in service benefit of £140,000 on 2 December 1991 and the net proceeds of sale of 21 Paskin Close on 16 February 1996. She refers to her having paid to Mr and Mrs Turner £267,000 in those ways. She refers to building works having cost about £200,000 (Paragraph 12). By that statement she was foreshadowing the assignment by the Trustees of the cause of action (to establish a constructive trust). By a third statement made on 18 November 2014, Maxine Turner at Paragraph 15 confirms that as set out in her statement dated 6 October 2014 she agreed with Mr and Mrs Turner that The Cottage "would be mine" and in reliance on that agreement she paid for it. She has later made an undated fourth statement in which she has stated that there was a family discussion under which she agreed to use the death in service benefits to fund the renovation of the Cottage and it was also decided that the proceeds of sale of 21 Paskin Close, when sold, would be paid to the Turners to repay them for their monies used in the renovation of the Cottage.
- Mrs Turner made an undated fifth statement in these proceedings, I infer at the request of Maxine Turner. She refers to Maxine and Alistair moving into The Cottage in 1993 and living there up to the present day. At Paragraph 8 she stated:
"It was always our intention that The Cottage would be Maxine and Alistair's home and although we stated in an application made for finance for the Company that we owned the whole of Etwall [Lawn] these facts were not strictly true as it was a decision made by my husband to secure funds for the Company to survive and to protect our employees, following extreme pressure applied to us from the banks."
She referred to her husband having been pressured into agreeing the mortgage to the Bank as the Company would otherwise have suffered. At Paragraph 9 she states:
"Following the death of my son, it soon became obvious that Maxine was in such a fragile state, which previous and present medical records state, we needed to protect her and my grandson, so The Cottage was not placed in her name as we were concerned for the future if she remarried and the marriage failed. This did in fact happen with Maxine remarrying, having a second child and the marriage failing after eleven months."
At Paragraph 10 she observes:
"The Cottage has never been lived in by anyone else, it has never been rented out as it has always been occupied by Maxine and Alistair as he was at school locally."
- Alistair Turner has made two statements. He is now a Demi-Chef de Partie at Rick Stein's Seafood Restaurant in Padstow, Cornwall. By his first undated statement he recalls the renovation of The Cottage for him and his mother to have somewhere to live "and call our home." He observes at Paragraph 4:
"My grandparents Stuart and Erica Turner have always looked after the family affairs, private school fees for myself, my sister and our cousins."
He refers to his grandmother having taken him back from school at Repton "home to The Cottage" on Sundays. He has made a second statement which does not deal with beneficial interests in The Cottage (it deals with the issue as to whether in 2005 Maxine Turner could have signed a Deed of Consent to the Bank mortgage).
- Mrs Turner made a sixth statement in these proceedings at the request of Maxine Turner referring to the Turners having put Etwall Lawn (including The Cottage) on the market. She refers to having removed The Cottage from the market after Maxine Turner began to refuse access to the agents to view The Cottage with potential purchasers. The Bank has obtained a statement dated 27 August 2015 from Mr Scargill, the agent, who has also given evidence to me and who confirms the withdrawal of instructions by Mrs Turner in relation to The Cottage. On 7 January 2015 he inspected The Cottage in the presence of Maxine Turner. He had viewings with potential purchasers of The Cottage on five occasions in 2014 when he met Maxine Turner.
- Maxine Turner has also called Mr Slaney, her step father who confirms that the family agreed that the death in service benefits would be used to renovate the Cottage and that the 21 Paskin Close proceeds of sale would be used to repay Turner moneys spent on the Cottage. She also called Mr Salt, who has been a friend of the Turners and was a godfather to Maxine Turner's late husband, Alex. He refers to Maxine and Alistair taking up residence in The Cottage:
"There was never any doubt in my mind that this cottage was Maxine's home. That was what the family intended considering it their moral responsibility to provide for Maxine even if this was never formally documented."
- Despite the fact that Maxine Turner paid the Turners the death in service benefit in 1991 and the net proceeds of sale of 21 Paskin Close in 1996, and made the Cottage her home in 1993, I do not consider that she has a beneficial interest in The Cottage, whether arising under a CICT or proprietary estoppel. I am not satisfied that there was an agreement, arrangement or understanding that Maxine Turner should have a beneficial interest in the Cottage or that the payment of the death in service benefit and the 21 Paskin Close proceeds to the Turners related to the acquisition of a beneficial interest in the Cottage. I am not satisfied that there was any representation or promise to Maxine Turner that she would have such an interest so as to render it unconscionable for the Turners to deny such an interest. Relevant conclusions inform that view.
- First, when Alex died in 1991 Maxine Turner was ill and fragile as well as the mother of Alistair. She has referred in passing in evidence to periods when she has had problems with alcohol and drugs and has had to have clinic rehabilitation. In 1991, she had anxiety and depression. In 1995, she had rehabilitation in the 'Dove Clinic'. She was unlikely ever to work. I have no doubt the Turners felt a strong moral obligation to look after Maxine Turner and Alistair (and in due course Megan). They provided Maxine Turner and Alistair with a home at Etwall Lawn in 1991 and then by 1993, once they had renovated The Cottage, she was provided with The Cottage as her home. They were to cause at all times from 1991 Maxine Turner to receive some maintenance, in effect from funds in the Company.
- Mr Turner was a very successful man and, in Mrs Turner's description of him to me, "controlling". Etwall Lawn was very much the home and property of the Turners. I can see no reason why either Turner would ever consider The Cottage other than their own property.
- Second, it appears to me that the reason Maxine Turner paid over in 1991 the death in service benefit to the Turners and in 1996 the 21 Paskin Close proceeds to the Turners was a Turner family view that Maxine needed protection from herself. I have already cited the evidence from Mrs Turner that one concern was to protect Maxine Turner from the consequences of any remarriage and attendant pressure from her new husband as to how she should spend her money and any adverse consequences in any divorce proceedings of her having assets. In one set of annual accounts in the 1990s, the Company recorded Maxine Turner as a creditor. I have cited the "To whom it may concern" letter of the Interim Manager of the Company in 2008 that Maxine Turner was a substantial creditor and in receipt of monthly income from the Company. It appears to me that insofar as the Turners considered the relevant benefits and proceeds of sale that were paid to them by Maxine Turner as a matter which would need recording, she would have been considered by them as an investor in the Company. If any thought were given to the matter, they and she may have thought that the monies she paid to the Turners justified her maintenance and the Turners meeting bills both of The Cottage and in relation to school fees.
- Third and importantly, I do not consider that Maxine Turner ever thought that she had a beneficial interest in The Cottage. In filing her 1998 Divorce Petition and making her statement as to the arrangements for her children, Maxine Turner expressly stated that The Cottage was owned by the Turners and that she was not paying rent. She did not seem to make any suggestion that she owned The Cottage or any interest in it. Significantly, when in 2006 Maxine Turner was with Mr Hankinson applying for finance to help purchase another new home in Barbados Maxine Turner was to tell the First Caribbean Bank that she had a share with her brother in a property inherited in England and owned her then Barbados house. She would have had every incentive in seeking to show her any real worth to that bank on a mortgage application to refer to any beneficial interest in The Cottage. She did not do so. Further, in early 2014 in making her answers to the Insolvency Service Information Questionnaire (the subject of an express perjury warning) Maxine Turner said that The Cottage was rented by her. She denied by the relevant answer that she had any interest as an owner in it. At about that time in applying to the Job Centre for an allowance, she denied owning her home. Alastair filled in the 2014 answers to help his fragile Mother. But I do not consider that respectively the statements to the Divorce Court in 1998, to a lending bank in 2006 and to the Insolvency Service and Job Centre in 2014 comprised artful deceptions intended to conceal a beneficial interest in The Cottage. Rather, I consider that Maxine Turner was truthfully reflecting her own understanding, namely that The Cottage belonged to the Turners beneficially as well as legally.
- The financial disaster of the administration in 2009 and the liquidation in 2010 of the Company has caused serious problems for Maxine Turner as well as the Turners. Had the Company continued to prosper, the Turners would doubtless have continued to provide her with a home in this country. Doubtless, as Mrs Turner observed in evidence to me, she might have had an expectation that the Turners would make testamentary provision for her. A decision, perhaps, to leave her The Cottage would only have been reached after informed decisions by the Turners that it was sensible to sever Etwall Lawn and The Cottage. But other provisions to ensure her home and maintenance might well have been expected.
- Maxine Turner may have been entitled to seek some form of account of the death in service benefits and the proceeds of sale of 21 Paskin Close, but none of the matters discussed in these last two paragraphs appears to me to help inform the counterclaimed interest in The Cottage which Maxine Turner has put forward with a view to obtaining some priority over the Bank.
The Occupation Issue
- The occupation issue arises if I have been wrong on the equitable interest issue and arises if Maxine held an equitable interest in it.
- For the alleged equitable interest to be binding on the Bank at the time of the mortgage on 11 October 2005, Maxine Turner would need to show that she was in "actual occupation" of The Cottage (Land Registration Act 2002, ss.29 and 30 and Schedule 3, para.2).
- But an anterior question is whether Maxine Turner executed the Deed of Consent requested by the Bank (Paragraph 23 above).
- Maxine Turner had readily on 1 May 2002 signed the Consent to Mortgage Deed required by Coutts Finance. She signed in the presence of Mr Kesterton. I do not doubt that she would have signed the Deed of Consent required by the Bank in 2005 had she been requested to do so by Mr and Mrs Turner. She was to be readily persuaded by one or other of them to sign a letter denying her residence of The Cottage on 22 January 2007.
- But Maxine Turner denies any such request was made of her in relation to the Bank's Deed of Consent and she denies signing any such consent form. Mr and Mrs Turner by their first statements in this claim take the point that she would appear to have a preceding interest to the Bank, albeit that they did not assert that she had an equitable interest. Inferentially, the Turners were saying that they did not ask or did not recall asking her to sign such Deed.
- The Bank's records do have a box ticked to say that it had received the Deed of Consent, but it cannot find such Deed in its records.
- The Bank have unsurprisingly now pursued Mr Kesterton on the point. He retired from his firm in 2010. A copy of his file obtained from his former firm refers to his intention to seek Maxine Turner's signing of the Deed of Consent in Barbados in November 2005, but he did not succeed in so doing. There is no record on that file of his chasing the matter up or the Bank chasing him.
- Mr Kesterton and his former secretary, Ms Bettison, have made statements this year which record memories of Maxine Turner attending the office before Christmas 2005 from which recollection they believe that the Deed of Consent was signed. Ms Bettison says that her practice would have been, once it had been signed, to send it under cover of a letter from the firm to the Bank. Ms Bettison colourfully recalls staff commenting on Maxine Turner passing in and out of the office and on of how the other half lives. Mr Kesterton tells me that it is possible that a copy of the Deed might have been put into another of his files. He tells me that he had a dispute with his former partners after his retirement. He was successful in the dispute, but he is not in a position to have access to all his old files to see if there is evidence vouching his recollection of the visit before Christmas 2005.
- Maxine Turner says she was not in England at the time. She cannot produce her 2005 passport to check Barbados entry visa stamps for that year. That passport was stolen and she was to obtain a new passport in 2006. But Megan's passport does not show any entry stamp in December 2005 as would have happened if they had been to England that month and returned to Barbados. Alistair's passport does show that he flew into Barbados on 15 December 2005 as he went there to spend Christmas with Maxine Turner and Megan.
- Mr Kesterton fairly accepted that I must have some doubt as to whether Maxine Turner executed the Bank's Deed of Consent. It is hard to believe that if she did, both his file and the Bank's records contain no trace of such a Deed (other than an unvouched tick on a box form). Mr Kesterton explained his shock at the reading of Maxine Turner's case that she had paid the death in benefit and the 21 Paskin Close proceeds to the Turners pursuant to an oral agreement about The Cottage. The shock was borne of the fact that as a longstanding friend as well as solicitor of the Turners he would have expected them to have told him of such matters. That want of knowledge meant that he had no reason to suspect that Maxine Turner might have any interest in The Cottage. He had considered her non-resident at The Cottage in June 2003 in reporting to Coutts that it did not need a consent form. He knew she was living in Barbados. It may well be that he overlooked his obligations to pursue the completion of the Deed of Consent. At all events, I am not satisfied on the evidence before me that the Deed of Consent was in fact signed by Maxine Turner.
- I should record that in applying to the Bank for a mortgage advance Mr and Mrs Turner had said that Maxine Turner was in occupation of Etwall Lawn, hence the Bank's request for the Deed of Consent. The Cottage was undoubtedly Maxine Turner's home when she was in England. This was confirmed by Alistair, the Turners, Mr Slaney and Mr Salt.
- Mr Price submits that Maxine Turner was in actual occupation of The Cottage on 11th October 2005. He refers to Maxine Turner and Alistair treating The Cottage as their home and to Alistair being there on some days during term-time at Repton. He points to Maxine Turner saying that she only resided in Barbados on a holiday visa. He submits that her primary residence was The Cottage. Further, he refers to her saying that she had a continuing intention to occupy The Cottage as her home for herself and her children.
- Mr Cousins QC has cited a number of "actual occupation" authorities to me in support of a submission that Maxine Turner's prolonged absence between 2002 and 2009 when she was visiting and in fact residing Barbados is fatal to her claim of actual occupation.
- In Strand Securities Ltd v. Caswell [1965] Ch 958, CA Mr Caswell was the tenant of a flat. In 1961 he allowed his stepdaughter, Mrs Reinhold, to occupy the flat rent-free. She took some of her furniture into the flat, but there remained a good deal that belonged to Mr Caswell, including carpets, a bed, a desk and other furniture. Mr Caswell and his wife lived in the country, but they used the flat to change if they were in London and going out for the evening. There was no doubt that Mrs Reinhold was in actual occupation; the question was whether Mr Caswell was also. The Court of Appeal held that he was not. Lord Denning MR said at Pages 980-981:
"I would like to hold that the first defendant was sharing the occupation of the flat with second defendant. But I cannot bring myself to this conclusion. The truth is he allowed her to be in actual occupation, and that is all there is to it. She was a licensee rent-free and I fear that that does not give him protection."
Lord Justice Russell, as he then was, said at Pages 983-984:
"On the facts, was the first defendant, at April 24, 1962, a person in actual occupation, though he was not in any ordinary sense residing there or treating it as his home, and the second defendant and her family were allowed by him to reside there? As a matter of the ordinary use of language, I do not consider the First Defendant to be such. For him it was argued that the phrase 'in actual occupation' derives from cases in which 'actual occupation' and 'actual possession' are used indifferently to describe a condition of enjoyment of the land itself, and the phrase 'actual occupation' here involves that form of the legal concept of possession as distinct from the other or notional forms of that concept consisting of the receipt of money payments derived from land, or of the right to possession though the land to be vacant. And it was argued that 'actual possession' was avoided by the draftsman as a phrase because of the difficulty which would flow from the definition of 'possession' in section 3(xviii) of the Land Registration Act 1925. Reference was made to a number of authorities, including cases in the fields of rating, poor law and landlord and tenant, with a view to showing that possession, and therefore occupation, may be had through the medium of another. Suppose it was said, that the first defendant employed a resident caretaker to look after the flat in question, would the first defendant not be a person in actual occupation? I think that is correct. Then, it was argued, that is because the caretaker would be his licensee, bound to go at his will, and that with the position of the second defendant. But I think that here there is the distinction between the occupation by the caretaker as a matter of duty on behalf of the first defendant and occupation of the second defendant on her own behalf; both were licensees, but the former, by her occupation for which she was employed, was a representative of the first defendant and her occupation may therefore be regarded as his. The proposition that in each case the first defendant was in actual occupation because neither caretaker nor the second defendant had a right to independently of him, seems to me too broadly stated and to ignore that distinction. I do not say that a contract of employment or agency with a person residing there is essential to actual occupation by the other person. I think it might well be that if a house was used as a residence by a wife, separated from the tenant, her husband (whether or not in desertion), he could also be regarded as in actual occupation through her; the question of whether the husband was also a person in actual occupation did not, of course, arise in National Provincial Bank Ltd v. Hastings Car Market Ltd [1965] AC 1175. But this conception, even if valid, could not extend to the relationship in the present case."
- Mr Cousins QC takes the point that the fact that Maxine Turner had left her possessions at The Cottage put her in no different position from Mr Caswell. Further, he argues that the fact that she may have permitted her son to use The Cottage when she was away does not assist her since he was obviously not a caretaker and as Strand Securities demonstrates, the premises' use by another in insufficient to amount to vicarious actual occupation. But Maxine Turner can always state that, unlike Mr Caswell, she had retained a furnished home at The Cottage as her home when in England and that she had not put anyone else in actual occupation.
- In Lloyd v. Dugdale [2002] 2 B&CR 13, CA Mr Dugdale, the major shareholder and managing director of a company ("JAD") licensed it to occupy premises. The issue was whether by virtue of such arrangement for JAD's occupation, he too could be regarded as in actual occupation. The Court of Appeal rejected that suggestion. At Paragraphs 44-45 Sir Christopher Slade (with whose judgment both Kennedy and Mummery LJJ agreed) said:
"
on a true analysis of the position, JAD was in my judgment at the material time occupying the Unit simply as Mr Dugdale's licensee.
45. While the Judge regarded this as a decision on its special facts, the decision of this court in Strand Securities Ltd v. Caswell [1965] Ch 958 is in my judgment clear authority for the proposition that where A permits B to occupy land on B's own behalf by way of gratuitous licence, his capacity as licensor will not by itself entitle him to claim to be in actual occupation of the land, although the position will be different if B occupies as the representative of A (see Pages 908D-981C per Lord Denning MR and Pages 983G-985A per Russell LJ). Unless B occupies as the representative of A, circumstances going beyond A's mere capacity as licensor will be required if he is to claim to be in actual occupation."
- In Williams & Glyns Bank Ltd v. Boland [1981] AC 487, HL in each of the several cases under consideration, the matrimonial home was registered land, the husband was the registered proprietor, the spouses lived together in the matrimonial home, and the wife had an actual interest by reason of having contributed a substantial sum to the purchase price. The House of Lords held that in each case the wife was a person in actual occupation within Section 70(1)(g) of the Land Registration Act 1925 so that her interest was protected. Lord Wilberforce said at Pages 505-506:
"Then, were the wives in actual occupation? I ask, why not? There was physical presence, with all the rights that occupiers have, including the right to exclude all others except those having similar rights. The house was a matrimonial home, intended to be occupied and in fact occupied by both spouses both of whom have an interest in it: it requires some special doctrine of law to avoid the result that each is in occupation. Three arguments were used for a contrary conclusion. First, it was said that if the vendor (I use this word to include a mortgagor) is in occupation, that is enough to prevent the application of the paragraph. This seems to me a proposition of general application, not limited to the case of husbands, and no doubt, if correct, would be very convenient for purchasers and intending mortgagees. But the presence of the vendor, with occupation, does not exclude the possibility of occupation by others. There are observations which would suggest the contrary in the unregistered land case of Caunce v. Caunce [1969] 1 WLR 286, but I agree with the disapproval of these, and with the assertion of the proposition I have just stated by Russell LJ in Hodgson v. Marks [1971] Ch 892, 934. Then it was suggested that the wife's occupation was nothing but the shadow of the husband's - a version I suppose of the doctrine of unity of husband and wife. This expression and the argument flowing from it was used by Templeman J in Bird v. Syme-Thomson [1979] 1 WLR 440, a decision preceding and which he followed in the present case. The argument was also inherent in the judgment in Caunce v. Caunce [1969] 1 WLR 286 which influenced the decision of Templeman J. It somewhat faded from the arguments in the present case and appears to me to be heavily obsolete. The appellant's main and final position became in the end this: that, to come within the paragraph, the occupation in question must be apparently inconsistent with the title of the vendor. This, it was suggested, would exclude the wife of a husband-vendor because her apparent occupation would be satisfactorily accounted for by his. But, apart from the rewriting of the paragraph which this would involve, the suggestion is unacceptable. Consistency, or inconsistency, involves the absence, or presence, of an independent right to occupy, although I must observe that 'inconsistency' in this context is an inappropriate word. But how can either quality be predicated of a wife, simply qua wife? A wife may, and everyone knows this, have rights of her own; particularly, many wives have a share in a matrimonial home. How can it be said that the presence of a wife in the house, as occupier, is consistent or inconsistent with a husband's rights until one knows what rights she has? And if she has rights, why just because she is a wife (or, in the converse case, just because an occupier is the husband) should these rights be denied protection under the paragraph? If one looks beyond the case of husband and wife, the difficulty of all these arguments stands out if one considers the case of a man living with a mistress, or of a man and a woman - or for that matter two persons of the same sex - living in the house in separate or partially shared rooms. Are these cases of apparently consistent occupation, so that the rights of the other persons (other than the vendor) can be disregarded? The only solution which is consistent with the Act (Section 70(1)(g)) and with common sense is to read the paragraph for what it says. Occupation, existing as a fact, may protect rights if a person in occupation has rights. On this part of the case I have no difficulty concluding that a spouse, living in the house, has an actual occupation capable of conferring protection, and an overriding interest, upon rights of that spouse."
- Mr Cousins QC submits that Boland demonstrates that someone living in a property is in actual occupation of it, but on the facts of this case Maxine Turner has no realistic chance of establishing she was living at The Cottage in October 2005. He submits that at best she was a very occasional visitor and her son used it (if indeed he did use it rather than the main house) on Sundays when at Repton. But Maxine Turner's case is that she had two homes at the time and that The Cottage was her permanent residence.
- In Kingsnorth Finance Co v. Tizard [1986] 1 WLR 783, His Honour Judge Finlay QC, sitting as a Judge of the High Court, held that regular usage of, and fairly regular living at, a property amounted to actual occupation. The material facts appear from his judgment at Page 706:
"In 1982 the marriage broke down. Mr and Mrs Tizard agreed that Willowdown and the adjoining land should be sold and the net proceeds divided between them in equal shares. This was not done before Mr Tizard emigrated and has not been done since. Mrs Tizard moved into the spare bedroom when the marriage broke down. Willowdown has four bedrooms: the master bedroom, which until then the spouses had used and which continued to be used by Mr Tizard; two bedrooms occupied by the two children respectively; and the spare bedroom which was a room with a double bed.
In November 1982 Mrs Tizard began to sleep, not always but sometimes, at her sister's house about four miles away. She would sleep at Willowdown when Mr Tizard was not spending the night there. He was away quite often, and kept her informed when he would not be there. If she slept at her sister's, Mrs Tizard would drive over early in the morning, give the children breakfast and get them ready for school, and then make herself ready to go to work at 9 am. She returned to give the children and herself an evening meal. She would leave if Mr Tizard returned in the evening, but stay the night, sleeping in the spare bedroom, if he was not there. Sometimes he was away for several nights, occasionally even weeks. Mrs Tizard formed a relationship with a Mr Mead; and, instead of going to her sister's when she was not sleeping at Willowdown, Mrs Tizard began to go to Mr Mead's cottage, which was also not far away. Most of her wardrobe she kept at Willowdown: her clothes were in three of the four wardrobe compartments in the master bedroom. Her toiletries, her dressing gown, her nightwear and so forth were also at Willowdown. These arrangements I find continued until mid-1983 when Mrs Tizard found a note from Mr Tizard saying that he was going on holiday abroad with the boy twin. Neither he nor the boy has returned."
- Judge Finlay then turned to the passage cited above from Boland and continued at Page 788:
"Mrs Tizard was in my judgment in occupation of Willowdown notwithstanding that Mr Tizard was living there also; and notwithstanding the fact that on numerous occasions she slept elsewhere. The 'physical presence' to which Lord Wilberforce refers does not connote continuous and uninterrupted presence; such a notion would be absurd. Nor, indeed, do I consider that the requisite 'presence' is negatived by regular and repeated absence. I find that Mrs Tizard was in Willowdown virtually every day for some part of the day; that her life and activities were based on her presence, interrupted though it was, in Willowdown: there she prepared herself for work; there she cared for her children; there she looked after the house and the concerns of herself and the children; she went in the morning and returned in the evening to discharge her duties as housewife and mother. It is clear that prior to the time, November 1982, when she ceased always to sleep in the house when her husband was there, she had been in occupation; and, in my judgment, she did not cease to be in occupation simply because she made that change in her habits; significant though the change was."
- But again, Maxine Turner can say that The Cottage was one of her two homes at the time and she has her case that The Cottage was her permanent residence.
- In Abbey National BS v. Cann [1991] 1 AC 56, HL Lord Oliver said at Pages 93-4:
"This [ie actual occupation of property at the material time] is, of course, essentially a question of fact, but there is a serious question of what, in law, can amount to 'actual occupation' for the purposes of Section 70(1)(g). In Williams & Glyns Bank v. Boland
Lord Wilberforce observed that these words should be interpreted for what they are, that is to say, ordinary words of plain English. But even plain English may contain a variety of shades and meaning. At the date of completion Mrs Cann was not personally even in England, leave alone in personal occupation of the property, and the trial Judge held that the acts done by Mr Abraham Cann and Mr George Cann amounted to:
'no more than the taking of preparatory steps leading to the assumption of actual residential occupation on or after completion, whatever the moment of day when completion took place
'
For my part I am content to accept this as a finding of fact which was amply justified by the evidence before me
It is perhaps dangerous to suggest any test for what is essentially a question of fact, for '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. A prospective tenant or purchaser who is allowed, as a matter of indulgence, to go into property in order to plan decorations or measure for furnishings would not, in ordinary parlance, be said to be occupying it, even though he might be there for hours at a time. Of course, in the instant case, there was, no doubt, on the part of the persons involved in moving Mrs. Cann's belongings, an intention that they would remain there and would render the premises suitable for her ultimate use as a residential occupier. Like the trial judge, however, I am unable to accept that acts of this preparatory character carried out by courtesy of the vendor prior to completion can constitute 'actual occupation' for the purposes of section 70(1)(g). Accordingly, all other considerations apart, Mrs Cann fails, in my judgment, to establish the necessary condition for the assertion of an overriding interest."
- This was followed by the decision of Robert Walker J, as he then was, in Stockholm Finance v. Garden Holdings [1995] MPC 1622, suggesting that prolonged absence is very detrimental to an assertion of "actual occupation":
"Whether a person's intermittent presence at a house which is fully furnished, and ready for almost immediate use, should be seen as continuous occupation marked (but not interrupted) by occasional absences, or whether it should be seen as a pattern of alternating periods of presence and absence, is a matter of perception which defies deep analysis. Not only the length of any absence, but also the reason for it, may be material (a holiday or a business trip may be easier to reconcile with continuing and unbroken occupation than a move to a second home, even though the duration is the same in each case). But there must come a point at which a person's absence from his house is so prolonged that the notion of his continuing to be in actual occupation of it becomes insupportable; and in my judgment that point must have been reached in this case, long before Mr Dawkins visited the house on 4 January 1990 (and still more so, long before 20 February 1990). By then Princess Madawi had not set foot in the property for over a year: she had for over a year been living with her mother in the Islamic household at Riyadh."
- In Thompson v. Foy [2010] 1 P&CR 16 Lewison J, as he then was, brought together what he considered to be the principles applicable to any attempt to recognise "actual occupation":
"127. Before addressing the question of Mrs Thompson's actual occupation directly, it is necessary to say a little more about 'actual occupation':
(i) The words 'actual occupation' are ordinary words of plain English and should be interpreted as such. The word 'actual' emphasises that physical presence is required: Williams & Glyns Bank v. Boland [1984] 1 AC 487 per Lord Wilberforce at 504;
(ii) It does not necessarily involve the personal presence of the person claiming to occupy. A caretaker or the representative of a company can occupy on behalf of his employer: Abbey National BS v. Cann [1991] 1 AC per Lord Oliver at 93;
(iii) However, actual occupation by a licensee (who is not a representative occupier) does not count as actual occupation by the licensor: Strand Securities Ltd v. Caswell [1985] Ch 958 per Lord Denning MR at 981;
(iv) The mere presence of some of the claimant's furniture will not usually count as actual occupation: Strand Securities Ltd v. Caswell [1985] Ch 958 per Russell LJ at 984;
(v) If the person said to be in actual occupation at any particular time is not physically present on the land at the time, it will usually be necessary to show that his occupation was manifested and accompanied by a continuing intention to occupy: compare Hoggett v. Hoggett (1980) 39 P&CR 121, per Sir David Cairns at 127."
- In Link Lending Ltd v. Bustard [2010] EWCA Civ 424 the issue of actual occupation arose in relation to a psychiatric patient who was detained under the provisions of the Mental Health Act 1983. The background was described in the judgment of Mummery LJ:
"3. The issue before the Judge was whether Ms Susan Bustard, who had been swindled into parting with her registered title to the property in November 2004, was, as at 29 February 2008, 'a person in actual occupation' of it for the purposes of entitlement to an overriding interest within the meaning of the 2002 Act. The key date is 29 February 2008 as that was when Link registered its charge over the property. Ms Bustard had been detained for the previous year in a residential care unit as a result of being sectioned under the 1983 Act. If Ms Bustard was a person in actual occupation of the property at that time, Link concedes that she had an equity in the property, that her equity takes priority over its legal charge and that its claim for possession of the property was rightly dismissed by HHJ Walton
6. The property is the only place that Ms Bustard could possibly call 'home.' From 17 August 2001 until December 2004 she was the registered proprietor with freehold title. For some years she had suffered from Korsakoff's Psychosis, a severe medical condition which affected her understanding, memory, insight, cognitive faculties and judgment. Those effects have been compounded by alcohol abuse. Over the years she had received in-patient hospital treatment. Advantage was taken of her vulnerability when, on 26 November 2004, Ms Bustard executed a transfer of the property to Mrs Noreen Hussain, who was acting as a nominee for her husband, Mr Muhammed Hussain. The stated consideration was £100,000. On the same date Mrs Hussain raised from HSBC a loan secured by a legal charge over the property. On 15 December 2004 Mrs Hussain was registered as proprietor of a freehold interest in the property with absolute title.
7. Ms Bustard received not a penny for the transfer of the property or from the loan secured on it. She continued to live there, though on numerous occasions during the period to December 2006 she was admitted to hospital for care and treatment. In January 2007 she was sectioned under the 1987 Act and admitted to St Luke's psychiatric hospital in Middlesbrough. She was later transferred to The Courtyard residential care home in the same hospital complex. She was not allowed by the medical authorities to return to live at the property while she was being cared for at the Courtyard. No-one else was living in the property during her involuntary absence.
8. In late 2007 Mrs Hussain approached Link to re-finance the HSBC loan. On 29 February 2008 Link, which specialises in short-term interest-only loans, made an interest-only secured bridging loan of £107,250 to Mrs Hussain for 9 months with monthly instalments of £1,608.75. Mrs Hussain granted Link a legal charge over the property, the HSBC mortgage having been discharged. She made no interest payments to Link. Ms Bustard received no consideration or other financial benefit under the Link charge. Link accepts that, if it wins this appeal and its charge has priority over her equity, Ms Bustard will have been completely cleaned out, since the amount secured by the charge will exceed the value of her interest in the property reclaimed and recovered from Mrs Hussain.
9. The Judge found that Ms Bustard was not personally present at the property on 29 February 2008. Her furniture and personal effects were still there; she made relatively brief, supervised visits about once a week to check out the property and collect post; but she was incapable of living safely in the property and at the relevant date the powers exercised under the terms of the 1983 Act prevented her from leaving The Courtyard
13. On the question whether she was 'a person in actual occupation' of the property on 29 February 2008 within the meaning of the 2002 Act the Judge concluded that she was. He said-
'45.
She genuinely wanted to return home even though prevented from doing so by an order under the Mental Health Act . Her furniture remained there. Arrangements had been made by those who had taken over responsibility for her finances to pay the regular bills such as the community charge from her funds. She was visiting the property, admittedly supervised, but precisely because she still considered it her home. She was trying to return there when she made her applications to the Mental Health Tribunals. No-one ever, that I can see, took a final and irrevocable decision that she would not eventually be permitted to return there to live. In my judgment she was still occupying the house even though she was for the time being resident elsewhere. Of the various cases cited, most were of examples of the working out of the basic principle in various factual contexts, I find Thompson v. Foy the most helpful. I accept, in terms of what is said at [127] of the judgment in that case, that while Mrs Bustard was not physically present on the land her occupation was manifested and accompanied by a continuing intention to occupy.'
14. In short, what mattered, in the view of the Judge, was the combined manifestation of her occupation, her continuing intention to occupy and the reason that prevented her from living at home. The Judge's approach was that whether someone is in actual occupation is a question of fact depending on all the circumstances."
- Mummery LJ went on to conclude that the facts in Link were not all one way and continued at Paragraph 25:
"
some of the primary facts point against Ms Bustard's actual occupation of the property at the relevant date: she was not personally present in the property on 29 February 2008; she had been in a residential care home since January 2007; she was incapable of living safely in the property; and her visits to the property were brief and supervised.
26. Some of the primary facts point to Ms Bustard's continuing actual occupation of the property: it was her furnished home and the only place to which she genuinely wanted to return; she continued to visit the property because she still considered it her home; those who had taken responsibility for her finances regularly paid the bills, such as the community charge, from her funds; she was in the process of making an application to the Mental Health Review Tribunal in order to be allowed to return home; and no-one took a final and irrevocable decision that she would not eventually be permitted to return home.
27. Whether Ms Bustard was in 'actual occupation' of the property at the relevant date was an issue on which the trial Judge had to make an evaluation based on his findings of primary fact. As for the law he considered the relevant authorities on the concept of 'a person in actual occupation' of land in the earlier Land Registration legislation and now found in the 2002 Act. The construction of the earlier equivalent provisions by the House of Lords is binding on this court. The trend of cases shows that the courts are reluctant to lay down, or even suggest, a single legal test for determining whether a person is in actual occupation. The decisions on statutory construction identify the factors that have to be weighed by the Judge on this issue. The degree of permanence and continuity of presence of the person concerned, the intentions and wishes of that person, the length of absence from the property and the reason for it and the nature of the property and personal circumstances of the person are among the relevant factors."
- The Court (Sullivan and Jacob LJJ agreeing with Mummery LJ) dismissed the appeal from the County Court Judge holding that on the facts the Judge could properly and reasonably conclude that Miss Bustard was in actual occupation. The Court expressly indorsed the summary of authorities set out by Lewison J in Thompson v. Foy.
- I confess that I have not found the occupation issue easy to resolve. Mr Cousins QC's forcible point that at the material time Maxine Turner was living in Barbados as she had been for a significant time prior to 11th October 2005 is in my view somewhat simplistic. As I questioned in argument, were I fortunate enough to be able to buy a second home in France where I lived for much of the year, would I cease to be in actual occupation of my home here? Many well-to-do people have second homes. If a reasonable person had looked at The Cottage and made enquiries about it on 11th October 2005 he or she would have learned that it was Maxine Turner's home and furnished by her though she was rarely there because she was mostly resident in Barbados. She was in fact in that month to apply for a mortgage to upgrade houses in Barbados. This, in my judgment, is not a case in which someone else at the relevant time was in occupation (compare Mrs Reinhold in the Strand Securities Ltd case and JAD in the Lloyd v. Dugdale case). But Maxine Turner was not in actual occupation in the sense of the wives in the Boland case or the wife in the Tizard case. This case concerns a contention that Maxine Turner had gone out of occupation when moving to Barbados (contrast the position of Mrs Cann in the Cann case who had yet to take up occupation). Some of the primary facts which informed Ms Bustard's actual occupation in her case were that it was her furnished home and the place to which she genuinely wanted to return and she was involuntarily prevented from returning by sectioning under the Mental Health Act 1983. But the issue is not who was the occupier of The Cottage, but whether Maxine Turner was in "actual" occupation at the relevant time. The evidence that I have sought to recite is that on 11 October 2005, Maxine Turner was resident in Barbados and only occasionally returned to The Cottage. She had in reality moved to her second home (cf the position of the alleged beneficial owner in the Stockholm Finance case). Mr Kesterton was in my view correct when saying to Coutts in June 2003 that she was not then actually resident in The Cottage. Neither was she on 11 October 2005 any more than she was when signing the letter on 22.01.07 (Paragraph 30 above). When the Turners said in their 2005 mortgage application that she was in occupation at Etwall Lawn, I consider that they meant no more than that The Cottage was kept by them for her and their grandchildren should they want it. Their occupation of it at the relevant time in 2005 was not, in my judgment, "actual". I do not consider that the use by Alistair of it on Sundays during term-time at Repton affects the case. His occupation was certainly not Maxine Turner's occupation.
The Subrogation Issue
- The subrogation issue only arises if I have been wrong both on the equitable interest and actual occupation issues.
- In such circumstances, the Bank would seek subrogation to the rights of Coutts Finance under its mortgage over Etwall Lawn dated 1 May 2002 and Coutts Bank under its second mortgage dated 3 June 2003. Maxine Turner had signed her consent to the Coutts Finance mortgage on 1 May 2002 (Paragraph 17 above). She did not sign a consent to the Coutts Bank second charge (Paragraph 19 above). Part of the Bank's loan on 11 October 2005 was used to repay the Turners' debts to Coutts Finance and Coutts Bank and to redeem the Coutts Finance and Coutts Bank charges.
- If contrary to my view that Mr Kesterton was correct to tell Coutts on 3rd June 2003 that Maxine Turner was not actually resident in The Cottage at that time (and thus not in actual occupation), any interest she had in the property would have had priority over the rights of Coutts Bank in relation to its second mortgage then made to secure its loan of £179,000.
- It is in that circumstance that the Bank, as I understand it, would limit its subrogation claim to the rights of Coutts Finance.
- Mr Cousins QC and Mr Price agree that the relevant principles relating to subrogation are the thirteen set out by Neuberger LJ as he then was in Cheltenham & Gloucester Building Society v. Appleyard [2004] EWCA Civ 291, beginning at Paragraph 32 and making reference to Banque Financiere de la Citι v. Parc (Battersea) Ltd [1994] 1 AC 221. I would emphasise a number of those principles that appear to me to have particular relevance to the suggested claim by the Bank. It is an equitable remedy to reverse or prevent unjust enrichment which is not based upon any agreement or common intention of the party enriched or the party deprived (per Lord Hoffman in the Banque Financiere case). It is a flexible remedy which nonetheless must be applied in a principled fashion. The fact that the lender's failure to obtain the security bargained for was attributable to his negligence is irrelevant. The absence of a common intention on the part of the borrower and the lender that the lender should have security is by no means fatal to a lender's subsequent claim to subrogation though their intention may be highly relevant. Further, the capital sum in respect of which the lender is subrogated cannot normally be greater than the amount of the secured debt which has been discharged.
- It appears to me that such principles would enable the Bank to be subrogated to the rights of Coutts Finance which had priority to the equitable interest of Maxine Turner because of her Deed of Consent and to Coutts Bank, if she was not in actual occupation at the time of its 2003 second charge. I do not understand Mr Price to challenge that proposition.
- But as Mr Cousins QC rightly contended, there would, were the subrogation to be relevant (should I be wrong on the equitable interest and occupation issues), need to be accounts and inquiries as to what was owed to Coutts Finance on 11th October 2005 and was then repaid to it. Had Maxine Turner had an equitable interest in The Cottage binding on the Defendants, she might have had a right to intervene in such inquiries either to seek postponement of any unnecessary sale of The Cottage or as to seek directions as to the proper application of the proceeds of sale.
The Abuse of Process Issue
- The Bank contends that Maxine Turner should have sought her joinder in this claim to advance her equitable interest and actual occupation points prior to the trial of the claim listed on 12 December 2013 against the Turners which led to the consent possession order on that date (Paragraphs 2 and 3 above).
- The Bank refers me to Johnson v. Gore-Wood [2002] 2 AC 1 and in particular to Page 31 and part of the speech of Lord Bingham which commanded the support of the majority of their Lordships on the point:
"But Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to an abuse if the court is satisfied (the onus being on the party alleging the abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where these elements are present the later proceedings will be more obviously abusive, and there will rarely be a finding of abuse unless the later proceedings involve what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in the earlier proceedings that it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question of whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that the lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds had been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice."
- In the Gore-Wood case, Mr Johnson's company, W Limited, had first sued the defendant solicitors for damages for professional negligence which claim was settled at trial. Mr Johnson then issued his own claim to recover what were alleged to be his losses. The House of Lords held that in all the circumstances his claim was not abusive. In that case Mr Johnson had been party to the settlement of W Limited's claim, but the underlying assumption of both him and the defendant solicitors was that further proceedings by him would not be an abuse of process. It was considered unfair and unjust to allow the solicitors to go back on that assumption.
- I note that in Gore Wood, an argument by Mr Johnson in the Courts below that the rule in Henderson v. Henderson principle did not apply to Mr Johnson since he was not a plaintiff/claimant in the first action against the solicitors was considered to be rightly rejected (Lord Bingham at 32). W Limited was the corporate embodiment of Mr Johnson and he made decisions and gave instructions on its behalf. If he wished to include his personal claim in the company's action or to issue proceedings together with those of the company, he had power to do so. Lord Bingham considered at 32 that the correct approach was that formulated by Sir Robert Megarry VC in Gleeson v. J Wipple & Co Ltd [1977] 1 WLR 510, at 515. Sir Robert Megarry VC in particular said:
"
it does seem to me that, having due regard to the subject matter of the dispute, there must be a sufficient degree of identification between the two to make it just to hold the decision to which one was a party should be binding in proceedings to which the other is party. It is in that sense that I will regard the phrase 'privity of interest'."
Lord Bingham at Paragraph 32 considered that on the facts in the Gore-Wood case the test was clearly satisfied. I also note that it appeared that an argument in the Courts below that Henderson v. Henderson should not apply to the first proceedings which had culminated in a compromise and not judgment was rightly rejected in the Courts below.
- In Aldi Stores Ltd v. WSP Group plc [2007] EWCA Civ 1260, Aldi had made a claim against a building contractor in relation to a store in regard to which it had had an agreement for a lease. The claim was for breach of warranty and negligence. That claim led to judgments on liability issues. It also obtained a judgment on a preliminary issue on quantum against the builder and in due course a consent judgment against the builder. The latter had, however, gone into administration and Aldi had pursued for a period excess layer underwriters. Ultimately Aldi issued proceedings alleging breach of warranties against other contractors. Those were struck out at first instance as an abuse. The Court of Appeal, however, allowed an appeal having regard in particular to the fact that Aldi had not behaved in a way that was culpable. The original action has been brought against different parties and the decision not to pursue the new defendants in the original action had been reasonable. The claim was not thought to be abusive. It observed that there was no rule of law that there could not be an abuse of process unless the defendants sued in the further action have a sufficient identity with the defendant's named in the original action. It did however think that such was a powerful factor in the broad merits based judgment. The original action had been brought by the claimants against one party and the second was brought against completely different parties.
- Maxine Turner tells me that at the time she signed her first witness statement on 5 April 2012 it was a statement prepared for her by Mr and Mrs Turner. She says she took it as read that The Cottage was hers. She recalls Mrs Turner telling her that there was nothing to worry about and that the mortgage would be paid off when they sold Etwall Lawn, but they needed her to sign her statement for their case against the Bank. She considered her statement was just a formality. She also points out that at the time of her signing the first statement she was recovering from damage to her ear from a physical assault she had received in October 2011 by her then partner. She explained that Mrs Turner following the order of December 2013 told her that The Cottage with Etwall Lawn had had to be put on the market to show the Bank that the Turners were serious about making payment, but that she was not to worry because Mr and Mrs Turner would repay the Bank from the sale of Etwall Lawn (without The Cottage). She says Mrs Turner explained that The Cottage would not be sold. I have noted that Mrs Turner did take The Cottage off the market (Paragraph 52 above). It was when Maxine Turner was informed on about 27 August 2014 by Mrs Turner that the latter had been notified by the Bank that they were going to issue a repossession order which was followed up by the Bank serving Maxine Turner with notice pursuant to Section 2(4) of the Mortgage Repossessions (Protection of Tenants) Act 2010, that Maxine Turner instructed solicitors and pursued completion of the assignment of the trustee in bankruptcy's cause of action to her. Maxine Turner also explains to me that she did not recover for about a year from the assault in October 2011 and that in May 2013 she had to undergo separately a 14 week course of structured therapy rehabilitation for alcohol and drug abuse in supported housing in Burton-on-Trent.
- Maxine Turner was joined in these proceedings by the Order of 20 October 2014 and her Defence and Counterclaim was served on 8 December 2014. The first Reply and Defence to Counterclaim was dated 23 December 2014. The abuse of process point was taken by an Amended Reply and Defence to Counterclaim dated 7 July 2015. The application to strike out was dated 21 July 2015 and, as I have already noted, on 27 July 2015 that application was ordered to be listed for the trial which came before me. My initial reaction to the strike out application was that I was surprised it was not made when Maxine Turner was applying to be joined in the claim in October 2014. The equitable interest, occupation and subrogation points were of course to be fully prepared for trial and have been fought out before me. If the counterclaim should have been struck out as an abuse, very substantial costs will have been wasted in dealing with the merits of the substantive issues. I have however been reminded by Mr Cousins QC that in the Gore-Wood case the abuse point was raised at trial, rather than before.
- Judging matters broadly on the merits and taking account of all the public and private interests involved and all the facts of this case, I have concluded that I should not strike out the counterclaim as an abuse of process. Maxine Turner was not independently advised at the time she made her first April 2012 statement. She was then suffering from problems from the physical assault. She was, as I accept, assured by Mrs Turner that the Turners would resolve their problems with the Bank. After she was informed by the Turners that the Bank had won its case against the Turners, she was assured that she was safe in The Cottage given plans to sell Etwall Lawn without it. It was in my judgment the notification in August 2014 by Mrs Turner that the Bank was seeking a repossession order and subsequently in September 2014, the Bank's first notice to her, that persuaded Maxine Turner that she needed independent advice and to take action herself, should she have rights of her own in The Cottage. Further, it was of course her home and had been her permanent residence since her return from Barbados in 2009. There has been no real saving to the public of the costs involved in the "second" trial, that is this trial of the counterclaim, since the time and money would have been as it has now been, expended in any event. Further, where the Bank is concerned it added with the consent of the Turners its costs of the "first" trial to its security. The Bank has not adduced evidence to me or suggested that Etwall Lawn including The Cottage would not be sufficient security for the Turners' debt and its costs of the claims. Whilst I accept that Maxine Turner could have sought her joinder in the claim prior to the 'first' trial and could have pursued her claims in the 'first' trial, in the other circumstances I have just discussed I do not consider it just to strike out the counterclaim as an abuse of process.
- In reserving judgment, I informed the parties that they would be excused
attendance at the handing down of the judgment and that I would deal on
paper with submissions concerning issues as to the terms of the order
consequent upon it and as to costs and permission to appeal. Such submissions
should be made to me within 7 days of the date of handing down. I would
expect Counsel to try to agree the terms of a minute of order in that period.
.
ANTHONY ELLERAY QC
30 November 2015
Claim No 2BM30370
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
BEFORE ANTHONY ELLERAY QC SITTING AS A DEPUTY HIGH COURT JUDGE
15, 16 AND 17 SEPTEMBER 2015 AND NOVEMBER 2015
B E T W E E N :
AIB GROUP (UK) PLC
Claimant
and
(1) MR STUART HAROLD TURNER
(2) MRS ERICA TURNER
(3) MISS MAXINE HAYLEY TURNER-HANKINSON
Defendants
AND B E T W E E N :
MISS MAXINE HAYLEY TURNER-HANKINSON
Part 20 Claimant
and
(1) AIB GROUP (UK) PLC
(2) MR STUART HAROLD TURNER
(3) MRS ERICA TURNER
Part 20 Defendants
J U D G M E N T
