Court House of Lords | ||
 | ||
Citation(s) [1987] UKHL 6, [1988] AC 54 Similar Williams & Glyn's Bank v B, Abbey National Building, National Provincial Bank Ltd, Lloyds Bank plc v Rosset, Ashburn Anstalt v Arnold | ||
City of London Building Society v Flegg [1987] UKHL 6 is an English land law case decided in the House of Lords on the priority given to overriding interests and overreaching interests.
Contents
The case was controversial because it construed the statutory framework so that interests which were previously thought always to override could be overreached. More recently it has been questioned whether the overreaching rules, as interpreted by Flegg, violate the right to peaceful enjoyment of one's possessions or the right to a family life and home under the European Convention on Human Rights.
Facts
In 1977, Mr and Mrs Flegg sold their home of 28 years and used the £18,000 they made to help buy a property named "Bleak House", at 256 Grange Road, Gillingham, Kent, registered at HM Land Registry title number K467866. Their daughter and her husband, Mrs and Mr Maxwell-Brown had asked them to, and they put in the remaining £16,000 by taking out a mortgage. It was meant for them all to live in, but the daughter and husband registered as the owners, despite their solicitor advising all four of them be registered. Thus, Mr and Mrs Flegg had an equitable property right from their contributions to the purchase price, the Maxwell-Browns holding on trust for them. The Maxwell-Browns had money trouble and remortgaged with the City of London Building Society to raise £37,500 without the Fleggs' consent. The Fleggs were suspicious and entered a caution against dealings at the Land Registry. They defaulted and the building society sought possession.
Court of Appeal
Dillon LJ held that, reversing the decision of the High Court, the Fleggs' interest in their home was not overreached through the building society's contract with the children.
Kerr LJ and Sir George Waller concurred.
House of Lords
The House of Lords held that the building society’s charge took priority, and could use the overreaching defence against the Fleggs’ pre-existing trust right. Although under the Land Registration Act 1925 section 70, people with actual occupation may have an overriding interest that would take priority over a third party, like the building society, this does not happen if the purchase money is paid to two or more trustees or a trust corporation. If that happens, under LPA 1925 section 2(ii) the interests of the beneficiaries will be overreached and will attach to the purchase price, not the property.
Lord Templeman said the following.
Lord Oliver gave a concurring judgment.
Significance
City of London BS v Flegg has come under substantial criticism, firstly, for misinterpreting the scheme of the statutes (as the Court of Appeal would have come to a different result) and more recently for potentially infringing the European Convention on Human Rights, either article 8 on the right to a home and family life, or Protocol 1, article on peaceful enjoyment of possessions.