If Pamela Has Priority over the Two Mortgagees - Coursework Example

Assignment based on Land Law Name Institutional Affiliation Date This first section aims to establish if Pamela has priority over the two mortgagees (Prestown Bank PLC and Prestown Building Society) as to the proceeds of the sale of the Dunroamin property. In order to establish who has priority in the proceeds of the sale of Dunroamin, it is important to first determine the law and apply it to the facts of this case. The key issue to be examined is the type of interest Pamela has, beginning with S.1 (2) LPA (1925)1. As Pamela contributed in the purchase of the Dunroamin property, she has an equitable interest under S.2 (3). Effectively, Peter is the trustee of Pamela’s interest because the property is registered under his name. This, therefore, implies that Pamela’s interest is a family type equitable interest. It is worthwhile to understand that, even though under curtain principles, overreaching normally applies kinds of interests where the buyers are fully protected under S. 27, this principle may not be applicable under the prevailing circumstances of the case. Registrable interests, overriding interests, and minor interests arise from the mirror principle. The main interest which can apply to Pamela is an overriding interest. This interest is one of the interests in the “crack in the mirror,” and although it is not protected under registration, it is legally binding. These interests are only applicable in cases where overreaching is not permitted, where there is a single legal owner, and in cases where a family type equitable interest exists. However, in order to establish if Pamela’s interest qualifies, three critical elements have to be satisfied. The legal provisions for registered land under Para 2 of Section 3 LRA 2002 include; an interest in land as well as actual occupation of the land has to be shown in addition to proof that the buyer of the land had knowledge of actual occupation or ought to have known upon careful inspection2. With regards to this, Pamela’s interest is a family type equitable interest. In addition, only a single legal owner exists, thus Pamela’s interests will suffice, unlike the decision made in Rosset [1991]. Nevertheless, the condition on ‘actual occupation’ presents complexities because the mortgagees did not conduct a careful inspection and only relied on Peter’s word to ascertain whether it is true that no one else was occupying the property. Additionally, Pamela was away on a business trip when Peter took out the second mortgage. Consequently, the case of Boland [1981] is crucial as it established that ‘actual occupation’ was supposed to be seen in the ordinary sense of the word, what a prudent and reasonable man would consider it to mean. Uncertainty is created in this case. However, as in the case of Bustard [2010] and Chhokar [1983], the ruling upheld that that actual occupation exists even in cases where evidence of temporary absence from the property. Applying the rulings in these cases to Pamela’s situation suggests a strong possibility that she would qualify for actual occupation on similar grounds. The final issue of analysis in this case is whether Pamela’s beneficial interest qualifies as an overriding interest that is capable of protection as an overriding interest. The first thing to consider in establishing this is the number of trustees. Although Pamela was in actual occupation at the time the mortgage was coming into effect, it is impossible to apply the Boland principle Boland [1981]. The doctrine of implied consent is a further limitation on the Boland principle. This is results from the fact that a person claiming beneficial interest is deemed to consent to the legal owner borrowing money through mortgages to purchase the property and, therefore, is unable to claim property over that mortgage as applied in Cook v Mortgage Business PLC [2012]3. Additionally, a lender who lends money to a sole legal owner (like Peter) to purchase property is thus unlikely to be affected adversely by the claims of an individual with beneficial interests like Pamela. Therefore, Pamela has no overriding priority over the two mortgagees as to the proceeds of the sale of the Dunroamin property. The other issue that needs to be analyzed is whether Pamela and her current partner (Jack) are entitled to any remedies about the missing items in the house they bought jointly. The first important thing in this case is to specify whether the missing items are classified as chattels or fixtures. Usually, these items are distinguished at the time of exchanging the contracts. However, if this was not ascertained during the exchange of contracts, two tests have to be performed. To begin with, the degree of an annexation test is evident in Holland v Hodgson [1872]4. The main aim of the annexation test is an objective test that is more commonly applied. This test seeks to establish the purpose of an item; whether it is meant to enhance the property’s value or just an attachment for enjoyment. These tests can be applied to the oak shelves and fluted cast-iron lamp post topped with a copper lantern in the North End House purchase by Pamela and Jack from Ahmed. Application of the degree of an annexation test would presume that the items are fixtures because they were free standing and did not result to any damage after their removal. However, when the degree of purpose test is applied, it may be argued that as the oak shelves contributed to the overall theme of the house, they created additional value to the property and can ultimately be classified as fixtures. Likewise, the fluted cast-iron lamp post topped with a copper lantern as it was slotted onto a short steel tube in the ground elicits a sense of permanency. It can thus be argued that it also increases value to the sale of the property, thus objectively classifying it as a fixture, like in Re Whaley [1908]5. According to the ruling in Gregory [1886], the removal of items destroyed the character of the overall design and thus they were considered to be fixtures. Nevertheless, in case the items served no purpose in terms of the overall theme or design of the property, they would be considered to be chattels as evident in Berkley [1976. Contracting parties can avoid such issues by exercising their rights as provided under S 62 (4) LPA 1925 by clearly stating their intentions before proceeding with the transaction. However, if the items were removed even though Ahmed stated otherwise, it would relate to the ruling in Taylor v Hamer [2002]6. If the seller of the property is deceitful, he/she bears liability to remedy the buyer of the property. In this case, it is evident and clear that the items that were removed were most likely fixtures, and Pamela and Jack are entitled to have the fixtures replaced, or Ahmed would stand liable to pay for damages. Another issue is whether Pamela has a right to have possession over the medieval brooch or coin she picked on the grassy areas surrounding the tarmac forecourt at the local garage. This matter essentially needs the relativity of title principle, which is used for distinguishing the owner of chattels that are found in or on land. Usually, the earliest claim of ownership is successful. However, in case the original owner cannot be recovered, it becomes an issue of importance of control over the land where the item was recovered. It may, therefore, be speculated that the item in not under the local garage’s control but in the control of the crown. As the Prestown Museum staff speculated that the item may be a medieval brooch or coin, it qualifies as treasure, as S. 1 of the Treasure Act 1996 states that an item is considered to be treasure if it is 300 years old and 10 percent silver or gold7. However, the metal composition has not yet been ascertained in the given case. If this is fulfilled, the item would eventually belong to the Crown as per S. 4 and as ruled in the Case of Mines [1568]8. Thus, Pamela’s overriding interest in the property is not binding on the two mortgagees and Pamela does not have priority over the two mortgagees as to the proceeds of sale of the Dunroamin property. It is also evident that in purview of the missing book shelves and lamp post, Pamela and Jack would most likely qualify to be paid damages by Ahmed. Finally, Pamela can take possession of the medieval brooch or coin that she picked up at the garage because the garage did not show interest in the item and the garage does not have sufficient control over the item and land where it was found. Similarly, the item does not suffice to be a treasure and thus cannot be claimed by the Crown. Bibliography Primary Sources Cases Berkley v Poulett (1976)120 Sol Jo 836 Case of Mines (1568) Chhokar v Chhokar [1983] EWCA Civ 7 D'Eyncourt v Gregory (1886) LR 3 Ew 382 Holland v Hodgson (1872) LR CP 328 Link Lending Limited v Bustard [2010]EWCA Civ 424 Lloyds Bank Plc v Rossett [1991] AC 107 HL Parker v British Airways Board[1982] QB 1004 Powell v MacFarlane (1977) QB 1004 Re Whaley [1908] 1 Ch 615 Taylor v Hamer [2002] EWCA Civ 1130 TSB Bank v Botham [1996] EGCS 149 Williams & Glyn's Bank Ltd v Boland [1981]AC 487 Statutes and Statutory Instruments Land Registration Act 2002 Law of Property (Miscellaneous Provisions) Act 1989 Law of Property Act 1925 Limitation Act 1980 The Treasure Act 1996 Secondary Sources Books Martin Dixon, Modern Land Law (8th edn, Routledge 2012) Robert Megarry, William Wade, Charles Harpum, Stuart Bridge, Martin Dixon, Land Law 8th edn (Sweet and Maxwell, 2012) Sandra Clarke & Sarah Greer, Land law Directions, 3rd edn (Oxford University Press, 2012) Websites accessed 14 November 2014 accessed 14 November 2014 Online Journal Articles Property Law Bulletin, 'Fixture or Chattel' (1998) P.L.B 19(2), 10 accessed 14 November 2014 Martin Dixon, 'Reaching up for the Box in the Attic' (2013) Conv. 3, 165-168 accessed 14 November 2014 Read More