Abbey National BS v Cann [1991] 1 AC 56 Case Summary

KEY POINTS

When a purchaser acquires a property with a mortgage, the entire procedure constitutes a single, indivisible transaction.
Thus, bringing in furniture a couple of minutes prior to the formal transfer of property did not meet the criteria for "actual occupation," as this concept implies a certain level of enduring presence rather than a temporary act.

George Cann and his mother, herein appellant, Mrs. Daisy Cann, initially lived together in Island Road, Mitcham, London. Although the property was registered solely under George's name, Daisy had contributed to its purchase price, creating a trust arrangement where George held the house for both himself and his mother.
George and Daisy later moved to a smaller house, using the proceeds from the sale of the Island Road property. They financed the purchase with a mortgage from Abbey National. Unbeknownst to Daisy, George also obtained another mortgage. As George faced difficulty repaying the mortgage, Abbey National sought to repossess the property. Daisy moved in 35 minutes before the charge.
Daisy argued that she had the right to remain in the home. She claimed that her equitable proprietary right existed before Abbey National's charge and that, coupled with her actual occupation, this gave her an overriding interest under the Land Registration Act 1925, section 70(1)(g).

The case clarified that while most overriding interests are judged based on the registration date, the "actual occupation" exception follows a different rule. For an "actual occupation" interest to be valid, it must predate the transfer or creation of the legal estate.

G purchased a house and M made a large financial contribution, entitling her under a constructive trust. G had taken out a mortgage without M’s knowledge and defaulted on the payment. M had not moved in by the time of completion but had moved in by the time of registration.
G defaulted and the bank, P claimed possession.
M resisted on the grounds of her interest as actual and apparent occupation and therefore as an overriding interest (s.70(1)(g) LPA 1925).
HL rejected this, saying that:
1. The relevant date for determining whether MOST overriding interest existed was the date of registration (i.e. was there an interest before the date of registration); but
2. that “actual occupation” interests constitute an EXCEPTION and had to have occurred BEFORE the moment of the transfer/creation of the legal estate; and
3. Where a bank loan is used to buy a house (i.e. mortgage) the creation/transfer of the estate is not complete until both the estate has been transferred/created AND the legal charge has been created.
In this case, Defendant 2 was not in actual occupation before the transfer was complete (even though some of her things had been moved in - these were merely preparatory steps towards occupation).

It would be absurd to have the relevant date for determining the possible existence of an “actual occupation” OI as the date of the registration (NB this comes after completion/transfer of legal estate): This is because if it were so, a person could, in between the bank’s completing the transfer of estate and official investigation, and the later registration, install themselves and claim OI.
This would make it impossible for the bank to carry out an effective search, since there will always be a delay between the search/completion and registration.

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Personal Property Law	Destruction Of Property Rights Notes (24 pages)
Land Law	Registration Theory Notes (39 pages)