Lloyds Bank plc v Rosset

The Court of Appeal 2—1 held that Mrs Rosset was in actual occupation of her home. Nicholls LJ held that it had been a common intention, on the facts, that she would share in the property. She had done acts to her detriment, and she was in actual occupation at the relevant date through the builders, agreeing with the court below. The term ‘actual occupation’ does not require physical presence, and daily visits of Mrs Rosset to the semi-derelict house was enough.[1] He also suggested builders for Mrs Rosset were also occupying on her behalf.

Purchas LJ agreed. He clarified in his view the meaning of actual occupation should reflect equitable rules, and so undiscoverable people’s interests would not bind. Further in his view, Mrs Rosset's occupation was "discoverable".

Mustill LJ dissented, finding Rossett not, in his view in actual occupation.

The court decided Mrs Rosset had no beneficial interest in the property. There were no discussions to that effect, and the work Mrs Rosset did was not enough for a constructive trust.

The court also held, obiter, the date to determine whether Mrs Rosset was in occupation under LRA 1925 section 70 was the date the charge was created, i.e. 17 December just as Scarlett J had interpreted the law at trial; however, it abjectly refused to be drawn into whether Rosset was "in actual occupation" (clarifying this would need to be before completion). In this court's view, finding unlike the courts below, no equitable interest of Rosset, it would be unnecessary to look at her actual occupation as she, in reality, had no strict economic right to be there so as to outrank the lender.

Lord Bridge gave the only legal opinion, holding that because there had never been any express agreement that she would have a share, nor any contributions to the purchase price, Mrs Rosset could establish no right in the home. The other judges said they had pre-read this judgment and they approved it. He said:[2]

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 the house as their home and managing their joint affairs, there has at any time prior to acquisition, or exceptionally at some later date, been any 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 one where 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 arrangement if they had applied their minds to the question, and where the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention to share the property beneficially and as 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 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.

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Outstanding examples on the other hand of cases giving rise to situations in the first category are Eves v Eves [1975] 1 WLR 1338 and Grant v Edwards [1986] Ch 638. In both these cases, where the parties who had cohabited were unmarried, the female partner had been clearly led by the male partner to believe, when they set up home together, that the property would belong to them jointly. In Eves the male partner had told the female partner that the only reason why the property was to be acquired in his name alone was because she was under 21 and that, but for her age, he would have had the house put into their joint names. He admitted in evidence that this was simply an "excuse." Similarly in Grant v Edwards the female partner was told by the male partner that the only reason for not acquiring the property in joint names was because she was involved in divorce proceedings and that, if the property were acquired jointly, this might operate to her prejudice in those proceedings.

[...]

If Mrs. Rosset had become entitled to a beneficial interest in the property prior to completion it might have been necessary to examine a variant of the question regarding priorities which your Lordships have just considered in Abbey National Building Society v. Cann and, subject to that question, to decide whether, as a matter of fact, she was in "actual occupation" of the property on 17 December 1982. Since these questions have now become academic, I do not think any useful purpose would be served by going into them.

Lord Griffiths, Lord Ackner, Lord Oliver and Lord Jauncey concurred.