The Gazette 1981

APRIL 1981

GAZETTE

by her husband? This situation was considered in Caunce v. Caunce [ 1969] 1 All E.R. 722. On 3 November 1959 there was a conveyance on sale of a house to the husband in fee simple, and on the same day he mortgaged the house to a building society for the purpose of meeting the purchase price of the property. The wife provided £479 out of her own money in respect of the purchase price. This house, which was bought as a proposed matrimonial home, was acquired on terms between husband and wife that the purchase price, so far as not obtained from the building society, should be provided by the wife and that the property was to be vested in the spouses as joint tenants at law. The husband, in breach of these terms, had the property conveyed to him alone, and although the wife knew this, she took no step to assert her rights. From the date of the conveyance down to the date of his bank- ruptcy, 7th July, 1966, the husband paid the instalments due on the mortgage, and thereafter they were paid by the wife. Unknown to her, the husband created three further mortgages in favour of Lloyds Bank Ltd. to secure money advanced to him. After a receiving order in July 1966, the husband left the house and thereafter the wife lived there without him. The wife issued a writ inter alia claiming against the bank a declaration that her beneficial interest in the property had priority over the three legal charges. The wife urged that then when so many matrimonial homes were purchased out of monies provided in part by the wife, a purchaser (including a mortgagee) who finds the matrimonial home vested in one of the spouses is put on inquiry whether the other spouse has an equitable interest in the property and that, if he does not inquire of the other spouse whether such an interest is claimed, he takes subject to that interest. In this case, as distinct from Ains worth's case, the wife was living in the house with the husband at the time of each of the bank's advances. The wife contended inter alia that an inquiry ought to have been made on the property and that, if such an inquiry had been made, the wife would have asserted her equitable interest. Therefore, so the wife's argument ran, the bank had constructive notice of that interest. On this point, Stamp, J. (at p. 728) ruled that "where the vendor or mortgagor is himself in possession and occupation of the property, the purchaser or the mortgagee is not affected with notice of the equitable interests of any other person who may be resident there, and whose presence is wholly consistent with the title offered. If one buys with vacant possession on completion and one knows or finds out that the vendor is himself in possession and occupation of the property, one is, in my judgment, by reason of one's failure to make further enquiries on the premises, no more fixed with notice of the equitable interest of the vendor's wife who is living there with him than one would be affected with notice of the equitable interest of any other person who might also be resident on the premises, e.g., the vendor's father, his Uncle Harry or his Aunt Matilda any of whom, be it observed, might have contributed money towards the purchase of the property." This decision has been both applauded (as by McWilliam J. in the Northern Bank case) and condemned, the latter

somewhat savagely, by John Eekelaar in Family Security and Family Breakdown, at p. 87:— "The reasoning in Caunce v. Caunce illustrates with the utmost clarity how alien it is to English legal thinking to conceive of the possibility that the wife might have an interest in the property of her husband simply because she is his wife. Ineed, had Mrs. Caunce been a stranger (a mistress, or a male friend of her husband's), she would have been in a stronger position because the mortgagee would have been on his guard as to whether the stranger was in possession under some interest in the property. It is difficult to find enthusiasm for a law according to which the holding of the marriage status, not only fails to achieve security of occupation in relation to dealings with it by the other spouse, but is a positive disadvantage to the person concerned." The pendulum swings There was another judicial oscillation towards a more liberal interpretation of the statutory protection of the oc- cupier's rights in Hodgson v. Marks [1971] Ch. 892. When the effect of paragraph (g) had been considered in National Provincial Bank Ltd. v. Ainsworth supra, by Lord Denning he had interpreted the paragraph literally and thereby had reached a liberal result. Russell, L.J., on the other hand, had construed the words of this paragraph in the general context of the law of property and, on appeal, the House of Lords had preferred his restrictive construction. In Hodgson this Lord Justice pronounced the leading judgment in the Court of Appeal which, if it cast no doubts on the Ainsworth case, at least

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