The Gazette 1985

GAZETTE

APRIL 1985

stated that such a development would make a caricature

of the system. Of course, in all the cases the courts were

strongly pressed with the argument that a literal

interpretation would place an unduly onerous burden of

inquiry on purchasers and mortgagees. In

Hodgson

-v-

Marks

Russell LJ. did not think that the conveyancing

consequences were a real problem: "Conveyancing is

conducted generally on a basis of good faith, with

something of a long stop in the shape of covenants for

title."

Boland,

Lord Scarman thought the difficulties

" e x a g g e r a t e d ". Lord Wilberforce was equally

unimpressed: "Conceded, as it must be, that the Act . . .

gives protection to occupation, the extension of the risk

area follows necessarily from the extension, beyond the

paterfamilias,

of rights of ownership, itself following from

the diffusion of property and earning capacity. What is

involved is a departure from an easy-going practice of

dispensing with inquiries as to occupation beyond that of

the vendor and accepting the risks of doing so. To

substitute for this a practice of more careful inquiry as to

the fact of occupation, and if necessary, as to the rights of

occupiers, cannot be considered as unacceptable."

The

recent cases clearly signal a shift in the policy of the law —

from a concern to protect purchasers and lenders from the

need to make unreasonable enquiries

to the social

implications of shared ownership

. As Lord Denning

M.R. put it, "We shall not give monied might priority

over social justice."

In view of the readiness of the courts to give equitable

interests to persons who have made contributions

towards the acquisition of property, and the number of

potential interests which this raises, the problem for

purchasers and lenders is very real. One can envisage

many situations where a contribution coupled with

occupation may be lurking behind an apparently

satisfactory documentary title: there may be a contri-

buting wife or mistress in occupation, a fiancé or fiancée,

a contributing parent or other relative, or indeed a total

stranger as in

Hodgson

-v-

Marks.

All potential claims will

have to be cleared. A purchaser or lender cannot safely

assume that any occupant has not made some contribu-

tion so as to be entitled to a beneficial interest. As Shaw

LJ. cautioned, "A purchaser (including a mortgagee)

cannot take for granted that things are necessarily what

they seem on the surface or what he expects or would

wish."

The uncertainty created by this state of affairs is

compounded by a marked lack of judicial unanimity on

the question of what principles govern the acquisition of

beneficial interests in this context. This is particularly

acute where the contributions are indirect — is a common

intention necessary to justify the inference of a trust or is it

sufficient that indirect contributions be substantial only

without any necessity for a link between them and the

purchase of the property? The conceptual casualness of

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the judges in addressing these questions and their failure to

agree on the principles to be applied makes it difficult to

advise clients with any degree of certainty.

Another source of difficulty is the interaction of the

Boland

development with the requirements of the Family

Home Protection Act, 1976. In

Northern

Bank-v-Henry

Parke J. thought that the question of what inquiries

would suffice to clear a possible claim by a wife was

"largely academic"

in view of the 1976 Act. That was an

unregistered land case and no doubt there is strong ground

for saying that a spouse who gives consent pursuant to the

Act to a disposition by the legally-owning spouse might

thereafter be estopped from asserting his or her interest

against the purchaser or mortgagee.

However, where

the land is registered the position is different. The

statutory provisions are quite categorial. As Murray J.

pointed out in

Ulster Bank Ltd.

-v-

Shanks,

"There is only

one way in which the rights of a person in actual

occupation can be overridden by a purchaser or

mortgagee viz by the making of an inquiry of such person

which results in that person not disclosing his rights."

Like the

Boland

development, the 1976 Act puts

purchasers and lenders on inquiry as to the possible

existence of an occupying spouse, but it does not expressly

relieve them of the duty under s.72(l)(j) to make inquiries

as to the spouse's possible beneficial interest. Moreover,

Boland

protects a spouse's proprietary rights in the family

home; the 1976 Act protects the spouse whether or not she

has such rights. In this writer's view, the type of inquiries

appropriate for the purposes of the 1976 Act are not

sufficient to bring a purchaser or lender within the

proviso to s. 72(l)(j).

Y event it is unsafe to rely on

doctrines like estoppel. Accordingly, it is suggested that

any new requisition to deal with possible "Boland rights"

should also be directed,

ex abundante cautela,

to the

spouse not on the title.

Another danger is the possible application of the

principle underlying the

Boland

decision to non-domestic

property. This problem was considered by Barrington J.

Kavanagh

-v-

Kavanagh

— a case involving a question

of priority of claims between a wife and a mortgagee-

bank. On the 9th October 1975 the husband deposited the

lease of a hardware shop with the Bank by way of

equitable mortgage. On the 14th October a company was

formed to manage the shop. The lease of the property

remained in the husband's name, but the rent was paid

out of the profits of the business. The wife helped manage

the business and owned 50% of the shares in the company,

the husband owning the remainder. In a judgment in the

main action delivered in 1978 the wife was held to be

entitled to 50% of the beneficial interest in the lease.

Barrington J. was satisfied that the Bank was not at any

material time aware that the wife claimed a beneficial

interest in the lease and that it had not occurred to its

officials to inquire of her. Counsel for the wife relied on

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