Capacity — Owner transferring home to swindler and received no consideration — Owner subsequently placed in residential care home — Swindler taking loan on property but failing to repay it or interest — Lender seeking loan repayment and possession of home on ground property unoccupied — Whether owner still in “actual occupation” of her home — Mental Health Act 1983, s 3 — Land Registration Act 2002, Sch 3, para 2
A person, who had been taken into psychiatric care under s3 of the Mental Health Act 1983 and had been involuntarily placed elsewhere, was still in actual occupation of her own home under the land registration legislation. Where therefore the owner, lacking legal capacity, had transferred the property to a swindler for no consideration and the swindler had secured a loan on the property from a lender which he had failed to repay, the lender as the registered chargee was not entitled to dispossess her on the ground that she was not in actual occupation of her home.
The Court of Appeal so stated in dismissing the appeal of the claimant, Link Lending Ltd, from the decision of Judge Walton who on 25 September 2009 in the Newcastle Upon Tyne County Court had given judgment against the first defendant, Noreen Hussain, in the sum of £100,000 as unpaid loan and interest, but dismissed the possession claim against the second defendant, Susan Bustard (by her litigation friend, Peter Walker).
On 26 November 2004 the second defendant, the registered owner of a property, had transferred it to the first defendant who had raised a mortgage loan of £100,000 from a bank on that property knowing that the second defendant had lacked mental capacity to enter into that transaction. He had not paid any money to the second defendant. The first defendant had subsequently taken a loan from the claimant to settle the bank loan, but had failed to repay the loan or interest. The claimant had then brought proceedings for the repayment of the loan and interest and possession of the property on the ground that it was unoccupied .
MUMMERY LJ said that the judge had considered the relevant authorities on the concept of a "person in actual occupation" of land in the earlier land registration legislation and now found in the Land Registration Act 2002. The construction of the earlier equivalent provisions by the House of Lords was binding on the court. The courts were reluctant to lay down, or even suggest, a single legal test for determining whether a person was in actual occupation. The decisions on statutory construction identified the factors which had to be weighed by the judge on that issue, which included the degree of permanence and continuity of presence of the person concerned, the intentions and wishes of that person, the length of absence from the property and the reason for it and the nature of the property and personal circumstances of the person. The question for the court was whether the judge could properly and reasonably conclude that the second defendant had been in actual occupation of the property at the relevant date. It was clear that the second defendant was not a "mere fleeting presence", nor was this a case like Abbey National Building Society v Cann  1 AC 56 of acts preparatory to the assumption of actual occupation. It was also distinguishable from Stockholm Finance Ltd v Garden Holdings Inc  NPC 162 where the owner had lived with her family abroad for more than a year. The new and special feature of the instant case was the psychiatric problems of the person claiming actual occupation. On the facts she remained in actual possession despite her involuntary removal to a care home.
JACOB and SULLIVAN LJJ agreed.
 EWCA Civ 424;  WLR (D) 103
CA: Mummery, Jacob, Sullivan LJJ: 23 April 2009
Appearances: Antoine Tinnion (instructed by Lightfoots LLP Thame) for the claimant; Iris Ferber (instructed by Punch Robson, Middlesbrough) for the second defendant; the first defendant did not appear and was not represented.
Reported by: Ken Mydeen, barrister