This case summary of Bristol & West Building Society v Henning [1985] analyzes crucial aspects of mortgage law and overriding interests, providing key insights for law students studying property rights and mortgage disputes.

Legal Principles and Key Points in Bristol & West Building Society v Henning

  • In the case of Bristol & West Building Society v Henning [1985] 2 All E R 606, the overriding interest of a beneficiary in land will not apply where they gave consent to such disposition.

Facts of Bristol & West Building Society v Henning [1985] 2 All E R 606

  • Mr and Mrs Henning bought a house, of which he was the sole mortgagor
  • Mrs Henning had knowledge of this, and gave her approval
  • After payments were not made to the building society, Mr Henning was sued for possession of the home
  • Mrs Henning argued that she had an overriding interest in the home, and it could not be possessed by the building society as she had priority

Issues in Bristol & West Building Society v Henning [1985] 2 All E R 606

  • Mrs Henning knew and consented to her husband’s name being the sole name on the mortgage, despite this could she still have an overriding interest in the property?

Held by the Court of Appeal

  • Order of possession made – Mrs Henning did not have an overriding interest in the property.

Lord Justice Browne-Wilkinson

Lord Justice Browne-Wilkinson considered any express intention or implied intentions made by the defendants, which would show Mrs Henning’s right as a beneficiary:

  • “Mr and Mrs Henning did not contemporaneously express any intention as to the beneficial interests in the property. Therefore such intention if it exists has to be imputed to them from their actions. Mrs Henning knew of and supported the proposal to raise the purchase price of the Devon house on mortgage. In those circumstances, it is in my judgment impossible to impute to them any common intention other than that she authorised” [609]

Even if there was imputed intention shown, it would not show her priority over the building society’s charge on the property by way of mortgage

  • “it is impossible for Mrs Henning to establish that she is entitled to some form of equitable interest which gives her rights in priority to the rights of the society. I would therefore hold that, even on the assumption that Mrs Henning has some equitable interest or right in the Devon house, such interest or right is subject to the society’s charge and provides no defence to the society’s claim for possession.” [610]

Significance of the Case on the Development of the Law

Bristol & West Building Society v Henning [1985] has played a significant role in clarifying the application of overriding interests in property law, particularly in the context of mortgage agreements. The case’s significance is illuminated through its relationships with several other landmark cases:

  1. Williams & Glyn’s Bank v Boland [1981]: In Boland, the House of Lords established that a spouse could have an overriding interest in a property if they could prove actual occupation. Henning contrasted this by emphasizing the consent to the mortgage, which negated any claim of an overriding interest by the spouse.
  2. City of London Building Society v Flegg [1988]: Post-Henning, Flegg further refined the limits on overriding interests by stating that the rights of the occupiers are subordinate to the rights of those holding registered charges, like building societies, when the occupiers’ interests are overreached.
  3. Abbey National Building Society v Cann [1990]: This case reinforced Henning‘s principles by holding that the timing of occupation was crucial, and that an overriding interest could not exist if the occupant moved in after the mortgage was granted.

Exam Questions and Answers

Below you will find answers to questions that are most commonly asked based on this case.

How has the interpretation of “actual occupation” evolved in subsequent case law following Bristol & West Building Society v Henning?

Following Henning, the concept of “actual occupation” has been scrutinized and refined in cases like Link Lending Ltd v Bustard [2010], where the court determined that actual occupation could include periods of temporary absence if the intention to return was evident. This case highlighted the importance of the occupier’s physical presence and intention to occupy, making it critical for mortgagees to verify occupation status thoroughly before proceeding.

What are the practical implications for solicitors advising clients on securing mortgage interests post-Henning?

Post-Henning, solicitors must ensure thorough due diligence to identify any potential overriding interests that could affect mortgage security. This involves advising clients to conduct detailed inspections and inquiries into the actual use of the property, as illustrated by Malory Enterprises Ltd v Cheshire Homes (UK) Ltd [2002], which emphasized the need for actual knowledge of any occupier’s rights that could impact the mortgage.

How do current UK property laws address the balance between protecting lenders and safeguarding the rights of non-owning occupants?

Current UK property laws, as reflected in the Land Registration Act 2002, aim to balance these interests by clearly defining the nature and scope of overriding interests. The Act provides a more streamlined approach to registration and rights acknowledgement, reducing the risk for lenders while protecting occupants through specified rights that must be acknowledged by lenders during the transaction process. This act supports a transparent and equitable property market, ensuring both parties’ rights are considered.

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