Hodgson v Marks [1971] Ch 892

In June 1960, the claimant, who since 1939 had owned the house in which she lived, executed a voluntary transfer of the house to her lodger (E). E was registered as proprietor of the house though it was orally agreed that the beneficial ownership was to remain in the claimant. The claimant and E continued to live in the house as owner and lodger respectively. In 1964 E sold the house to the first defendant who executed a charge on it in favour of a building society, the second defendant. The first defendant was registered as proprietor subject to the charge. In 1965 when the claimant and the first defendant learnt of each other’s claims, the claimant issued a writ seeking, inter alia, a declaration hat the first d3fednant was bound to transfer the house to her free from the charge. On June 16th, the action was dismissed.

Did Mrs Hodgson retain a beneficial interest despite the transfer, and did her own actual occupation protect that interest against the purchaser under the 1925 registration scheme?

The Court of Appeal upheld Mrs Hodgson’s beneficial entitlement and its protection through actual occupation under the 1925 legislation. The transfer to her lodger was not intended as a beneficial gift. A resulting trust could recognise her retained ownership notwithstanding difficulties enforcing the oral express arrangement, because resulting trusts were not defeated by the writing requirement in the same way. Her continued occupation was her own, and the vendor’s presence did not make it legally disappear. The purchaser could not assume that everyone living with the vendor occupied only on the vendor’s behalf. The case therefore combined the source of beneficial ownership with a separate priority enquiry.

A resulting trust may preserve beneficial ownership where a transfer was not intended to benefit the transferee, despite failed oral express-trust formalities. A beneficiary’s own actual occupation is not negated merely because the registered transferor also lives at the property.

Hodgson connects trust formalities with the protection of occupiers. It should not be restated as a rule that every failed express trust automatically generates a resulting trust: the beneficial intention and disposition matter. Its priority reasoning also rejects a broad assumption that co-occupation with the vendor removes the need for enquiry. Modern registration consequences require the Land Registration Act 2002 rather than unchanged reliance on the 1925 wording.