The Gazette 1985

GAZETTE

APRIL 1985

stated that such a development would make a caricature 14 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." 15 In 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." 16 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 17 to the social implications of shared ownership 18 . As Lord Denning M.R. put it, "We shall not give monied might priority over social justice." 19 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." 20 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

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 21 , Parke J. thought that the question of what inquiries would suffice to clear a possible claim by a wife was "largely academic" 22 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. 23 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." 24 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). an 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. in Kavanagh -v- Kavanagh 25 — 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 FOR THE BEST IN COMPUTER AND WORD PROCESSING SUPPLIES Contact ZIA'GOLD ZIA-GOLD, 59 TERENURE ROAD EAST, DUBLIN 6 Telephone: 901148 Telex:25874

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