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Property Law - Scottish & Newcastle plc v Lancashire Mortgage

Area(s) of Law :
Property Law
Court :
Source : EWCA Civ 684

Real Property
Land Registration Act 1925; priority of charges; proprietary estoppels; Law of Property (Miscellaneous Provisions) Act 1989 section 2

Scottish & Newcastle plc v Lancashire Mortgage Corporation Ltd

Legal charges in favour of the Claimants and Defendants, with the Defendants’ charge being executed first. However, the Claimants’ charge was registered first and thereafter they claimed priority under the Land Registration Act 1925. The Defendants contended that because the Claimants were aware that they had advanced money (some of which went to the Claimants) on the expectation that they were to have a first legal charge over the property, the Claimants were estopped from denying that their legal charge ranked behind the Defendant’s, and the Judge at first instance agreed.

Held: In the circumstances, the Judge had been entitled to find that the Claimants had passively acquiesced in (as opposed to positively represented, encouraged or promised) the Defendants’ expectation that they would obtain a first legal charge over the property and thus were estopped from thereafter asserting their priority. The estoppel was propriety in nature, but section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 was not relevant as there was no contract and the substantive effect of the estoppels was not the disposition of an interest in land, but a variation in the beneficial interests of the parties in the net proceeds of sale.