The High Court has held that a third party, who was given the means of representing themselves as the beneficial owner of the property by the occupying beneficial owner, could create a charge that would take priority to the beneficial owner’s occupation.
Interests of persons in actual occupation have given rise to much litigation with lenders over the years. Paragraph 2 of Schedule 3 to the Land Registration Act 2002 provides that an interest belonging, at the time of the disposition, to a person in actual occupation will override a registered disposition (such as a mortgage or charge), so far as the interest relates to the land of which the person is in occupation.
Recent cases have tended to focus on what constitutes actual occupation. In this case, the court was in no doubt that the occupier was in actual occupation. This decision is interesting because of the way in which the occupier’s interest was defeated using the principles of agency.
This judgment does not produce new law (agents have been able to bind their principals for many years if their principal has actually or ostensibly authorised them to do so). However, this decision does approach matters from an interesting slant that could be particularly useful to lenders trying to defeat occupiers’ claims that their occupation constitutes an overriding interest and therefore takes priority to a charge.
Credit & Mercantile plc v (1) Kaymuu Ltd and others  EWHC 1746 (Ch).