Lancashire Mortgage Corporation Ltd v Scottish & Newcastle plc
10th July 2007
[2007] EWCA Civ 684; [2007] All ER (D) 68 (Jul); Court of Appeal, Civil Division; Mummery, Sedley and Moore-Bick
P owed money to the the defendant and paid off a part of the debt using money lent to him by the the claimant, secured by a legal charge over P’s real property. The day after the execution of the claimant’s charge, a charge over P’s property was executed in favour of the defendant. The defendant’s charge was, however,registered first, at a time when the claimant did not have the protection of a priority search. After a sale of the property, the proceeds were insufficient to pay off both the claimant and the defendant.
The claimant brought proceedings for a declaration that its charge had priority, even though, under s 29 of the Land Registration Act 1925, the first to be registered had priority. It was held that the claimant’s charge did have priority, on the basis of proprietary estoppel. The defendant knew that the claimant expected to have priority, stood by while the claimant made the loan and part of its debt was discharge with money from that loan. The equity arising from the estoppel was satisfied by imposing a constructive trust on the net proceeds of sale in favour of the claimant.
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