Aspects of Priorities Disputes – Consent and Overreaching
Consent
One of the issues to discuss with regards to priority disputes, is whether consent plays any role in
determining whether a claimant’s beneficial right takes priority to that of a mortgagee
Abbey National Building Society v Cann
Cann and his mother wanted to move from their current house to a smaller home
Paid for the new home by means of
o Proceeds of sale of their old home (which both had contributed to purchasing), and
o Loan from Abbey National Building Society
Loan from Abbey was secured by a charge over the new home
Cann failed to repay the loan as agreed Abbey attempted to remove his mother from the
home so that it could sell the home and use the proceeds to meet the outstanding debt
HoL eventually decided that Abbey National’s charge arose before that of Daisy Cann’s
beneficial interest set out the new commercial view on scintilla temporis with regards to
acquisition mortgages
However, prior to this, the CA also decided that on the facts of the case, Daisy had impliedly
consented to the mortgage lender Abbey National taking priority
o Lod Oliver set out that although she was unaware of George’s intentions to raise any of
the money required for the purchase on mortgage, she was aware that there was a
shortfall in the amount needed to meet the purchase price, and that it would have to be
met from somewhere
o By leaving it to George to raise the balance, it was held that he was permitted by her to
raise money on the security of the property without any limitation on his authority
being conveyed to the building society
Smith (1990) – criticizes Lord Oliver’s argument
A borrowed from the bank far more than he needed to cover the shortfall of the purchase
price of the property – secured the money borrowed by a mortgage charge
Even if we argue that B did know of the shortfall and thus impliedly consented to A obtaining
the money [as Lord Oliver says] – her knowledge that led to the implied consent is only limited
to the shortfall of the purchase price [eg. £4,000] not the full amount A borrows
B only consents to the £4,000, not the full amount A borrows
Bank of Scotland v Hussein
Court stated that in some cases, the person claiming not to be bound by mortgage can fairly
be taken to have given the legal owner actual authority to enter into it or to have ratified it.
Where that is so, the mortgage may be binding on ordinary agency principles
Consent
One of the issues to discuss with regards to priority disputes, is whether consent plays any role in
determining whether a claimant’s beneficial right takes priority to that of a mortgagee
Abbey National Building Society v Cann
Cann and his mother wanted to move from their current house to a smaller home
Paid for the new home by means of
o Proceeds of sale of their old home (which both had contributed to purchasing), and
o Loan from Abbey National Building Society
Loan from Abbey was secured by a charge over the new home
Cann failed to repay the loan as agreed Abbey attempted to remove his mother from the
home so that it could sell the home and use the proceeds to meet the outstanding debt
HoL eventually decided that Abbey National’s charge arose before that of Daisy Cann’s
beneficial interest set out the new commercial view on scintilla temporis with regards to
acquisition mortgages
However, prior to this, the CA also decided that on the facts of the case, Daisy had impliedly
consented to the mortgage lender Abbey National taking priority
o Lod Oliver set out that although she was unaware of George’s intentions to raise any of
the money required for the purchase on mortgage, she was aware that there was a
shortfall in the amount needed to meet the purchase price, and that it would have to be
met from somewhere
o By leaving it to George to raise the balance, it was held that he was permitted by her to
raise money on the security of the property without any limitation on his authority
being conveyed to the building society
Smith (1990) – criticizes Lord Oliver’s argument
A borrowed from the bank far more than he needed to cover the shortfall of the purchase
price of the property – secured the money borrowed by a mortgage charge
Even if we argue that B did know of the shortfall and thus impliedly consented to A obtaining
the money [as Lord Oliver says] – her knowledge that led to the implied consent is only limited
to the shortfall of the purchase price [eg. £4,000] not the full amount A borrows
B only consents to the £4,000, not the full amount A borrows
Bank of Scotland v Hussein
Court stated that in some cases, the person claiming not to be bound by mortgage can fairly
be taken to have given the legal owner actual authority to enter into it or to have ratified it.
Where that is so, the mortgage may be binding on ordinary agency principles
