Birmingham Midshires v Sabherwal
Encyclopedia
Birmingham Midshires Mortgage Services Limited v Sabherwal [2000] 80 P&CR 256 is an English property law
case, concerning the principles of equitable interests
, overriding interests
, and overreaching interests
. It is one of many cases where the commercial rights mortgage lenders need to do business clash with the rights of innocent parties facing the loss of their home.
; the mortgage company claimed to have overreached
them. The mortgage company won the original case.
The three key issues were
went to some length in his judgment to detail the family financial history, which showed that Mrs Sabherwal had contributed to the purchase price of the house (although the question of by how much was not considered). The court also accepted that she was in actual occupation.
These being the case, the court appears to conclude that Mrs Sabherwal had an overriding interest.
Counsel for Mrs Sabherwal attacked the claim that the interest was overreached by arguing that the Trusts of Land and Appointment of Trustees Act 1996
altered the common law precedent, and by arguing that his client’s human rights (specifically the right to respect for one’s home in Article 8 of the European Convention on Human Rights
) had been breached. Walker LJ found that neither the 1996 Act or the implementing 1998 Human Rights Act were in force at the material time, and furthermore even if they were neither would apply.
Despite searching at length for a reason why he should not, Walker LJ ultimately concluded that the precedent in City of London Building Society v Flegg
should apply and Mrs Sabherwal’s interest was perfectly capable of being overreached and as the respondent had loaned capital money to two individuals – the sons – they had succeeded in overreaching her interest.
English property law
English property law refers to the law of acquisition, sharing and protection of wealth in England and Wales. Property law can refer to many things, and covers many areas. Property in land is the domain of the law of real property. The law of personal property is particularly important for...
case, concerning the principles of equitable interests
Equitable interest
An equitable interest is an "interest held by virtue of an equitable title or claimed on equitable grounds, such as the interest held by a trust beneficiary." The equitable interest is a right in equity that, if violated , is subject to satisfaction...
, overriding interests
Overriding interest
Overriding interest is an English land law concept. The general rule in registered conveyancing is that all interests and rights over a piece of land have to be written on the register entry for that land, otherwise, when anyone buys that piece of land, the interests won't apply to the purchaser,...
, and overreaching interests
Overreaching interest
Overreaching Interest is a term in English land law.Overreaching can only exist where a trust is in existence and a property is sold. The occupiers of a property in such a situation cannot then claim that their occupation of the property is an overriding interest, as the joint trustees have brought...
. It is one of many cases where the commercial rights mortgage lenders need to do business clash with the rights of innocent parties facing the loss of their home.
Facts
Mrs Sabherwal was facing eviction from her home, bought in the names of her two sons in 1987 with family assets and a mortgage. It was occupied by Mrs Sabherwal, her sons, and their wives. In 1990 the sons took out a loan, secured on the house, with the mortgage company; this loan replaced an existing mortgage but was primarily taken in order to finance family business interests. In 1993 the sons defaulted on the repayments. Possession proceedings soon began. Mrs Sabherwal claimed to have overriding interestsOverriding interest
Overriding interest is an English land law concept. The general rule in registered conveyancing is that all interests and rights over a piece of land have to be written on the register entry for that land, otherwise, when anyone buys that piece of land, the interests won't apply to the purchaser,...
; the mortgage company claimed to have overreached
Overreaching interest
Overreaching Interest is a term in English land law.Overreaching can only exist where a trust is in existence and a property is sold. The occupiers of a property in such a situation cannot then claim that their occupation of the property is an overriding interest, as the joint trustees have brought...
them. The mortgage company won the original case.
The three key issues were
- Did Mrs Sabherwal have an equitable interest?
- Was this an overriding interest?
- Did the mortgage company successfully overreach this interest?
Judgment
Mrs Sabherwal was found to have an equitable interest in the property. Lord Justice WalkerRobert Walker, Baron Walker of Gestingthorpe
Robert Walker, Baron Walker of Gestingthorpe, PC, QC is an English barrister and Justice of the Supreme Court of the United Kingdom...
went to some length in his judgment to detail the family financial history, which showed that Mrs Sabherwal had contributed to the purchase price of the house (although the question of by how much was not considered). The court also accepted that she was in actual occupation.
These being the case, the court appears to conclude that Mrs Sabherwal had an overriding interest.
Counsel for Mrs Sabherwal attacked the claim that the interest was overreached by arguing that the Trusts of Land and Appointment of Trustees Act 1996
Trusts of Land and Appointment of Trustees Act 1996
The Trusts of Land and Appointment of Trustees Act 1996 is an Act of Parliament of the United Kingdom, which altered the law in relation to trusts of land in England, Wales, Scotland and Northern Ireland.-Background:...
altered the common law precedent, and by arguing that his client’s human rights (specifically the right to respect for one’s home in Article 8 of the European Convention on Human Rights
European Convention on Human Rights
The Convention for the Protection of Human Rights and Fundamental Freedoms is an international treaty to protect human rights and fundamental freedoms in Europe. Drafted in 1950 by the then newly formed Council of Europe, the convention entered into force on 3 September 1953...
) had been breached. Walker LJ found that neither the 1996 Act or the implementing 1998 Human Rights Act were in force at the material time, and furthermore even if they were neither would apply.
Despite searching at length for a reason why he should not, Walker LJ ultimately concluded that the precedent in City of London Building Society v Flegg
City of London Building Society v Flegg
City of London Building Society v Flegg [1987] is an English land law case decided in the House of Lords on the priority given to overriding interests and overreaching interests.-Facts:...
should apply and Mrs Sabherwal’s interest was perfectly capable of being overreached and as the respondent had loaned capital money to two individuals – the sons – they had succeeded in overreaching her interest.