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Essay: Critically evaluate the definition of actual occupation

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  • Published: June 10, 2021*
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  • Critically evaluate the definition of actual occupation
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In this essay I will attempt to critically evaluate the definition of actual occupation. In order to do so first it is needed to refer to the Land Registration Act 2002 , which provides a rule whereby a closed list of certain interests can override a registered disposition. Within which it states that the claimant to the overriding interest must be in actual occupation of the premises. Despite actual occupation being mentioned in the 2002 Act, the phrase has not actually been “statutorily defined.” This makes evaluating the definition difficult, with the Law Commission labelling actual occupation as “notorious and much-litigated.” As a result the only method to evaluate actual occupation is to refer to case law, which this essay will aim to do by analysing and critiquing what is required for actual occupation. First by evaluating the view of actual occupation advocated by Lord Wilberforce and Lord Denning, secondly by discussing the critiques of that definition, thirdly by evaluating the various tests for actual occupation leading to the 2002 Act and finally critiquing the two most prominent sides of actual occupation throughout the English legal systems history.

Firstly in 1979, it was said by Lord Denning in Boland that actual occupation is a “matter of fact,” Lord Wilberforce concurred, saying the phrase required interpreting using the ordinary “plain English.” . This looser approach to statutory interpretation can be viewed as a policy decision, creating an environment more in favour of the occupiers than the purchasers and banks. Lord Denning went on to state that his interpretation of actual occupation in the Court of Appeal “did a lot for the deserved wife.” This absolutist approach, in which it does not matter if it is “unreasonably difficult to ascertain the actual occupier,” provided an equitable solution for the facts given before the court. The absolutist test for actual occupation is particularly important in decisions such as Bird. In this judgment, Lord Templeman followed the reasoning given in the judgment of Caunce, in which Lord Stamp drew the ratio that wives were a shadow of the husband’s occupation, so could not claim actual occupation, notwithstanding occupying the property. By the 1970s such beliefs rightly became both politically, and judicially, unacceptable, which caused the definition of actual occupation to change in response to societal views. Historically, women could be left “very financially vulnerable” with regards to property interests by the rule in Caunce. Women’s liberation led to a “rapid development” of the constructive trust in relation to land, and this was reflected in the judicial interpretation of actual occupation. Many women relied on an absolutist approach to actual occupation, advocated by Lord Wilberforce and Lord Denning, to remedy such vulnerabilities. A counter argument to this leaning towards the protection of vulnerable parties view perhaps, is that by Robinson it is still said that a minor child cannot be in actual occupation. However, the reasoning for this appears to be the inability to make an effective enquiry into their potential rights or interests, at least in regard to“very young children.” So the definition of actual occupation seems to remain loose in service of protection, to an extent with reasonable judgement, although the line deciding this is subjective.

Secondly, following the initial definition of actual occupation many critiques followed, as shown most prominently In Cann. Lord Oliver criticised the ‘ordinary meaning’ test, pointing out that even plain English contained “a variety of shade of meaning.” This raised a valid critique of the definition of actual occupation as viewed by Lord Wilberforce, with the meaning being left to the courts to decide and creating potential inconsistency on what was truly intended. Following this, by the 1980s, the Court of Appeal was advocating a constitutionalist view of actual occupation, while the House of Lords maintained the absolutist view. Such a large disconnect between branches does further enforce that the definition of actual occupation is lacking in clarity. This divide on views on actual occupation is best illustrated in Rosset. In this case, Lord Purchas qualifies the “was she in actual occupation” test with a limiting condition: “would appropriate inquiries made by the bank have elicited the fact of her interest?” However, this case does illustrate the varying positions of the Court of Appeal and the House of Lords as it was held on appeal that Mrs Rosset did not have an overriding interest in the property, making the actual occupation element “academic.” Peter Sparkes suggested that the rule in Rosset, created a “notice test.” He goes on to state this is reconcilable to Boland’s “plain English” test, in that they were intended to be applied in differing circumstances. This lends credence to previous views on actual occupation, although could also be viewed as muddying the definition of actual occupation further.

Thirdly, the definition of actual occupation changed with the addition of the 2002 Act introducing a statutory “reasonable inspection” test judges became equipped to adjust the tests for actual occupation. As a result of critiquing the definition of actual occupation as it was previously, judges during this time began to shift further from the absolutist interpretation to better ensure justice, it was said in Cann that the “nature and purpose” of the occupation should be carefully examined. This was followed by Robert Walker J in Garden Holdings in which he suggested that actual occupation is a “matter of perception.” Supporting this, in the pre-2002 Act authority of Chhokar, the personal circumstances of the parties were considered seriously by the court. Chhokar’s case however, raises an issue. The court viewed a ‘reasonable expectation’ test as “intention to return to the property could be viewed as a virtual certainty.” In Chhokar the presence of the claimant’s personal possessions paired with her unquestionable intention of returning was enough to prove actual occupation. This is a direct change from the opinion of Lord Russel, who held that a claim for actual occupation could not be founded in the mere fact the claimant’s furniture was left in the property, or that he possessed a key. It could be argued that the court was more sympathetic due to Mrs Chhokar’s circumstances and sought a change in service of seeing justice done. Given this, the courts seem to focus on a definition based around controlling equity from dominating in favour of the right holder claiming an overriding interest based on actual occupation. In Garden Holdings the court held a “fleeting presence” cannot be said to be actual occupation. Similarly, it was stated in the case Celsteel, and by the Law Commission, that user of an easement cannot claim the overriding interest by actual occupation, as such a presence is merely fleeting, and an easement is of a “none possessory character,” at least based upon on the “cryptic wording” of the 1925 Act. Although it can be argued that restraining an alleged tax exile as in Mehta and a princess who has not “set foot” in the property for over a year from claiming the protection of actual occupation is in following suit of decisions such as Boland, rather than deciding in favour to protect a lender’s interests. By Cann however, Lord Oliver is keen to protect the acquisition mortgagor from being opposed by a right based on actual occupation. In this decision, it was said that moving in furniture into the property half an hour before completion could not supersede the acquisition mortgagor’s right and they were preparatory acts before taking up actual occupation. The intended purpose of actual occupation remains contested, which while beneficial in being able to be applied to a variety of situations, leaves the definition extremely broad in scope and difficult to view objectively outside of case law.

Finally, comparing Boland and Cann, shows the largest disparity regarding the definition of actual occupation. The former advocating actual occupation as a form of protection for the vulnerable, such as women at that time, conflicting with the former which focuses on the principle that the lender expected to be repaid. This contradiction is frequent in the case law, and as such makes the definition of actual occupation contradictorily depending on the views of the court applying it. For example, Lord Denning, speaking in the Court of Appeal, claimed that money should not be given priority over “social justice.” In direct contrast to this, Robert Raid, counsel for the bank in Boland, claimed the decision was “the furthest extension […] of the Nanny State.” The judiciary however did not share his view, Hailsham LC pointing out the world “did not come to an end” because of Boland. Scott VC, in Zaroovabli, was keen to highlight that “the Cassandra-like prophecies of disaster” predicted by Reid and others were unfounded. Considering this, the definition of actual occupation has seen a change in societal and judicial attitudes to the position of lenders over the years. As a result of developments after Boland there has been a trend for the lender to mount an attack on the beneficial interest protected by actual occupation itself. This form of attack was used against Rosset’s appeal, and has somewhat gained judicial acceptance, as seen in cases such as Buggs. In relation to evaluating the definition of actual occupation, this turn sees a shift to a more consistent and defined form of actual occupation, albeit one that no longer operates to achieve the same purpose it was intended to in Lord Denning and Lord Wilberforce’s view.

In conclusion, this essay has sought to provide an evaluative critique on the definition of actual occupation using legislation, case law and scholarly literature, focusing on actual occupation advocated by Lord Wilberforce and Lord Denning. By using that initial definition and comparing against developments in case law relating to actual occupation before and since allows for a comprehensive evaluation on the most prominant tests found in actual occupation and the intention behind their creation. This in turn also highlights the aspects that have been critiqued due to being un-clear or no longer in keeping with the political and social landscape at the time. Due to the developments in the English legal system over the decades, the definition of actual occupation as it stands now is far clearer post the 2002 Act than it was during the divide between the Court of Appeal and the House of Lords however there is still areas to be disputed, especially regarding the recent shift away from its more liberalised interpretation to one more in favour of the less vulnerable parties.

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