Winkworth v Edward Baron Development Co Ltd

Winkworth v Edward Baron Development Co Ltd [1986] 1 WLR 1512

Land held by a company does not automatically create an equitable interest .

Facts:

The defendants, Mr and Mrs Wing, were directors of a company. The company owned the couple’s matrimonial home, which they sold and paid the proceeds into the company’s bank account to reduce the company’s overdraft. They then moved into another property also owned by the company. The husband in his capacity as a director of the company mortgaged this property by forging his wife’s signature. The company subsequently became insolvent and the plaintiff mortgagee claimed possession. The Court of Appeal held that the wife had an overriding interest in the property which bound the mortgagee. The plaintiff appealed to the House of Lords.

Issues:

Mrs Wing, argued that she had an overriding interest in the property under s.70(1)(g) Land Registration Act 1925. This provision stated that the interest of someone in actual occupation of land overrides any registered disposition of the land. She argued that she acquired an interest in the house as she had paid her share of the proceeds of the sale of the first house into the company’s bank account and she was in occupation of the house. She also argued that the mortgage was not a valid legal charge.

Held:

The Court of Appeal decision was reversed. The wife had no interest in the property and so could not have an overriding interest. The money paid into the company’s bank account did not relate to the acquisition of the current property. There was no evidence the company had intended to sell her an interest in the house. The company had also admitted the legal charge was valid despite the forged signature.