Key Point

A third party given authority to represent itself as owner of a property by the occupying beneficial owner could create a charge that would take priority to the beneficial owner's occupation.        

The Facts

Legal title to a residential property was owned by a company controlled by one party, S. His friend and business partner (W) believed he was the beneficial owner even though he had no input in the acquisition of the property.  Unknown to W, a charge had been created by S in favour of the lender over the property. When the lender's surveyor inspected the property for the purposes of a valuation, they failed to notice W's occupation. When the charge was executed in favour of the lender, W (with his partner) was in actual occupation of the property. The court established that the property was held on constructive trust for W. 

At first instance, the court found in favour in favour of the lender, despite acknowledging that W was in actual occupation of the property when the charge was executed.


The Court of Appeal upheld the first instance decision and dismissed the appeal by W.


The judgment does not produce new law – agents have been able to bind their principals if their principal has actually or ostensibly authorised them to do so – however, it is useful for lenders trying to defeat occupiers' claims that their occupation consitutes an overriding interest and therefore takes priority to a charge.

Wishart v Credit & Mercantile Plc [2015] EWCA Civ 655