National Provincial Bank Ltd v Ainsworth [1965] AC 1175

Court: House of Lords

Facts: The respondent, a deserted wife (D), had an equitable right to remain in occupation of her former husband’s home under what is known as the "deserted wife’s equity." The husband defaulted on the mortgage of the house, and the mortgagee bank (C) sought an order for sale of the house. D argued that her equitable right of occupation constituted an overriding interest, which would take priority over the bank’s mortgage. In 1958, the husband charged the property to the appellant bank. In 1959, the husband transferred the house to a company, Hastings Car Mart Ltd., which then charged the property to the bank. The company failed to repay the loan, prompting the bank to seek a sale of the property. The key issue was whether the wife’s right of occupation constituted an overriding interest under section 70(1)(g) of the Land Registration Act 1925.

Issue: Does the deserted wife's equitable right to remain in the property constitute an overriding interest that can take priority over the mortgagee's right to sell the property?

Held: The House of Lords ruled in favor of the mortgagee bank (C), granting the order for sale. D’s right to remain in the house was a personal right against her husband and not binding on the mortgagee. The equitable right of occupation did not constitute a proprietary interest and, therefore, did not qualify as an overriding interest under section 70(1)(g) of the Land Registration Act 1925.

Key Judicial Statements: Lord Wilberforce stated that "equitable does not mean proprietary," emphasizing that the nature of the right, not the remedy available for its enforcement, determines its classification. He explained that a right binding on a person's conscience is not always binding on third parties. Therefore, the wife’s right was personal in nature and could not bind the mortgagee. The judgment also clarified that for a right or interest to be considered as property or a right affecting property, it must be definable, identifiable by third parties, capable of being assumed by third parties, and possess some degree of permanence. These characteristics did not apply to the wife’s right of occupation.

💡 Leveluplaw: An equitable right of occupation is not automatically a proprietary right and may not bind third parties like mortgagees. For a right to be classified as an overriding interest, it must meet strict legal requirements, including being capable of assumption by third parties.