[2014] UKSC 52
UKSC 2012/0102
Scott (Appellant) v Southern Pacific Mortgages Limited (Respondents)
On appeal from the Court of Appeal (Civil division) (England and Wales)
This appeal concerns “equity release schemes”. Under such schemes the owners of registered land sell their homes to purchasers, who promise the vendors the right to remain in their homes after the sale. The Appellant, Mrs Scott sold her home pursuant to such an arrangement. On the day of the sale the purchaser simultaneously executed a mortgage over the property and purported to grant a lease back to the Appellant. However under the terms of the mortgage, the purchaser was prohibited from granting the rights of occupation which they had promised to the Appellant. The purchasers defaulted on their mortgage payments and the lenders, who are the Respondents in this case, sought possession of the mortgaged properties. Two questions arose in the appeal (i) whether the purchaser had been in a position at the exchange of contracts to confer equitable proprietary rights on Mrs Scott, as opposed to personal rights only, and (ii) whether, even if she had, the transaction of acquiring the legal estate and granting the charge was one indivisible transaction so that Mrs Scott could not assert against Southern Pacific an equitable interest which had only arisen on completion.
The Supreme Court unanimously dismisses the appeal. Lord Collins, with whom Lord Sumption agrees, finds against Mrs Scott on both issues. Lady Hale, with whom Lord Wilson and Lord Reed agree, holds that the appeal must fail because the purchaser could not confer equitable proprietary rights on Mrs Scott at any time before completion of the purchase. On this basis the second issue does not arise, but they would have taken a different view on the indivisibility of the transaction had it done so.
