The Appellant (W) claimed that he was entitled to the proceeds of sale of a house (“Dalhanna”).
W’s claim arose from an alleged overriding beneficial interest enforceable against the Respondent (CM) based on an entitlement in equity to ownership of Dalhanna.The facts: W had agreed with his friend (S) that certain monies would be used from a commercial venture to purchase a family home for W without a mortgage. W left S to act as his agent in the purchase of Dalhanna. Unbeknown to W, S purchased Dalhanna in the name of a company owned solely by him. S then obtained a loan from CM using Dalhanna as collateral. The loan was obtained on the basis of vacant possession. S defaulted on his loan repayments. CM obtained possession and sold the property.
In dismissing W’s appeal, the Court of Appeal held that W’s claim was defeated by the principle in Brocklesby v Temperance Permanent BS  AC 173 (“the Brocklesby Principle”). W was precluded from maintaining that he had a beneficial interest in respect of Dalhanna with potential to have priority over the security of C&M.
The Brocklesby Principle operated where actual authority was given by the owner of an asset to a person authorised to deal with it in some way on his behalf; where the owner had furnished the agent with the means of holding himself out to a purchaser or lender as the owner of the asset or as having the authority of the full owner to deal with it; together with an omission by the owner to bring to the attention of a person dealing with the agent any limitation that existed as to the extent of the actual authority of the agent.
Elizabeth Dwomoh / 1st Aug 2015
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