Iqbal Mohammed explores the unusual facts in the case of Pervaiz v Akhtar, decided by Her Honour Judge Truman in July 2024.
Imagine searching for a new home, we’ve all been there, and finally finding one. The right size, within your budget and one you can see yourself in with your family. You get your mortgage, instruct solicitors, raise the deposit and pay the price to the seller. Then, the day comes to move in. You arrive at your new home but are met by a woman at the door who claims that the house is, in fact, hers and she did not sell it.
Most lawyers will think back to their land law module at university and recall ‘Equity’s darling,’ the good faith purchaser buying without notice. How the law strives to protect her and save transactions entered into by innocent parties. However, this case provides a rare example of one such darling forced to litigate the issue to trial.
Facts
In the summer of 2021, the Claimants, a husband and wife, and their 7 children searched for a larger house. They found the Property, a 5-bed home being sold by a Mr Hanif, through Zoopla. The house had a FOR SALE sign outside. They viewed it on an evening and saw that it needed work. It was largely empty. Mr Hanif showed the family around alone. When asked why he was selling, he explained that he purchased the Property to renovate it but had run out of funds.
The Claimants liked the house and put in an offer. Eventually, a price was agreed. The Claimants visited again. Once with a builder to consider the cost of renovation and, again, to think about furniture. Like the first viewing, Mr Hanif was alone at each visit, one being at 9pm and another at the weekend. When Mr Hanif was asked if he was married, he replied that he was not.
Having agreed a price, the Claimants obtained a mortgage and instructed solicitors. The seller’s solicitor provided a Property Information Form, which stated that no one lived at the Property other than Mr Hanif. Of course, Mr Hanif held the legal title. Having had 3 viewings, the Claimants did not visit the Property again until after the sale completed in December 2021.
Following payment of the price, the Claimants arrived to move in but were met by Mr Hanif. He said that he had been unable to move out in time and asked for (or insisted on) a short-term tenancy for some months. The Claimants, not wanting to be difficult, agreed a 3-month tenancy.
Three months later, the Claimants arrived again to move in, without keys as Mr Hanif had not provided any, but were shocked to be greeted by a woman, the Defendant, who claimed to be Mr Hanif’s wife. She said that she knew nothing of the sale and refused to leave. The Defendant called Mr Hanif who told her on the phone that he “had done it to teach her a lesson.” He then hung up on her. Mr Hanif had apparently left for Pakistan, leaving his wife and children to deal with the problem he had caused.
Proceedings
As Defendant refused to leave, the Claimants brought a claim for possession. The Defendant counterclaimed for a declaration that she had an interest in the Property which “the Claimants should have known” about. She relied on the Land Registration Act 2002, Sch. 3, para 2 of which states that unregistered interests which override any sale of property include:
( c)an interest—
(i)which belongs to a person whose occupation would not have been obvious on a reasonably careful inspection of the land at the time of the disposition, and
(ii)of which the person to whom the disposition is made does not have actual knowledge at that time
The Defendant argued that her interest in the Property derived from (1) her marriage to Mr Hanif; and/or (2) a loan she had advanced to extend the Property. The latter, she claimed, was declared in a written document she found after she had filed her defence (and so, had to file an amended defence).
The Defendant claimed that it would be obvious to any viewer that Mr Hanif did not occupy the Property alone as she lived there with her children and, as such, the Claimants knew that she was also in occupation when they visited the Property. The Claimants denied this.
Trial
Despite two defences and some letters showing that she had, for example, registered the Property as her address with her GP, the Defendant provided no evidence that she was in occupation during the period of the sale, the viewings and the conveyancing. In cross, she admitted that at least for some months of this period, she had been in Pakistan.
While the Defendant made various assertions about what the Claimants would have seen in viewings, she could offer no direct evidence as she had not been present (and potentially not even in the country). In contrast, the judge accepted the evidence of the Claimants on what they had seen in the viewings, namely a bare property with little furniture.
The Defence argued several points to persuade the judge that the Claimants were on notice of the Defendant’s alleged occupation including:
- The unlikelihood that such a large house would be occupied by Mr Hanif alone;
- The failure to view the Property again during the conveyancing (which amounted to “turning a blind eye” to Mr Hanif’s story); and
- The failure to “make inquiries” with neighbours and “the community” to verify what Mr Hanif had said.
Judgment
The judge determined that the Defendant had an interest in the Property based on the (unchallenged) written document granting her an interest in return for a loan. The Claimants were not able to dispute its authenticity for want of knowledge.
However, the issue was whether, under the Act, this interest overrode the sale to the Claimants. On this, the judge found as follows.
Firstly, the Defendant had failed to prove that she was in occupation at the material time of the sale to the Claimants. In fact, she had avoided mentioning her absence from the country for some 4 months during this period. There was no real evidence to show that the Defendant was physically present at the Property in this period.
The judge rejected the criticisms of the Defence to the effect that the Claimants had failed to repeatedly visit the Property after the initial viewings or that they had failed to inquire within the neighbourhood. There was no obligation on the Claimants to do this nor did it prove anything.
Secondly, the court found that there was nothing in what was said by Mr Hanif or seen by the Claimants that would put them on notice of any interest held by the Defendant. She rejected the claim that the Claimants had actual knowledge of the occupation (which, she had already found was not made out on the facts).
As such, the judge held that the Defendant had failed to prove that her interest had overreached the sale to the Claimants, and she granted a possession order.
Observations
When faced with a Defence of this type, solicitors acting for purchasers must scrutinise the Defence for facts which, on a summary judgment test, would demonstrate (1) actual occupation by the Defendant and (2) actual notice to the purchaser. General assertions should be met with an application for summary judgment.
Likewise, for solicitors acting for a Defendant, pleading specific facts is critical. Where there is an absence of occupation, it will do no good avoiding that in the pleadings or evidence; it will only impair the witness’s credibility when it comes out at trial. Where actual occupation is alleged, it must be proved with direct evidence such as photographs, videos, witness evidence and the paraphernalia available to show that a person was physically present in the Property. General assertions or evidence of registration is unlikely to persuade a judge.
For conveyancers, buyers should be given advice on what they should do where, as in this case, vacant possession is not given on completion. This case also provides a salutary lesson on reading the Property Information Form with great care.
