Scott v Southern Pacific Mortgage Limited

22 October 2014

Judgment was handed down on today in Scott v Southern Pacific Mortgages and others [2014] UKSC 52. James Stark of Garden Court North Chambers led by Bryan McGuire QC, instructed by David Gray Solicitors, represented Mrs Scott.

Mrs Scott sold her home on a sale and leaseback to the nominee of an organisation named UK Property Buyers at a considerable undervalue and in return for which she had a significant deduction made from the proceeds of sale in return for promises that she could stay as a tenant at a low rent for life and that her son could succeed to her tenancy .

Unknown to her the purchase was funded by a self-certificated Buy to Let mortgage and when UK Property Buyers, together with its associated organisation North East Property Buyers, stopped paying the sums due under the mortgage Southern Pacific Mortgage Limited sought possession.

The Supreme Court considered whether Mrs Scott obtained an equitable interest binding under paragraph 2 of Schedule 3 to the Land Registration Act 2002 upon the mortgagees at the time of the contract of sale and whether Abbey National Building Society v Cann [1991] 1 AC 56 applied to this situation where it was argued that the sale and leaseback are one transaction such that the mortgagee at no time received a charge over a freehold already subject to the lease.

The appeal was dismissed.