Land - Mortgage & Adverse Possession (1)

5. Wilson and his mother Augusta decided to purchase Red House (registered land) as their home. The price was $200,000. Augusta, who was elderly and without significant income, agreed to contribute her life savings of $25,000 to the purchase price. They intended that Wilson, who had a highly-paid job, would borrow the remainder of the price on the security of a mortgage and that the house would be registered in his sole name. Contracts were exchanged on 1 February 1999 and Wilson and his mother moved into Red House the following day. On 10 February Augusta fell ill and was admitted to hospital where she remained till 15 March. On 10 March the purchase was completed and the charge executed in favour of the Savequick Bank. On 17 March the transfer and charge were registered. Recently Wilson lost his job and has fallen seriously into arrears with the mortgage repayments. The Bank is commencing possession proceedings with a view to selling the house.
Advise Augusta.

* Follow Cann

Augusta
- She’s a tenant in common, the contribution is not a gift
- She’s a beneficial owner based on contribution to purchase price
- New quantification principle (i.e. the broad brush approach) may not apply to mother & son (it usu. Applies to husband and wife or non-married couples)
- Apply Cann, Le Foe, Cooke
Implied waiver
- It’s an acquisition mortgage, likely to imply August has waived her right to be subject to the Bank’s

Scintilla temporis principle
- Arguably Augusta does not have equitable interest until Wilson becomes the legal owner and trust will then be into existence; and then the mortgage happens; so arguably mortgage comes later
- However, Cann said there is no split second division between equitable interest and mortgage: they are interwined; Augusta has no priority in time
- Apply Mendelsohn, Cann

Actual Occupation
- Augusta has actual occupation on the day of disposition on 10 Mar though she is temporary absence due to illness LRA 1925 s70(1)(g)
- There must be obvious actual occupation of a woman in the house even though Augusta is not physically present- Temporary absence won’t negate LRA 2002 Schedule 3 either