High Court Denies Beneficial Interest Claim in Mortgagee Possession Case

8 Jan 2025Court Report

The High Court ruled against Fay of London Limited in a mortgagee possession case, rejecting claims of beneficial interest by Ms Tatiana Peganova

Introduction

The High Court of Justice, Business and Property Courts of England and Wales, recently delivered a significant judgment in the case of Together Commercial Finance Limited (TCFL) vs Fay of London Limited (FOL) and Ms Tatiana Peganova. The case revolved around mortgagee possession proceedings, where TCFL sought possession of a property leased to FOL, with Ms Peganova claiming a beneficial interest in the property.

Background

The proceedings were initiated by TCFL, a mortgagee, seeking possession of Flat A, 1 Eaton Square, leased to FOL. FOL, originally obtaining the lease in 2011, had its defence struck out in July 2024. The defence and counterclaim sought to be amended by FOL and Ms Peganova were central to the case.

Claims of Beneficial Interest

Ms Peganova claimed a beneficial interest in the property based on proprietary estoppel and common intention constructive trust. She argued that the property was intended as a permanent family home, and she relied on this understanding to her detriment. However, the court found that the alleged understanding did not confer any beneficial ownership rights.

Legal Analysis

HH Judge Davis-White KC, presiding over the case, emphasized that a common intention to use a property as a family home does not imply beneficial ownership. The court found no evidence supporting a proprietary estoppel or common intention constructive trust that would bind the mortgagee, TCFL.

Decision on Joinder and Amendments

The court refused permission to amend the defence and counterclaim, concluding that the proposed amendments lacked a real prospect of success. The application to join Ms Peganova as a defendant was also not deemed necessary, as the possession order would operate against the world.

Implications for FOL

FOL's proposed defence was entirely dependent on Ms Peganova's claim, which the court found unsubstantiated. Consequently, the court denied FOL's application to amend its defence and counterclaim, paving the way for TCFL's possession claim.

Conclusion

The judgment underscores the importance of clear legal arrangements and the limitations of proprietary estoppel and constructive trusts in property disputes. The court's decision highlights the need for parties to provide substantial evidence when asserting beneficial interests in property.