Mortgage Express v Lambert [2015]

1. Facts

• Background: The case involved Mortgage Express (C) seeking to enforce a mortgage on a property against Lambert (D). Lambert claimed an equity arising from a right to rescind a contract related to the land in question.

• Claim: Lambert argued that his equity, arising from the right to rescind the contract, should not be subject to overreaching, challenging the application of established principles that might otherwise extinguish his interest through the sale of the property.

2. Outcome

• Court of Appeal Decision: The Court of Appeal held that an equity, such as a right to rescind a contract, can be overreached in relation to land. The court emphasised that if such an equity can be overreached, it logically follows that other equitable interests, including those arising from proprietary estoppel, should be treated similarly.

3. Impact and Analysis

• Equity and Overreaching:

◦ Principle of Overreaching: The court’s decision reinforces the principle that equitable interests, including those arising from a right to rescind a contract, are subject to overreaching. This principle ensures that when property is sold and the purchase money is paid to two trustees, such equitable interests can be extinguished in favour of the purchaser.

◦ Consistency Across Equities: The court reasoned that if an equity related to rescission can be overreached, there is no reason to treat equitable interests arising from proprietary estoppel differently. The rationale is to maintain consistency in how different types of equitable interests are handled in property transactions.

• Proprietary Estoppel:

◦ Treatment of Proprietary Estoppel: The decision suggests that interests arising from proprietary estoppel should be subject to the same overreaching principles as other equitable interests. This means that if a property is sold with payment to the two registered trustees, the proprietary estoppel claim could also be overreached.

◦ Legal Uniformity: By aligning the treatment of proprietary estoppel with the treatment of other equitable interests, the court aims to provide a uniform approach to handling these interests in property law, thereby reducing potential inconsistencies.

• Legal Implications:

◦ Clarity and Predictability: The decision contributes to legal clarity and predictability in property law by affirming that various forms of equity, including those arising from proprietary estoppel and rescission rights, can be overreached. This helps streamline property transactions and provides a clear framework for dealing with different types of equitable claims.