Scott v Southern Pacific Mortgages Ltd [2014]
![Scott v Southern Pacific Mortgages Ltd [2014]](https://images.unsplash.com/photo-1448630360428-65456885c650?crop=entropy&cs=tinysrgb&fit=max&fm=jpg&ixid=M3wxMTc3M3wwfDF8c2VhcmNofDF8fHByb3BlcnR5fGVufDB8fHx8MTcyMzgwNzQxM3ww&ixlib=rb-4.0.3&q=80&w=1200)
1. Facts
• Mrs. Scott (the defendant) planned to sell her house under the agreement that she could continue living there indefinitely at a discounted rate.
• The purchaser obtained a mortgage from Southern Pacific Mortgages (SPM), but later defaulted on the mortgage.
• SPM (the claimant) sought possession of the property, while Mrs. Scott claimed she had an overriding interest that protected her right to remain in the property.
• She argued that her overriding interest was due to her being in actual occupation (AO) at the time of the execution of the mortgage.
2. Outcome
• Mrs. Scott’s claim of an overriding interest failed.
• The court held that, under the Land Registration Act 2002, Schedule 3, Paragraph 2, an occupier must have a legal right to the property at the time of the disposition (i.e., when the property is transferred to the new owner).
• Mrs. Scott did not have an enforceable right at the time the disponee (SPM) obtained the property.
• The court determined that there is no scintilla temporis (no gap in time) between the completion of the sale and the execution of the mortgage. Therefore, Mrs. Scott's interest could not override SPM’s claim to the property.
3. Impact and Analysis
• Overriding Interest and Timing: This case clarified that for an overriding interest to exist, the right must be established at the time of the disposition. Mrs. Scott’s right was found to be subsequent to the transfer of the property, and therefore, it could not be enforced as an overriding interest.
• LRA 2002, Schedule 3, Paragraph 2: The ruling emphasised the importance of this provision, which restricts the protection of overriding interests to those rights that exist at the moment the new owner takes possession. This decision limits the scope of protection for individuals in actual occupation who acquire rights after a property transfer.
• No Scintilla Temporis: The court's rejection of the scintilla temporis argument—where there would be a brief moment between the sale and mortgage execution—ensures that property transactions are treated as seamless. This prevents individuals from claiming rights that arise after the transaction as overriding interests, reinforcing the security of lenders.