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Mentally ill woman was "in actual occupation" of house she had to leave

26 April 2010

A woman who lived in a residential care unit after she was sectioned under the Mental Health Act remained in “actual occupation” of her former home, the Court of Appeal has unanimously ruled.

Lord Justice Mummery said the woman’s “persistent intention to return home” and her “involuntary residence elsewhere” were factors that had to be considered by the courts.

Delivering the leading judgment in Link Lending v Bustard [2010] EWCA Civ 424, Mummery LJ said that since Susan Bustard was in actual occupation of the house in Middesbrough, her equity took priority over Link Lending’s legal charge.

He said the house was “the only place that Ms Bustard could possibly call ‘home’” and from 2001 until December 2004 she was the registered proprietor with freehold title.

She suffered from Korsakoff’s Syndrome, a severe condition which affected her understanding, memory, cognitive facilities and judgment.

“Over the years she has received in-patient hospital treatment,” Mummery LJ said.

“Advantage was taken of her vulnerability when, on 26 November 2004, Ms Bustard executed a transfer of the property to Mrs Noreen Hussain, who was acting as a nominee for her husband, Mr Muhammed Hussain.

“The stated consideration was £100,000. On the same date Mrs Hussain raised from HSBC a loan secured by a legal charge over the property. On 15 December 2004 Mrs Hussain was registered as proprietor of a freehold interest in the property with absolute title.

“Ms Bustard received not a penny for the transfer of the property or from the loan secured on it. She continued to live there, though on numerous occasions during the period to December 2006 she was admitted to hospital for care and treatment.”

Mummery LJ said that Bustard was sectioned in January 2007, admitted to a psychiatric hospital and transferred to its residential care home. She was not allowed to return to her former home, but no one else lived in it during her absence.

The court heard that Mrs Hussain approached Link, a company which specialised in short-term interest-only loans in 2007. The company agreed to make an interest-only bridging loan, the HSBC mortgage was discharged and a new charge created in favour of Link.

Mummery LJ said that if Link won the appeal and its charge had priority, Bustard would have been “completely cleaned out”, since the amount secured by the charge was greater than the value of her interest in the property.

Bustard continued to visit the property while in hospital because she considered it her home and those who had taken responsibility for her finances regularly paid the bills, such as the community charge.

Lord Justice Mummery said she was making an application to the mental health review tribunal in order to be allowed to return home.

“The trend of the cases shows that the courts are reluctant to lay down, or even suggest, a single legal test for determining whether a person is in actual occupation,” he said.

“The decisions on statutory construction identify the factors that have to be weighed by the judge on this issue. The degree of permanence and continuity of presence of the person concerned, the intentions and wishes of that person, the length of absence from the property and the reason for it and the nature of the property and personal circumstances of the person are among the relevant factors.

“The judge was, in my view, justified in ruling, at the conclusion of a careful and detailed judgment, that Ms Bustard was a person in actual occupation of the property.”

Lord Justices Sullivan and Jacob agreed.

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