CIBC v Christiansen

• Jurisdiction: Cayman Islands
• Judge: (Henderson, J.)
• Judgment Date: 16 April 2008
• Court: Grand Court (Cayman Islands)
• Date: 16 April 2008

Grand Court

(Henderson, J.)

CIBC CAYMAN LIMITED

and

R. CHRISTIANSEN and E. CHRISTIANSEN

Ms. S.M. Corbett for the plaintiff;

S. Wilson for the first defendant;

G. Hampson for the second defendant.

Cases cited:

(1) Gissing v. Gissing, [1971] A.C. 886; [1970] 3 W.L.R. 255; [1970] 2 All E.R. 780; (1970), 114 Sol. Jo. 550; 21 P. & C.R. 702, referred to.

(2) Hammond v. Mitchell, [1991] 1 W.L.R. 1127; [1992] 2 All E.R. 109; [1992] 1 FLR 229; [1991] F.C.R. 938, referred to.

(3) Lloyds Bank plc v. Rosset, [1991] 1 A.C. 107; [1990] 2 W.L.R. 867; [1990] 1 All E.R. 1111; [1990] 2 FLR 155; (1990), 60 P. & C.R. 311, applied.

(4) Stack v. Dowden, [2007] A.C. 432; [2007] 2 All E.R. 929; [2007] 1 FLR 1858; [2007] UKHL 17, referred to.

(5) Williams & Glyn”s Bank Ltd. v. Boland, [1981] A.C. 487; [1980] 3 W.L.R. 138; [1980] 2 All E.R. 408; (1980), 124 Sol. Jo. 443; 40 P. & C.R. 451, applied.

Legislation construed:

Registered Land Law (2004 Revision), s.28: The relevant terms of this section are set out at para. 11.

Land Law-overriding interest-actual occupation-if wife, as equitable co-owner of matrimonial home, in discoverable actual occupation and chargee fails to formally inquire about such occupation, interest becomes ‘overriding’ and takes priority over that of chargee, by virtue of Registered Land Law, s.28

Trusts-constructive trust-common intention-constructive trust in matrimonial home registered in husband”s name, in favour of wife, in absence of financial contribution if husband and wife have common intention to create trust-wife to demonstrate detrimental reliance on agreement or significant alteration of position, e.g. by stopping work after marriage and undertaking domestic responsibilities

The plaintiff bank applied for declaratory orders to assist it in enforcing its security over land owned by the first defendant.

The first defendant was the registered owner of four parcels of land, which he had used as security for a significant personal loan from the plaintiff bank. Soon after, in December 1995, he married the second defendant. Although she was not made a registered co-owner of the land, before marrying him she agreed that, in exchange for relinquishing her job and undertaking domestic responsibility for the matrimonial home, she would acquire a half interest in it.

The first defendant subsequently extended the first loan and more were secured against the land, although his wife was unaware of any except the first. At no time did he reveal to the bank that he had granted her a half interest in the land, and he even made misrepresentations as to the true state of ownership; she herself made no effort to conceal her beneficial interest in, or occupation of, the matrimonial home, which was situated on the largest of the four parcels of land in contention.

In May 2004, due to the first defendant”s default on the loans, the plaintiff bank commenced the steps which would lead to foreclosure, which were challenged by the wife, who claimed an overriding equitable interest in the land, taking priority over any interest of the bank”s.

The plaintiff submitted that declaratory orders should be made assisting it in enforcing its security over the land because (a) the first defendant had defaulted on loans secured against that land; (b) he was the only registered

owner of that land and he had not brought to its attention any interest that his wife had in the land, misrepresenting the true state of ownership; and (c) any beneficial interest that the wife did have in the land could not take priority over its own, as it was aware of her occupation and no further inquiry was necessary.

The defendants submitted in reply that (a) the wife had acquired a beneficial half interest in their home and the land upon their marriage, as they had made a bargain to that effect, which had led her to alter her position significantly, relinquishing her job and undertaking responsibility for all of the domestic arrangements in the home; (b) the plaintiff was aware that the first defendant was married and living with his wife in the home and her occupation was entirely discoverable upon formal inquiry; and (c) because the plaintiff failed to make such formal inquiry, the wife”s interest in the land was overriding, by virtue of to s.28 of the Registered Land Law (2004 Revision), taking priority over that of the plaintiff.

Held, dismissing the application:

(1) Orders assisting the plaintiff bank in its foreclosure on the loans of the first defendant would not be made, as the wife had an equitable half interest in all the land on which those loans were secured, which was overriding, and took priority over the interest of the bank, in accordance with...