Scott (Appellant) v Southern Pacific Mortgages Limited (Respondents)

The case of Scott v Southern Pacific Mortgages Limited and others involved an appeal against the decision of the Court of Appeal in which the Court held that the vendors had no proprietary interest in the property which could take priority over the lenders' charge. The appeal raised two main questions: (1) whether the purchasers were in a position at the date of exchange of contracts to confer equitable proprietary rights on the vendors, as opposed to personal rights only; and (2) whether, even if the equitable rights of the vendors were more than merely personal rights, the rationale of the decision of the House of Lords in Abbey National Building Society v Cann applied in this case. The Supreme Court held that the appeal should be dismissed. The purchasers were not in a position at the date of exchange of contracts to confer equitable proprietary rights on the vendors, as opposed to personal rights only. Even if the equitable rights of the vendors were more than merely personal rights, the rationale of the decision in Abbey National Building Society v Cann applied in this case. The purchasers, conveyance, and mortgage were indivisible and the vendors could not assert against the lenders their interests arising only on completion. The court also held that the contract of sale, conveyance, and mortgage were not indivisible for the purposes of this appeal. The reasoning of the court was based on the law of proprietary estoppel and the effect of the contract of sale on the parties involved. The court held that the vendors acquired no more than personal rights against the purchasers when they agreed to sell their properties on the basis of the purchasers’ promises that they would be entitled to remain in occupation. Those rights would only become proprietary and capable of taking priority over a mortgage when they were fed by the purchasers’ acquisition of the legal estate on completion. The court also held that the decision in Abbey National Building Society v Cann applied to the facts of this case and that the contract of sale, conveyance, and mortgage were indivisible for the purposes of this appeal. The final orders of the court were that the appeal should be dismissed.