Wishart v Credit and Mercantile plc [2015] 2 P & CR 322

Key point

  • Beneficial interest in land is overreached where a disposition is made by the trustee with actual or apparent authority from the beneficiary


  • W was beneficial owner of a property, of which K Ltd was the legal owner
  • K Ltd mortgaged the property to the C without W’s knowledge in order to fund the gambling of K’s owner, S, who later disappeared

Held (Court of Appeal)

  • The mortgage had priority over W’s beneficial interest, despite W being in actual occupation

Sales LJ

Actual and apparent authority

  • Where a person (an equitable owner behind a trust of land) has allowed another (the trustee of land) to manage his asset any limitations on the powers of the manager must be brought to the attention of a third party if the owner is to be able to set up his interest against the third party
  • The modern manifestation of this principle, in the context of registered land, is said to be found in cases such as Abbey National v Cann and Paddington Building Society v Mendelsohn

On the facts

  • W had left the acquisition of the property completely in S’s hands and had given S authority to make whatever arrangement he saw fit to acquire it, so long as the net result was that W had the beneficial ownership free of any mortgage
  • S had acted outside the limits of his authority by arranging the mortgage to C but C had not been on notice of any such restriction on his authority


  • Prior to Wishart, in no case has the equitable owner been held to have surrendered their priority where they did not consent or could reasonably be held to consent to a mortgage necessary for a transaction they had knowledge of
    • In Cann, Mrs Cann had given George authority to raise money by way of mortgage if necessary
    • In Paddington, a mortgage was taken out with the agreement of the mother
  • The case imposes a positive obligation on the beneficiary to make his interest known
  • The case seems to reintroduce the bona fide purchaser defence into the land registration scheme