A contractual licence does not bind a mortgagee

A contractual licence does not bind a third party such as a mortgagee.

In Chartered Bank v Wong ([1987] HKLR 844) a man had given his mistress a contractual licence to occupy the family apartment until the two children had finished full-time education. The man then mortgaged the property but failed to keep up with the mortgage repayments. The Bank sought possession of the property but the mistress refused to leave. She claimed that she had an interest that was binding on the bank. It was held that she had only a contractual licence and there was no equitable dimension to her rights (such as a proprietary estoppel or constructive trust). Her licence was not binding on the bank. Garcia J suggested that the result might have been different if the bank had had actual notice of the licence. It is hard to see why this should make a difference.

Michael Lower


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