City of London Building Society v Flegg [1988] AC 54, HL
Overreaching and overriding interests.
Facts
Here, the Maxwell Browns purchased a property, attaining half of the cost form Mrs Maxell Brown’s parents, the Fleggs. The property was placed solely under the Maxwell Brown’s name with both the Browns and the Fleggs in actual occupancy. Later, in breach of the trust created from the Fleggs’ lending of money, the Maxwell Browns sought a mortgage for the property from the claimant which they ultimately defaulted on repayments for, and so the claimant sought to repossess the house. The Fleggs attempted to halt this, claiming an overriding interest per the 1925 Land Registration Act s.70(1)(g), reasoning that they held a beneficial interest in the property arising from their contribution to the purchase price and were in actual occupation. In response, the claimants submitted this right had been overreached as the purchase contribution had been given to the Maxwell Browns as trustees.
Issues
Whether contribution to purchase price and actual occupation can amount to an overriding interest, or whether such rights can be overreached.
Decision/Outcome
Whilst at first instance the Court found for the claimant, the Court of Appeal found for the Fleggs. Upon final appeal, the House of Lords found for the claimant, viewing that the Fleggs’ rights in the property per se had been overreached, and thus their rights attached to the property’s sale value. In the leading judgment, Lord Oliver emphasised the risks to financial institutions of ‘unsuspected hazards’ should they be bound by unregistered rights.
Updated 19 March 2026
This case summary remains legally accurate. City of London Building Society v Flegg [1988] AC 54 is still good law and continues to be the leading authority on the relationship between overreaching and overriding interests in registered land. The principle that overreaching under sections 2 and 27 of the Law of Property Act 1925 (payment to two or more trustees) defeats a beneficiary’s overriding interest under the Land Registration Act 1925 has been affirmed and applied in subsequent case law, including Birmingham Midshires Mortgage Services Ltd v Sabherwal (2000) 80 P & CR 256.
Students should note that the Land Registration Act 1925 (including s.70(1)(g), relied upon by the Fleggs) has been replaced by the Land Registration Act 2002. The functional equivalent of s.70(1)(g) is now found in Schedule 3, paragraph 2 of the 2002 Act. The overreaching framework itself remains governed by the Law of Property Act 1925. The replacement of the 1925 Act does not alter the outcome or reasoning in Flegg, but students should use the 2002 Act provisions when applying the principles to modern problem questions. The Law Commission has previously considered reform of overreaching (Law Com No 188, 1989), though no legislative change has followed on this point.
