## Facts

- Mr. Sabherwal owned a property and granted a mortgage over it to Birmingham Midshires Mortgage Services Ltd.
- Mrs. Sabherwal, the claimant, contributed financially to the property and was promised by her husband, the legal owner, that she would have a beneficial interest.
- Mrs. Sabherwal relied on these assurances and lived in the property, which she claimed resulted in a detriment beyond mere financial loss, including loss of alternative housing.
- At the time the mortgage was granted, Mrs. Sabherwal was in actual occupation of the property.
- The mortgagee did not register Mrs. Sabherwal’s interest but was argued to have constructive notice of her occupation and contributions.

## Issues

1. Whether Mrs. Sabherwal had established a proprietary estoppel claim over the property.
2. Whether the mortgagee, Birmingham Midshires Mortgage Services Ltd, had constructive notice of Mrs. Sabherwal’s equitable interest such that it would take priority over the registered mortgage.

## Decision

- The court held that Mrs. Sabherwal had successfully established a proprietary estoppel claim through her financial contributions, reliance on assurances of beneficial interest, and the detriment suffered.
- It was determined that her detriment was not solely financial but included loss of the chance to secure alternative accommodation.
- The court found that the mortgagee had constructive notice of Mrs. Sabherwal’s equitable interest due to her actual occupation and the observable facts of her residence and contributions at the time of the mortgage.
- The equitable interest created by proprietary estoppel was therefore held to take priority over the registered mortgage.

## Legal Principles

- Proprietary estoppel arises where a representation or assurance is relied upon to a party's detriment, giving rise to an equitable interest in land.
- The Land Registration Act 1925 provides for indefeasibility of registered title, but unregistered equitable interests may bind a registered proprietor if the latter has notice.
- Constructive notice occurs where a lender is deemed aware of the rights of persons in actual occupation at the time the security is granted.
- For estoppel to operate, the claimant must prove a clear assurance, reliance, and identifiable detriment.

## Conclusion

The Court of Appeal held that a proprietary estoppel claim, where supported by assurances, reliance, and detriment, can override a registered mortgage if the lender has constructive notice of the claimant’s equitable interest, underscoring the need for lenders to investigate possible equitable claims by persons in occupation.

Birmingham Midshires Mortgage Services Ltd v Sabherwal (2000) 80 P&CR 256