Lyus v Prowsa Developments Ltd
A purchaser who bought land expressly subject to a contract with a third party held it on constructive trust to give effect to that contract.
Facts
Mr and Mrs Lyus contracted with a developer to buy a house that the developer was to build on a plot on an estate. The developer became insolvent, and the bank, which held a mortgage over the estate, sold the land to Prowsa Developments, expressly subject to the Lyuses' contract. Prowsa sold the plot to another company, also subject to the contract. The Lyuses sued to enforce their contract, but it had not been protected on the register, so it would not normally bind a purchaser.
Legal principle
Dillon J held that Prowsa and the later buyer held the land on constructive trust to give effect to the Lyuses' contract. The land had been sold expressly subject to and with the benefit of the contract, and it would be a fraud for the purchasers to rely on the lack of registration to deny it. The fact that the contract was not protected on the register under the Land Registration Act 1925 did not prevent the imposition of a constructive trust where the purchaser's conscience was affected.
Related cases on constructive trusts
- Ashburn Anstalt v Arnold [1989] Ch 1
- Banner Homes Group plc v Luff Developments Ltd [2000] Ch 372
- Bannister v Bannister [1948] 2 All ER 133
- Binions v Evans [1972] Ch 359
- Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105
- Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147
- Crossco No 4 Unlimited v Jolan Ltd [2011] EWCA Civ 1619
- Gissing v Gissing [1971] AC 886
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